September 7th will go down in the history of the Internet, but certainly in the history of crypto assets. From this day on, Bitcoin will become the official means of payment in the Central American country El Salvador alongside the US dollar. From that day onwards, every citizen can install the Chivo wallet on their smartphone and receive BTC for the equivalent of 30 dollars. 200 Bitcoin ATMs that are being distributed across the country are intended to ensure that citizens can exchange their fiat money for BTC.
A new law that makes Bitcoin the official means of payment in El Salvador has caused a stir around the world. It was announced on June 5 by President Nayib Bukele, whose brothers Ibrahim and Yusef are known to be crypto enthusiasts. Just three days later, on June 8th, the Bitcoin law was approved by Congress with a clear majority. Bukele, himself an entrepreneur (he owns Yamaha Motors El Salvador) and decried as a populist, expects economic benefits from the move.
$ 30 for everyone: When a country makes a Bitcoin airdrop
Great expectations, a lot of skepticism
That’s why his Bitcoin commitment should not be dismissed as a pure marketing gag. “If someone continues to withdraw cash, does not receive an entry bonus, does not want to win customers with Bitcoin, does not want to expand his business and pay fees for transfers, he can continue to do so,” said the presidential house smugly. Rumors that there will be high exchange fees between dollars and Bitcoin are attributed to misinformation that is scattering the opposition.
What is certain is that, in addition to the US dollar, which was introduced as the official currency in 2001, every business in El Salvador will have to accept BTC as a means of payment from September 7th. Bukele believes that this will make his country more attractive to international investors. The Bitcoin law is an additional boost that could cause the country’s economic growth to shoot up to 9 percent this year – after a severe slump in the Corona year 2020, mind you.
BTC from abroad
The diaspora of the small people is also an essential factor. In addition to the 6.5 million inhabitants, there are 2 million who live abroad and send a lot of money home. Money transfers make up a whopping 20 percent of GDP and are therefore an enormous economic factor. Facilitating these shipments via Bitcoin is of course in the interests of the state. Bukele hopes that many families will soon get more from abroad and spend more domestically because they save the transfer costs in the conventional way.
Internationally, El Salvador has not only made friends with the Bitcoin law. Both the World Bank and the International Monetary Fund are critical of the development and have warned that Bitcoin could lead to economic instability. The citizens themselves are also doubtful. According to a survey by Disruptiva, three-quarters of Salvadoreans are skeptical about the introduction of Bitcoin, two-thirds do not want to be paid with BTC, and just under half knew nothing of their president’s grand plans in July.
El Salvador is making Bitcoin legal tender – currency on the rise