Bitcoin introduces as legal tender in El Salvador

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Yusuf Balogun
Yusuf Balogun
Yusuf is an aspiring Journalist and Health law expert with a special focus on technology innovations. He is a guest writer at Qwenu and Deputy Editor-in-chief of Gamji Press.

El Salvador will become the first country to use bitcoin as legal cash on September 7th, making it a historic day for bitcoin.

El Salvador’s president, Nayib Bukele, has already verified that the country had acquired 400 bitcoins, but the Chivo app’s incentive mechanism will necessitate additional bitcoin purchases in the future.

El Salvador has explained its decision by citing two primary factors. The first is the country’s high reliance on remittances, as well as the current inefficiencies in the remittance system. Remittances accounted for a stunning 24 percent of El Salvador’s total gross domestic product, according to the World Bank (GDP).  

Fixed-fee crypto remittances could be speedier and less expensive than present options, which can be expensive and time-consuming. Second, El Salvador is attempting to recruit new enterprises by positioning itself as a crypto-friendly hub. 

El Salvador’s legal tender decision has sparked heated controversy both inside and beyond the country. The IMF has expressed alarm, and there have been protests against the bill within the country. 

According to certain polls conducted in El Salvador, many El Salvadorians are skeptical of bitcoin and the law has limited awareness of bitcoin.

Nonetheless, El Salvador will give out $30 to every registered El Salvadorian user of the Chivo app to encourage usage. If the entire adult population of El Salvador, which numbers more than 4 million people, signs up for Chivo and receives $30 in BTC, Salvadorans will earn 2366 BTC. 

Only 50.5 percent of Salvadorans, or about 2.2 million individuals, have an internet connection, according to DataReportal. If all of these folks sign up for Chivo, the country’s residents will receive 1301 BTC. 

To get around the country’s limited Internet connectivity, El Salvador plans to install bitcoin ATMs across the country, where people can buy and sell bitcoins for dollars. 

Approximately 70% of Salvadorans do not have a bank account. If the unbanked population remains away from the Chivo app but the rest registers, around 1.2 million Salvadorans will receive $30 worth of bitcoin, which at current rates equals 710 BTC. 

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