Bitcoin Now Legal Tender in El Salvador, Marking World First
In a show of support, crypto proponents are buying $30 worth of bitcoin to commemorate the occasion known colloquially as “Bitcoin Day.”
Sep 7, 2021 at 8:04 p.m. UTCUpdated May 11, 2023 at 4:49 p.m. UTC
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Bitcoin is now officially legal tender in El Salvador, three months after the Bitcoin Law passed the country’s legislature.
- While the move marks a world first, El Salvador’s President Nayib Bukele said in a tweet the “bitcoin process” in the country comes with a “learning curve.”
- “We must break the paradigms of the past,” Bukele said. “El Salvador has the right to move toward the First World.”
- Bukele tweeted on Monday morning, however, that the Chivo digital wallet the government had set up for citizens to use had been temporarily disabled in order to increase server capacity. At 16:35 UT, Bukele tweeted that the Chivo wallet was ready to be downloaded again from Apple’s App Store for a large-scale test.
- El Salvador is using cryptocurrency wallet company BitGo to provide Chivo’s underlying technology.
- “This is an historic day and a great opportunity for the people of El Salvador to build financial freedom,” said Mike Belshse, BitGo’s CEO, in a statement.
- El Salvador’s legislature passed the Bitcoin Law on June 9 by a supermajority, with 62 members voting in favor of the bill, while 19 opposed and three abstained. The crypto officially became legal tender on Tuesday.
- Bitcoin is now on equal footing with the U.S. dollar, which has been in circulation throughout the country since 2001.
- Goods, services and even taxes can now be paid using the world’s oldest crypto. “Every economic agent” must accept the use of bitcoin as a legal form of payment under the law.
- The law has not been without controversy or opposition, with some calling it unconstitutional. In June, the International Monetary Fund said El Salvador’s move raised a number of macroeconomic, financial and legal issues.
- Similarly, JPMorgan has suggested El Salvador’s economy could face headwinds, suggesting a potential “limitation” on its use case as a medium of exchange may emerge.
- In a show of support, crypto proponents are buying $30 worth of bitcoin to coincide with Salvadorans getting the same amount preloaded onto a government-sanctioned digital wallet.
- Of 75,489 votes on a poll put out by MicroStrategy CEO Michael Saylor, 82% of respondents said they would each buy $30 worth of bitcoin.
- On Tuesday, presidential legal adviser Javier Argueta confirmed in an interview that it is mandatory to have an electronic wallet to receive payments in bitcoin, despite the fact that the payment may not be received in that cryptocurrency but in dollars.
- A day before the law came into effect, El Salvador purchased its first 200 BTC, with Bukele saying the country’s brokers would be buying a lot more. On Monday, Bukele tweeted that El Salvador had purchased 150 more bitcoins on its recent price drop, bringing its total holdings to 550 BTC.
- The price of the world’s largest crypto by market cap is up more than 2.3% over a 24-hour period and is currently changing hands for around $52,600.
Andrés Engler contributed to reporting.
UPDATE (Sept. 7, 12:51 UTC): Updated to include information about the problems with the Chivo digital wallet in the third bullet point.
UPDATE (Sept. 7, 15:49 UTC): Updated to include information about the country’s additional purchases of bitcoin in the fourteenth bullet point.
UPDATE (Sept. 7, 16:59 UTC): Updated with information from Bukele’s latest tweet in the third bullet point.
UPDATE (Sept. 7, 17:24 UTC): Updated with details about BitGo in the fourth and fifth bullet points.
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Sebastian Sinclair is a CoinDesk news reporter based in Australia.