The 46th President of El Salvador, Nayib Bukele has made history by formally adopting the world-famous cryptocurrency, Bitcoin as a source of Legal Tender in the country of El Salvador making the country the first-ever country to do so. The”Bitcoin Law” was approved by the majority of lawmakers and out of 84 votes, 62 votes were in the four of the said law. However, we would like to mention here that Bukele has said that the usage of Bitcoin is optional in nature but that does not mean that the US dollar will stop as legal tender.
The president of El Salvador has hinted that the use of Bitcoin will bring financial investments, FDIs, tourism and innovation and will also boost the economic development of the country. Bukele further stated that the law has passed with a majority of votes and now, the workers abroad can use Bitcoin as a source of remittance instead of US dollar if they want. Besides, he also ensured that the coin is optional in nature and would not risk the users in anyways, as a proper regulatory body will regulate the coin.
Well, the inclusion of Bitcoin as a source of the legal tender will hugely benefit the economy of El Salvador as most of their economy is mostly relies on the money sent back from workers working abroad. As per the data shared by the World Bank, in the year 2019, the majority GDP of the country of El Salvador contained a remittance of $6 billion which is roughly around a 5th of GDP. It is one of the highest ratios in the world. Bukele also said that the government of Salvador will guarantee the convertibility of Bitcoin to the exact value in dollars at the time of each transaction.
However, as per the opinions of the experts, the initiative taken by the government of Salvador to make Bitcoin a legal tender will complicate things between Bukele & International Monetary Fund (IMF). It has been reported that the programme of El Salvador with the IMF requires a fund of more than $1bilion which is roughly around Rs. 7300 coroners in the Indian Rupees. Well, many countries have accepted Bitcoin as a source of making payments.
At present, the valuation of Bitcoin is somewhat around Rs. 24.5 lakhs and if 1 per cent of it is invested in El Salvador, that would speed the GDP of the country by 21%. Thus, the Bitcoin law will generate employment and will boost the financial inclusion to thousands of non-formal economy in the short run, while in the medium and the long run, the law will definitely going to benefit the economy of El Salvador, as most of their GDP relies on the money sent back form workers working outside the country.
