It was on Sep 15, 1821, El-Salvador signed the Act of Independence of Central America, declaring independence from the Spanish Empire. And nearly 200 years later, the country adopts Bitcoin declaring independence from the fiat hegemony.
The El-Salvador government with a huge majority passed a bill to accept BTC as a legal tender, the current national currency way back in June. And today, the country is all set to transform the bill into law. All entities in the country will now have to oblige the law in accepting BTC as a payment mode for goods and services. Moreover, it is to note that the use of BTC is not mandatory.
Why Did El-Salvador Legalize BTC As A Legal Tender?
El-Salvador receives a good chunk of its economy from remittances, last year alone remittances attributed to almost $6 billion. Which is about 23% of its GDP, now that is one of the highest ratios in the world. Citizens will save around $400 million that is spent annually in commissions for remittances, most of which are sent from the U.S.
Implementation of BTC as a legal tender will reduce the cost of remittances, to a greater extent. Moreover, the business of remittances relies on the electronic transfer of funds through commercial bank’s payment systems, and banks charge hefty charges for the use of their infrastructure. Moreover, a significant number of citizens are unbanked.
The use of BTC will enhance the power of purchasing to a greater extent while boosting the import of goods and services. With a newer model of payment coming into place, citizens will find newer employment opportunities in their region. Bitcoin being globally recognized, El-Salvador will see a major boost in foreign trade, investments, and migration.
Moreover, it is known to the masses that BTC will act as an inflation hedge, reduce the nation’s debt, counter shortcomings of FIAT, and will encourage more businesses to follow blockchain technology. Over time acceptance will penetrate in masses.
How Is The Nation Preparing For The Big Move?
El-Salvador is readying itself for the big move, by incorporating necessary changes in its system. The country has set up 200 Bitcoin ATMs and 50 kiosks. BTC adoption will get an initial boost from the government’s BTC wallet “Chivo”. This comes pre-loaded with $30 worth of the currency for users who register with a Salvadoran national ID number.
The finance ministry of El-Salvador has created a $150 million fund at the state-run bank “Banco de Desarrollo de la República de El Salvador”, Bandesal, to back the transactions. The country has also proposed the idea of implementing Bitcoin mining, using renewable energy from volcanoes.
El-Salvador has bought 200 bitcoins ahead of the BTC legalization, and the country now holds about 400 BTC’s. The country will be buying a lot more coins. El-Salvador is the first country to buy BTC, implement BTC as a legal tender, and give BTC to its citizens.
Bitcoiners Look No Further!
El-Salvador President Nayib Bukele has listed the perks for the people who wish to settle in their territory. The individuals who wish to carry out crypto-related business are entitled to the following,
- Great weather, world-class surfing beaches, beachfront properties up for sale.
- No taxes on properties.
- No capital gains tax on Bitcoin, as it is a legal currency.
- Immediate permanent residence for crypto entrepreneurs.
In conclusion, El-Salvador is all geared up for its economic development. The perks are drool-worthy for any crypto enthusiast. We can expect more countries to join the league. El-Salvador’s adoption of Bitcoin might turn pivotal in the mass acceptance of cryptocurrencies across the globe.