A big and important milestone for Bitcoin?
You have certainly read or heard about the official acceptance of Bitcoin as legal tender in El Salvador. It is the first country in the world to take this step. El Salvador is currently in the sight of crypto enthusiasts as well as sceptics. This is the first opportunity to monitor the use of Bitcoin by the entire state and nation. President Nayib Bukele points out, in particular, that up to 70% of their citizens do not have their own bank account and therefore have no access to financial services. Bitcoin should solve this problem in El Salvador.
The law recognizing Bitcoin as a legal tender was passed on June 9 and will take effect on September 7. President said that they are currently taking all the necessary steps to ensure that everything is ready by then. Among other things, they are working on the development of their own government electronic wallet Chivo, and a number of cryptomats (crypto ATMs) should be installed in the country.
El Salvador bitcoin flag, Source: shutterstock.com
The criticism did not take long
Of course, the information about this adoption of Bitcoin did not escape from negative reactions either. The IMF has pushed on El Salvador by saying that the adoption of Bitcoin could seriously disrupt negotiations on a $ 1 billion loan. The country also asked the World Bank for help with this process, but they strongly rejected its involvement in it. They cited issues related to environmental protection and the transparency of Bitcoin as reasons, why WB did not want to engage.
However, President Bukele is determined to continue without the help of these institutions. In his opinion, it makes no sense to fight them, and plans to build a Bitcoin infrastructure. He points to the fact that up to 62 out of 84 voted for the law, which is more than two-thirds of the congress seats – supermajority. Officials added that the US dollar remains legal tender also.
First state electronic wallet and the first state airdrop of Bitcoin
El Salvador also wants to help with the acceptance of Bitcoin in the country with the announced airdrop, in which every adult citizen could get $ 30 in BTC. Altogether, up to 4.5 million people could participate, representing an airdrop worth $ 195 million. Bitcoin’s global user base could grow by up to 2.5%. With this step, the government wants to motivate the population to try cryptocurrencies.
An interesting feature of the whole process is certainly the development of the state electronic wallet, which will be issued on September 7 and was introduced under the name Chivo. Why is this wallet needed? The government says the answer is simple – logistics. There are a number of e-wallet providers on the market and it would be quite difficult for public authorities to find out who has already participated in airdrop and who has not. They add that once accepted, residents can send BTC to any other wallet, but there will be a record. In addition to cryptocurrencies, Chivo should also support the holding of the USD.
What will it look like in practice?
The new law states that every economic entity must accept payment in Bitcoin if the customer chooses this form. The president adds that the exception is if someone does not have access to the technology needed to receive Bitcoin. However, pensions and salaries will continue to be paid in US dollars, as well bank account balances. The state is planning various training courses and support mechanisms to help the population in adopting the new technology.
It is not yet clear how many residents will decide to actually accept Bitcoin into their daily lives. However, the country is currently under the scrutiny of a number of observers who are particularly interested in the effects of this step on various aspects of the state’s economy.
Interesting note: The president said that there will be an opportunity to obtain citizenship of El Salvador, with the investment of at least 3 BTC in the economy of the state.
Comments