El Salvador president Nayib Bukele introducing a bill to recognize Bitcoin as legal tender alongside the US dollar. According to CNBC, this will make it the world’s first sovereign nation to formally accept cryptocurrency as legal money.
In a video broadcast to Bitcoin 2021, President Nayib Bukele announced the country’s partnership with digital wallet firm Strike. The partnership will build the country’s modern financial infrastructure using bitcoin technology. Bitcoin 2021, a multiday conference in Miami is the most significant bitcoin event in history. Adopting natively digital currency as legal tender provides El Salvador most secure, efficient, and globally integrated open payment network in the world.
“Next week I will send to Congress a bill that will make bitcoin a legal tender,” said Nayib Bukele.
Lightning Network payments platform, Strike’s founder and CEO Jack Mallers called the announcement “shot heard ’round the world for bitcoin.”
Mallers continued that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from the potential shock of fiat currency inflation.
Why El Salvador is Adopting Bitcoin?
El Salvador is the biggest cash economy, where about 70% of people do not have bank accounts and credit cards. Remittances account for more than 20% of its GDP. Incumbent services can charge 10% or more in fees for those international transfers. Adopting Bitcoin and other cryptocurrencies could make those transfers more practical and immediate.
Bukele’s New Ideas party has control over the country’s legislative, so the passage of the bill is very likely.
“It was an inevitability, but here already: the first country on track to make bitcoin legal tender,” stated Adam Back, CEO of Blockstream. Back said he plans to contribute technologies like liquid and satellite infrastructure to make the El Salvador model for the world.
“We’re pleased to help El Salvador on its journey towards adoption of Bitcoin standards,” he said.
In March, Strike launched its mobile payment app there and it quickly became the number one downloaded app in the country. The vision of the company to build a more connected financial world by making the bitcoin network easily accessible.
Most of the world’s central banks are looking into the possibility of creating their own digital currencies. Recently, China’s ex-tech head of CBDC discussed the possibility of CBDC operating on Ethreum and Diem.