El Salvador is not exactly known for being a progressive country.
Consider this fact as proof; 25% of the country’s GDP comes from remittances—money El Salvadoran’s living in other nations send back to family.
On Tuesday, the Central American nation did what no other country has tried in the past. They adopted bitcoin as a national currency.
It’s a risky move by President Nayib Bukele that could take his country to a new level or set them back even further.
Late Monday, Bukele announced his government purchased an additional 200 bitcoins, which means they now hold a total of 400 bitcoins worth roughly $21 million. He even announced on Twitter that the bitcoin buying spree is just beginning, saying his government will buy much more.
Starting Tuesday, bitcoin can be used to purchase anything, big or small in the country. Citizens can even make their tax payments with the crypto. It will be the official currency along with the US dollar.
Salvadorans can download the government created app called “Chivo Wallet,” which will deliver $30 of bitcoin to citizens as a way to promote using the cryptocurrency for their purchase.
Having bitcoin as an official currency definitely complicates things for people who will have to closely follow the crypto’s value, which fluctuates.
Kristalina Georgieva is the managing director of the International Monetary Fund. Here’s part of what she said recently, reported by CNN.
“How do we know what we collect in taxes when bitcoin goes up and bitcoin goes down? 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.”
By using bitcoin, Salvadorans living in foreign countries will be able to save money from expensive fees attached to wiring funds back home.