El Salvador made history earlier this week when it became the first country to officially accept Bitcoin as a legal tender. While the community rejoiced about the significance of the news, Fidelity’s Director of Global Macro – Jurrien Timmer – said the move had been overplayed.
BTC Adoption in El Salvador is Overplayed
Three months after the surprising announcement that the country will adopt Bitcoin, El Salvador officially went into the history books on September 7th as it made the cryptocurrency a legal tender within its borders.
Being the first nation to do so, it urged prominent community members to highlight the importance of the move, and some even argued that other countries should follow suit.
However, the move, which was met with enhanced criticism by organizations like the IMF, also expanded outside the cryptocurrency ecosystem. Popular names continue to weigh in on whether or not El Salvador made the right move.
The latest to opine is Jurrien Timmer – an executive with Fidelity Investments. Speaking to CNBC, he called it a “new and interesting development,” but believes the significance of it is “a little bit overplayed.”
“It’s not like El Salvador has dropped the US dollar as its peg – it’s not like it switched from dollars as its currency peg to Bitcoin. It still has the dollar, and people can decide to be paid in dollars. So, this is a voluntary thing essentially.”
As such, Timmer warned that this will be the first “major test” for bitcoin as a medium of exchange instead of a store of value. This could create issues for the proof of work network, which is less scalable than other projects.
Timmer also outlined the differences between gold and bitcoin in their adoption cycles. The precious metal went from “being money to being an asset class in the 1970s,” while the situation with bitcoin is somewhat in reverse.
The Bitcoin Day Wasn’t Without Issues
September 7th, which became known as the Bitcoin Day, didn’t go all that well. In the days ahead, when the world anticipated the adoption of BTC in El Salvador, the asset’s price had risen to a 4-month high at $53,000.
However, shortly after the Central American nation officially accepted bitcoin, the cryptocurrency tumbled by $10,000 in hours. It has recovered several thousand dollars since the low of $43,000 but still struggles away from the $50,000 mark.
The launch of the Chivo wallet also presented some issues as many users were unable to access it. This caused President Nayib Bukele to stepped up by promising that he will personally oversee the network upgrades. Also, he urged people to report any issues on his Twitter feed directly.
Featured Image Courtesy of Fidelity