El Salvador could become the first county to officially make Bitcoin as a legal tender, Salvadorian President Nayib Bukele announced in a video recording shown during the Bitcoin 2021 conference held in Miami.
“Next week I will send to congress a bill that will make Bitcoin a legal tender,” Bukele said.
Mr Bukele, a 39-year-old, right-wing populist who came to power in 2019, has a strong majority of 56 out of 84 seats since a landslide victory in legislative elections last March. With that majority in hand, the passage of the bill is possible.
Mr Bukele said El Salvador partnered with digital finance company Strike to set up the logistics of the decision.
“Over 70 per cent of the active population of El Salvador doesn’t have a bank account. They’re not in the financial system,” Strike CEO Jack Mallers said.
“They asked me to help write a plan and that they viewed Bitcoin as a world-class currency and that we needed to put together a Bitcoin plan to help these people.”
As of now, El Salvador uses the US dollar as its official currency.
Future of digital currencies
Although central banks around the world have positively reacted to Bitcoin , they have been hesitant to embrace cryptocurrencies due to their extreme volatility.
Bitcoin, for example, crashed by more than half its value on several occasions this year following rocketing to a record high above US$60,000.
Other, more thinly traded cryptocurrencies are even more volatile, trading up and down — often based on speculation or meme tweets from Tesla CEO Elon Musk.
But, crypto’s rise in popularity has led the Federal Reserve to reconsider the old-fashioned dollar’s limitations — specially making payments and money transfers that could take days to accomplish.
The legalisation of cryptocurrency as a tender is a seminal development in the field and would affect the trading blocs like EU and Commonwealth of Nations and facilitate speed and secure intra-regional as well as international trade.
