Bitcoin, the world’s leading cryptocurrency, positively impacts multiple industries, markets and countries. And, up until now, while Bitcoin is in the mainstream, it not being legal tender anywhere on the planet proves to be a stumbling block. However, all that is now changing. As in a world first, El Salvador has moved to adopt cryptocurrency as a form of legal tender in the country.
At the start of June, Congress approved El Salvador’s President Nayib Bukele’s request to open the country’s door to Bitcoin. The proposal picked up 62 from 84 votes, with the 73% share enough to get the ball rolling. El Salvador, a country without its own currency, hopes BTC is a solution for Salvadorians living elsewhere to send money to those at home. The US Dollar, also legal tender in the country, will remain, working alongside Bitcoin.
And Nayib Bukele is a man with a plan. He wants LaGeo, a company that is state-owned and responsible for geothermal electrics, to get to work on mining facilities for Bitcoin, which uses renewable energy the country’s volcanoes provide. As the first country to adopt Bitcoin as legal tender, the potential is to turn El Salvador into a mining hub, especially with the geothermal potential on offer. Bukele also insists citizenship is up for grabs for anyone who has invested in three or more Bitcoins. This could prove to be beneficial when attracting those invested in BTC mining operations.
The roadmap Bukele is working through will see the use of Bitcoin as an option to citizens of El Salvador and is in no way mandatory. However, the new law does mean companies must accept BTC when it presents as a payment method for goods, for example. The government will also accept Bitcoin as a way to make tax contributions. Nevertheless, Bukele insists there is no risk to BTC users and that there is a guarantee where convertibility to and from the US dollar is concerned.
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Speaking in Congress on how using Bitcoin in El Salvador will work, Bukele said, “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.” There are now less than eighty days until the use of BTC in the country begins. The exchange rate in the hands of the market, rather than the government, currently, does not hold any Bitcoin.
The move by Bukele and El Salvador is significant news to the cryptocurrency community, as it feels the legitimising of Bitcoin will be the start of a new era. There is a belief that now that one country has shown commitment, it won’t be long before others follow suit, which could have a positive knock-on effect worldwide. While some are sceptic that it could be a one-off, most are keen to see how things progress in El Salvador.