El Salvador became the first country in the world to adopt bitcoin as its national currency, allowing people to use a digital wallet to pay for everyday goods.
Bitcoin is a digital currency that has been around for over a decade.
By some estimates, it has a global market capitalization of around $32 billion, just behind the market capitalization of Amazon ($49 billion) and eBay ($37 billion). It also outranks the world’s leading gold ETF, the SPDR Gold Shares GLD, -1.54% that stands at $15.3 billion. Read: What is bitcoin and why is it soaring? El Salvador’s chief of the Central Bank, Ana Lucía Martinez, said on Sunday, “In adopting this instrument, we are joining a long list of countries that use it as a means of payment, and we have done so in a responsible way.” The Central Bank has a long-standing policy of not intervening in the currency markets. El Salvador’s official rate for the U.S. dollar is 9.7865 bolivars.
Bitcoin’s value has been steadily increasing in recent years, and it reached an all-time high in recent weeks.
El Salvador became the first country in the world to adopt bitcoin as its national currency, allowing people to use a digital wallet to pay for everyday goods and services. The decision to create a national cryptocurrency – El Salvador’s central bank announced the move Friday – comes after months of discussions with the private sector, international organisations and the country’s national assembly, which all supported it. At the moment, bitcoin trading is not allowed in El Salvador because it’s not recognised as a legal currency, but the country’s financial regulator plans to study the possibility of legalizing the digital currency in the future.
El Salvador becomes the first country to adopt bitcoin as its national currency.
In a bid to increase financial inclusion and reduce reliance on the US dollar, El Salvador’s Central Bank (CBN) announced on Monday it would allow people to use digital wallets to pay for everyday goods such as bus fares, groceries and rent, reported the Guardian. “This is a victory for El Salvador and for the entire world,” commented Farid Jousif, the head of innovation at El Salvador’s Bank for Credit and Commerce International (Bancaldivo), said in a statement to the Guardian. “We hope other Central American countries will follow.” Bitcoins are a digital currency created by anonymous computer programmers, and since its creation in 2009 the value of one bitcoin has skyrocketed from $0.003 to a staggering $10,300.
What does this mean for the future of cryptocurrencies?
The Salvadorean government is hoping that other countries will follow in its footsteps, but this decision has come with its share of critics. Critics of the currency argue that bitcoin is a bubble ready to burst, but not everyone thinks so. Dave Hudson, founder of DaveCoins.com and DaveCoin.com, a cryptocurrency news and information portal, believes that the move by El Salvador will make other countries interested in the crypto market more likely to implement the currency. “A country like El Salvador will generate tremendous excitement within the cryptocurrency industry, and it will put cryptocurrency on the map around the world,” he said.