El Salvador is currently the first and only country in the world to adopt Bitcoin as its legal tender. This change makes the bitcoin alongside the dollar the country’s legal for transactions.
Its President Nayid Bukele made the announcement via a tweet about the historic moment. This news came on the back of the country purchasing about 400 Bitcoins.
The move to make Bitcoin a legal tender has been in the works for months. El Salvador finally passed the legislation in June 2021. El Salvador also launched its digital wallet “Chivo” which it intends for holding and transferring bitcoins.
Although adopting cryptocurrency as a legal tender looks futuristic and techy, the country’s population is relatively no-tech savvy. CNN reported that a research by the CEO of Strike, a digital finance company says that about 70% of the El Salvador “active population” don’t have access to a bank account.
What the country needs are active bank accounts, fewer cash-only transactions and more financial inclusion. Bitcoin or cryptocurrency has relatively been very volatile, and this could hurt the country’s economy in case of a swing.
-Bitcoin Slips Under $30,000 For The First Time In Five Months
-OnePlus To Join The Cryptocurrency Race?
–Bitcoin Holders Expect High Volatility As Roughly 100,000 BTC Options Contracts Expire
Bitcoin rose historically over $60,000 in April and later crashed to less than half of its peak value some months ago. Besides, there have been several calls for the regulation of cryptocurrency throughout different economies.
Even Salvadorans are not keen on adopting cryptocurrency. A survey by the Central American University found that 70% of the population are against adopting bitcoin as a legal tender.
To make matters worse, the rating agency Moody has downgraded the country’s debt rating. Also, the IMF warns that the new move might have destabilising effects on the economy soon.
The only meaningful application of the adoption might just be remittances. Philip Gradwell, chief economist at data platform Chainalysis says “Bitcoin isn’t really designed to be a means of exchange so this is an early experiment for the currency”
“I think the main use in El Salvador is really going to be around remittances and people using it to save some wealth and really perhaps just to be some competition to the dollar in the country.” Time will tell on how the adoption of bitcoin in El Salvador will affect its economy and its people.
For your daily dose of tech, lifestyle, and trending content, make sure to follow Plat4om on Twitter @Plat4omLive, on Instagram @Plat4om, on LinkedIn at Plat4om, and on Facebook at Plat4om. You can also email us at firstname.lastname@example.org and join our channel on Telegram at Plat4om. Finally, don’t forget to subscribe to OUR YOUTUBE CHANNEL.