El Salvador is the first country to have legalized cryptocurrency
El Salvador has passed a resolution legalizing Bitcoin, making it the first country to do so. Citizens will be able to use Bitcoin for a variety of purposes, including paying taxes and repaying debts, as well as purchasing goods and services. President Nayib Bukele has defended the move as a way to assist those without access to banks and those wishing to send money back to the country from abroad, but critics fear it will be more show than substance.
El Salvador's congress approved the proposal on Tuesday night, following Bukele's announcement at a Bitcoin conference in Miami last week. It wasn't a close vote, with 62 of 84 legislators voting in favor, but it's worth noting that Bukele wields considerable political clout in the country — his party controls a majority of the congress, allowing him to seize control of much of the government earlier this year.
While Bitcoin will become the official currency of El Salvador in less than three months, it will not be the only currency — the US dollar, which was previously the country's sole currency, will remain an option, though Bukele stated to Cryptonews that he wanted the country's citizens to think about money in terms of Bitcoin, not dollars. Citizens should be able to convert between the two currencies at any time, and US dollars will be used as the accounting reference currency.
According to The Guardian, some human rights organizations focused on Central America are skeptical that Bitcoin's adoption will result in meaningful change for the country's many citizens. One concern is that the country's poorest citizens will lack access to the technology necessary to use and store Bitcoin. While the law requires merchants and service providers to accept Bitcoin, it makes an exception for those without access to the technology. The law does state, however, that the government will "promote the necessary training and mechanisms" to enable the general public to use Bitcoin.
Currently, the country is not a significant hub for Bitcoin mining — according to University of Cambridge estimates, it is not even in the top ten. Indeed, El Salvador contributes 0.00 percent of the global computing power dedicated to Bitcoin, according to the university's map. Bukele, on the other hand, may be looking to change that — he recently tweeted that the state-owned electric company has been directed to provide cheap electricity for mining via volcanoes (no, this is not a joke).