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Salvadoran President Nayib Bukele has offered to give $ 30 in Bitcoin to all citizens who decide to download the government BTC wallet called Chivo, which is cool slang in the Central American nation.
The country’s authorities are thus trying to encourage people to use cryptocurrency in order to minimize the use of the US dollar.
People will be able to download Chivo just by using their phone number and ID number. From September 7, Bitcoin will become legal tender in this country and Bukele hopes this could attract a lot of investment and improve the purchasing power of citizens.
He also added that dollar bank accounts will remain in dollars, along with salaries and pensions.
Why create this law? Because Bitcoin has a market capitalization of $ 600 billion in the world and if we do that, investors and tourists who own Bitcoin will come to the country and benefit Salvadorans and the economy, he said.
He also added that there are positive and negative sides to printing money. Yet, since Salvadorans use the US dollar as legal tender, they feel no positive side to printing money in the United States.
However, what they feel is the negative influence of such an impression which leads to inflation. In times of inflation and, therefore, recession, people tend to turn their investments to other assets such as real estate, precious metals or, in this case, cryptocurrency.
Bukele explained that consumers will be able to pay businesses with Bitcoin from their wallets for items listed in dollars. However, if business owners want to receive USD, there is a button in the Chivo app that turns Bitcoin into dollars.
El Salvador is the first country in the world to start accepting Bitcoin as legal tender and therefore anyone doing business in the country will be forced to accept it. However, a private citizen has the option of choosing whether or not to accept Bitcoin. Yet, knowing that the minimum wage in the country is around $ 430 (but starts from $ 103), there is a reasonable belief that many people will accept BTC.
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Not everyone is happy with this solution. According to Fitch Ratings, this adoption could increase the need for local banks to strengthen their anti-money laundering (AML) and terrorist financing standards. Fitch Ratings said Salvadoran banks are not ready to implement the Bitcoin legal tender provision and that this could weigh on investor confidence.
“A rushed implementation of the new alternative payment system platform will affect financial institutions’ management framework for operational, cyber / ransomware, currency and liquidity risks, with additional implications for underwriting standards. banks, Fitch Ratings said.
The move was also criticized by the International Monetary Fund as well as the World Bank which said it would not help with the implementation of Bitcoin.
One thing is certain, whether successful or not, the example of El Salvador will give us a good idea of what happens when Bitcoin is used in everyday life.
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