A year ago, El Salvador began accepting Bitcoin as legal tender following a controversial and much criticized decision by President Nayib Bukele.
All seemed rosy for the first few months as citizens enthusiastically embraced the new opportunity, but Bitcoin’s value has plummeted since and some experts say the move has been a failure.
Maria Aguirre, 52, a shopkeeper in the El Zonte seaside resort that has been a major center for Bitcoin use, says things were going well last year as Bitcoin’s value rose from $52,660 at opening on September 7, 2021, to briefly over $68,000 a couple of months later.
“But over the last five months it’s been only falling,” said Aguirre, who continues to accept Bitcoin transactions.
Bitcoin has dipped under $20,000 for most of this September.
In El Zonte, around 60 kilometers southwest of capital San Salvador, Bitcoin was already being used before Bukele’s move, which was designed to encourage a population where only 35 percent of people owned an account at a financial institution in 2021, according to the World Bank.
El Salvador became the first country to accept Bitcoin as legal tender, alongside the US dollar that has been the official currency for two decades.
The government even created the Chivo electronic wallet and granted each user the equivalent of $30.
By January, the application had been downloaded four million times, according to Bukele — an impressive amount in a country of 6.6 million, although with a diaspora of three million living mostly in the United States.
Bukele’s idea was to ensure that remittances, which make up 28 percent of El Salvador’s GDP, be sent by Chivo meaning less money lost in commission to exchange agencies.
However, former central bank president Carlos Acevedo says the body’s records show that “less than two percent of remittances are arriving through digital wallets, which means that this hasn’t been a benefit either.”
University student Carmen Majia, 22, said she used Bitcoin in the beginning “but given how things are going, now I don’t trust it and I uninstalled the application.”
– Volatility –
When Bukele’s plan was launched, Aguirre had already been using Bitcoin for eight months in the Pacific seaside resort that is popular with surfers.
After Bitcoin shot up in value between September and November 2021, Bukele announced a plan to build Bitcoin City — a tax haven for cryptocurrencies and blockchain technology on the Gulf of Fonseca that would be powered by geothermal energy from the Conchagua volcano.
To build it, Bukele was going to issue $1 billion in Bitcoin bonds but those plans were delayed by the volatile cryptocurrency market that saw some less robust currencies crash and Bitcoin take a huge hit.
According to the credit rating company Moody’s, Bukele’s plan has cost El Salvador $375 million.
Taking advantage of the drop in value, Bukele bought 80 Bitcoins at $19,000 each in July, taking El Salvador’s total holdings to 2,381 units of the cryptocurrency, all bought over the last year.
In June he told compatriots to “stop looking at the graph” insisting that Bitcoin is a secure investment that will bounce back up.
“Patience is the key,” he said.
– Little enthusiasm –
But Acevedo insists that the use of Bitcoin “really has not worked” and that “so far it has really been a failed bet.”
But not a total failure “because it could recover and get out of this crypto winter.”
Acevedo says Bitcoin has not produced Bukele’s stated aim of “financial inclusion” and its fall in value has “psychologically influenced people who do not view it with enthusiasm.”
The adoption of Bitcoin has also complicated El Salvador’s attempts to secure a $1.3 billion loan from the International Monetary Fund, which had urged against the move.
Faced with a warning that the country could default over its public debt that has surpassed 80 percent of GDP, Bukele announced in June a plan to buy back bonds due to expire in 2023 and 2025.
He insists the country has the cash to do so.
That reduced the country’s risk from 35 percent to 25 percent but Acevedo says El Salvador will not be able to return to the debt markets until that figure comes down to “at least five percent.”
In El Zonte, Cheetara Hasbún, a hotel employee, still thinks Bitcoin is a “good payment” method and just “needs more time, as was given to the dollar.”
UK unveils £11 bn windfarm investment by UAE, German firms
UK Prime Minister Rishi Sunak announced Friday plans by UAE state-owned renewables firm Masdar and German energy giant RWE to invest up to £11 billion ($14 billion) in a giant offshore windfarm.
The joint investment plans will help erect turbines at the UK’s massive Dogger Bank site in the North Sea, he said at the COP28 climate talks in Dubai.
The long-planned offshore windfarm off the coast of Yorkshire in northern England, will be the largest in the world, the UK government claims.
Several other multinational companies are involved in ventures.
“I’m pleased to announce a new deal between Masdar and RWE, which includes a commitment to jointly invest up to £11 billion into the UK’s new windfarm at Dogger Bank,” said Sunak.
