The First of Many: The First Country to Recognize Bitcoin as Legal Tender
By supermajority vote, 62 out of 84 possible votes in favor, El Salvador's government will recognize Bitcoin as a legal tender in the country alongside the current tender, the US dollar. Going into effect September 7, 2021, the government believes it will be beneficial to the country's economy. However, the government has received mixed feedback from the country's citizens as to whether or not this will help the country. Only 30% of citizens have access to traditional financial services which will make it difficult for many to use or access bitcoin tender. In addition, the country is heavily reliant on money sent back to the country by workers abroad with a fifth of the county’s GDP consisting of such. Many citizens of lower economic class still feel lingering trust issues from when they lost considerable purchasing power when the USD was adopted as the only legal tender in 2001. However, the government has taken that into consideration and is developing solutions to address the problem.
The El Salvadoran government was recently denied assistance by the International Monetary Fund of the World Bank to help implement Bitcoin as a legal tender citing, “this is not something the World Bank can support given the environmental and transparency shortcomings"; however, this did not mean the World Bank was against the implementation of the tender. The national government has created a trust through the Development Bank of El Salvador, BANDESAL, that will allow business owners to convert their Bitcoin currency to USD should they not want to keep such a volatile currency. With an initial value of 150 million, the government will sell Bitcoin to replenish the value of the trust overtime to ensure there is never a shortage. By downloading the government cryptocurrency app, every adult citizen will be entitled to $30 worth of Bitcoin to help start getting citizens used to the cryptocurrency. In addition, citizens will now be able to pay taxes in Bitcoin. The government will also have a new program that will offer citizenship to people who can prove they have invested in at least 3 Bitcoins. With access to geothermal energy, the government is further hoping to welcome new businesses such as energy-intensive mining companies.
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