El Salvador has become the first country to adopt Bitcoin as an official currency

Bitcoin is as of today the official currency of El Salvador alongside the US dollar, after the Central American country became the first to adopt the cryptocurrency as legal tender.

Andchirp The country’s president needs that El Salvador is about to make history with this step, after confirmed Previously, it bought 400 bitcoins, which is equivalent to about $20.9 million at today’s prices.

Proponents argue that the move makes it cheaper and easier for migrants to send money home to El Salvador, which is significant given that these remittances account for more than 24 percent of the country’s gross domestic product.

There are also hopes that this move will improve citizens’ access to financial services.

The CEO of Strike, a digital finance company that helped with the logistics of the new law, said more than 70 percent of the country’s active population currently does not have a bank account.

But there are concerns that adopting such a historically volatile currency could harm El Salvadorans and risk economic stability.

The currency reached an all-time high of more than $60,000 in April, before losing nearly half of its value in a subsequent summer crash.

The law contributed to rating agency Moody’s decision to downgrade El Salvador’s debt rating. The International Monetary Fund has also warned of its potential destabilizing effects.

The law means that citizens are able to pay taxes in bitcoin. Stores are able to display prices in digital currency.

Money exchanged in currency will also not be subject to capital gains tax. The move makes El Salvador the first country to officially have bitcoin on its balance sheet and hold it as part of its reserves.

Read also: Tik Tok no longer welcomes cryptocurrency content

El Salvador has become the first country to adopt Bitcoin as an official currency

El Salvador has been preparing to support cryptocurrency for months, after the legislation was passed in June. Last month, it began installing 200 ATMs across the country to allow citizens to convert between two official currencies in the country.

It is also launching its own digital wallet called Chivo, which gives users $30 of free Bitcoin to encourage adoption.

Despite all the initiatives, anecdotal evidence suggests that few companies are ready for change.

The Financial Times surveyed more than 20 companies in the country’s capital and three said they had immediate plans to accept the currency. Other companies have not started their preparations, or have been actively resisting cryptocurrency.

A survey conducted by the University of Central America found that 70 percent of Salvadorans disagreed with the decision to adopt cryptocurrency as legal tender.

Also Read: Cuba Now Recognizing Cryptocurrencies Like Bitcoin

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