El Salvador is expected to become the first sovereign country to adopt Bitcoin as its legal currency
The Republic of El Salvador is seeking legislation to make it the first sovereign country in the world to use Bitcoin and the U.S.U.S. dollar as legal tender.
In a video broadcast provided to the Bitcoin 2021 conference, President Nayib Bukele announced that El Salvador has partnered with digital wallet company Strike to use Bitcoin technology to build the country's modern financial infrastructure.
Note: The Bitcoin 2021 conference is a multi-day conference held in Miami and the most prominent Bitcoin event in history.
"Next week, I will submit a bill to Congress to make Bitcoin legal tender," Bukele said.
Jack Mallers, founder of the Lightning Network payment platform Strike, said that this would become a "gunshot" for Bitcoin that can be heard worldwide.
"The revolutionary thing about Bitcoin is that it is not only the greatest reserve asset ever but also a superior currency network. Thus, holding Bitcoin provides a way to protect developing economies from the potential impact of fiat currency inflation. " Mallers continued.
Mallers stated that this move would help unleash the power of Bitcoin and its potential to benefit individuals, businesses, and public sector services as a daily use case for an open network. It is worth mentioning that Bukele also replaced his Twitter avatar with a laser eye image popular in the encryption field.
El Salvador is a cash-based economy, and approximately 70% of people do not have a bank account or credit card. As a result, the funds remitted by migrants to their home countries account for more than 20% of El Salvador's G.D.P. Existing service agencies charge 10% or more for these international transfers, sometimes it takes a few days to arrive, and sometimes they need to be withdrawn in person.
Assets do not back Bitcoin, nor does it have the complete trust and support of any government. Its value is partly due to its digital scarcity, and its supply will only be 21 million.
CNBC was informed that although details on how this bill will be implemented in the country have not yet been announced, El Salvador has formed a Bitcoin leadership team to help build a new financial ecosystem based on Bitcoin.
Bukele's New Ideas party controls the country's Legislative Assembly, so the bill is likely to be passed.
"This is inevitable and is happening: El Salvador has become the first country that is expected to turn Bitcoin into legal tender." Blockstream C.E.O. Adam Back said.
Back stated that he plans to contribute technologies like Liquid and satellite infrastructure to make El Salvador a global model.
"We are very pleased to be able to help El Salvador on the path towards Bitcoin standard adoption," he said.
This is not El Salvador's first foray into Bitcoin. In March of this year, Strike launched a mobile payment application in the country, which quickly became the most downloaded application.
Bukele's popularity is high, and his New Ideas party won a significant victory in the recent elections. However, the new parliament has recently come under fire after removing the attorney general and senior judges because the move prompted the U.S.U.S. Agency for International Development (U.S.U.S. Agency for International Development) withdraws aid to the Salvadoran National Police and a public information agency and instead transfers funds. Transfer to civil society groups.