El Salvador, a country from Central America, on Tuesday became the first state in the world to officially adopt Bitcoin, a widely-popular cryptocurrency, as legal tender amid confusion among people and international warnings.
El Salvador President Nayib Bukele, who actively spearheads the campaign, hopes that the move will provide a number of nationals access to bank service for the first time and reduce commission costs for billions of dollars sent by overseas Salvadorans to home.
The decision to adopt bitcoin as legal tender would help, the netizens to save on $400 million, which is spent as commission cost for remittances.
Bukele started talking about the change on Monday evening when he announced on Twitter that El Salvador had bought its first 400 Bitcoins and promised more were coming.
According to the cryptocurrency exchange app Gemini, the value of the 400 Bitcoins currently stands at $21 million.
“Tomorrow, for the first time in history, all the eyes of the world will be on El Salvador. #Bitcoin did this,” Bukele said on Twitter on Monday.
El Salvador just bought 200 new coins.
— Nayib Bukele 🇸🇻 (@nayibbukele) September 6, 2021
However, polls show that most of the Salvadorans are not in favour of adoption of Bitcoin as legal tender mostly due to wary of the volatility of the cryptocurrency.
Earlier this year, Bitcoin crossed $US64,000 in April and fell almost as low as $US30,000 in May.
The critics argue that move could increase regulatory and financial risks for financial institutions. Still, some residents are optimistic.
“It’s going to be beneficial … we have family in the United States and they can send money at no cost, whereas banks charge to send money from the United States to El Salvador,” a consumer told an international media outlet.
Back in June this year, El Salvador’s Congress lawmakers approved a proposal made by President Nayib Bukele to adopt the world’s biggest and well-known cryptocurrency. 64 out of 84 lawmakers voted in favour of legalising the digital currency.
The use of bitcoin as legal tender was to begin in 90 days.
“It will bring financial inclusion, investment, tourism, innovation and economic development for our country,” Bukele had said in a tweet after his proposal sailed through the Congress.
He had announced that mining of the bitcoin will be made through renewable energy from the country’s volcanoes.
Bukele also announced to award citizenship to people who had invested in at least three bitcoins, Reuters reported.
Saying the currency will bring no risks to user, he said that the government will give guarantee to convert the digital currency to dollars.
Under the law, firms across the country will accept bitcoin as payment for goods and services. Tax contributions can also be paid in the cryptocurrency.
“If you go to a McDonald’s or whatever, they cannot say we’re not going to take your bitcoin, they have to take it by law because it’s a legal tender,” Bukele said in an online conversation with cryptocurrency industry persons.