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Bitcoin becomes legal tender in El Salvador

El Salvador buys 200 bitcoins as it becomes legal tender. (Source: Reuters)

SAN SALVADOR: El Salvador on Tuesday became the first country to adopt Bitcoin as a legal tender, kicking off a radical monetary experiment that could pose risks to the fragile economy.  

President Nayib Bukele announced late Monday that his government has purchased another 200 bitcoins ahead of El Salvador’s formal adoption of the currency. El Salvador now holds 400 bitcoins, which are worth nearly $21 million at current trading levels.

 “Tomorrow, for the first time in history, all the eyes of the world will be on El Salvador. Bitcoin did this,” Bukele said on Twitter on Monday. Bitcoin will be used as legal tender in El Salvador alongside the US dollar starting on Tuesday. Bukele tweeted that the country’s brokers “will buy much more as the deadline approaches.”

Recent opinion polls showed a majority of El Salvador’s 6.5m people reject the idea and will continue using the US dollar, the country’s legal currency for the last 20 years.

“This Bitcoin is a currency that does not exist, a currency that will not benefit the poor but the rich,” said sceptic Jose Santos Melara, who took part in a protest by several hundred people in the capital San Salvador last week.

In June, El Salvador’s parliament approved a law to allow the crypto money to be accepted as tender for all goods and services in the small Central American nation, along with the US dollar.

The government is installing more than 200 Bitcoin teller machines, some guarded by soldiers to prevent possible arson by opponents. Bukele has promised $30 for each citizen who adopts the currency.

Cryptocurrencies are held in digital wallets, rather than through a traditional bank account — meaning that people in poorer communities with less access to banks could use bitcoin as a way to gain increased access to their finances.