Since El Salvador's recent decision to make Bitcoin legal tender, the International Monetary Fund is following the situation closely. It's a world first for President Nayib Bukele, whose country is the first to make Bitcoin legal tender. Lawmakers in Congress voted overwhelming to adopt the digital currency despite concerns over how the IMF may react since the country is seeking help from the pandemic.
Salvadorans currently use the US dollar as legal tender currency as the nation does not have its own currency. Now the people have a choice. Companies must accept Bitcoin as payment for goods and services now. Bukele stated he thought it would be easier for Salvadorans living abroad to send money home to their families. About 20 percent of El Salvador's GDP is made up of citizens of the country working abroad. The President tweeted, "[Bitcoin]will bring financial inclusion, investment, tourism, innovation and economic development for our country," before the vote.
Cryptocurrency supporters are hoping El Salvador's more will lead to adoption in other countries. In many emerging countries, there are not enough banks to serve the population. It's estimated that 70 percent of Salvadorans don't have access to traditional banking and financial services, such as credit cards or bank accounts. Traditional services take 10 percent or more in fees and can take days to process.
El Salvador is partnering with Strike, a digital wallet company, Strike, to help Salvadorans use bitcoin technology. Strike is built on Bitcoin’s Lightning Network. making them perfectly poised to become the modern financial infrastructure the country needs. Strike is a peer-to-peer app that lets its users send and receive money for free, instantly. It is already the most downloaded app in the country.
Despite the IMF's dire warnings of the volatility of crypto assets, El Salvador is going full steam ahead, even planning for the geothermal energy needs of Bitcoin miners.