06 Sep 2021
Today, bitcoin becomes legal tender in El Salvador
Today, September 7th, bitcoin is introduced as legal tender in El Salvador. To incentivize adoption and learning, El Salvador will airdrop $30 worth of BTC to every Salvadorian downloading the Chivo Wallet.
Today is a historic day for bitcoin as El Salvador will become the first country ever to implement bitcoin as legal tender. El Salvador’s president Nayib Bukele has already confirmed that the country has purchased 400 BTC, but the incentive system from the government-supported Chivo app will require further bitcoin purchases onwards.El Salvador has explained this move by pointing to two major reasons. The first of which is the high dependency on remittances in the country and the current inefficiencies involved with remittances. According to the World Bank, remittances made up a whopping 24% of El Salvador's entire gross domestic product (GDP). Fixed-fee crypto remittances may be faster and cheaper than existing alternatives, which can be costly and time-consuming. Second, El Salvador seeks to attract new businesses to the country and aims to position itself as a crypto-friendly hub.The legal tender decision has been a hotly debated topic both within El Salvador and outside of the country. The IMF has raised concerns, and within the country, there have been protests against the bill. Some polls ran within El Salvador suggest that many El Salvadorians are skeptical towards bitcoin and the bill and have little knowledge about bitcoin.Nevertheless, through the Chivo app, El Salvador will give away $30 to each and every registered El Salvadorian user of the app to incentivize usage. Assuming the entire adult population of more than 4 million El Salvadorians register on Chivo and receives BTC worth $30, this will translate to 2366 BTC paid out to Salvadorans.According to DataReportal, only 50.5% of Salvadorans have internet access, equalling approximately 2.2 million adults. Assuming all these adults register on Chivo, 1301 BTC will be paid out to the country’s inhabitants. To circumvent the limited Internet access, El Salvador will roll out bitcoin ATMs throughout the country where others may buy or sell bitcoins for dollars.Roughly 70% of all Salvadorans do not have a bank account. If the unbanked population stays away from the Chivo app but the rest registers, approximately 1.2 million Salvadorans will receive $30 worth of bitcoin, in sum equalling about 710 BTC at current prices.