Nayib Bukele, President of El Salvador, will address the Congress at the Legislative Assembly building in San Salvador, El Salvador on Tuesday, June 1, 2021. Photographer: Camilo Freedman / Bloomberg via Getty Images
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MIAMI – El Salvador wants to introduce a law that will make it the first sovereign nation in the world to introduce Bitcoin as legal tender alongside the US dollar.
In a video broadcast on Bitcoin 2021, a multi-day conference in Miami considered the largest Bitcoin event in history, President Nayib Bukele announced El Salvador’s partnership with the digital wallet company Strike to power the country’s modern financial infrastructure with Bitcoin Build technology.
“Next week I’m going to send a bill to Congress that will make Bitcoin legal tender,” said Bukele.
Jack Mallers, founder of the Lightning Network payment platform Strike, said this will be considered “the global shot for bitcoin”.
“What is transforming here is that Bitcoin is both the largest reserve asset ever created and a superior currency network. Holding bitcoin provides a way to protect developing economies from potential shocks from fiat currency inflation, ”Mallers continued.
From the main stage, Mallers said the move will help unlock the power and potential of Bitcoin for everyday use cases in an open network that will benefit individuals, businesses and public sector services.
El Salvador is a largely cashless economy, with around 70% of the people without bank accounts or credit cards. Remittances, or the money sent home by migrants, account for more than 20% of El Salvador’s gross domestic product. The established services may charge fees of 10% or more for these international transfers, which can sometimes take days to arrive and which sometimes require physical collection.
Bitcoin is not backed by any asset, nor does it have the full trust and support of any single government. Its value stems in part from the fact that it is digitally scarce; There will only ever be 21 million bitcoins.
While details are pending on how the rollout will work, CNBC is told that El Salvador has assembled a team of Bitcoin executives to help build a new financial ecosystem with Bitcoin as the base tier.
Bukele’s New Ideas party is in control of the country’s legislative assembly, so the bill is very likely to pass.
“It was inevitable, but here it was: the first country on the way to establishing Bitcoin as legal tender,” said Adam Back, CEO of Blockstream.
Back said he plans to contribute technologies like Liquid and satellite infrastructure to make El Salvador a model for the world.
“We are excited to support El Salvador on its path to adopting the Bitcoin standard,” he said.
This isn’t El Salvador’s first step in Bitcoin. In March, Strike launched its mobile payments app there, which quickly became the number one downloaded app in the country.
Bukele was very popular, with its populist party New Ideas, which won the last election. However, the new congregation recently came under fire after it removed the attorney general and chief judges. The move prompted the US Agency for International Development to call for help from the El Salvador national police and a public information institute and instead divert funds to civil society groups.