Bitcoin stumbles in El Salvador — protests erupt

El Salvador became the first country to adopt the world’s largest cryptocurrency, Bitcoin, as legal tender alongside the US dollar.

Launched on 7 September, the adoption of the cryptocurrency got off to an unfavourable start, plagued by digital wallet glitches and protests by those opposing the new Bitcoin law.

The law officially took effect at 15:00 local time (23:00 SAST), after having already experienced issues with the government-backed digital wallet  — Chivo — which was temporarily taken offline to improve server capacity.

The lack of capacity was aggravated by the fact that Apple and Huawei were not initially offering the digital wallet application on their platforms.

“We have disconnected it while increasing capacity of the image capture servers,” President Nayib Bukele said on Twitter.

“The installation problems that some people had were for that reason.”

At the same time, a group of those opposed to the new Bitcoin law began protests in the capital.

The group, whose numbers grew steadily during the protests, explained that they were not against Bitcoin. They were protesting because they felt the public had little say in the decision.

There appears to be hesitation amongst the population, caused by a lack of understanding of how cryptocurrency works and is traded.

“If we don’t understand Bitcoin, then people will lose money when the price drops,” a protesting student told Al Jazeera.

“We need a lot more education or people will be taken advantage of.”

The adoption of Bitcoin as legal tender took a further hit as the value of the cryptocurrency dropped on Tuesday to a low of $43,000 (R616,000), down from $52,000 (R745,000).

“It was a very bad day for President Bukele, his government and his Bitcoin experiment,” opposing politician Johnny Wright Sol told BBC News.

“The majority of the population knows very little about cryptocurrencies. What we do know is it’s a very volatile market. Today that was surely made manifest.”

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Bitcoin stumbles in El Salvador — protests erupt