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El Salvador will become the first country in the world to adopt bitcoin as legal tender

El Salvador will become the first country in the world to adopt bitcoin

June 8, 2021: -El Salvador wants to introduce legislation that will make it the world’s first sovereign nation to adopt bitcoin as legal tender, with the U.S. dollar.

In a video broadcast to Bitcoin 2021, a multiday conference in Miami being billed as the most significant bitcoin event in history, President Nayib Bukele announced El Salvador’s partnership with digital wallet company, Strike to build the modern financial infrastructure of the country using bitcoin technology.

“Next week, I will send to Congress a bill that makes bitcoin a legal tender,” Bukele added.

Jack Mallers, founder of the Lightning Network payments platform Strike, said this would go down as the “shot heard ’round the world for bitcoin.”

“What’s transformative here is that bitcoin is the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provided a way to protect developing economies from potential shocks of fiat currency inflation,” continued Miller.

Mallers said the move would unleash the power and potential of bitcoin for the daily use cases on an open network that benefits individuals, businesses, and public sector services.

El Salvador is a predominantly cash economy, where roughly 70% do not have bank accounts or credit cards. Remittances, or the money sent home by migrants, accounting for above 20% of El Salvador’s gross domestic product. Incumbent services will charge more than 10% in fees for those international transfers, which can sometimes take days to arrive and sometimes require a physical pick-up.

An asset doesn’t back Bitcoin, nor does it have the full faith and backing of any government. Instead, its value is derived, in part, from the fact that it is digitally scarce; there will ever be 21 million bitcoin in existence.

While details are forthcoming about how the rollout will work, CNBC is told that El Salvador has assembled a bitcoin team to help build a new financial ecosystem with bitcoin as the base layer.

New Ideas party of Bukele has control over the country’s Legislative Assembly, so the bill’s passage is very likely.

“It was an inevitability, but here already: the first country on track to make bitcoin legal tender,” said Adam Back, CEO of Blockstream.

Back said he is planning to contribute technologies such as Liquid and satellite infrastructure to make El Salvador a model for the world.

“We’re pleased to help El Salvador on its journey towards adoption of The Bitcoin Standard,” he added.

This is not El Salvador’s first move in the bitcoin. In March, Strike launched its mobile payments app there, and it became the number one downloaded app in the country.

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