What El Salvador’s Bitcoin Law Brought – Bitcoin Magazine
This is an opinion editorial by Gaby Vivas, a entrepreneur in Latin America offering outsourcing services worldwide and a long-term investor in bitcoin.
El Salvador made history by becoming the first state to use bitcoin as legal tender when it was officially announced by their president in June 2021.
The Salvadoran government approved bitcoin as legal tender in a country with nearly 70% of its people unbanked and a large portion of its productive population living abroad since 2006. Bitcoin as legal tender addresses these two issues.
Before we start talking about the financial solutions bitcoin brings to El Salvador, we need to remember what legal tender means and how it is used:
“Lawful to tender is a form of money which courts are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything that, when offered (“tendered”) in payment of a debt, removes the debt. There is no obligation on the creditor to accept the offered payment, but the act of offering the payment in legal tender discharges the debt.”
Long-term plan to develop the country’s infrastructure.
In September 2021, El Salvador began requiring all businesses to accept bitcoin and adheres to Article 102 of the Republic’s Constitution: “The State is obliged to promote and protect private enterprise, creating the necessary conditions to increase national wealth.”
It is believed by many in the bitcoin community that by 2025 several other nation states will adopt bitcoin. El Salvador in 2021 wanted to ensure that its citizens and future investors would have an advantage when other countries buy bitcoin. This enables them to build out the country’s infrastructure before the upcoming adoption. Other countries have come to El Salvador to better understand the transition and how they can apply it to their countries.
In the past year, El Salvador has seen foreigners promote international projects that have a positive impact on the economy. These projects include medical facilities, tourism and other investments that have created job opportunities for Salvadorans. They have also implemented security measures to encourage people to visit El Salvador and invest. El Salvador continues to look for investment to continue building out the local infrastructure.
Due to the use of bitcoin, those citizens who left in the diaspora will be encouraged to return to El Salvador. When they return, they will bring with them the potential to positively impact Salvador’s economy.
“Private sector creates more than 65,000 new jobs.”
The biggest investment effort in history
Remittances have gone to investments, no longer to consumption, and there are more than 100 projects that represent 400 million dollars from the diaspora.
People outside the country are enthusiastic about the change in El Salvador, but due to the lack of understanding of Bitcoin, people inside are often hesitant to trust the new economic system that President Bukele introduced a year ago.
Other countries in Latin America are already trying to replicate the Salvadoran model. Leaders from the central banks of Paraguay, Haiti, Honduras, Ecuador, Costa Rica and the Dominican Republic have already met with Bukele.
According to the World Tourism Organization. El Salvador is now ranked 13th out of the 15 countries listed, and appears among the top destinations in terms of income in the first five months of 2022.
In accordance Bitcoin MagazineThe country is on track to earn $99 million more from tourism this year compared to 2019.
In fact, support for Nayib Bukele has increased compared to the rest of the presidents in Latin America. The latest survey by La Prensa Grafica Newspaper gave President Nayib Bukele an 87% approval rating after three years in office. 86.8% of Salvadorans who responded said they approve of the work President Nayib Bukele has done after three years in office.
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But what do people do actual thinking about El Salvador’s bitcoin adoption?
An anonymous citizen of El Salvador told us that they have not seen any change in the economy and that few people use bitcoin for their own transactions. People do not feel confident about the use and implementation of bitcoin.
People are still very distrustful because they don’t know if the Bitcoin network is secure. The Chivo wallet has been plagued with issues and has had mixed effects on its rollout according to the anonymous citizen. There has not been enough education and there are very few people who have been able to educate themselves.
“There is still not enough access to the internet in El Salvador. Various plans to bring satellites have not happened yet and everything is still in the pipeline,” they said.
El Salvador’s internet penetration rate was at 50.5% of the total population at the start of 2022.
Despite these concerns, the country continues to lean into developments around Bitcoin and the infrastructure needed to facilitate this. In the end, it remains to be seen whether their bets on Bitcoin will pay off.
This is a guest post by Gaby Vivas. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc Bitcoin Magazine.
