HomeNewsEl Salvador makes Bitcoin legal tender — first country in the world to do so
El Salvador makes Bitcoin legal tender — first country in the world to do so

El Salvador makes Bitcoin legal tender — first country in the world to do so

Last updated 5th Aug 2022

This week, El Salvador will accept digital currency as legal tender — becoming the first country in the world to do so.

However, millions of Salvadorans have been trying to wrap their heads around Bitcoin in the past few days. Many vow not to accept it, and for good reasons.

To begin with, the Bitcoin adoption plans were rushed.

So, many people are afraid because there’s a lack of information. Some say if Bitcoin becomes legal tender, they’ll immediately convert it into US dollars.

The Latin American nation, El Salvador, adopted the US dollar as its national currency about twenty years ago. So, accepting bitcoin straightaway will take time.

What if the Bitcoin price falls?

According to the president, Nayib Bukele, who spearheads the Bitcoin adoption plans, citizens can now buy land, pay taxes, and shop using the volatile digital currency.

Crypto enthusiasts say Bitcoin will enhance financial inclusion in the country for those without bank accounts. And even give them access to more lucrative digital assets.

But what if the Bitcoin price falls? What will happen to the poor citizens?

The Bitcoin move risks increased insurance and banking costs, a proliferation of money-laundering activities, fraud, and even economic instability.

The IMF is against the adoption of crypto as legal tender because it puts the country’s financial system at risk. In addition, it could destabilize commodity prices with significant effects.

“We won’t use Bitcoin”

Salvadorans are against the idea as well. And their anger is evident in protests witnessed last week. From pensioners to trade unions, many people do not want to make the currency switch.

“We won’t use it,” people on the streets of the capital said.

In the coming days, the government plans to also roll out a digital coin wallet aptly named “Chivo” (slang for “cool”). Users will get $30 free to entice its adoption.

Bukele’s government will install Chivo ATMs across the country, allowing customers to instantly buy or convert Bitcoin into dollars — with zero fees incurred.

Large retail businesses in El Salvador are preparing to accept Bitcoin in the coming days — expecting bumper sales thanks to the extra liquidity from the digital currency.

The government now dictates that anyone with access to technology must accept Bitcoin this week. But there’s no mention of consequences for non-compliance.

Over the weekend, Bitcoin prices surged again, hitting above $52,000 on Tuesday. Bitcoin now leads the crypto market to a four-month high. And the trend is projected to soar.

Walter Akolo

Walter Akolo

Walter is a writer from Nairobi, Kenya. He covers the latest news on the cryptocurrency market and blockchain industry. Walter has a decade of experience as a writer.