On June 8, El Salvador became the first country to declare bitcoin as legal tender. A month later, it's safe to say the entire country is still processing the news and its impact on future of the economy and their lives. Some sectors have voiced approval and enthusiasm. But small businesses and merchants, which comprise the largest sector of the Salvadoran economy, are harboring doubts and raising questions without, for the moment, clear answers.
To Juan Chávez, an ice cream street vendor of the suburban area of Santa Tecla, bitcoin is simply an economic dynamic he does not understand and that has yet to be adequately explained to him. “I've been hearing about that coin, and I don't understand what it means. I know there is a law, but not what it says. They (legislators) say that it will begin to circulate in September, but I know nothing about how it’s used.”
Daysi Moza, who sells clothes in the Central Market in the town Santa Tecla, expressed similar confusion. "I don’t know what bitcoin is, I have only heard that it is a new currency that is going to affect us as poor people.”
Moza believes, "the authorities must retract [the legalization of] that currency."
“It may work in other countries, but here, in El Salvador, there is a lot of poverty. I'm not going to accept bitcoin, even if they force me to,” she said.
One big issue for merchants is that the law was sprung on the country as a surprise. María de Jesús Hernández, another retailer at the Santa Tecla City Market, says, “They should have asked the population. If the people disagree and [legislators] approve, what are we going to do? They should have asked before putting that law into place.”
"I'm not going to accept bitcoin, even if they force me to."
Rafael Cativo, a carpenter, says small merchants will face a big problem when a customer wants to pay in bitcoin, because so many only accept physical currency. “If someone wants to pay me with bitcoin, I will ask them to give me dollars instead because it is easier for me. If I’m given a dollar, I put it in my pocket and I’m able to use it whatever I want. But I don't know what to do with digital money.”
Lack of information = fear
Doubts about bitcoin are also present among entrepreneurs, many of whom own small businesses and represent the next economic leg up from vendors in town markets.
For Cesar and Susana Perez, who own a bakery, the Bitcoin Law was a “hasty measure.”
“It was a very hasty decision. It’s okay for [lawmakers] to implement it, but not to make it mandatory. In our case, if someone comes and wants to pay with bitcoin and we can't accept it, we’ll lose the sale and profit. I hope the authorities explain to us how it is going to be used.”
“People are uncertain because they don't know how to handle it. It's something that came all at once and we don't know how to use it. That's what all the people we've talked to tell us. To me it doesn’t seems right how the government has done this. I think it has done things backwards: first gave us the law and then explained it. It should have been the opposite," Cesar and Susana Perez added.
"I hope the authorities explain to us how it is going to be used.”
This uncertainty is shared by Roberto and Stefani Cerna, founders of Nutrifood, a cloud kitchen focussed on healthy eating. One of their main fears is bitcoin’s price fluctuation. The Cernas said, “Some vendors have already asked us if we would work with bitcoin. Our fear is that the cryptocurrency's price fluctuation will have an impact on large companies, who provide us with the goods we need to work. They don't want to be impacted [by that] and will force us to buy at higher prices [to compensate]."
“We think the law should have gone through a consultation period. A law that affects businesses should have been studied. However, legislators merely approved it and it was all done. There was no consultation on the part of the government to small businessmen that are the ones hit the hardest by this.”
Despite the doubters, there is a sector in El Salvador that supports the implementation of bitcoin and believes that education and training in Financial Technology (Fintech) will smooth the transition. Carlos Bonilla, a Salvadoran investor, is among the believers. “The population must be trained and informed. Fears are understandable, but as people get to know, understand and learn how to use bitcoin, its advantages will be seen. We have an evidence in El Zonte Beach [a beach town that runs primarily on bitcoin]. The locals took the time to learn about bitcoin and now they are an example of how a local economy can grow with this tool,” said Bonilla.
"As people get to know, understand and learn how to use bitcoin, its advantages will be seen."
Given the doubts expressed on social media, along with the perception that the law is unpopular, President Nayib Bukele spoke on a national broadcast on June 24, saying there will be no obligation for merchants to accept bitcoins if they do not have the resources to accept cryptocurrencies.
Bukele also said the government will train and support merchants so that they can use bitcoin and provide the necessary technology for those who want to accept it.
“The state is going to promote training so that the population can access the benefits of bitcoin transactions. Therefore, the state is going to improve internet access. Dollar-denominated bank accounts will remain in dollars; no account will be converted to bitcoin. If someone receives a payment in bitcoin, they can choose to automatically receive it in dollars [instead],” Bukele said.
Bukele also introduced a government-backed digital wallet, in order to facilitate the bitcoin transition. He said access to the wallet would not consume data on citizens' cell phone plans and that it would work as simply as a debit card, except it would facilitate transactions in both dollars and bitcoin.
The Bitcoin Law will take effect on Sept. 7, leaving time for the government and reserve bank to establish regulations for the circulation of bitcoin into the economy. For now, the population awaits answers to their questions and doubts about becoming a nation of crypto.