El Salvador Adopts Bitcoin as Its Legal Tender

Bitcoin (BTC) was launched more than a decade ago by its mysterious creator, Satoshi Nakamoto. However, over the past few years, many countries have been ready to explore the miraculous path of digital currency. A recent Atlantic Council report says, the moment more than 80 countries/regions consider creating their own virtual currency, digital currency that is the central bank (CBDC).

Interestingly, El Salvador’s plan is different. Instead of creating and launching its own digital currency, the country made a historic decision: El Salvador finally adopted Bitcoin as legal tender.

But why did El Salvador choose to legalize today’s leading cryptocurrency? What happened after this major event? More importantly, which countries are likely to follow El Salvador’s brave move? Let’s explore together.

El Salvador: The first country to use BTC as a national currency

On September 7, 2021, El Salvador formally adopted Bitcoin as legal tender. This paves the way for the country to accept BTC as a method of trading goods and services. According to a Reuters report, President of El Salvador Nayib Bukele see Bitcoin help people easily Salvador overseas remittance potential return.

A bright future for finance

“It [Bitcoin] will bring financial inclusion, investment, tourism, innovation and economic development to our country,” Bukele said in a tweet. While BTC is now the country’s legal tender, citizens can choose whether to use it or not. But by law, companies must accept bitcoin as a payment method.

At the time of this writing, El Salvador is still the first and only country to adopt Bitcoin as legal tender. While many countries have been exploring Bitcoin’s potential, adopting it as national legal tender means that the government is responsible for the Cryptocurrencies providing sovereign backing or guarantees. In addition to this, governments must prepare for the impact of Bitcoin’s high volatility.

Now, we can safely say that El Salvador is well prepared for this. On August 23, 2021, President Bukele mentioned that the country is installing 200 Bitcoin automated teller machines (ATMs) in preparation for its application.

A tough start opens up learning opportunities

Despite all preparations for the digital currency transition, El Salvador has had a very rough first day. El Salvador’s brave move got off to a difficult start when the government-backed bitcoin mobile app Chivo was suddenly unavailable on platforms such as Apple and Huawei. More than 1,000 people also protested against Bitcoin adoption in San Salvador.

Bitcoin prices also fell that day, but President Bukele mentioned that “as with all innovations, there is a learning curve for the Bitcoin process in El Salvador.” He added in a tweet: “Not everything can be done in one day. or within a month.”

Countries with the most Bitcoin

According to the Chainalysis 2021 Global Cryptocurrency Adoption Index, global cryptocurrency adoption has grown by more than 880% over the past 12 months. Below are the top 20 countries where cryptocurrency-related activity is most prevalent, out of 154 countries ranked by peer-to-peer (P2P) transaction volume, total cryptocurrency activity, and transaction activity by non-professional users.

Countries with the most Bitcoin

This shows that while the US leads the way in overall cryptocurrency friendliness, not all of the bulk of the cryptocurrency activity is coming from the US. The countries on the list can also be considered as countries with the fastest cryptocurrency adoption or emerging countries.

Four Countries Likely to Follow El Salvador’s Adoption of Bitcoin

Previously, we have seen reports listing countries where Bitcoin or cryptocurrency transactions have surged. Now, let’s take a look at which countries might follow El Salvador.

Brazil

In October 2021, Brazilian Federation Vice President Aureo Riberio revealed that Brazilians will soon be able to use BTC to buy cars, houses, and even buy food from McDonald’s. Riberio introduced Bitcoin Bill 2.303/15 in the Brazilian House of Representatives and was approved by a select committee of the House of Representatives on September 29.

According to a Yahoo report, Riberio said, “We want to remove the rubbish and save the essentials and develop relevant regulations so that you can understand the channel of the purchase and the object of the transaction at the same time as the transaction.” At present, Bitcoin is still unregulated in Brazil, and the government does not It is encouraged to use it for trading.

Ukraine

A day after El Salvador adopted bitcoin, the Ukrainian government voted almost unanimously to regulate and legalize the country’s cryptocurrency. This is a bold move for Ukraine, since before this decision, cryptocurrencies were considered illegal within the country. According to Kyiv Post, “Ukraine plans to open the cryptocurrency market to businesses and investors in 2022.”

Ukrainian nationals can buy and sell cryptocurrencies, but the new law does not make BTC and other digital currencies legal tender, and the government is keeping a close eye on cryptocurrency trading platforms and exchanges. Unlike El Salvador, the country’s cryptocurrency laws discourage the use of BTC as a means of payment and do not treat bitcoin on an equal footing with Ukraine’s official currency, the hryvnia.

Panama

On the day of El Salvador’s historic decision to accept Bitcoin as legal tender, Panama also began to lean towards cryptocurrencies. However, Panama’s acceptance of cryptocurrencies differs from that of El Salvador, which also includes Ether (ETH) on its list of accepted cryptocurrencies.

Panama plans to promote the use of BTC and ETH as payment options, while also planning to use powerful blockchain technology in the public and financial sectors. The draft law points to Bitcoin’s potential as an inflation hedge and a high degree of divisibility. Unlike El Salvador, however, Panama does not require businesses to accept BTC and other cryptocurrencies.

Cuba

Cryptocurrencies such as Bitcoin are now legally recognized for payments in commercial transactions in Cuba. On September 15, 2021, just days after El Salvador adopted Bitcoin, the Central Bank of Cuba (BCC) adopted Resolution No. 215 of 2021, recognizing the digital currency. While the BCC has approved the use of Bitcoin and other cryptocurrencies in the country, it still reminds everyone of the potential risks of using cryptocurrencies, such as policy risks and threats to financial stability.

Conclusion

Although El Salvador is the smallest country in Central America, its courage is immeasurable when it comes to new things that can shape its financial future. As more countries take their first steps towards accepting digital currencies, we can clearly see the impact El Salvador has had. Soon, we will see more countries exploring the benefits of Bitcoin. Which countries do you think will make the list? Please leave your thoughts in the comments.