El Salvador Buys 550 Bitcoins, Officially Adopts the Crypto as Legal Tender

El Salvador President Nayib Bukele said he plans to spend more than $225 million for the country’s adoption of bitcoin.

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key takeaways

key takeaways

  • Bitcoin holders globally shared support for the country on Tuesday by advocating for users to buy $30 of bitcoin, to match the $30 given to Salvadorans
  • But the positive movement faced opposite results as bitcoin fell 10.3% on the day to about $47,000 as of 12:30 pm ET, after hefty liquidations of about 2.87 billion in cryptocurrency occurred in the past four hours

Tuesday marks the official beginning of El Salvador adopting bitcoin as its national legal tender alongside the US dollar. Now, Salvadorans can use bitcoin to pay taxes, rent and lunch at McDonalds while also receiving a paycheck in the cryptocurrency. 

The 40-year-old President of El Salvador Nayib Bukele shared on Tuesday that the country was off to a bumpy start with the roll out of bitcoin across the country as Chivo, the official wallet of the government for bitcoin and dollar purchases, faced technical difficulties. 

Bukele said he plans to spend more than $225 million for the country’s adoption of bitcoin and is giving $30 worth of bitcoin to individuals who download and use Chivo. With that, the government-owned wallet went offline temporarily as the capacity of the servers was being increased from its current levels, indicating that many citizens were trying to onboard.

Separately, the El Salvador government bought 400 bitcoins on Monday and an additional 150 bitcoins on Tuesday as the cryptocurrency market dipped, bringing its total holding to 550 bitcoins at the time of publication. 

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As with all innovation, the process of implementing bitcoin will have a learning curve and can take more than a day or even a month to roll out, Bukele tweeted in Spanish. “But we must break the paradigms of the past. El Salvador has the right to advance towards the first world,” he added. 

Bitcoin holders globally shared support for the country on Tuesday by advocating for users to buy $30 of bitcoin, to match the $30 given to Salvadorans. But the positive movement faced opposite results as bitcoin fell 10.3% on the day to about $47,000 as of 12:30 pm ET, after hefty liquidations of about 2.87 billion in cryptocurrency occurred in the past four hours. 

Crypto proposals in Panama 

While El Salvador makes its adoption of bitcoin official, other Latin American countries like Panama are also making moves to accept cryptocurrencies, too. 

A Panamanian Congressman Gabrial Silva tweeted Monday that he was presenting “The Crypto Law” to make Panama “compatible with blockchain, crypto assets, and the internet.” The law has the potential to create jobs, attract investment and bring transparency, he added. The proposed law would promote the use of blockchain in public administration to make processes more transparent and efficient, it said. 

In the past politicians from Brazil, Paraguay, Argentina and Mexico and other countries have expressed interest and support for the cryptocurrency, Blockworks previously reported.

While the Panama-based proposal is a step toward crypto adoption for the country, it is not the same as El Salvador’s implementation of bitcoin as legal currency. The proposed crypto bill does not aim to require bitcoin adoption across the nation in businesses like El Salvador, but calls for the allowance of cryptocurrencies to be accepted for taxes, fees and other payments in Panama. Additionally, the law aims to provide legal, regulatory and fiscal certainty to the use of crypto assets, but the use of cryptocurrencies would be optional, not mandatory, it said. 

In July, JPMorgan put out a report stating that El Salvador’s approval of bitcoin as a legal tender could create issues for the Central American nation’s economy and the digital asset. According to the document, JPMorgan cited illiquidity, high volatility, and U.S. dollar conversion as obstacles for bitcoin as a medium of exchange and questioned the illiquidities tied to bitcoin.

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