El Salvador became the first country to adopt bitcoin as a national currency on Tuesday.
President Nayib Bukele announced late Monday that his government has purchased another 200 bitcoins ahead of El Salvador’s formal adoption of the currency. El Salvador now holds 400 bitcoins, which are worth nearly $21 million at current trading levels.
Bitcoin will be used as legal tender in El Salvador alongside the US dollar starting on Tuesday. Bukele tweeted that the country’s brokers “will buy much more as the deadline approaches.”
Bukele, a right-wing populist who rose to power in 2019, announced the plan to start using bitcoin in June. The law designating bitcoin as legal tender says that all “economic agents” shall accept the cryptocurrency as a form of payment. It also says that tax payments can be made in bitcoin.
Salvadorans will be able to download the “Chivo Wallet,” an application created by the government which will deliver $30 worth of bitcoin to people to promote its use.
“The process of #Bitcoin in El Salvador has a learning curve. Every step toward the future is like this, and we will not achieve everything in a day, nor in a month,” Bukele tweeted. “But we must break the paradigms of the past.”
Some citizens have embraced the technology, while others are wary. According to a recent poll 70% of El Salvador residents don’t trust cryptocurrency ↗️
El Salvador has partnered with digital finance company Strike to create the infrastructure required.
Cryptocurrencies are held in digital wallets, rather than through a traditional bank account — meaning that people in poorer communities with less access to banks could use bitcoin as a way to gain increased access to their finances.
However, social organizations have asked the Salvadoran government to repeal the law, largely because they fear the extreme volatility of the cryptocurrency.
Bitcoin has recovered some lost ground following a dramatic crash earlier this year, but it remains well below its record high of nearly $65,000 set in April.