At a Bitcoin conference held in Miami this past Saturday, the president of El Salvador announced it: he wants Bitcoin as legal tender. He indicated that this next week he will send a proposal to Congress. If it goes ahead, El Salvador will be the first country in the world to accept Bitcoin as legal tender.
Nayib Bukele, President of El Salvador, announced the initiative through a recorded video that was played at the Bitcoin conference in Miami. He said that this has short, medium and long term benefits. According to the statement:
“In the short term, this will create jobs and help provide financial inclusion to thousands outside of the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a little in the right direction.”
Nayib Bukele and his political party have an absolute majority in El Salvador, with an approval rating of more than 90% right now. This makes it difficult for their legislative proposals not to be approved by congress. If the proposal is sent to congress this next week, perhaps in a few months Bitcoin will be the default currency in the Central American country.
The (particular) dependence on the United States
Currently the US dollar is the legal tender in El Salvador. Considering that a quarter of the country’s citizens live or work in the United States, a huge amount of money comes to the country from the United States. This makes the country directly dependent on the United States.
Last year, even with the pandemic, more than $ 6 billion was sent from the United States to El Salvador. In messages on Twitter the president has indicated that with Bitcoin it could be “the fastest growing way to transfer 6 billion dollars a year in remittances.”
The president of the country also explains that much of the money that comes from the United States is often lost through intermediaries. With Bitcoin the amount received is maintained and “will improve the lives and future of millions.” It also adds that it is “a way to make the country’s economy grow, providing access to credit, savings, investment and secure transactions.”
Finally, the president has also opened the doors for entrepreneurs to turn El Salvador into a kind of crypto paradise. It says the country has no property taxes, no tax on Bitcoin earnings, and immediate permanent residence for crypto entrepreneurs.