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Digital currency: Bitcoin is a means of payment in El Salvador




Digital currency
Bitcoin is a means of payment in El Salvador

Bitcoin

“No to Bitcoin”: According to a survey, around 70 percent of Salvadorans reject the Bitcoin law. Photo: Víctor Peña / dpa

© dpa-infocom GmbH

El Salvador is the first country in the world to introduce the digital currency Bitcoin as legal tender. Taxes can also be paid in the cryptocurrency.

The digital currency Bitcoin has become legal tender in El Salvador. When a corresponding law came into force, the Central American state was the first country in the world to take this step.




The law stipulates that every trader who is technically capable of doing so must accept Bitcoin as a means of payment. Taxes can also be paid in the cryptocurrency. President Nayib Bukele announced on Twitter that the country had bought its first 400 Bitcoin.

No capital gains tax should be levied on the exchange of Bitcoin in El Salvador, a country with around six million inhabitants. The exchange rate to the dollar, which is used there instead of a local currency as an official means of payment, is to be decided freely by the market. According to Bukele, anyone who downloads the Chivo digital wallet receives a starting credit worth 30 dollars (25 euros). There are also said to be 200 Chivo ATMs.

Bitcoin is the most popular digital currency. It is not controlled by a central bank, but created by a decentralized, energy-intensive computer process. The cryptocurrency is considered an object of speculation and is subject to violent price fluctuations.

The dollar has been used as a means of payment in El Salvador since 2001. This makes the country dependent on the monetary policy of the US Federal Reserve. For the nation’s economic growth, it is necessary to allow a digital currency, the value of which depends solely on market economy criteria, says the text of the law. In addition, around 70 percent of residents have no access to traditional financial services. Many rely on their loved ones to send money in the United States.

According to a nationwide survey by the Universidad Centroamericana with almost 1,300 participants in August, around 70 percent of Salvadorans reject the Bitcoin law. Around as many had imprecise ideas about Bitcoin: 4.8 percent of those surveyed correctly defined it as a cryptocurrency.

dpa


Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.
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