El Salvador first to accept bitcoin as official currency
El Salvador on Tuesday became the first country to adopt bitcoin as legal tender, a real-world experiment proponents say will lower commission costs for billions of dollars sent from abroad but which critics warned may fuel money laundering.
The change means businesses should accept payment in bitcoin alongside the US dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.
President Nayib Bukele, who has pushed for adopting the cryptocurrency, says it will help Salvadorans save about $400 million the government calculates is spent annually on commissions for remittances.
The 40-year-old president is popular with the public but has been accused of eroding democracy, including by the US Biden administration.
Doubters say bitcoin could increase regulatory and financial risks for the Central American nation, and polls show Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of dollars in value in a day.
To warm up a skeptical public, Bukele has promised every citizen $30 in bitcoin if they sign up for a government digital wallet. Ahead of the launch, El Salvador bought 400 bitcoins, Bukele said, helping drive the currency price BTC= above $52,000 for the first time since May.
In the early hours of Tuesday the wallet had not appeared on Apple Inc AAPL.O, Google GOOGL.O and Huawei’s [RIC:RIC:HWT.UL] app download platforms.