Cryptocurrency Bitcoin is El Salvador's legal tender officially from Tuesday, as planned by its President Nayib Bukele. With this, El Salvador has become the first country to accept Bitcoin as its currency.
The step is believed to cut billions spent as commission every year for sending money home. Although, some say it may give a push to money laundering.
President Nayib Bukele is aiming to allow Salvadorans to save $400 million spent annually in commissions for remittances mostly sent from the U.S. Remittances to El Salvador amounted to $6 billion last year, almost one-forth of its GDP.
Bitcoin's technology allows transferring money across borders at a very minimal cost.
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The country bought 400 bitcoins ahead of the roll-out, with a market value of about $20 million at current prices.
El Salvador government’s launched Bitcoin wallet Chivo comes pre-loaded with $30 worth of the currency for users who register with a Salvadoran national ID number.
Bukele’s administration has installed 200 Bitcoin ATMs around the country that can be used to exchange the cryptocurrency for U.S. dollars.
However, people remain hesitant of the new law as a poll last week by El Salvador’s Universidad Centroamericana Jose Simeon Canas found his Bitcoin law is widely unpopular. Two-thirds of respondents said the law should be repealed while more than 70% said they prefer to use U.S. dollars instead.