Which Is the First Country in the World to Grant Legal Tender Status to Bitcoin

Bitcoins are loaded onto digital wallets and accessed via a mobile app. In El Salvador, the wallet is called “Chivo,” which means “cool” in the local dialect. The government of President Nayib Bukele, 40, plans to spend more than $225 million on the launch, including a $30 bitcoin credit for those who use Chivo — local slang for “cool” — the government-run e-wallet that can be used for purchases in bitcoin or dollars. Economists and international organizations such as the World Bank, the International Monetary Fund, and the Inter-American Development Bank have expressed concerns about the adoption of Bitcoin in El Salvador. Almost 78% of those who knew about the app tried to download it. The most common motivator was the $30 bonus, although respondents also highlighted contactless payment technology at a time when the COVID-19 pandemic was in full swing and the potential to receive remittances. Among the five Salvadorans who knew Chivo but didn`t download it, the main reason was a preference for money. Others said they didn`t trust the system or Bitcoin, that they didn`t own a phone with the internet, or that the technology was complicated. El Salvador is the first country in the world to officially adopt cryptocurrency after its Congress overwhelmingly voted in favor of a law classifying bitcoin as legal tender, President Nayib Bukele said Wednesday, a move he hopes will encourage foreign investment, improve financial inclusion and create jobs. To increase Bitcoin acceptance in the country, the government is also installing more than 200 Bitcoin ATMs.

AFP reports that some of these machines are even guarded by soldiers to prevent possible arson. In addition, Bukele advertised $30 for every citizen who accepts cryptocurrency. “How will a poor person invest (in Bitcoin) if they barely have enough to eat?” The government kicked things off by buying its first 400 bitcoins on Monday, followed by another 150 on Tuesday worth a total of $26 million. “These are decisions that the government and legislators have made without consulting the population,” said Laura Andrade, director of the Central American University`s Institute of Public Opinion, who found in a poll that 70 percent of Salvadorans opposed the decision. The city started as a project of an anonymous bitcoin donor and until recently had El Salvador`s only bitcoin ATM. A recent survey by the Universidad Centroamericana José Simeón Cañas, a Jesuit college based in El Salvador, found that 67.9% of people disagreed with the decision to legalize Bitcoin Bitcoin. Many respondents said they don`t know how to use cryptocurrency, according to the survey. Bitcoin and other cyber currencies are “mined” by solving complicated puzzles with powerful computers that consume huge amounts of electricity – much of which is produced by coal-fired power plants. The IMF also raised concerns, saying El Salvador`s decision “raises a number of macroeconomic, financial and legal issues that require careful analysis.” Although the law requires all businesses to accept Bitcoin, in reality, only 20% do.

About 5% of all sales were paid in bitcoin through the Chivo wallet, and just as most households using Chivo prefer to keep their money in cash rather than bitcoin, 88% of businesses convert their bitcoin to dollars. The World Bank has rejected a request from El Salvador for help in adopting Bitcoin as its currency, citing “environmental and transparency gaps.” “I just walked into a McDonald`s in San Salvador to see if I could pay for my breakfast with Bitcoin, I was expecting to be told no,” Aaron van Wirdum said in a tweet retweeted by Bukele. Many of them live in the coastal town of El Zonte, where hundreds of businesses and individuals are using the currency to help people who previously had little access to banks, thanks to a project by an anonymous bitcoin donor. In June, El Salvador`s parliament passed a law allowing cryptocurrency to be accepted along with the U.S. dollar as payment for all goods and services in the small Central American country. Bukele also said using bitcoin would be an effective way to transfer the billions of dollars in remittances that Salvadorans living outside the country send home each year, The Associated Press reported.