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The Bitcoin Gamble in El Salvador has started with Rocky Start

Like El Salvador as it enters the bitcoin era, its sky will shine with the lights of a platoon of drones. “We’re throwing an event,” American cryptocurrency broker Brock Pierce says. “They did great in the Burning Man in the past. They joined in the Super Bowl. So we threw the best drone crew in the world, and we’re going to have quite a show in the sky. ”

A former child actor and current and well-known technology investor Burner, Pierce led a delegation of cryptographic entrepreneurs to the Central American country in June, with President Nayib Bukele expecting El Salvador to receive bitcoin as legal tender, in addition to the U.S. dollar, beginning September 7, 2021. Since then, Pierce has had relations with government officials in El Salvador – “I have just called the President’s brother on the phone,” he says, and with business people who want to establish a presence in the country to respond to new crypto needs. Now he’s back in El Salvador to go to the big day. “That’s the amazing speed at which it launches,” he says. “Like everything, I guess it’s going to be less than perfect in the beginning. But perfection is the enemy of progress. ”

The speed with which the Bukele government has launched this experiment, with the passage of a law punishing the turn of parliament 90 days after the start of bitcoinization in the country, is striking. To ask whether the country and its inhabitants would benefit from a longer advantage. Or at least from greater transparency.

The crucial details of how the adoption of Bitcoin will be played out in practice are not yet clear or have only been revealed in recent days. A government regulations issued on 27 August established that Salvadoran banks should offer bitcoin exchange in dollars and vice versa — when done through a government-backed wallet — without charging a commission; the regulations also require all companies that provide bitcoin-related services to register with a government agency and take action against money laundering. (It is unclear what the penalties would be if they did not do so.)

“That was done a week and a half before September 7,” says Mario Aguiluz of IBEX Mercado, a Guatemalan company that sells bitcoin exchange and payment solutions, which also operates in El Salvador. “You really have to ask if the government is ready. It’s a mixed bag. “

There is little information about the government’s bitcoin portfolio called Chivo. It is known that it will work with 200 Chivo ATMs, where users can exchange their bitcoin money without commission (recently Economist story reported that a 5 percent fee is charged for converting dollars into bitcoins, even though the publication had to use a third-party wallet), and that each Chivo wallet will be supplemented with $ 30 bitcoin as government free. What we don’t know is exactly who developed the wallet or ATM and what technology it will be based on.

According to Chris Hunter, co-founder of the bitcoin company Galoy, such plans are changing “almost by the hour”. Hunter, who said the nationwide project to provide bitcoin payment services in the coastal town of El Zonte, El Salvador, said the situation was still “very mild” in early September. Like last week, he was sure that Chivo would not be able to use the lightning network, a system that speeds up bitcoin transactions tremendously, otherwise it would take a few minutes to confirm. “Now, it seems pretty clear to me — you asked me to bet — that it will be enabled from Tuesday,” Hunter says. The government of El Salvador has not responded to the request for a response.

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