El Salvador on Tuesday (Sept 7 2021) became the first country to adopt bitcoin as legal tender. The change means businesses should accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender. President Nayib Bukele, who has pushed for adopting the cryptocurrency, said:
“We must break the paradigms of the past. El Salvador has the right to advance towards the first world.”
The government is installing more than 200 bitcoin teller machines, some guarded by soldiers to prevent possible arson by opponents. And Bukele has promised $30 for each citizen who adopts the currency.
What is legal tender?
Legal tender refers to money – typically coins and banknotes – that must be accepted if offered in payment of a debt.
Do merchants have to accept legal tender?
But despite the definition above, legal tender doesn’t mean all businesses must accept it in payment for a good or service.
There is clearly some confusion in El Salvador over the issue, however. Its original bitcoin law, passed in June 2021, states that “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.”
Why did El Salvador make bitcoin legal tender?
El Salvador is betting that being the first to open its doors completely to bitcoin will help boost its economy.
President Bukele said he believes this will encourage investors with cryptocurrency to spend more of it in his country. He even has a plan to have El Salvador’s state-run geothermal utility use energy from the country’s volcanoes to mine bitcoin.
Creating, or mining, bitcoin takes energy to provide the required decentralization and security of the world blockchain.
Enjoy and good luck – El Salvador.
