El Salvador becomes the first country in the world to accept Bitcoin as legal currency
With 6.4 million inhabitants, from today Bitcoin is the official currency together with the dollar.
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El Salvador has become the first country in the world to accept cryptocurrency as a legal tender. With 6.4 million inhabitants, Bitcoin is now also their official currency along with the U.S. dollar. Its circulation was approved by an express law of Parliament last June, which is controlled by President Nayib Bukele's party.
The decision has opened the debate for many other countries to consider the opportunities for the use of cryptocurrencies, but also risks. Many Salvadorans fear that their country is now the world's laboratory for cyber currency.
The Bitcoin Law went ahead with the votes in favor from 62 of the 84 deputies in the country. It establishes that the exchange rate with the dollar will be the one established by the market. That is the main factor that worries the population due to the volatility of the cryptocurrency, which is not official anywhere else in the world.
Although its use is optional, the law specifies that "every" economic agent must accept it as a form of payment for any good or service. To use it, citizens will have to download a wallet, named Chivo Wallet. With it, they will be able to withdraw dollars in one of the 200 Chivo points the Government has installed throughout El Salvador.
To stimulate downloads, the Government is giving away $30 in Bitcoins to those who install the wallet on their smartphones, although they will not be able to exchange them for dollars. In El Salvador, the majority of the population does not have access to the Internet.
Despite this, Bukele has already announced that the country has bought its first 200 bitcoins, which is equivalent to more than $10 million.
The president has a high approval rating among the population, above 70%. But polls in recent weeks show that Salvadorans mostly reject the Bitcoin Law, are not interested in downloading the wallet, and prefer to continue using the dollar.
There have also already been demonstrations for the repeal of a law that many consider imposed and generating legal uncertainty. However, the government trusts that Bitcoin will help boost the economy and employment in the country and above all, benefit those who receive remittances from abroad.
Bukele estimates expats spend $400 million on commissions for sending money home to their families.