On Wednesday, June 9, El Salvador’s legislative arm approved President Nayib Bukele ‘s proposal to make Bitcoin legal tender.
According to Reuters, “with 62 out of 84 possible votes, lawmakers voted in favour of the move to create a law to adopt bitcoin as an official currency. Before the vote was taken in Congress, President Bukele noted that accepting to make Bitcoin legal tender will “will bring financial inclusion, investment, tourism, innovation and economic development for our country.”
“#Bitcoin has a market cap of US$680 billion. If 1% of it is invested in El Salvador, that would increase our GDP by 25%. On the other side, #Bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances,” President Bukele wrote in a tweet.
Since 2001, El Salvador has not had its monetary policy since a right-wing government made the US Dollar the official currency of the Latin American nation. With the coming into force as Bitcoin being recognized as legal tender, President Nayib Bukele noted that “in the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction.”
Bitcoin isn’t going to replace the local currency which is the U.S Dollar but be used alongside the Dollar.
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What this means
With the passing of the proposal, all firms and individuals must accept Bitcoin as a means of transaction. Its use as legal tender will, however, begin in 90 days with the bitcoin-dollar exchange rate determined by the market.
“If you go to a McDonald’s or whatever, they cannot say we’re not going to take your bitcoin, they have to take it by law because it’s a legal tender,” said President Bukele.