El Salvador adopts bitcoin as official currency, first country to do so

SAN SALVADOR – El Salvador became the first country to introduce Bitcoin as legal tender on Tuesday.

The change means companies should accept payments in Bitcoin alongside the US dollar, which has been the official currency of El Salvador since 2001 and will remain legal tender.

President Nayib Bukele, who pushed for the adoption of the cryptocurrency, says it will help Salvadorans save about $ 400 million, which the government has calculated is spent annually on remittance commissions.

The 40-year-old president is popular with the public, but has been accused of undermining democracy by the Biden government, among others.

Doubters say Bitcoin could increase regulatory and financial risks for the Central American nation, and surveys show that Salvadorans are suspicious of the volatility of the cryptocurrency, which can depreciate hundreds of dollars in one day.

To warm up a skeptical public, Bukele has promised every citizen $ 30 in Bitcoin when they sign up for a government digital wallet. Before the launch, El Salvador bought 400 bitcoins, Bukele said, helping push the currency price above $ 52,000 for the first time since May.

However, in the early hours of Tuesday morning, the wallet had not shown up on the Apple Inc., Google and Huawei app download platforms, leading to a number of tweets from Bukele, including one with a red-faced “angry” emoticon.

“Set him free! @Apple @Google and @Huawei, “said Bukele. The wallet was later available from Huawei.

“It will be beneficial … we have a family in the United States and they can send money for free while the banks charge fees,” said Reina Isabel Aguilar, a shopkeeper in El Zonte Beach, 30 m . southwest of the capital San Salvador.

The town of El Zonte known as Bitcoin Beach is aiming to become one of the first Bitcoin economies in the world.

In advance of the launch, the government installed ATMs that allow Bitcoin to be converted into dollars and withdrawn from the digital wallet called Chivo without commission.

Bukele tried to lower expectations for quick results on Monday and asked for patience.

“Like all innovations, the Bitcoin process in El Salvador has a learning curve. Every way forward is like this and not everything will be achieved in a day or in a month, ”he said on Twitter.

The cryptocurrency was notoriously volatile, rising to more than $ 64,000 in April and falling to nearly $ 30,000 in May of this year.

The move to make Bitcoin legal tender alongside the US dollar has clouded the outlook for El Salvador’s quest for more than $ 1 billion in funding from the International Monetary Fund (IMF).

Analysts fear that the introduction of the cryptocurrency could fuel money laundering in a country with serious problems of government corruption and organized crime.

Bukele has promised to clean up grafts, but the Biden government recently got some of its close allies on a blacklist for corruption.

In just under two years in office, he has taken control of almost all the levers of power. Top judges were appointed by his allies last week decided he could serve a second term.

After the Bitcoin law was passed, the rating agency Moody’s downgraded El Salvador’s creditworthiness, while the country’s dollar-denominated bonds came under pressure.

But Bukele, not afraid of controversy, retweeted a video on Monday showing his face over actor Jaime Foxx in a scene from Django Unchained, Quentin Tarantino’s film about American slavery. The video shows Bukele whipping a slave trader with the IMF emblem on his face.

Bukele later deleted the retweet.

In his own tweet, Bukele said, “We have to break the paradigms of the past. El Salvador has the right to advance towards the First World. “

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