As of early June, Él Salvador is adopting Bitcoin as a legal tender. If any adult citizen downloads the government’s cryptocurrency app, each will receive $30 upon registering.
They will be completely adding Bitcoin as a legal tender by September 2021. “What we are doing is encouraging the use of bitcoin and encouraging the use of this system, which is going to generate the multiplication of money in the economy,” said President Bukele when explaining the process. The president also touched on the fears from citizens that all salaries, wages, and pensions will be paid in cryptocurrency; he said this is not the case. Cash will still be the mainstream currency, with Bitcoin as another option. Since 2001, Él Salvador has been using the US dollar as their currency.
For years, Él Salvador has been a cash based economy. Only 30-40% of citizens there have a bank account. The goal of implementing cryptocurrency into their everyday lives is to build a new ecosystem within their economy. March 2021 is the first time they adopted Strike, an app used to transfer money using Bitcoin. It quickly shot to their number one downloaded app. “The move will help unleash the power and potential of bitcoin for everyday use cases on an open network that benefits individuals, businesses, and public sector services,” CNBC reported.
When Él Salvador adopted the US dollar in 2001, everything had to be switched over to that currency as soon as possible. With the implementation of Bitcoin, this will not be the case since they are still keeping their current currency system in place. Adding another legal tender decentralizes the currencies. According to Bitcoin Market Journal, “A decentralized currency insulates customers from bank failures and collapses, as well as exuberant bank fees and aggressive bank policies. Payments are borderless, allowing for seamless and cheap international payments despite current limits on transnational fiat payments.”
Due to Él Salvador being the first country to adopt Bitcoin into their economy, many other countries will be watching them to see how successful it gets. If this is something that proves to be worthy, other countries will follow suit. Bitcoin is a cryptocurrency that was invented in 2009, meaning it has little experience as a monetary system.
ARTICLE: DANI EGAN
MANAGING EDITOR: CARSON CHOATE
PHOTO CREDITS: TIMES OF INDIA
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