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El Salvador’s Bitcoin Adoption ‘Casts Doubt On Crypto’s Potential As a Payment Method’

A roundup of Wednesday’s news from across Latin America

Bloomberg Línea
By Adam Critchley
May 04, 2022 | 11:39 pm

Bloomberg Línea — El Salvador’s experience with bitcoin (XBT) renews doubts about the true potential of the cryptocurrency to achieve real-world use as a means of payment, according to U.S. economist Paul Krugman. Krugman cited a report by the U.S. National Bureau of Economic Research (NBER), in association with CID Gallup, which states that only 20% of citizens continue to use Bitcoin after having their first contact with the cryptocurrency.

Krugman posited that, in its attempt to be a “Crypto Republic,” El Salvador has pushed for “optimal conditions to make it a functional form of money”, having declared Bitcoin legal tender and provided subsidies to promote it. But, he says, “despite Bitcoin’s legal tender status and the large incentives implemented by the government, the cryptocurrency is not a widely accepted medium of exchange in El Salvador”.

“Most businesses don’t accept it; few people use it,” Krugman wrote in a series of tweets on his personal account.

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On the region’s stock markets, Chile’s IPSA index (IPSA) led the gains across the region, boosted by the performance of the communication services, materials and energy sectors. Shares of Entel (ENTEL), SQM/B (SQM/B), and SMU (SMU) were among the best performers of the day.

The Mexican index (MEXBOL) and Brazil’s Ibovespa (IBOV) also closed with gains.

Following is a roundup of Wednesday’s news from Bloomberg Línea and Bloomberg reporters across Latin America.

Argentina:

Brazil

Chile:

Colombia:

Costa Rica:

Ecuador:

Dominican Republic:

El Salvador:

  • El Salvador’s experience with bitcoin (XBT) renews doubts about the true potential of the cryptocurrency to achieve real-world use as a means of payment, according to U.S. economist Paul Krugman. Krugman cited a report by the U.S. National Bureau of Economic Research (NBER), in association with CID Gallup, which states that only 20% of citizens continue to use Bitcoin after having their first contact with the cryptocurrency. Krugman posited that, in its attempt to be a “Crypto Republic,” El Salvador has pushed for “optimal conditions to make it a functional form of money”, having declared Bitcoin legal tender and provided subsidies to promote it. But, he says, “despite Bitcoin’s legal tender status and the large incentives implemented by the government, the cryptocurrency is not a widely accepted medium of exchange in El Salvador”. “Most businesses don’t accept it; few people use it,” Krugman wrote in a series of tweets.

Mexico:

Uruguay:

Venezuela: