El Salvador, the first country to officially recognize Bitcoin as legal tender

El Salvador, the first country to officially recognize Bitcoin as legal tender

BUSINESS | ECONOMY | Sep 8, 2021 | WOZINGA NEWS

El Salvador became the first country to officially recognize Bitcoin as legal tender

  • Bitcoin officially became legal tender in El Salvador on Sept. 7, 2021, making it the first country to adopt the currency.
  • Government installed Special ATMs throughout El Salvador. It will allow bitcoin holders to convert and withdraw their cryptocurrency without paying a commission.

By Elah Mae Ariate Wozinga Journalist

El Salvador, the first country to officially recognize Bitcoin as legal tender

Bitcoin is now accepted as a form of payment in the Central American country, and also Salvadorans can use it for all purchases, according to the report.

The move has made Central America the first national experiment in the use of the often-volatile currency. It is becoming increasingly popular among many investors and speculators around the world.

The Reason for the Move

The elevation of Bitcoin to the status of legal cash, according to President Nayib Bukele, will benefit many Salvadorans. To migrate into the formal sector, over 70% of people do not have bank accounts, Mail Online reported on Tuesday.

He specifically anticipates that this action will make receiving remittances from abroad cheaper and also faster for citizens. For his heavily indebted country, remittances are a major source of revenue.

In 2020, remittances from abroad totaled $5.9 billion, accounting for more than a fifth of the country’s GDP. President Bukele claims that the use of Bitcoin will reduce annual remittance commissions by $400 million, resulting in even larger transfers of funds.

Enabling Bitcoin Acceptance

The new law mandates that all businesses accept Bitcoin as payment. Meanwhile, the Salvadoran government will contribute $150 million to a trust fund to facilitate currency conversions.

Furthermore, the government has created a digital wallet called “Chivo,” which is Salvadoran slang for “cool,” and will give citizens who download it a $30 Bitcoin bonus.

In addition, they installed special ATMs throughout El Salvador. It will allow bitcoin holders to convert and also withdraw their cryptocurrency without paying a commission.

Salvadorans will be able to withdraw cash from 200 ATMs as well as 50 other locations. Due to technical issues, the government had to take the digital wallet offline in an early setback illustrating Bitcoin’s challenges. The Salvadoran government has made an initial purchase of 400 Bitcoins. The value is around $21 million at the time of purchase.

President Bukele predicted that there would be some growing pains as the country embraced technology. ‘El Salvador’s bitcoin process, like all innovations, has a learning curve,’ he tweeted on Monday. ‘Every road to the future is like this, and nothing is accomplished in a day or a month.’

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