This means businesses within the country must accept Bitcoin as a form of payment for goods and services, giving it the same status as traditional fiat currencies. The move was initiated by President Nayib Bukele and has attracted attention from the global cryptocurrency community, sparking discussions on the potential benefits and challenges of widespread adoption.
Chivo Wallet Sees 2.2 Million Salvadorans Adopt Bitcoin
The official government wallet, Chivo Wallet, has reported onboarding 2.2 million Salvadorans in the month following the decision to adopt Bitcoin as a legal tender. The move could increase financial inclusion for Salvadorans living abroad, who can now send money back to their families in the country through remittances using Bitcoin. However, implementing Bitcoin has faced issues such as needing more funds, system issues, and a lack of interest from everyday citizens.
Bitcoin City Proposed in El Salvador
In addition to adopting Bitcoin as legal tender, President Bukele has also proposed the creation of a low-tax Bitcoin city powered by crypto mining operations. The project, which would be funded through the sale of $1 billion worth of Bitcoin bonds, has raised concerns about the negative environmental effects of cryptocurrencies and the uncertain success of the plan.
El Salvador's Bitcoin Experiment Raises Concerns
While the adoption of Bitcoin in El Salvador has generated a lot of interest and has the potential to pave the way for wider cryptocurrency adoption, it has also caused concern among citizens and regulatory bodies. El Salvador's credit rating and ties with the International Monetary Fund have suffered. The IMF has advised revoking Bitcoin's legal tender status due to its volatility and potential use in fraud and other criminal activities. The World Bank has also raised concerns about the environmental impacts of cryptocurrencies. Additionally, most Salvadorans still need knowledge about Bitcoin, and blockchain technology can be difficult for everyday users.