El Salvador becomes the first country to use Bitcoin as legal tender

El Salvador becomes the first country to use Bitcoin as legal tender

El Salvador becomes the first country to use Bitcoin as legal tender. 

For El Salvador, September 7 is a special day. From September 7th,  El Salvador will officially become the first country in the world to use Bitcoin as legal tender.

On this day, 40-year-old President of El Salvador satisfied Ibu Buke Lai (Nayib Bukele) on Twitter announced on Monday the government was the first to buy a 200 BTC, and will buy more. Subsequently, Bukley announced that El Salvador had purchased another 200 Bitcoins, and that the State Treasury of El Salvador held a total of 400 Bitcoins .

After the news was sent, the price of Bitcoin rose accordingly, rising by 2.3% within the day, breaking through US$52,000, the highest price in the past three months.

At 1:57 in the afternoon, Bukley couldn’t hide his excitement. He wrote on social media: “We have three minutes to make history. ” This tweet of Mr. President quickly received thousands of replies and congratulations. One after another, the entire encryption community is also excited about this matter.

Internationally renowned media including Bloomberg and Reuters have reported the news. As a small country in Central America, El Salvador has gained worldwide attention during this time.

This means that starting from September 7, Bitcoin will have the same status as the U.S. dollar in El Salvador. In El Salvador, people can use Bitcoin to pay for goods, purchase services, and even pay taxes. As legal tender, “every economic entity” in El Salvador must accept the use of Bitcoin as a legal payment method stipulated by law.

But this use is not mandatory. On August 23, Buclay confirmed that the use of Bitcoin as legal tender is not mandatory.

“If someone wants to keep carrying cash, doesn’t want to get sign-up bonuses, doesn’t want to win customers who own Bitcoin, doesn’t want to grow their business and pay remittance commissions, they can continue to do so,” Buclay wrote on Twitter at the time.

In the past three months, the President of El Salvador has worked tirelessly to make the bill effective.

On June 9, 2021, the President of El Salvador, who had just taken office for the second anniversary, officially submitted the Bitcoin bill to the Legislative Assembly of the Republic of El Salvador. The proposal states: “The purpose of this law is to regulate Bitcoin as an unrestricted legal tender, so that Bitcoin has free power and is unrestricted in any transaction, and it is owned by public or private, natural or legal persons. Any ownership of.”

Subsequently, the bill was passed by an absolute majority in the El Salvadorian legislature. 62 members voted in favor of the bill, 19 opposed, and 3 abstained.

In order for the bill to take effect, El Salvador has developed a bitcoin wallet “chivowallet” for citizens, and has reserved $30 worth of bitcoin in the wallet of each registered user.

On September 7, with the entry into force of the bill, Ibrahimovic announced that the wallet was officially launched on the Apple Store, GooglePlay and the HUAWEI application store. According to screenshots of Twitter users, the Bitcoin wallet can already be downloaded and installed on their Apple phones.

On August 31, El Salvador released the first official Bitcoin commercial video advertisement, which foretells the various applications of Bitcoin after it becomes a legal tender. But at the same time, cash transactions, commodity prices and wages in the country will still be denominated in U.S. dollars.

In order to show El Salvador to the global public, Ibrahimovic Bukley regards Bitcoin as an important turning point for the country to get out of its historical predicament. But not everyone agrees with El Salvador’s move.

The World Bank stated on June 17 that due to environmental and transparency deficiencies, it cannot help El Salvador realize its plan to use Bitcoin as legal tender.

A World Bank spokesperson said in an emailed statement: “We are committed to helping El Salvador in a variety of ways, including improving currency transparency and regulatory procedures. Although the government does ask us for help with Bitcoin, it takes into account the environment and The World Bank is unable to provide support for the lack of transparency.”

On June 22, the vice chairman of the Salvadoran opposition party Marti National Liberation Front, Jamie Guevara, filed an unconstitutional lawsuit , alleging that the president’s Bitcoin bill may be unconstitutional and harmful to the country. He described the country’s Bitcoin laws as “lack of legitimacy and foundation, and did not consider the harmful effects that such laws would have on the country.”

On July 27, the International Monetary Fund (IMF) said that the country’s adoption of Bitcoin as a national currency may cause “extremely bad” consequences.

Tobias Adrian, Director of Finance of the IMF Market Department, and Rhoda Weeks-Brown, General Counsel and Director of the Legal Department, said that cryptocurrencies such as Bitcoin may become popular in countries with inflation and unstable exchange rates. However, for an economy, the cost may be huge. Using it as legal tender, in addition to issues surrounding macroeconomic stability and the environment, may also make domestic prices unstable, and the use of assets may violate anti-money laundering and combat terrorist financing laws.

In addition to the doubts of these international institutions, a previous report by DeepChain Finance showed that residents of the country did not have enthusiasm for Bitcoin as a legal currency.

Maggie Wu, CEO of Golden Krypton Group , who visited El Salvador on July 5, told Shenzhen Chain Finance that the population of El Salvador has been divided into two levels. Some elites who understand Bitcoin and cryptocurrency are very concerned about and agree with the change. But for people who don’t understand Bitcoin, they don’t really care too much, because their cultural level and their financial ability are not able to allow them to accept Bitcoin quickly.

Maggie Wu introduced the current famous check-in spot in El Salvador, Bitcoin Beach. Small businesses on the coast, such as food and beverage vendors, will accept Bitcoin as payment. But most people still don’t know what Bitcoin is, and many businesses don’t accept Bitcoin, or don’t know how to accept it.

Behind this phenomenon is that this country with a population of only 6.705 million, the domestic economy is dominated by agriculture, and the country with a nominal GDP of 31.202 billion U.S. dollars in 2020 does not yet have cryptocurrency-related infrastructure.

According to Maggie Wu, the situation in July was that the government actually announced the bill first, but its infrastructure construction could not be matched. It is as if a country today said that high-speed rail and maglev trains will be opened soon, but that country currently does not have trains or railways.

This is in sharp contrast to the huge momentum generated by Mr. President on Twitter.

But in any case, for a region that was deep in civil war ten years ago and was rated as one of the most dangerous areas in the world, neither the U.S. dollar nor Bitcoin is the most expensive thing. Peace and development are what El Salvador needs most.