El Salvador wants Bitcoin as legal tender

El Salvador wants to be the first country in the world to Bitcoin accept as legal tender. This was announced by the country's president, Nayib Bukele, on Saturday through a video message during the Bitcoin 2021 Conference in Miami. According to the president, this could create new jobs in the short term. It can also provide access to a new way of paying for the people of the country.

As much as 70% of the population of the Central American country does not have a bank account and is therefore dependent on cash or foreign payment services. By accepting Bitcoin as a means of payment, anyone with a mobile phone can make electronic payments.

The government of El Salvador has partnered with the company behind the mobile payment app Strike. Through this app, people can create a Bitcoin wallet and make payments. By using the Lightning network, transaction costs remain low. As a result, it is also possible to settle smaller payments in the cryptocurrency. 

"With the introduction of a pure digital currency as legal tender, El Salvador offers the most secure, efficient and globally integrated open payment network in the world," said Jack Mallers, founder and director of payment app Strike.

Bitcoin as legal tender in El Salvador

The decision to accept Bitcoin as legal tender did not come entirely out of the blue. It also seems to be more than just a publicity stunt. Last year, an investor in the south of El Salvador started a new project called Bitcoin Beach. In two small villages on the coast, the use of Bitcoin as a means of payment was promoted.

Residents and shopkeepers in these villages were helped to set up a circular Bitcoin economy, in which the virtual currency became the primary means of paymentEntered. By using a Lightning network, transaction fees remained low and the virtual currency became a viable alternative to traditional coins and banknotes.

The Central American country not only wants to accept Bitcoin as a means of payment, it would also consider keeping part of its foreign exchange reserves in Bitcoin. This is a remarkable development, given that most countries are putting forward digital central bank money as a successor to cash and as an alternative to cryptocurrencies. Many countries see Bitcoin and other virtual currencies as a threat to their monetary sovereignty, because they cannot control them.

This contribution was made from Geotrendlines