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TechnologyBitcoin Fell 17% After It Was Recognized as Official Currency in El Salvador

13:00  16 september  2021
13:00  16 september  2021 Source:   pressfrom.com

Since its emergence in 2008, bitcoin has remained a major cryptocurrency, outpacing altcoins in value and capitalization. Many companies and services have already made bitcoin an official payment method, making it easier for customers to use their services. In this way, they attract new customers because everyone uses a word of mouth to talk about "this site or company where you can do everything with bitcoins."

But finance is something that is not static and is constantly changing. For example, bitcoin fell 17% to $43,000 on Sept. 7 after it officially became legal tender in El Salvador along with the U.S. dollar. This is reported by Bloomberg.

The reason for the cryptocurrency's collapse was the Salvadoran government shutting down its cryptocurrency wallet Chivo due to technical problems. The country's president, Nayib Bukele, tweeted that the authorities took advantage of the situation and bought another 150 digital coins during the bitcoin collapse, increasing the state's total number of tokens to 550 (about $26 million).

El Salvador Is Ahead of the Planet and Making Bitcoin Official

El Salvador became the first and only country to make cryptocurrency a state payment instrument. The president expects it to help create jobs and make it easier for citizens working abroad to send money back home. At the same time, 70% of Salvadorans do not have bank accounts or credit cards and only use cash. To encourage citizens to use cryptocurrency, Buquele promised everyone $30 in bitcoins when they open an account with Chivo.

Bukele also said on his micro-blog that the country took advantage of the situation and bought 150 bitcoins during the fall in addition to the 400 already bought the day before. "Looks like the discounts are over," Bukele wrote as the value of the cryptocurrency began to rise, specifying that the total number of tokens in El Salvador's possession reached 550 (about $26 million).

Earlier, Buquele explained that the use of cryptocurrency would help El Salvador attract investment, increase consumption and reduce remittance costs for the millions of residents working abroad.

The dollar will still be used in the country, but merchants and companies have been required to ensure that bitcoin payments can be accepted, which has been met with mixed reactions from locals and companies. Bukele retweeted several messages from Salvadorans who are already paying with cryptocurrency at McDonald's and Starbucks.

Experts doubt the success of El Salvador's bitcoin experiment because of its volatility, which could hurt the country's economy. They also warn of an inevitable rise in fraud.

What Happens Next?

Nevertheless, as early as Wednesday, September 8, the bitcoin rate has stabilized slightly. At the moment, its value is $45,700, according to the cryptocurrency exchange CoinDesk.

However, according to economic expert Luis Membreno, the problems could have been foreseen. The expert called what happened a disaster, noting that it could lead to losses for citizens and undermine confidence in the system. In addition, some experts do not support the decision of the Salvadoran authorities.

This is primarily due to the fact that the implementation of the program increases the burden on the state budget. Despite the introduction of settlements in bitcoins, all debts will be paid in dollars, according to the Financial Times.

Is El Salvador to Blame for the Collapse?

However, the main cryptocurrency collapsed not only because of El Salvador. The collapse in quotations may have been triggered by the news that the U.S. Securities and Exchange Commission (SEC) has launched an investigation into one of the largest decentralized crypto exchanges Uniswap, said the head of the analytical department of British banking giant Standard Chartered believes that these cryptocurrency problems are transient, and the bitcoin rate in the medium term will grow by 3 times and may even reach $175 thousand.

Bitcoin is also expected to rise in the retail cryptocurrency market. Senior analysts believe that the cryptocurrency could reach the $57,000 to $67,000 mark.

As previously reported, U.S. billionaire John Paulson described cryptocurrencies as a "limited supply of anything." He said that he would not recommend anyone to invest in this sphere. According to him, crypto-assets will eventually fall to zero.

Fossil fuel firms find friends in Bitcoin mining .
“When people don’t see pollution, they don’t think it’s there,” one expert said.Today, through a holding company based in Kennerdell, Pennsylvania, called Stronghold Digital Mining that bought the plant, Scrubgrass burns enough coal waste to power about 1,800 cryptocurrency mining computers. These computers, known as miners, are packed into shipping containers next to the power plant, the company stated in documents filed with the U.S. Securities and Exchange Commission ahead of its initial public offering. Coal waste is a byproduct from decades of mining in the region, left behind in enormous black piles.

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