El Salvador, a Central American country, became the first to legalize Bitcoin. It will also use US dollars for daily money transfers. This move comes at a time cryptocurrency is being regulated in many countries. Here are the essential facts you should know
El Salvador’s economy
Remittances from foreign workers are a major source of income for El Salvador. According to World Bank data, remittances accounted for one-fifth the country’s GDP in 2019. They amounted to $6 billion. Bitcoin can help create jobs in the short-term and provide financial inclusion for thousands of people outside the formal economic system.
President Nayib Bukele, via Twitter, announced that anyone who invests three bitcoins into El Salvador’s economy would be granted citizenship.
El Salvador’s Currency
Since 2001, the country has used the US Dollar to pay its official currency. Bitcoin is an alternative.
President Bukele stated that the government would guarantee conversion to dollars at the time the transaction takes place. This will be done through a trust of $150 million created by BANDSEAL (the country’s development bank).
Bitcoin’s supply is limited to 21 million units. This makes it invulnerable to changes in US Dollars or other currencies. A mobile payment app called “Strike” is being used to introduce cryptocurrency in the country.
The new law requires bitcoin to be accepted as payment for goods or services. Tax contributors may also pay bitcoin.
As the focus shifts to BUIDL, recruitment spikes (crypto slang term for BUILD)
Investors are shifting to the fundamentals. Credible projects begin to recruit great talent. The focus is on building products and projects that can be used. Tokens and coins increase in value organically, not through price pumping. These are the best times to invest because the valuations can be reasonable and they can see their money being used to build the product and not in activities that will keep their coins in focus. Investors who are willing to grab any coin as the market swings upwards love these times.
Bitcoin mining center
The president has instructed LaGeo, a state-owned geothermal electric company LaGeo to devise a plan to offer Bitcoin mining services using renewable energy from the nation’s volcanoes.