El Salvador Legalizes Bitcoin, Becomes a Haven for Crypto Start-ups

According to El Salvador’s President Nayib Bukele, using BTC will be optional for citizens. The vendors, though, will have to accept the coin alongside the US dollar, which has been the state currency here since 2001. Compensations – such as pensions and salaries – will still be paid out in dollars.

The state will encourage Salvadorians to try the new technology by offering them wallets pre-loaded with $30 worth of BTC, educating them on digital currencies, and eliminating capital gains tax on crypto. To ease the transition, Athena Bitcoin will install around 1500 Bitcoin ATMs across the country, while BANDESAL bank will guarantee on-the-spot convertibility to dollars through a $150 million trust.

How Bitcoin is helping El Salvador’s economy

So how come El Salvador decided to make such a bold move? First, more than two-thirds of the country are seriously underbanked. Second, a large number of citizens rely on remittances from their relatives who are working abroad; for one, in 2019 the volume of those almost reached $6 billion.

With the fees eating away this hard-earned money, the government was searching for a way to cut the transaction costs. And lastly, adopting Bitcoin as a legal tender is likely to give a boost to the economy: it has already started to draw the attention of investors, startups, and tourists with BTC in their accounts.

Reaction to legalized Bitcoin

Bitcoin enthusiasts and professionals alike expect the country to turn into the biggest ever sandbox for crypto very soon. A number of projects from the field already expressed their desire to help El Salvador in the adoption process, and test their own economical models.

Bukele took into account the recent controversy over the sustainability of Bitcoin, too, as he announced the plans to use the country’s geothermal potential for building mining facilities powered by clean energy.

The precedent has been made. Do you think other countries will follow El Salvador?

Leave a Reply

Your email address will not be published.

Related Articles
Read More

Why China’s Crackdown On Crypto Mining Could Be Good For BTC

Over the weekend, Chinese authorities cracked down on crypto mining activities in Sichuan, one of the major mining hubs in China. Sichuan is an ideal Bitcoin mining center because of the availability of cheap and efficient hydroelectric power. However, the authorities claimed that miners were...
Read More

Hard Fork Your Life II – Crossing Over into Crypto

In the Shibuya section of Tokyo sits a secluded and tumbledown neighborhood dubbed the “The Zaka” by those who regularly frequent her squalid charms. Known officially as Dogenzaka, this abstruse and constricted quarter of dark alleyways and dead-end passageways is home to a myriad of...
Read More

Bitcoin Network Node At Over 13,000, Sets New All-Time High

The previous all-time high for this metric was reached in January this year when the number of reachable Bitcoin nodes reached 11,613. Out of these nodes, 98.77% are running on the Bitcoin Core software, while the remaining percentage belongs to other protocols such as Bitcoin...