El Salvador adopted bitcoin as legal tender and became the first country to do so. Congress on Wednesday approved President Nayib Bukele’s proposal to accept cryptocurrency, a move that has delighted the country’s currency supporters.
62 out of 84 possible votes favored the move to make a law and adopt bitcoin. However, El Salvador has a pressing concern that it will impact its program with the international monetary fund.
Bukele has suggested using bitcoin because of its potential to help Salvadorans living abroad send remittance to their family back home. While the U.S dollar will continue as legal tender, currently, El Salvador doesn’t have its currency.
President Bukele said in a tweet, ” It will bring financial incorporation, investment, tourism, innovation and economic development for our country.” He tweeted this before they voted in the Congress, which his party and allies control.
Bukele said that he developed his idea at night; he later said that he instructed state-owned geothermal electric firm LaGeo to make a strategy to offer bitcoin mining facilities using renewable energy from the country’s volcanoes. His idea was to build a bitcoin mining hub around the country’s geothermal potential. He further added that he would offer citizenship to people who will buy at least three bitcoins.
The use of bitcoin as a currency is optional to the citizens and does not bring risk to users; Bukele guaranteed convertibility to dollars at the time of transactions. Under this new law that Congress passed, bitcoin is used to pay for goods and services and be accepted by firms. Tax benefactions can also be paid in cryptocurrency.
The use of bitcoin as a legal tender will begin in 90 days of the announcement, with the bitcoin-dollar interchange price established by the market. Bukele said the government does not currently have any bitcoin.
However, people’s reactions in the capital San Salvador were mixed, with some citizens excited that the possibilities will increase prosperity and financial options. Others are skeptical of the opportunities.
There are no indications that other nations will follow this change and adopt the law. But the analysts have said that move will complicate El Salvador’s talks with the IMF, where the government seeks more than $1 million.
President Bukele says that he will talk to the IMF on Thursday to discuss the bitcoin law, among other issues. Bitcoin enjoyed its best days in two weeks, raising as much as 6% to $35,200.
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