Several countries have begun to recognize Bitcoin as legal tender, but El Salvador is one of them. The country is the first in the world to do so. Moreover, it has made a significant effort to use taxpayer dollars to establish a national First Cryptocurrency -wallet and bitcoin ATMs.
But what exactly can you buy with Bitcoin? Here are some examples. And remember to be careful what you wish for! Bitcoin is still very new in El Salvador, but there are many reasons why you should consider using it.
El Salvador Is A Country Where You Can Buy Anything With Bitcoin
The recent crash of cryptocurrency prices has impacted investors worldwide. Still, the rise of Bitcoin in El Salvador has been particularly promising. El Salvador made Bitcoin legal tender nine months ago and encouraged citizens to use the cryptocurrency in everyday transactions.
So whether you want to buy a car, pay bills, or buy groceries, you can purchase almost anything using digital currency. While it’s not as easy as it sounds, the experience is remarkable.
While Bitcoin is a prevalent currency, it’s still not easy to use. Even if it is legal tender, ordinary citizens will still have to convert the prices they pay for items in Bitcoin to their native currencies. For example, in El Salvador, the government has given out $30 in bitcoin to each Salvadoran citizen. The country also requires companies to accept bitcoin or U.S. dollars, which means they can instantly swap the money. In Panama, a congressman has even proposed legislation to follow El Salvador’s lead.
It Is The First Country To Recognize Bitcoin As A Legal Tender
Adopting bitcoin as a legal tender is a major step forward for the digital currency. The country plans to promote mechanisms and training to make it easy for citizens to make purchases and payments in cryptocurrency. Critics say Bitcoin will only encourage money laundering and is not yet safe enough to be used as a legitimate currency.
Business owners, however, should accept bitcoin alongside the U.S. dollar. El Salvador has had the U.S. dollar as its official currency since 2001.
While the U.S. and other countries have yet to adopt bitcoin as their official currency, El Salvador is ahead of the curve. The country is implementing a new law that requires all businesses to accept cryptocurrency as legal tender. The government is also setting up a trust for the currency with $150 million in public funds to facilitate conversions to dollars. The move is a huge step forward for cryptocurrency enthusiasts in El Salvador.
Its Economy Depends Heavily On Remittances
Remittances are the lifeblood of El Salvador’s economy. As a consequence, its unemployment rate has reached close to 20%. Meanwhile, according to Reuters, remittances to El Salvador dropped by 40 percent in April compared to the same month last year.
A similar drop is expected in May, as experts predict a further 20% drop. Remittances are El Salvador’s largest source of foreign exchange, accounting for two out of every 10 dollars that flow to the country.
Remittances from Salvadorans living in the United States are vital to El Salvador’s economy. In 2016, remittances from Salvadorans living in the U.S. were estimated at $4.6 billion, with 90 percent coming from the U.S. population. Despite the country’s long-term dependence on remittances abroad, this growth rate has been sustained.
The adoption of bitcoin by El Salvador’s government has provoked widespread protests. Protesters threw tires on the streets of San Salvador in disdain. Heavy-handed police dispersed the protesters.
El Salvador’s national debt has already topped 50% of its GDP. Recently, Moody’s downgraded the country’s credit rating to Caa1, a risky classification.
Using taxpayers’ funds to develop a cryptocurrency infrastructure would boost the country’s economy. It would ease sending money home from abroad, attract investors, and encourage remittances abroad. But a few questions remain about the fund’s operation. One doubt is whether the government is truly committed to the idea of a national crypto-wallet and bitcoin ATMs.
The adoption of Bitcoin in El Salvador is ambitious and fraught with risk. It will depend on how stable Bitcoin remains since the currency is largely out of El Salvador’s hands. Because it saves them time, big investors always use software like bitcoin trading software to trade in cryptocurrencies.
If the adoption of Bitcoin in El Salvador goes through, it could be a gamble that pays off. Unfortunately, the country is still far away from being able to exploit Bitcoin fully.