How El Salvador became the First country to declare Bitcoin as Legal Tender?

Alan Joseph Alan Joseph
Jun 29, 2021 5 min read
How El Salvador became the First country to declare Bitcoin as Legal Tender?

El Salvador which is known as the Republic of El Salvador is a country that is located in Central America. The country has a population of more than 68 lakhs. El Salvador has accepted bitcoin as a legal tender and will be accepted in 90 days starting from 9 June 2021. Let’s look at how El Salvador became the first country to accept bitcoin as a legal tender.

El Salvador - Latest News
Reason Why El Salvador declared bitcoin as Legal Tender
How will El Salvador manage Bitcoin Mining
Acceptability of Bitcoin in El Salvador
Response to the announcement of declaring Bitcoin as Legal Tender
FAQ

El Salvador - Latest News

El Salvador has become the first country in the entire world to accept Bitcoin as a legal tender after the country’s congress had approved it on 9 June 2021. The proposal was laid down by President Nayib Bukele in order to accept the cryptocurrency, this was a move that has delighted the supporters of the digital token.

In respect to the law to adopt Bitcoin, around 62 out of the 84 votes had voted in the favour of the law even though there was a concern about the potential impact on the country’s programme with the International Monetary Fund.

The President of the country had stated the various uses of Bitcoins. He has conveyed that through the potential held by Bitcoins the citizens of Salvador who live abroad will be able to send remittances back home. He added that Bitcoins would bring financial inclusion, tourism, innovation, investment and economic development to the country.

El Salvador is a country that relies heavily on the money that is sent back from the workers abroad. The cryptocurrency offers a quick and a cheap way to send money across borders without relying on the remittances firms. According to a data from World Bank, the remittances received in the country have made up a fifth of its GDP which is one of the highest ratios in the world.

He had stated all these shortly before the vote in Congress which is controlled by his party members. It was conveyed through a tweet and he also added that the US Dollar would also continue as a legal currency of the country. El Salvador does not have a currency of its own.


Why Paul Krugman, The Famous Economist, thinks Bitcoin is a Cult?
Bitcoins have been criticized by a lot of people from the beginning of thelaunch of the cryptocurrency. Many of the investors and economists believe thatthe coin is worthless and does not have any valuation and the increase in theprice is mainly due to skepticism. Paul Krugman who is a Nobel Peac…

How will El Salvador manage Bitcoin Mining

The President later had conveyed to La Geo which is a state owned geothermal electric firm to develop a plan in order to provide the Bitcoin mining facilities using the renewable energy from the volcanoes of the country.

He has stated that the idea was to build a mining hub around the geo thermal potential of the country. However, the idea is stated to be an overnight one. He also stated that El Salvador would provide citizenship to the people who show evidence that they had invested in at least 3 Bitcoins.

Acceptability of Bitcoin in El Salvador

The acceptability and the use of Bitcoins for the individuals are optional and would not bring any risks to the users. The President has conveyed that the government will guarantee convertibility to the US Dollars at the time of transaction through a trust that was created using USD 150 million at the development bank of the country, BANDESAL.

Under the law, the cryptocurrency should be accepted by the firms when they are offered as a payment for various goods and services. The Government has conveyed that the Tax can also be paid using the cryptocurrency.

The President of the country through an online conversation has conveyed that, if an individual visits McDonald’s and wants to pay through Bitcoins, then they will have to accept the Bitcoin and will not be able to tell that they won’t accept it as the Bitcoin is a legal tender of the country.


Why did China ban Cryptocurrencies Transactions and How it Affected the market?
One of the major countries in the world China has banned any transactions andfinancial products related to cryptocurrency in the country. The Chinesegovernment had earlier bought certain regulations towards these financialassets. Let’s look at the reason for the ban and how it has affected thecr…

In the capital of the country, it was found that there were mixed emotions when it came to declaring Bitcoins as a legal tender. Some of the individuals were excited about declaring it as a legal tender and the increase in the financial options and prosperity of the new currency, while the others were quite skeptical about it.

Analysts have conveyed that the move from the country would cause certain complications with the IMF, where the country has sought for more than USD 1 billion programme.

Estela Gavidia had questioned about, How he is going to accept the Bitcoins when he hasn’t seen it not even in photos and added that he doesn’t know nothing about it and understanding your currency is very important.

Conclusion

The supporters of the cryptocurrency have claimed it as a move to validate the emerging asset but also added that the regulation on Bitcoins, taxation, or the adoption in other countries is yet to be seen. However, there are no immediate signs that the other countries would follow El Salvador’s acceptance of Bitcoin.

FAQ

Is El Salvador a poor country?

El Salvador is one of the poorest countries, with low per capita income, chronic inflation, and high unemployment.

Does El Salvador have its own currency?

The official currency used in El Salvador is the US dollar.

What is El Salvador known for?

El Salvador is a country in Central America which is Known as the Land of Volcanoes, as it has frequent earthquakes and volcanic activity.

Must have tools for startups - Recommended by StartupTalky

Subscribe to StartupTalky

Get the latest insights delivered to you right in your inbox

Great! Next, complete checkout for full access to StartupTalky.
Welcome back! You've successfully signed in.
You've successfully subscribed to StartupTalky.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info has been updated.
Your billing was not updated.