Bitcoin El Salvador Legal

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In a January 2022 tweet, he argued that a “gigantic price increase is only a matter of time” because there will only ever be 21 million bitcoins, while there are 50 millionaires in the world. “Imagine that each of them decides that they should have at least ONE #Bitcoin,” he announced. The value of Bitcoin has since halved. No other country with its own currency, not even those like Zimbabwe and Venezuela with discredited currencies, has followed suit and made Bitcoin legal. As a result, the Bukele government was excluded from international financial markets. The usual way out of this debt would be a multilateral loan. But thanks to the Bitcoin law, Bukele was reprimanded by the International Monetary Fund. In late January, the organization warned him to withdraw Bitcoin as legal tender. Bukele responded on Twitter with a Simpsons meme. Bitcoin officially became legal tender in El Salvador on September 7, 2021, making it the first country to adopt the currency.

This decision made the Central American country the first national experiment regarding the use of the often volatile currency, which is becoming increasingly popular among many investors and speculators around the world. The U.S. dollar will remain the country`s other important medium of exchange. September 15 was a celebration to celebrate 200 years of Spanish independence. About 15,000 people took to the streets for massive protests, by far the largest in Bukele`s presidency – not only against Bitcoin, but also against Bukele`s impeachment of pesky judges, which ensured a Supreme Court ruling allowing him to run for president again, and a series of constitutional changes. El Salvador`s President Nayib Bukele (featured here at a press conference in May 2020) led efforts to make Bitcoin legal in his country. Yuri Cortez/AFP on Getty Images Hide the legend Despite free bitcoin and discounted gasoline for those who download and use the cryptocurrency app, downloads are at a standstill and its use in everyday life is not widespread. In a July poll, 49% of respondents didn`t know how the Bitcoin project would play out; 29% were afraid. 76% had some sort of internet access, but this included low-cap data plans; Other surveys have shown that reliable internet is available to 45% of the population and less than 10% in rural areas.

Chivo`s problems continue. To sign up for Chivo and get their $30 worth of Bitcoin, Salvadorans would need a photo of their national ID card, a photo of themselves, their ID card number, and their date of birth. But Chivo`s ID verification feature didn`t even verify the photos – you could only sign up with a DUI number and a corresponding date of birth. Some users have noticed that their DUI number has already been used. Others have tested the system with publicly known DUIs. Residents who did not install the app received verification codes via SMS. In the United States, Salvadorans who wanted to send remittances home had difficulty registering. The International Monetary Fund (IMF) has called on El Salvador to reverse its decision to make Bitcoin legal tender. Making Bitcoin legal meant much more than using Bitcoin for transactions. This has already been possible, as is the case in most (but not all) countries.

Nearly 78% of those who knew about the app tried to download it. The most common motivator was the $30 bonus, although respondents also highlighted contactless payment technology at a time when the COVID-19 pandemic was in full swing and the ability to receive referrals. Among the five Salvadorans who knew Chivo but did not download it, the main reason was a preference for using cash. Others said they didn`t trust the system or Bitcoin, they didn`t own a phone with the internet, or the technology was complicated. On June 5, El Salvador`s President Nayib Bukele said that Bitcoin, the first cryptocurrency, would be legal tender in El Salvador. A few days later, the Bitcoin law was passed, which came into effect on September 7. Businesses should accept Bitcoin for all payments. Another advantage was the no-fee transactions. Outside of Chivo, Bitcoin transactions can incur high fees.

When using a Bitcoin ATM, a fee of up to 20% of the transaction amount may be incurred. But with Chivo, there are no fees for transactions, bitcoin to dollar conversions, and chivo ATM withdrawals. Meanwhile, Bukele is no less optimistic about Bitcoin. He regularly boasts on Twitter of buying Bitcoin with government funds – to date, the government has acquired more than 1,000 Bitcoins. But since it peaked at nearly $69,000 in early November, the price of a single bitcoin has fallen, falling nearly 50 percent in late January, reducing the value of the country`s bitcoin holdings by tens of millions of dollars. Bukele may well fall victim to one of the main reasons why governments tend to shy away from Bitcoin: its volatility. A year ago, El Salvador was the first country to have bitcoin as legal tender – alongside the US dollar, which the Central American country introduced in 2001 to replace its own currency, the Colón. A recent survey by the Universidad Centroamericana José Simeón Cañas, a Jesuit college based in El Salvador, found that 67.9% of people disagreed with the decision to make Bitcoin legal. Many respondents said they didn`t know how to use cryptocurrency, according to the survey. Salvadoran government officials have repeatedly claimed that accepting Bitcoin will be completely optional, and a number of other times that it will be mandatory.

Article 7 of the Bitcoin Act, which makes the acceptance of Bitcoin mandatory, has remained in force. In January, the IMF called on El Salvador to reverse Bitcoin`s legal lender status due to “major risks to financial and market integrity, financial stability, and consumer protection.” .

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