The Central American state of El Salvador will enter history as the first country in the world where you can buy and sell using Bitcoins.
Bitcoin was accepted as legal tender on Tuesday, 7 September, 2021. People can use the world’s most famous cryptocurrency in exactly the same way as they use their US dollars.
Ground-breaking presidential proposal
President Nayib Bukele set out his ground-breaking proposal in June, and by September he had already implemented the idea. Critics regard the move as premature and overly rushed. They also point to the alleged protests launched by several groups.
Why has El Salvador in particular taken this step? The country relies on a large influx of money into the country – today 22% of GDP comes from personal remittances. President Bukele believes his measure is a way to integrate the population into the legal economy. A solid 70% of the population do not have a bank account and work in the black economy.
Long-term investment strategy
Accepting bitcoin in the country can also make cash transfers more effective, support financial digitization, provide greater consumer choice, and open up the country to foreign investors. The new Bitcoin Law gives Salvadorians the option to hold digital assets as part of a long-term investment strategy. Alternatively, they can get cash from any of the 200 ATMs installed across the country.
Support for the bitcoin wallet
The country is also building infrastructure to support a state-issued Bitcoin wallet, the so-called Chivo. Chivo wallets will have their own ATMs, enabling citizens to withdraw cash 25 hours a day without paying commission.