El Salvador adopts bitcoin as legal tender

El Salvador has adopted Bitcoin as legal tender, making it the first country in the world to do so.

Businesses will be legally obligated to accept the currency for all goods and services, and it will also be used for taxes.

Citizens of the Central American nation are generally critical of the move according to a poll by JP Morgan.

Over half - 54 per cent - of Salvadorans said the law was “not at all correct”, 24 per cent felt the law was “only a little correct”, and just 20 per cent were in favour of it.

Public awareness of cryptocurrency is also quite low in El Salvador; 46 per cent of respondents to the US bank’s poll said they knew "nothing" about bitcoin, while almost 65 per cent said they would not be open to being paid in the cryptocurrency.

President Nayib Bukele has said the law will improve financial inclusion, investment, tourism, innovation, and economic development.

Bukele has also argued for Bitcoin adoption to facilitate remittance payments to the country - which are large part of the nation’s income - claiming it will help avoid the fees transfer vendors charge.

In 2019, The World Bank estimated the total value of these remittances nearly at $6 billion - around a fifth of GDP - one of the highest ratios worldwide.

However, use of the cryptocurrency will remain optional, and El Salvador’s current currency the US dollar will continue to be used for salaries and pensions.

El Salvador has used the US dollar since 2001, when it replaced the Salvadoran colon.

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