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El Salvador Officially Adopts Bitcoin as Legal Tender, BTC at $51K

UTC by Tolu Ajiboye · 4 min read
El Salvador Officially Adopts Bitcoin as Legal Tender, BTC at $51K
Photo: Nayib Bukele / Facebook

There are a few key things to also watch out for in Bitcoin this week. The asset passed the $51,000 barrier after multiple attempts to break through $50,000.

The Republic of El Salvador is now the first country to officially adopt Bitcoin as legal tender. The digital currency is now accepted as a means of exchange in the Central American country, alongside the US dollar. This means that residents can now use BTC to shop, pay taxes, and buy land in the nation. However, El Salvador’s decision to start using Bitcoin as a mainstream form of transacting came under some dissuasion. 

The International Monetary Fund (IMF) and other key global finance bodies initially tried to point out the nation’s apparent risk. However, El Salvador’s president, Nayib Bukele, remained resolute, and the country moved ahead as intended. 

Some observers of the international community are skeptical and see this decision as a form of experiment. According to Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation:

 “As El Salvador takes a massive technological jump into the financial future, before any other country, there are bound to be mishaps”.

Gladstein says that the El Salvadoran adoption of BTC is noteworthy, considering the Central American country’s political issues. He however pointed out that there might be inherent personal benefits of BTC adoption available to Salvadorans. In Gladstein’s own words:

“For Salvadorans who are open-minded and willing to put in work to understand Bitcoin, it could yield enormous fruits.”

General Opinion Remains  Divided on El Salvador Adoption of Bitcoin as Legal Tender

Further opinions among the generality are polar on whether this new mandate will leave El Salvador better off or worse. Proponents of the adoption argue that it will reduce the fees local citizens pay to send home remittances. El Salvadoran home remittances currently represent one-quarter of the nation’s GDP. Furthermore, there is also the advantage of financial inclusion for those without bank accounts and access to high-yielding assets as other benefits.

Conversely, others say that El Salvador rushed the decision and that it could render financially vulnerable citizens poorer. They emphasize Bitcoin’s volatility, stating that this might happen if the price of BTC crashes. In addition, those who are against BTC adoption cite increased economic stability risks as potential pitfalls for El Salvador. Finally, they also say it could raise costs for banks and insurers and provide a cover for money launderers.

El Salvador’s Legislative Assembly Recently Approved $150 Million Bitcoin

The government of El Salvador last week approved a motion to create a $150 million Bitcoin Trust. Furthermore, the nation is also looking to support crypto infrastructure and services across the country. 64 members of the El Salvadoran legislature voted in favor of the said bill, and 14 opposed it. Part of the nation’s $500-million-dollar loan with the Central American Bank for Economic Integration (CABEI) will finance the $150 million initiative.

Out of those funds, $23.3 million will cover the installation of government-backed crypto ATMs. This will allow local citizens to exchange BTC and US dollars. Also, $30 million will go to offer incentives to encourage the adoption of Chivo, the government’s digital wallet. ]In addition, every adult citizen who downloads Chivo will receive $30 worth of BTC. However, the available designated funds may not cover the 6.5 million current El Salvadoran population. So, this may mean either the government anticipates a low adoption of Chivo, or may increase the total available funds.  

Bitcoin This Week

There are a few key things to also watch out for in Bitcoin this week. The asset passed the $51,000 barrier after multiple attempts to break through $50,000. The question remains whether BTC can hold and maybe consolidate this new position. According to analyst William Clemente, the next target might be $54,000. 

BTC is well on track to record a fourth consecutive increase. Possible reasons include fundamental support received, strong mining activity, and increased hardware resources from active miners as they boost the network’s hash rate.

Also, the stock-to-flow model that puts Bitcoin at $100,000 by Christmas is one to look out for. Creator PlanB was spot on with his August $47,000 close, making the model one of the most accurate predictions for the asset. He is still adamant that BTC will double in value within the next three months.

As of press time, Bitcoin is trading at $51,383.

Bitcoin News, Cryptocurrency news, News
Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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