Bitcoin Now Legal Tender in El Salvador, Marking World First

While the move marks a world-first, El Salvador’s President Nayib Bukele said in a tweet the “bitcoin process” in the country comes with a “learning curve.”

“We must break the paradigms of the past,” Bukele said. “El Salvador has the right to move toward the first world.”

Bukele tweeted on Monday morning, however, that the Chivo digital wallet the government had set up for citizens to use had been temporarily disabled. “The system is offline while the capacity of the servers is being increased,” Bukele tweeted, while asking for “a little bit of patience.”

El Salvador’s legislature passed the law on June 9 by a supermajority, with 62 members voting in favor of the bill, while 19 opposed and three abstained. The crypto officially became legal tender on Tuesday.

Bitcoin’s use coincides with the U.S. dollar, which has been in circulation throughout the country since 2001.

Goods, services, and even taxes can now be paid using the world’s oldest crypto. “Every economic agent” must accept the use of bitcoin as a legal form of payment under the law.

The law has not been without controversy or opposition, with some labelling it as unconstitutional. In June, the International Monetary Fund said El Salvador’s move raised a number of macroeconomic, financial, and legal issues.

Similarly, JPMorgan has suggested El Salvador’s economy could face headwinds, suggesting a potential “limitation” on its use case as a medium of exchange may emerge.

In a show of support, crypto proponents are buying $30 worth of bitcoin to coincide with Salvadorans getting the same amount preloaded onto a government-sanctioned digital wallet.

Of 75,489 votes on MicroStrategy CEO Michael Saylor’s poll, 82% of respondents said they would buy $30 worth of bitcoin.

On Tuesday, presidential legal advisor Javier Argueta confirmed in an interview that it is mandatory to have an electronic wallet to receive payments in bitcoin, despite the fact that the payment may not be received in that cryptocurrency but in dollars.

A day before the law came into effect, El Salvador purchased its first 200 BTC, with Bukele saying the country’s brokers would be buying a lot more.

The price of the world’s largest crypto by market cap is up more than 2.3% over a 24-hour period and is currently changing hands for around $52,600.