Bitcoin is the most famous digital currency that was founded in January 2009 and is based on the concepts of the mysterious and pseudonymous Satoshi Nakamoto, who laid out his ideas in a whitepaper. It also promises reduced transaction fees than standard online payment methods, and unlike government-issued currencies, it is not subject to government regulation, operated by a decentralized authority. However, offering a new era for bitcoin, El Salvador has officially become the first nation to accept bitcoin as a legal tender. Regarding the use of the often volatile currency has turned the Central American country into the first experiment. That is increasing day by day among many investors and explorers all over the world. Yet, the country’s principal unit of exchange will remain the US dollar.
When El Salvador announced the move, bitcoin’s price fell speedily. They were recovering vaguely by early afternoon on Tuesday. Between the US dollar and that country’s monetary unit, the colon, EL Salvador’s law of monetary integration set a fixed rate of exchange in 2001. Yet, the colon is no longer in circulation and technically remains its legal tender. Furthermore, the colon is rarely used now.
El Salvador Accept Bitcoin with Novelness
El Salvador is the first country who accept bitcoin, and bitcoin has joined the US dollar as a legal tender in El Salvador. Experts are saying that adopting bitcoin will cause an increase in money laundering and other illegal activities. Most Salvadorans are dubious, and they want the new bitcoin law repeated. The country’s president expecting this to prod remittances from abroad and boost the economy.
The Salvadoran government will contribute 150 million dollars to trust to help dollar conversions. The new law needs all businesses to adopt bitcoin as payment. Moreover, the government has developed a digital wallet called CHIVO, which is a Salvadoran slang word for cool, and it will give 30 dollars bitcoin bonus to people who will download it. From 200 ATMs and 50 other locations, Salvadorans will be able to withdraw funds in cash.
Criticisms Behind the Scene.
Many financial critics are dubious regarding El Salvador’s move to bitcoin. They are saying that cryptocurrencies such as bitcoin are highly fraught. Jaime Reusche warned that having risky exchange rate volatility was what was trying to be avoided when El Salvador adopted the dollar. This clearly has no exemplar. Taxi driver Daniel Hercules was commenting on the volatility of bitcoin; According to him, it was one of the things that made him worried the most.
Furthermore, only 3 percent of Salvadorans use the internet. A large amount of people lives below the poverty line. Surveyors indicated that they have little intention of using bitcoin. In the second survey, more than only two-third wanted the bitcoin law to rescind.
Salvadoran government adopted a digital currency that was designed in large part to skirt the traditional controls that the government practice over money. Some respondents see a weird irony in this decision. Others worry that El Salvador is being used as a test subject to advance the agenda of cryptocurrency promoters.
The international monetary fund (IMF) and world bank see the acceptance of bitcoin by El Salvador, which is potentially making the country a prime destination for money laundering and other illegal financial activities. The IMF warned in a blog post, adding, “ without robust anti-money laundering and combating the financing of terrorism measure, crypto-assets can be used to launder ill-gotten money, fund terrorism and evade taxes. Furthermore, this could pose risks to a country’s financial system, fiscal balance, and relationships with foreign countries and correspondents banks.’’