September 7, 2021

El Salvador has legalized bitcoin

El Salvador has legalized bitcoin

On Tuesday, September 7, El Salvador enacted a law recognizing bitcoin as a legal tender. The country's president, Nayib Buquele, posted a tweet to that effect three minutes before midnight local time.

In three minutes, we will make history, Bukele wrote.

Earlier, the head of state confirmed that the Salvadoran government had purchased the first 200 BTC. The purchase is part of a new $150 million fund approved by the authorities to provide bitcoin and dollar exchanges.

Our brokers will be buying up much larger volumes as the deadline approaches, Bukele said.

He later reported an additional 200 BTC purchases. As of this writing, the total amount of coins purchased is about $21 million.

Update: Amid a drop in the price of the first cryptocurrency, Bukele said that El Salvador has purchased an additional 150 BTC. Thus, the state fund owns 550 BTC.

Since midnight on September 7, the Chivo bitcoin wallet became available. At the end of June, the president eliminated transfer and conversion fees, announced the possibility of cashing in bitcoin-ATMs or offline branches, and announced a $30 giveaway in the first cryptocurrency to every adult in the country.

On Sept. 6, a Reddit user offered to buy $30 worth of bitcoin in solidarity with El Salvador. MicroStrategy head Michael Saylor asked subscribers if they would like to join the campaign. As of this writing, 86,497 people have voted - with 83.9 percent answering in the affirmative.

Not everyone shares Saylor's optimism, however. The Twitter account of a conference of cypherpunks in Prague noted that the forced integration of bitcoin into the financial system "goes against the core values" of the cryptocurrency community.

In the track, Bukele posted short videos explaining how to use Chivo. He said the app's appearance in Apple, Google and Huawei stores "won't take long."

Changpeng Zhao, CEO of bitcoin exchange Binance, noted that so far only one country in the world uses cryptocurrency as a means of payment.

This is just the beginning, he wrote.

On the night of Sept. 7, the price of bitcoin approached values near $53,000. Quotes are currently near the $52,470 mark.

Hourly chart of BTC/USD exchange Bitstamp. Data: TradingView.
In early June, El Salvador passed a bill recognizing bitcoin as a legal means of payment.

The initiative found no response among local money transfer services - only some integrated support for the first cryptocurrency. The opposition called the bill unconstitutional.

The International Monetary Fund saw risks in the legalization of bitcoin payments, and the World Bank refused to help El Salvador with the implementation of the cryptocurrency.

JPMorgan questioned the benefits of digital gold for the country's economy. Analysts cited low liquidity, volatility, and the risk of conversion to the U.S. dollar as the main limitations to using the coin.

The initiative was supported by the Central American Bank for Economic Integration. Later, U.S. cryptocurrency ATM operator Athena Bitcoin announced plans to deploy 1,500 devices in El Salvador.

Recall that in August, local residents came out to a rally against the legalization of the first cryptocurrency. The Salvadoran Association of International Cargo Carriers demanded that the obligation to accept digital gold as payment be abolished.

According to a survey, 70% of Salvadorans opposed the bill. According to another survey, only 20% of respondents supported the Buquelet initiative.

Jack Evans

About the author

I became a crypto asset owner in 2014, when the industry was in its infancy. Before that, I was working in the classic US and European stock markets. Since then, I have gained extensive experience in both cryptocurrency investing and day trading. I am happy to share with readers my experience with crypto exchanges, DeFi and NFT instruments. 

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