Back in June, the government of El Salvador proposed and passed a law which would see bitcoin become legal tender in the country. The law has since come into effect on Tuesday where the country’s government also purchased 400 bitcoins which was valued at around $20.9 million.
With this new law coming into effect, it essentially makes El Salvador the first country in the world to recognize bitcoin as legal tender. For those unfamiliar, legal tender means that this is a form of money that the law recognizes as a form of payment, such as actual cash. Why this is important is because prior to this, bitcoin and other forms of cryptocurrency were only accepted by some places.
By making it officially recognized as legal tender, it means that those living in the country can pay for goods and services using bitcoin. However, while it is an interesting idea, some have questioned the government’s decision. This is because cryptocurrency like bitcoin has been known to fluctuate wildly.
This means that the 400 bitcoins the country purchased might not be as valuable tomorrow as it is today. Also, a survey conducted by the Central American University found that 70% off Salvadorans disagreed with the decision, with many expressing that they weren’t sure on how to use the digital currency.