El Salvador becomes first nation to adopt Bitcoin as legal tender

El Salvador has become the first country to adopt the cryptocurrency Bitcoin as a legal tender, The New York Times reported.

El Salvador President Nayib Bukele tweeted on Tuesday that the country held 550 Bitcoin.

Businesses in the country are required to accept Bitcoin as a legal payment, and the government is creating a trust with $150 million in public funds to aid in dollar conversions, according to the Times.

Bukele said adopting the cryptocurrency system will help citizens be introduced to formal banking and said this will be a cheap alternative for them to purchase remittances abroad. 

About 34 percent of El Salvador adults have bank accounts, according to Acuant.com data.

Como toda innovación, el proceso del #Bitcoin en El Salvador tiene una curva de aprendizaje. Todo camino hacia el futuro es así y no se logrará todo en un día, ni en un mes.

Pero debemos romper los paradigmas del pasado. El Salvador tiene derecho a avanzar hacia el primer mundo.

— Nayib Bukele (@nayibbukele) September 6, 2021

Some critics have argued that El Salvador’s new law will create more problems for an already insatiable economy, the Times reported. 

“Having that risky exchange rate volatility is what was trying to be avoided when El Salvador adopted the dollar,” Jaime Reusche of rating service Moody told the Times. “This clearly has no precedent.”

“It seems that for them, El Salvador is just a tool to promote their cryptocurrency,” said Salvadoran economist Tatiana Marroquín, according to the Times. “El Salvador isn’t just a means to an end — for us, El Salvador is the end.”

One-third of Salvadoran citizens don’t have internet access and nearly a quarter of the population lives below the poverty line, according to a La Prensa Gráfica newspaper survey.