El Salvador became the world's first country to accept bitcoin as legal tender on Tuesday
On Tuesday, El Salvador became the first country in the world to adopt bitcoin as a legal tender. The proponents will most probably lower commission costs for billions of dollars which are usually sent home from abroad but critics warned may fuel money laundering.
Nayib Bukele introduced this plan which is ideally for letting Salvadorians save $400 million spent annually in commissions remittances which is usually sent from the United States. The remittances last year amounted to $6 billion, or 23% of its gross domestic product, one of the highest ratios in the world. The polls depict Salvadorans are confused about whether or not they want to use bitcoin and are not sure of the volatility of the cryptocurrency that critics believe will increase regulatory and financial risks for financial institutions.
“It’s going to be beneficial we have family in the United States and they can send money at no cost, whereas banks charge to send money from the United States to El Salvador,” said Reina Isabel Aguilar, a store owner in El Zonte Beach, some 49 km (30 ml) southwest of capital San Salvador. El Zonte is known to be a part of the so-called Bitcoin beach focused to develop the town into one of the world’s first bitcoin economies. In the process of the launch the government has been installing ATMs of its Chivo digital wallet which will let the crypto to be converted into dollars and withdrawn without commission.
“Like all innovations, El Salvador’s bitcoin problem has a learning curve. Every road to the future seems like this and not everything will be achieved in a day, or in a month,” Bukele said on Twitter. On Monday, El Salvador bought its first 400 of the cryptocurrencies temporarily increasing prices for Bitcoin 1.49% higher to more than $52,680. The crypto is known to be quite volatile as during spring it increased over $64,000 in April and went down as $30,000 in May. Analyst thinks this step will make bitcoin legal tender with U.S dollar look distraught in the quest for El Salvador to get more than $1 billion financing agreement with the international monetary fund (IMF).
“We must break the paradigms of the past. El Salvador has the right to advance towards the first world.”