El Salvador Becomes the first country to adopt Bitcoin As Legal Tender 🇸🇻

The South American country of El Salvador has become the first country in the world to accept Bitcoin as legal tender.

On Wednesday, the Legislative Assembly of El Salvador voted to pass a bill that declared Bitcoin, the world’s largest cryptocurrency by market capitalization, as legal tender. It reportedly secured 62 out of 84 votes.

The populist President Bukele had championed the move to help low-income countries like El Salvador move from a large cash economy to a digital economy, where a person’s bank account is essentially their smartphone.

According to statistics, roughly 70 percent of people in El Salvador do not have bank accounts or credit cards. The country replaced its local currency, the colón, with the US dollar in 2001.

​In practice, the new law means that businesses in El Salvador must accept Bitcoin as legal tender for goods or services unless they cannot sustain the technology needed to do the transaction. The Salvadoran government has also voted that the market will freely establish the exchange rate between Bitcoin and the US dollar. Those tax contributions can also be paid in cryptocurrency.

​The government vowed to promote the necessary training and mechanisms so that the population can facilitate Bitcoin transactions. The national economy in El Salvador is dependent on remittances or money sent home from abroad, making up about 20 percent of the country’s GDP.

Historically, the country had a mostly agriculture-based economy, but it has been riven with chronic political and economic instability, including coups. It continues to struggle with high rates of poverty, inequality, and gang-related violent crime.

​Note that Bitcoin’s value has been decreasing since it hit an all-time high of over $64,000 in mid-April. In June, the cryptocurrency dropped to just over $33,000.