Businesses and Countries Watch and Learn from El Salvador’s Bitcoin Experience
- “The multinationals that now accept bitcoin payments in El Salvador will certainly learn from this experience.”
- Don’t expect a company like McDonald’s to rush to add BTC acceptance in other markets.
- Clear regulations would encourage multinationals to start accepting crypto.
It has now been over a month since El Salvador officially started to enforce a law Bitcoin (BTC) legal tender in the country of Central America. Much has been the speed with which this law was proposed and then passed, with protests suggesting that at least part of the local population did not really agree with President Nayib Bukele’s plans to turn El Salvador into a Bitcoin nation.
Despite the rollout attracting a certain amount of controversy and skepticism, it has been a kind of PR extravagance for Bitcoin, especially with big multinational brands such as Mcdonalds and Starbucks now accepting BTC in their Salvadoran outlets. But even though these companies have started to accept bitcoin, to what extent exactly do they and other companies actually use BTC, and do they intend to accept cryptocurrency at their branches elsewhere in the world?
Well, the multinationals themselves remain zealous on their future plans with BTC, with none of them responding in the affirmative to requests for comment. That said, observers inside and outside El Salvador suspect that their acceptance of bitcoin may be part of a gradual journey towards wider acceptance in other parts of the world.
How is El Salvador’s flirtation with BTC
Reports from El Salvador on behalf of Reuters to suggest that while many El Salvadorians have at least tried the country’s new BTC infrastructure, businesses are generally less enthusiastic.
For example, the Salvadoran Foundation for Economic and Social Development shared data revealing that three million people have downloaded the Chivo app, roughly half of El Salvador’s population. At the same time, 12% of consumers have actually used bitcoin for payments or transfers.
On the flip side, this same data reveals that 93% of businesses operating in El Salvador still report that they haven’t made any bitcoin payments. This picture is largely supported by testimony from industry players watching the situation in El Salvador as it unfolds.
âWe haven’t seen any reports or evidence of widespread use of bitcoin for payments from major brands in El Salvador that have added BTC payments, and it’s not surprising,â said Garrick Hileman, manager. research at Blockchain.com.
âAlthough we have seen anecdotal reports of how well BTC payments work at McDonald’s and Starbucks, the Chivo public wallet – which Salvadorans must use to access their government-provided bitcoin – encountered initial technical difficulties,â he said. he noted.
Hileman adds that a major educational push is needed around bitcoin and digital wallets in El Salvador before we likely see companies – local and multinational – embracing cryptocurrency. He also notes that the economics of Bitcoin make it less likely that people actually use BTC for daily spending.
âThe traditional reluctance of many bitcoin owners to spend their BTC should not be underestimated either. Many would rather save bitcoin than spend it, âhe said. Cryptonews.com.
Observers in El Salvador also corroborate this account. Dr Javier SimÃ¡n, president of National Association of Private Enterprises of El Salvador (ANEP), said Cryptonews.com that bitcoin “did not become popular”, with technical problems being one of the main reasons.
âMost large businesses and franchises have reported issues accepting payments through Chivo Wallet, the government sponsored app, and are using alternative apps instead. But all businesses convert bitcoins to dollars as immediately as possible so that they don’t incur currency losses, âhe said, noting that economic rationalism means that very few businesses would like to speculate with BTC or other crypto-assets.
Likewise, Valeria VÃ¡squez, Central American analyst at the risk consultancy firm Controlling the risks, also cites technical issues and security concerns as one of the main reasons that few companies have seen widespread use of bitcoin.
âSeveral stores and restaurants (even hotels) accept bitcoin as a form of payment – in places like McDonald’s, you can pay with bitcoin not only in restaurants, but also online and through the delivery app. world does not use government wallet (Chivo) due to technical issues, security and better functionality of other wallets, âshe said. Cryptonews.com.
VÃ¡squez notes that some users had to wait several hours for the transaction to take place or for the store to receive payment. This turned off many, but the reluctance is even greater among companies.
âOn the local business side, there is more reluctance to use the Chivo wallet and BTC, but they will continue to use bitcoin mainly because everyone is obligated to accept it and all prices for products and services must. be expressed in USD and bitcoin, âshe added. .
When you look at multinationals – Starbucks, McDonald’s, Pizza Hut, Olive garden – who started accepting bitcoin in El Salvador, observers warn of the hypothesis that they will soon start accepting cryptocurrency in other countries.
âThe multinationals that now accept bitcoin payments in El Salvador will certainly learn from this experience, and those lessons can be shared across global operations. However, given that retail BTC payments at companies like McDonald’s will likely be de minimis in El Salvador for the foreseeable future, I wouldn’t expect a company like McDonald’s to rush to add BTC acceptance on d. ‘other markets,’ said Garrick Hileman.
Javier SimÃ¡n of ANEP also says that it is unlikely that we will soon see a rush of multinationals to start processing cryptocurrency transactions around the world.
âWe cannot assume what multinational companies will do [the same] in other countries with other currencies, âhe said.
SimÃ¡n also recalls that when you have a dollarized economy (like El Salvador’s), it âdoesn’t make sense to convert dollars into bitcoins and then back to dollarsâ. On the other hand, he acknowledges that “Bitcoin can be seen differently in countries less dependent on the US dollar.”
While noting the current likelihood that multinationals will start accepting bitcoin elsewhere, Valeria VÃ¡squez is hopeful for the more distant future.
âCurrently, a growing number of businesses are embracing cryptocurrency, allowing customers to pay with it. In El Salvador, for example, multinationals are learning to adapt to this new reality and this will probably happen around the world, âshe said.
She cautions that businesses need to be aware of the dangers and challenges inherent in processing cryptocurrency payments. However, unlike El Salvador (which has a weak regulatory framework with fewer protections), other more developed countries may be more successful in encouraging greater acceptance of cryptocurrencies among businesses.
“Multinationals will be more receptive to the acceptance of cryptos as long as the regulatory and compliance framework is strong and has a transparent basis,” she added.
Cryptonews.com contacted the four US-based multinationals (McDonald’s, Starbucks, Pizza Hut, and Olive Garden) that have accepted BTC the most in El Salvador. Only one responded to our inquiries, and in the case of the company that responded – Olive Garden – it “politely declined the opportunity” to comment on its future plans.
An important first step
But while multinationals are probably very reluctant at the moment to push their acceptance of bitcoin any further, at least some commentators say El Salvador is an important first step in making the world familiar with Bitcoin and cryptocurrency.
“I believe that in the future, we will revisit El Salvador’s adoption of bitcoin both as legal tender and as a reserve asset as a major step in bitcoin’s journey to become a global reserve currency,” Garrick Hileman said.
Valeria VÃ¡squez also reminds us that the deployment of Bitcoin in El Salvador has been problematic, which may or may not hurt its chances of future adoption in the long term. Likewise, Javier SimÃ¡n argues that making bitcoin legal tender can be a backlash against cryptocurrency, not least because its volatility could be damaging to consumers and businesses.
He concludes: âPeople expect legal tender to be secure. Not risky. All businesses are risky enough already. People don’t want to take on additional currency or devaluation risks. “
In either case, VÃ¡squez notes that El Salvador’s new relationship with Bitcoin is an experiment that other countries are watching very carefully.
“Other countries will probably wait and see El Salvador’s implementation, if it works, if it is beneficial, if it attracts more foreign investment,” she said.
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