El Salvador, a Central American country, is the first to legally recognise Bitcoin as legal currency. It will go into effect on September 7, 2021. The US dollar, El Salvador’s official currency, will be used alongside Bitcoin from then on. As a result, Bitcoin will be accepted as payment for goods and services by all businesses. Citizens may also elect to pay their taxes in bitcoin.
“It will bring financial inclusion, investment, tourism, innovation, and economic development for our country,” Mr. Bukele said in a tweet.
“Bitcoin use will be optional, and no one will receive Bitcoin if they do not want it… If someone receives payment in Bitcoin, they can choose to receive it in dollars automatically,” stated Mr. Bukele, President of El Salvador, adding that salaries and pensions will continue to be paid in US dollars.
“In the short term, this will produce jobs and enable thousands of people outside the formal sector to get financial inclusion,” Mr. Bukele said, adding that it may also encourage investment in the country, improving lives and the future of millions.This decision may have been influenced by the success of Bitcoin Beach, a Salvadoran beach town called El Zonte where 3,000 residents have been utilising Bitcoin for nearly two years.
There are plans to construct a Bitcoin mining hub using renewable energy from the country’s volcano. Satellite infrastructure will also be created, allowing El Salvarodans in rural areas to connect to the Internet and the Bitcoin network. El Salvador, in collaboration with Blockstream, a Bitcoin infrastructure business, will serve as a paradigm for the rest of the globe, according to Mr. Bukele on Twitter.
Some people expressed concern about the volatility of the coin. Experts have also warned that it might complicate matters with the International Monetary Fund (IMF), where El Salvador is seeking a $1 billion programme. Financial authorities and lawmakers have also issued warnings. Bitcoin aids money laundering and other nefarious activities. Bukele rejected the concern, claiming that criminals already utilise US dollars and other assets to launder money. “The issue isn’t the dollar; it’s the criminals,” he explained.
There may still be many questions about how El Salvador would deploy Bitcoin as legal cash. In any case, this action moves cryptocurrency one step closer to being the payment system of the future.