The Central American country of El Salvador made a tremendous change to its economy on Tuesday as it has become the first country in the world to accept Bitcoin as a legal tender. This means that citizens of El Salvador can use Bitcoin to purchase just about any commodity that would otherwise require a U.S. dollar after the nation adopted the U.S. dollar as its national currency in 2001.
The El Salvador government is assisting in the adoption of Bitcoin by installing more than 200 Bitcoin ATMs as well as the release of the government-run app Chivo wallet, unfortunately, the app faced some delays and resulted in Apple and Google being unable to release the app on their app stores. Business owners may have some issues in regard to the quite surprising and extremely fast adoption of Bitcoin. Mr. Hasbún, a small business owner, stated that “If a client comes to pay with bitcoin, I’m not ready. We could have ridden the wave in a positive way, but the way the law was imposed wasn’t positive.”
Critics of El Salvador’s decision to adopt Bitcoin as a national currency argue that El Salvador “is [essentially] betting more than $200 million in a virtual casino, and that’s taxpayer money,” said Ricardo Castañeda, senior economist at the Central American Institute for Fiscal Studies, a think tank. This argument comes out of the fear that the volatile currency and its sharp fluctuations could result in a significant loss of tax revenue for the entire country. Bitcoin dropped below $43,000 upon the news of the poorly executed rollout.