SAN SALVADOR: El Salvador has become the first country today to approve Bitcoin as legal tender. The whole world will be watching bitcoin and El Salvador’s fate. Will it improve the economy and condition of this underdeveloped Central American nation, will it be able to compete for head to head with the U.S dollar, only time will tell.
For now, this is nothing less than a remarkable day in the history of both the world and cryptocurrency. El Salvador now has 400 bitcoins with a market value of $20 million, more bitcoins will be bought in coming times by El Salvador, President Nayib Bukele announced via Twitter.
The government will accept bitcoins for tax payment, businesses will have to accept bitcoin for goods and services, if this adoption goes successful then more countries may try to adopt it a well. This is good news for crypto enthusiasts, there had been a lot of backlash from Countries around the world, then there was China’s FUD when they completely shut down mining ( 70% of bitcoin mining used to take place in China), but after long years of the tussle between banks, governments, international monetary fund, etc. it seems that crypto is finally becoming viable option. Some countries are even planning to accept bitcoin as an asset class.
Coming back to El Salvador, the adoption will be kickstarted by the government’s Bitcoin wallet Chivo, users who register using the country’s national ID number will get access to $30 worth of bitcoin for use. President Nayib Bukele believes that this will bring more people into the financial system (70% of the population is out of the banking system) and make sending remittances cheaper.
200 Bitcoin ATMs are now functioning in El Salvador, which can be used to exchange Bitcoin for US dollars and withdraw it as cash to make it legal tender. A $150 million fund has been created by the finance ministry at state bank Banco de Desarrollo de la Republica de El Salvador, to support the transactions.
The dollar will remain the national currency for those who don’t have the technology to accept the digital currency. Remittance sent by overseas migrants makes a huge chunk of El Salvador’s dollarized economy. It makes a fifth of the Nation’s GDP and last year accounted up to $6 billion, President Bukele says that using Bitcoin will save up to $400 million every year in fee for remittance transactions.