Amidst huge criticisms and recent volatility, Central American country El Salvador has adopted bitcoin as a legal tender, becoming the first country in the world to do so. This came to be after lawmakers in the country’s Congress voted by a supermajority in favour of the Bitcoin Law.
Lawmakers in the country’s Congress voted by a “supermajority” in favour of the Bitcoin Law which received 62 out of 84 of the legislature’s vote.
This development comes not too long after Donald Trump; the former of the United States of America declared Bitcoin as a scam currency that was both valueless and depended on thin air.
Shortly after the vote, the price of bitcoin went up 5% to $34,239.17
The President of the Central American country – Nayib Bukele, earlier on Wednesday, sent the law to Congress for a vote.
The Bitcoin Law adopting the currency as a legal tender read; “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out”.
What the adoption of Bitcoin as a legal tender means is that prices of goods and services can now be set in the biggest cryptocurrency, tax contributions can be paid with the currency, and exchanges in bitcoin will not be subject to capital gains tax.
Bitcoin is the most famous and most used cryptocurrency in the world and has witnessed its fair share of highs and lows, which have made people and analysts criticize the currency. Many people, like Donald Trump and Peter Schiff who said gold was a better alternative to storing wealth and transacting, have declared Bitcoin unsuitable and a sham.
El Salvador’s current official currency is the U.S. dollar. It is still quite some mystery as to how El Salvador will ultimately roll out Bitcoin as legal tender but according to the proposed law, the exchange rate with the U.S. dollar “will be freely established by the market”.
The law also says that the state will “promote the necessary training and mechanisms so that the population can access cryptocurrency transactions.”
According to the Bitcoin Law, about 70% of El Salvador does not have access to traditional financial services, and cryptocurrency is a way to increase financial inclusion.
The Bitcoin Law comes shortly after the Central American country’s President announced last week that El Salvador had struck a partnership with digital wallet company Strike, to build the country’s modern financial infrastructure using the cryptocurrency technology.
Bitcoin has had quite a grass-to-grace story, from being rejected as a means of payment by Tesla out of claims of environmental sustainability to becoming a legal tender in El Salvador.