El Salvador Aims to Becomes the First Country to Adopt Bitcoin As a Legal Tender
Last week, El Salvador President Nayib Bukele delivered a speech to the Congress at the Legislative Assembly wherein he talked about introducing a new legislation that makes Bitcoin a legal tender. If passed, El Salvador will becomes the world’s first sovereign nation to adopt Bitcoin.
While speaking at the Bitcoin 2021 Conference in Miami, President Nayib Bukele announced his country’s partnership with digital wallet company, Strike. This partnership aims at building the country’s modern financial infrastructure using the Bitcoin technology.
In a message on his Twitter timeline, the 39-year-old president wrote: “Next week I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction.”
Currently, the official currency of El Salvador is the U.S. Dollar. At present, it is legal to own Bitcoin in several countries. However, it has never been designated legal tender. If El Salvador gives Bitcoin this status, it would make BTC an official mode of transaction that can be used to settle other financial transactions including taxes.
El Salvador has largely been a cash economy with 70% of the people not having bank accounts or credit cards. Jack Mallers, founder or payments platform Strike said: “What’s transformative here is that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation”.
Mallers also added that this move will help to unlock the power and potential of using Bitcoin for daily use cases. He believes that it will be beneficial for a wide sector including individuals, businesses, and public sector services.
As per the CNBC report, El Salvador has already assembled a team of Bitcoin leaders who help to build a new financial ecosystem having Bitcoin as the base layer. In a bill sent to the Congress proposing Bitcoin as a legal tender, Bukele has also blamed the central bank aka the U.S. Federal Reserve for massive money printing and taking actions that can cause major harm to the economic stability of El Salvador.
The bill further notes: “In order to mitigate the negative impact from central banks, it becomes necessary to authorize the circulation of a digital currency with a supply that cannot be controlled by any central bank and is only altered in accord with objective and calclable criteria.”