Why it matters: El Salvador is officially the first country to adopt bitcoin as its official currency, an event that El Salvadorans, economists, and crypto advocates alike witnessed with the same excitement and concern. This is Bitcoin's boldest experiment yet, the outcome of which could improve or defeat the Central American economy.
When the small country's plans were first launched earlier this year, many attributed the move to the volatile nature of bitcoin, making it worthwhile for comments or seemingly good news. Around the world, changing and dangerous. Suppress cryptocurrencies and destroy their potential as a means of storing value or conducting financial transactions. Today, Bitcoin has become El Salvador's official currency alongside the US dollar, just months after it was approved as a legal tender currency by President Ned Buckle, tweeting that his country was "making history." And now she has 400 bitcoins in stock - the equivalent of $20.5 million at the time of writing. He also indicated that brokers in the country will eventually buy more bitcoins.
< p> Photo: Chivu Bitcoin ATM
Enthusiasm for the move is based on immigrants' hopes that El Salvador families can do it easier and cheaper than before. About three-quarters of the working population do not have a bank account, at least according to Strike, the company that provided the infrastructure needed for bitcoin transactions. Salvadoran citizens can download a “Chivo Wallet” to quickly transfer money on their phones, but not all want it, and some are actively protesting the country's decision to accept bitcoin.
People using bitcoin in this country believe that it is causing more economic inequality and jeopardizing the livelihoods of the poor due to the fluctuating value of cryptocurrencies. On the other hand, Bokel is convinced that more people will come up with the idea over time. Businesses now have to accept bitcoins in exchange for goods and services, and Salvador can use them to pay taxes. To encourage their use, the Salvadoran government has made an exception that the conversion of bitcoins and US dollars is not subject to capital gains tax.
< p> If this daring experiment succeeds, it could potentially change the way we view cryptocurrencies. Meanwhile, many Salvadoran companies are struggling to use bitcoin in such a short time, and Moody's Investors Service recently raised the country's debt rating to junk territory, warning that the latest move could undermine the government's ability to influence the repayment of creditors. the future.
Officially: El Salvador is the first country to accept Bitcoin as its official currency