World first move by President Nayib Bukele, after Bitcoin is passed as a legal tender in the South American country of El Salvador
The South American country of El Salvador has become the first country in the world to accept Bitcoin as legal tender.
The move happened after that country’s legislator approved President Nayib Bukele’s proposal to embrace the cryptocurrency.
The move was driven by President Bukele, who some regard as a controversial figure after his administration and officials faced accusations of alleged corruption and graft.
In May for example, the United States reportedly named five of Bukele’s ministers and aides as being corrupt and diverted foreign aid funds away from the country’s government institutions, instead to local civil society groups.
It should be noted that President Bukele had introduced the bill to the Legislative Assembly last week on 5 June.
On Wednesday the Legislative Assembly of El Salvador voted to pass a bill that declared Bitcoin, the world’s largest cryptocurrency by market capitalisation, as legal tender.
The populist President Bukele had championed the move as a way to help low income countries like El Salvador move from a largely cash economy, to a digital economy, where a person’s bank account is essentially their smartphone.
It should be noted that roughly 70 percent of people in El Salvador do not have bank accounts or credit cards. The country replaced its its local currency, the colón, with the US dollar in 2001.
Historically the country had a mostly agriculture-based economy, but it has been riven chronic political and economic instability including coups. It continues to struggle with high rates of poverty, inequality, and gang-related violent crime.
Nowadays remittances account for more than 20 percent of El Salvador’s GDP, and incumbent services can charge 10 percent or more in fees for international transfers that take days to arrive and must be collected from a physical location.