With a small population density of about 7 million citizens, El Salvador is making history. The country will be the first country to adopt a cryptocurrency (Bitcoin) as its national currency. How cool is that?
The Big Announcement – Bitcoin Legal Tender
The Legislative Assembly of El Salvador passed the Bitcoin Law proposed by the country’s president Nayib Bukele this year in June (8) with 62 out of 84 votes. The government says it will use Bitcoin alongside the US dollar.
According to the president, the idea will make it easy for the Salvadorians in the diaspora to send money home. This adaptation is an excellent strategy as El Salvador relies heavily on funds from abroad.
More than two million citizens live and work outside the country, additionally, the country gets 20% GDP. These people, however, keep tabs with their family members back home who keep the economy going.
Additionally, the adoption of Bitcoin will bring financial inclusion, investment, tourism, innovation, and economic development for El Salvador.
In June, the World Bank rejected the country’s plea for help with pushing the Bitcoin agenda. World Bank claimed that it declined the offer because the project exhibited transparency concerns.
Despite this, the law was passed and will officially run from 7th September 2021. This law requires all business owners to accept payments with Bitcoin. However, vendors or services providers who don’t have access to the technology necessary to process the transaction will be exempted from the rule.
To kick off the usage of Bitcoin in El Salvador, every citizen will receive free $30 in BTC through the government’s Chivo wallet app. This is to encourage more El Salvadorians to have a starting point and begin using Bitcoin as a legal tender in their day to day lives.
El Salvador’s History
El Salvador is a country in Central America bordering Honduras, Guatemala, and The Pacific Ocean. Sal Salvador is the country’s largest city and doubles up as its capital city.
Civil wars around the end of the 19th and the start of the 20th century led to the migration of many Mexicans. By the end of 2008, they became the most prominent immigration group in the United States.
The country still deals with the problem of gang-related crime, poverty, and inequality.
El Salvador’s Economy
The El Salvador economy has been affected by natural disasters (hurricanes), corruption, and poor government policies. Despite the country mining Gold and silver in the past; a previous government shut down the efforts to try, and revive the mining industry further lavishing El Salvador into poverty.
In 2006, in a bid to eradicate poverty in the country, the Millennium Challenge Corporation signed a treaty with the government that saw the disbursement of more than 400 million dollars. The government channeled the money to the Northern part of the country to improve transportation and build social amenities, including schools and enterprises.
Even though the El Salvador ranks as the 17th happiest country globally, financially its been rollercoaster. The recent development will elevate the Citizens’ happiness if it goes according to plan.
With Bitcoin running part of the country’s economy, results might be positive or negative. Sending and receiving money from abroad gets more accessible, resulting in an improved economy. The world will definitely be watching an taking note!