El Salvador has become the world’s first country to accept Bitcoin as legal money. The government of El Salvador announced the decision on Tuesday, claiming that the move will provide many residents of the nation with access to banking services for the first time in their lives.
Furthermore, the trading of cryptocurrencies will assist the government in saving around $400 million in fees that are charged by banks and financial organizations on money returned home by ex-pats from their respective countries.
El Salvador’s adoption of Bitcoin as a legal tender is the result of a bill passed by the country’s parliament in June this year. Also, you may be interested to read: World’s First Cryptocurrency: All you need to know about Bitcoin.
Bitcoin was recognized as legal money for all products and services at the time, according to the regulations in place. President Nayib Bukele submitted the measure to Congress and it was passed within 24 hours of being introduced.
El Salvador has purchased its first 400 Bitcoins as a result of the move, according to Bukele, who revealed it on Monday evening.
The Bitcoins were purchased in two separate tranches of 200 each. Bukele has even stated that more cryptocurrencies would be imported into the nation in the future.
“For the first time in history, El Salvador will be the focus of the whole world’s attention starting tomorrow. Bitcoin was the one who did it “Bukele shared his thoughts on Twitter on Monday.
The government is also deploying around 200 Bitcoin teller machines across the country to increase the acceptability of Bitcoin in the country. According to the AFP, some of these devices are even guarded by troops to avoid any arson attacks on them. Also mentioned was a $30 reward for any person who adopts the cryptocurrency by Bukele.
El Salvador’s government hopes to address two significant financial issues as a result of the growing usage of Bitcoin in the nation.
For starters, it believes that the adoption of cryptocurrencies would enable more residents than ever before to have access to financial services.
The decentralized nature of Bitcoin means that it is not reliant on any one institution to be made available to the general population. Anyone with a device that can connect to the internet may participate and exchange Bitcoins.
Another important element working in El Salvador’s favor is the fact that Bitcoin will assist the country to avoid the huge fees charged by banks when over 1.5 million people residing in other countries transfer money home.
According to the AFP, such remittances account for more than a fifth of the country’s gross domestic product (GDP) and would total more than $5.9 billion in 2020, according to World Bank estimates.
Having seen its economic struggle during the Covid-19 epidemic, the government is hoping that the adoption of Bitcoin would allow it to keep more of its money through a whole new method of distribution.