“This is a huge boost for UK renewables, creating more jobs, helping to power three million homes and increasing our energy security,” he told a press conference on the fringes of COP28.
Masdar will purchase a 49-percent stake in RWE’s 3.0 gigawatt (GW) projects at Dogger Bank South, both companies said.
The southern section is capable of powering three million typical UK homes, creating 2,000 jobs during construction and over 1,000 direct and indirect roles during its operational phase, it added.
The financial deal is expected to complete in the first quarter of next year, the state-owned UAE enterprise noted.
Sunak has come under pressure over his commitment to climate change mitigation this year, after softening several policies aimed at reaching net-zero carbon emissions by 2050.
But he used his appearance at the United Nations climate conference to defend those decisions and insist the UK was on course to meet its commitments.
“What I can reassure you is we’re going to continue to do more than others going forward to,” Sunak told reporters.
“We can meet targets that are already more ambitious than anyone elses but we can do so in a more pragmatic way,” he added, noting the cost-of-living crisis impacting many Britons.
The British leader, struggling in the polls ahead of an expected general election next year, claimed no other world leaders at COP28 had raised his slew of recent rollbacks to UK climate policies.
“Because most of their targets are less ambitious than the UK’s,” he said.
EU wants to know how Meta tackles child sex abuse
The EU on Friday demanded Instagram-owner Meta provide more information about measures taken by the company to address child sexual abuse online.
The request for information focuses on Meta’s risk assessment and mitigation measures “linked to the protection of minors, including regarding the circulation of self-generated child sexual abuse material (SG-CSAM) on Instagram”, the European Commission said.
Meta must also give information about “Instagram’s recommender system and amplification of potentially harmful content”, it added.
The investigation is the first step in procedures launched under the EU’s Digital Services Act (DSA), but does not itself constitute an indication of legal violations or a move towards punishment.
Meta must respond by December 22.
A report by Stanford University and the Wall Street Journal in June this year said Instagram is the main platform used by paedophile networks to promote and sell content showing child sexual abuse.
Meta at the time said it worked “aggressively” to fight child exploitation.
The commission has already started a series of investigations against large digital platforms seeking information about how they are complying with the DSA.
It has sought more information from Meta in October about the spread of disinformation as well as a request for information last month about how the company protects children online.
The DSA is part of the European Union’s powerful regulatory armoury to bring big tech to heel, and requires digital giants take more aggressive action to counter the spread of illegal and harmful content as well as disinformation.
Platforms face fines that can go up to six percent of global turnover for violations.
US judge halts pending TikTok ban in Montana
A federal judge on Thursday temporarily blocked a ban on TikTok set to come into effect next year in Montana, saying the popular video sharing app was likely to win its pending legal challenge.
US District Court Judge Donald Molloy placed the injunction on the ban until the case, originally filed by TikTok in May, has been ruled on its merits.
Molloy deemed it likely TikTok and its users will win, since it appeared the Montana law not only violates free speech rights but runs counter to the fact that foreign policy matters are the exclusive domain of the federal government.
“The current record leaves little doubt that Montana’s legislature and attorney general were more interested in targeting China’s ostensible role in TikTok than they with protecting Montana consumers,” Molloy said in the ruling.
The app is owned by Chinese firm ByteDance and has been accused by a wide swathe of US politicians of being under Beijing’s tutelage, something the company furiously denies.
Montana’s law says the TikTok ban will become void if the app is acquired by a company incorporated in a country not designated by the United States as a foreign adversary.
TikTok had argued that the unprecedented ban violates constitutionally protected right to free speech.
The prohibition signed into law by Republican Governor Greg Gianforte is seen as a legal test for a national ban of the Chinese-owned platform, something lawmakers in Washington are increasingly calling for.
The ban would make it a violation each time “a user accesses TikTok, is offered the ability to access TikTok, or is offered the ability to download TikTok.”
Each violation is punishable by a $10,000 fine every day it takes place.
Under the law, Apple and Google will have to remove TikTok from their app stores.
State political leaders have “trampled on the free speech of hundreds of thousands of Montanans who use the app to express themselves, gather information, and run their small business in the name of anti-Chinese sentiment,” ACLU Montana policy director Keegan Medrano said after the bill was signed.
The law is yet another skirmish in duels between TikTok and many western governments, with the app already banned on government devices in the United States, Canada and several countries in Europe.
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