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El Salvador makes history as the first country to adopt Bitcoin as legal currency

By AYIE LICSI Published Sep 08, 2021 3:46 pm

Bitcoin is now an official currency in El Salvador, making the Central American country the first to adopt cryptocurrency as legal tender.

Minutes before midnight, populist president Nayib Bukele tweeted that the country was about to make "history."

Preparing for Bitcoin

The country has so far purchased 550 Bitcoins, an equivalent of $25 million as of writing, and has put up 200 Bitcoin automated teller machines nationwide.

Today, Salvadorans can use Bitcoin like their fiat currency, the US dollar, for cash payments.

To buy and spend Bitcoin, they would need the cyber wallet app Chivo, but this government-backed app was initially unavailable on popular platforms like Apple and Huawei. Bukele took to Twitter to press the online stores to make the Chivo available, and the two smartphone makers did.

The 40-year-old Bukele believes that Bitcoin will give Salvadorans access to bank services and make it cheaper for migrants to send money home. He promised $30 for citizens adopting the new wallet. 

Before Sept. 7, thousands of unbanked Salvadorans have already been using Bitcoin.

"They are now able to do online payments, they are able to send money back and forth with family members even hundreds of miles away," said Mike Petersen, director of the El Zonte Bitcoin Beach project.

"They can buy a new roof for their house, buy a cow, send their kids to school, and these are opportunities they didn't have before," Petersen said.

Not all natives were ecstatic about cryptocurrency. On Sept. 7, more than 1,000 people marched to protest against the adoption.

"This is a currency that's not going to work for pupusa vendors, bus drivers, or shopkeepers," a San Salvador resident told Reuters. "This is a currency that's ideal for big investors who want to speculate with their economic resources."

Protests in El Salvador. Photo by Marvin Recinos / AFP

Another skeptic told AFP that they don't want "that Bitcoin."

"Someone in the field selling fruit, how will they be able to operate this money?" remarked 68-year-old Rosa Martha Perez.

Few businesses are ready for the change, as well. The Financial Times found that only three out of 20 enterprises have immediate plans to adopt cryptocurrency.

Moreover, the Wall Street Journal reported that 65% of Salvadorans don't want the government spending money on embracing Bitcoin with 80% having little or no confidence in it.

Others fear that Bitcoin is too volatile. In April, it saw a historic high of $60,000 but crashed later in the summer losing half its value.