El Salvador on Monday became the first country in the world to adopt bitcoin as legal tender. And while critics warn about money laundering Salvadorians are betting on the pioneering decision to spur its economy. The decision however has sparked a mixed bag of reactions, both within the country and abroad, with some hailing this as the beginning of a new era, while others lash out at the President.
A fervent proponent of the cryptocurrency, President Nayib Bukele has asked the more than two million Salvadorans who live overseas to send their remittances in Bitcoin, arguing it will be cheaper than transferring dollars. He also says it will stimulate foreign investment. "It will be a great benefit for our people," wrote on Twitter.
While other countries have dabbled in cryptocurrencies, none has gone so far as El Salvador. From Tuesday, all businesses will have to accept payments in Bitcoin, except those lacking the technology to do so, according to a law approved by the congress, which is controlled by Bukele's New Ideas party. The US dollar, however, will remain the country's main currency and no one will be forced to pay in Bitcoin.
Bitcoin, an alternative to government-backed money, exists only in computer circuits and memory. It's based on data-scrambling cryptography - thus the term "cryptocurrency" - lots of processing power and a distributed global ledger called a blockchain, which records all transactions. No central bank or other institution has any say in its value, which is set entirely by people trading Bitcoin. That independence and secrecy have made it a favorite of people suspicious of governments, as well as criminals trying to hide their transactions.
While some say that the system is too complicated and opaque, others worry about the way Bitcoin values can rise and fall sharply overnight - potentially giving recipients a windfall or a loss. And while some are willing to transact in bitcoin rather than dollar now, others flag the technological challenges involved and the price fluctuations. A significant portion of the population continues to seek answers and remain wary.
"In El Salvador, President Bukele is acting as a madman. He just announced that El Salvador purchased 200 highly speculative Bitcoin. My thought: it’s easy to speculate with taxpayers’ money," read a tweet from Economist Steve Hanke.
"So far, only one country in the world uses crypto as legal tender. Just the beginning," hailed Binance CEO Changpeng Zhao.
Take a look at some of the reactions:
(With inputs from agencies)
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