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Thursday, June 20, 2024

El Salvador is making Bitcoin legal tender

El Salvador introduces Bitcoin as legal tender. Was that the redemptive blow for the crypto market?

El Salvador makes history. The smallest country in Central America introduced Bitcoin as legal tender on Wednesday June 9th . El Salvador is the first country in the world to go this way. As the President of El Salvador announced via Twitter, the parliament passed the law with an absolute majority of 62 out of a possible 84 votes. However, the approval of the parliamentarians was considered certain in advance, as the ruling party Gran Alianza por la Unidad Nacional (Great Alliance for National Unity) has an absolute parliamentary majority.

The law is historical. After all, El Salvador is the first country in the world to raise Bitcoin to legal tender status. There is now compulsion to accept BTC. From now on, Bitcoin will complement the US dollar (El Salvador no longer has its own national fiat currency since 2001) as a currency.

A look at the text of the law also proves that BTC is not a second-class currency. There it says, for example: “Prices may be expressed in Bitcoin”. And: “Everyone who acts economically has to accept Bitcoin”. Citizens of the country are also allowed to pay taxes in BTC from now on.

Bukele in Twitter chat

Shortly before the vote in parliament, El Salvador’s President Nayib Bukele was available to answer questions in a Twitter Spac, a kind of clubhouse alternative for voice chats, organized by Nic Carter. Within a very short time, the online event attracted over 22,000 interested listeners. For example, Bukele announced a trust fund for the expansion of the digital infrastructure in order to make the actual exercise of the law even feasible. After all, you need both internet access and at least one smartphone to actually use Bitcoin. First and foremost, Bitcoin is supposed to lead to improved financial inclusion of the population, the majority of whom have no access to financial infrastructure.

Bitcoin mining in El Salvador?

During the talk, President Buklele also touched on climate issues. For example, he promoted the building of Bitcoin mines in the country. The geographical location is predestined for this, as the country has cheap and above all green electricity that is generated via geothermal energy.

Perhaps someone would like to build a mining farm in El Salvador that does not generate CO2 emissions. That would not only be cheap because the energy would not have to be transported, it would also be environmentally friendly.

Nayib Bukele

Bitcoin has advantages for everyone. Other countries are now looking to El Salvador. If we succeed with the law, it can be assumed that Bitcoin will also be introduced as legal tender elsewhere. And then Bitcoin takes the next level of development. We are then no longer talking about one or two countries in which BTC is used as legal tender; that would be the domino effect. We then talk about an established currency.

Nayib Bukele

How the people in the country will use their new money will be seen in the future. For Bitcoin, however, it was undoubtedly bullish news, as the first nation states have now arrived in the Bitcoin standard. On a daily basis, the key crypto currency is 5 percent up, and since the parliamentary decision it has been 2.4 percent.

The overall market is now looking much brighter. At 1.6 trillion US dollars, the crypto market is a good three percent up on the previous day.

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