In June 2021, El Salvador became the first country in the world to make Bitcoin legal tender. This means that businesses in the country are now required to accept Bitcoin as payment for goods and services, alongside the US dollar, which is the country’s official currency. This move has sparked a lot of interest in Bitcoin usage in El Salvador, as it provides a new way for people to store value and make transactions.
One of the main reasons for the adoption of Bitcoin in El Salvador is the high inflation rate and currency devaluation that the country has been experiencing. With the US dollar being the country’s official currency, many people have been turning to Bitcoin as a way to store value and protect their wealth from inflation. Bitcoin, as a decentralized digital currency, is not controlled by any government or institution, making it a more stable store of value compared to the local currency.
Another reason for the adoption of Bitcoin in El Salvador is the lack of access to traditional banking services. According to the World Bank, around 70% of adults in El Salvador do not have access to a bank account. This means that many people are unable to access the financial services they need to manage their money and make transactions. Bitcoin, as a decentralized digital currency, can provide an alternative way for people to store and transfer money without needing a bank account.
Additionally, the usage of Bitcoin in El Salvador is also driven by the potential for remittance. As a migrant nation, El Salvador receives a large amount of money from its citizens abroad, and Bitcoin can provide a cheaper and faster alternative to traditional money transfer services.
In conclusion, following the move to make Bitcoin legal tender in El Salvador, the usage of Bitcoin has increased in the country as a way to store value, make transactions and as a remittance tool. The high inflation rate and currency devaluation, lack of access to traditional banking services, and the potential for remittance services have made Bitcoin an attractive alternative for many people in El Salvador. This move to make Bitcoin legal tender could potentially serve as a model for other countries in the region and globally.