With the popularity of cryptocurrencies at an all-time high, countries such as France, the United States, Israel, and Slovenia are on the path to legitimise Bitcoin as a means of payment.
El Salvador, on the other hand, went a step further by becoming the first government to recognise Bitcoin as legal cash tender. This means that Bitcoin can now be used for any transaction on a national level.
However, this begs the question – “What can I buy with Bitcoin in El Salvador?” We explore this question and understand what this decision means for El Salvador.
Brief History
El Salvador has a long history with the United States of America. Receiving financial aid during from 1989 to 1999, it accounted for 60% of its exports from 2004. These and several other reasons like inflation necessitated the need for the country to shift its focus from its original legal tender – the Colon – to the Dollar.
Soon, the Dollar became more common and, over time, the Colon died out. And with the advent of the US legalising Bitcoin as a form of payment, El Salvador took a step in the same direction but only bigger.
June 5 started with the president of El Salvador declaring Bitcoin as a legal tender in the country. Bitcoin is the first cryptocurrency which is valued at more than $56,000 so, naturally, this decision caused a stir. Never had it been done before, making a decentralised blockchain currency a legal tender.
This was a far cry from what some nations who had banned the use of cryptocurrency had done. So, a few days later, the Bitcoin law was passed. It stated that all businesses were mandated by law to accept Bitcoin for all payments.
The reason for the surprise was that Bitcoin was originally created as a form of payment that could not be controlled by a single body – the government, for example. So, using Bitcoin as a legal tender seemed counterproductive if not suicidal. Cryptocurrencies’ are volatile and prone to money-laundering problems to name a few.
Legality of Bitcoin
After the “Bitcoin law” was passed on June 8, Bitcoin became a legal tender of El Salvador. This meant that Bitcoin could be used for everyday transactions. In fact, in a month, more citizens had more Bitcoin wallets than conventional bank accounts. The government’s official ‘Chivo’ wallet had more than 2.25 million downloads, which is at least 45% of the population of El Salvador.
Although legal, only about 12% of the population actively use Bitcoin to make purchases, and companies report 93% of the population had not made any payments in the first month. While the law may take some time to hit the ground running, the government is positive that it will do better than expected.
Applicable usage of Bitcoin in the country
The government of El Salvador has taken the first step of making Bitcoin a legal tender; this eliminates all of the technicalities that would have come to play if this wasn’t the case. This is because in certain countries, although Bitcoin might be legal, it cannot be used for everything.
What can I buy with Bitcoin in El Salvador?
With the move to make Bitcoin a legal tender in the country, the people of El Salvador can now purchase their day-to-day amenities with cryptocurrency. However, to be able to do this, payments can only be made through the Chivo digital wallet, which is the only wallet recognised by law. Citizens then have to register with their National Identity Number (NIN), and you are ready to make payments.
With this, you can then make payments on everything, from buying a house to buying a pizza. The Bitcoin law makes it compulsory for all businesses to offer Bitcoin as a means of payment. This means you can pay for anything. Hospital bills, rent, clothing, food, school fees, etc. All you need is to have your wallet ready to pay.
Ultimately, Bitcoin is now a legal tender in El Salvador, and if you are big on cryptocurrencies, this is good news for you. More so, you can take full advantage of this opportunity if you reside in El Salvador or plan on visiting.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.