El Salvador becomes first country to make bitcoin official currency

El Salvador has become the first country in the world to adopt bitcoin as a legal tender. The Central American country has bought 200 bitcoins worth $20.9 million dollars ahead of the country’s cryptocurrency rollout on Tuesday. 

The plan was spearheaded by the young, populist President, Nayib Bukele which is aimed to allow Salvadorans to save on $400 million spent annually in commissions for remittances, mostly sent from the United States.

While the remittances amount to around 23% of the country’s Gross Domestic Product, polls show that Salvadorans are still skeptical of using bitcoin and are wary about the regulatory and financial risks of cryptocurrency. 

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In June 2021, the country announced its adoption of bitcoin as a legal tender. Following the announcement, the country has so far managed to purchase 400 bitcoins as a part of its advancement towards digital currency. 

The government has already been installing ATMs of its Chivo digital wallet that will allow the cryptocurrency to be converted into dollars and withdrawn without commissions in their run-up launch. 

The bitcoins are also suffering with constant increase and decrease in its worth. Last summer, the currency lost nearly half of its value just after hitting a historical high of over $60000 in April. 

While the IMF has warned the country regarding the risks associated with the currency, the law allows citizens to use Bitcoins as a part of their daily currency and to pay taxes. CNBC notes that El Salvador becomes the first country to officially have Bitcoin on its balance sheet and to hold it as a part of its reserves. 

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