The dollar is no longer the only currency Salvadorians can use to pay for their goods and services. On Monday, September 6, El Salvador president Nayib Bukele announced that they have become the first country to adopt bitcoin as a national currency.
Bukele also said Monday the government has purchased 200 bitcoins, which were in addition to the other 200 it already owned. On Tuesday morning, he tweeted that they purchased another 150. At current trading levels, the 550 bitcoins El Salvador now owns are worth about $26 million.
To encourage citizens to get on board, the government is also giving everyone who downloads the platform “Chivo Wallet” $30 worth of bitcoin for free. Bitcoin is a decentralized digital currency that can be used to make payments online. It had not been supported by any banks nor any governments until El Salvador said they would start accepting the cryptocurrency this week.
“The process of #Bitcoin in El Salvador has a learning curve,” Bukele tweeted. “Every step toward the future is like this, and we will not achieve everything in a day, nor in a month. But we must break the paradigms of the past.”
According to CNN, the International Monetary Fund (IMF) says the move made by El Salvador could put them in economic, financial, and legal trouble.
“How do we know what we collect in taxes when bitcoin goes up and bitcoin goes down?” asked IMF managing director Kristalina Georgieva. “How do we plan for expenditures? Remember in April, bitcoin crossed $65,000, and then it dropped almost half of it. That is a problem that the ministry of finance is going to be wrestling with. And it is not an easy one.”
Apparently, people are already using their bitcoin today to purchase things in El Salvador. One man tweeted a copy of his receipt where he bought breakfast at McDonald’s with the cryptocurrency.
Who knows what the future will hold for bitcoin in El Salvador, but they’ve already seen how volatile the market can be in just one day. So far, Bitcoin has dropped 8 percent in the past 24 hours according to Coinbase.