El Salvador is the first country to recognize bitcoin as legal tender.
Nayib Bukele, the country’s president, hailed the move as a historic step toward financial inclusion and economic growth for the impoverished Central American nation. On Wednesday, the legislature, which Bukele controls, passed the bill with 62 of 84 possible votes. “History!” wrote the 39-year-old authoritarian leader on Twitter.
As a result, the country is the first to adopt a cryptocurrency for everyday use.
Late Tuesday, lawmakers in the Central American country’s Congress passed a bill that will eventually allow the notoriously volatile digital currency to be used for many aspects of daily life, from property purchases to tax contributions.
President Nayib Bukele tweeted after the vote, “The #BitcoinLaw has just been approved by a qualified majority” in the legislative assembly.
“History!” exclaimed the president.
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A majority of 62 out of 84 lawmakers, according to the 39-year-old leader, approved the bill, which he proposed just last week.
The law was passed with the support of Bukele’s allies, despite the refusal of minority opposition parties, who had criticized the speed of the vote, to support it.
Cryptocurrencies have grown in popularity due to their use as a store of value, the relative anonymity they provide users, and wild price fluctuations that provide opportunities for greater profits than investing on the world’s regular stock exchanges.
The volatility of bitcoin — which is currently valued at $33,814 — as well as its ambiguous legal status have raised concerns about whether it will ever be able to replace traditional currency in day-to-day transactions.
However, El Salvador, a small country where four out of ten people live in poverty, has turned to the top crypto asset backed by billionaires such as Elon Musk.
El Salvador’s primary currency is the US dollar, and it is unclear how the country intends to implement bitcoin as a working currency.
Nonetheless, El Salvador’s president has praised virtual currency as the “fastest growing way to transfer” billions of dollars in remittances and prevent millions from being lost to intermediaries.
Remittances from Salvadorans working abroad account for a sizable portion of the economy, accounting for roughly 22 percent of GDP.
According to official figures, remittances to the country totaled $5.9 billion in 2020.
Prior to the vote, Bukele stated that the cryptocurrency would bring the country “financial inclusion, investment, tourism, innovation, and economic development.”
“This is a law that will put El Salvador on the map; we will be more appealing for foreign investment,” Romeo Auerbach, deputy of the Grand Alliance for National Unity, a Bukele ally, said.
According to the Coinmarketcap page, the cryptocurrency market had grown to more than $2.5 trillion by the middle of last month, driven by increased interest from Wall Street to Silicon Valley.
Bitcoin’s price increased nearly 800 percent between the beginning of 2020 and a peak in mid-April of $64,870.
However, the cryptocurrency’s value has dropped by more than half since then.
Its value has plummeted sharply toward a symbolic $30,000 mark that it has not crossed since January, dragging other cryptocurrencies with it.
The price increased by more than 5% following the vote on Tuesday.