Bitcoin is a pretty volatile financial instrument…..
Anyone who is even slightly familiar with cryptocurrencies knows this, and in fact this volatility is really a hallmark of most digital assets, a simple look at BTC’s price chart reveals exactly that:
— The Quill Press (@VinceQuill) August 29, 2021
This is one of the reasons protestors in El Salvador cited this week as they took to the streets in mass protest against Bitcoin’s legal status as a newly minted form of legal tender.
Pensioners and retirees point out that these volatility swings pose a great risk to them in terms of both potential diminished earning power as well as volatility hits to state pension funds held in Bitcoin.
As someone who applauded the government of El Salvador’s move to make Bitcoin a form of legal tender, I thought about this issue, but thought they might find a way to mitigate it.
Perhaps a solution would have been making Bitcoin a legal tender, but still keeping pensions and paying out pensioners in U.S. Dollars due to the fact that they are the most vulnerable demographic to market exchange risk.
In The U.S. it isn’t uncommon for a state to make investments with employee pension funds, but many point out that some of these investments lose money, accrue debt, and lend themselves to a looming pension crisis.
Keep in mind that these states are investing these pension funds into instruments and markets that are far less volatile than Bitcoin and the crypto market.
If even they are experiencing financial woes while investing in less volatile markets, perhaps it is unwise for the government of El Salvador to make Bitcoin a legal tender and then handle most official business through Bitcoin.
BTC is a powerful instrument no doubt, but everything has a time and place.
Here’s more on this developing story:
El Salvador protest against Bitcoin. Most merchants prefer US dollar and do not want to accept Bitcoin. https://t.co/FDEmkvKlqF
— Adam Mashrique 🥕 (@sakak_musdom) August 29, 2021
Crypto Potato had more details:
On September 7 of this year, the waiting period for the Bitcoin Law to become mandatory is over. According to the text of this Law, all economic agents must accept Bitcoin along with the dollar as a means of payment.
Bukele promises that the measure seeks to benefit the people and save the country close to $400 million in remittance commissions, guaranteeing instant and more secure financial transactions.
But Salvadorans do not seem to agree.In the last few days, annoyance and fear of the imminent application of the Law have exacerbated the mood of Salvadorans, and demonstrations have already begun to take place in the streets against Bitcoin.
We all hooted and hollered at the bullishness of El Salvador adopting Bitcoin as an official currency now we must act like this never happened 🤣https://t.co/eECeJkOUML
— BiZzy.jpg (@BiZzy_BlocKs) August 29, 2021
Massive Anti Bitcoin Protests Fill The Streets of El
Salvador | CRYPTO
The political situation in El Salvador is only getting worse as the day#cryptohttps://t.co/IU9uPWWEoQ #cryptocurrency #crypto #altseason #defi #enrichedfeed #smartcontracts #furucombo #dex #cex
— EFeeds (@EnrichedFeed) August 29, 2021
Some of the protestor’s concerns were reported by Euro News:
“We know this coin fluctuates drastically. Its value changes from one second to another and we will have no control over it,” Stanley Quinteros, a member of the Supreme Court of Justice’s workers union, told Reuters.
Neighbouring central American countries are eagerly waiting to see if El Salvador’s adoption of Bitcoin as parallel legal tender cuts the cost of remittances, an important source of income for millions of people, the region’s development bank said.
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