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El Salvador to officially adopt Bitcoin as legal tender on September 7 El Salvador to officially adopt Bitcoin as legal tender on September 7

El Salvador to officially adopt Bitcoin as legal tender on September 7

Bitcoin as the official currency through everyday economics of crypto adoption.

El Salvador to officially adopt Bitcoin as legal tender on September 7

Cover art/illustration via CryptoSlate

Payment processors that facilitate the immediate transfer of crypto into fiat currency and enable acceptance of Bitcoin (BTC) payments for e-commerce, point-of-sale, invoicing and remittance, have a finger on the pulse of the everyday economics of cryptocurrency adoption.

Crypto payment gateway Triple A, summarized what El Salvadorโ€™s adoption of Bitcoin as official currency on September 7 means for the local economy.

Everyday life transactionsย 

โ€œThe use of Bitcoin will be optional, and nobody will receive Bitcoin if they donโ€™t want itโ€ฆ If someone receives payment in Bitcoin, they can choose to automatically receive it in dollars,โ€ said El Salvadorโ€™s president Nayib Bukele, who also assured citizens that pensions and salaries will continue to be paid in US dollars.

As Bitcoin becomes El Salvadorโ€™s official currency, alongside the US dollar, businesses in the country will accept it for goods and services payments, while citizens will be able to opt for paying their taxes in crypto.ย 

As the majority of surveyed El Salvadorโ€™s citizens are sceptical of the new official currency and international financial authorities keep adding to the global uncertainty surrounding crypto adoption, the potential relief for the local economy in need of a boost gets overlooked.ย 

The country has a population of 6.5 million, with over 2 million that live abroad and continue sending money home, leading to over 20% of the countryโ€™s gross domestic product (GDP) being made up of remittances.

In terms of remittances as a share of GDP, the top five recipients in 2020 were smaller economies, including Tonga, Lebanon, Kyrgyz Republic, Tajikistan, and El Salvador.

Infrastructure for the financial inclusion

Adopting Bitcoin as the official currency will enable bypassing costly and slow traditional remittance firms, but also open up financial services to 70% of the countryโ€™s citizens who do not have a bank account.ย 

To boost Bitcoin adoption and facilitate financial inclusion Bukele committed to developing the necessary infrastructure, including creating a Bitcoin wallet called Chivo, while offering $30 worth of crypto to citizens who download it and register.

In addition, Athena Bitcoin announced a $1 million investment into installing 1,500 cryptocurrency ATMs across the country, while focusing on areas where residents receive remittances from abroad.

Both the new wallet and crypto ATMs would enable instant conversions, guaranteeing freedom of choice regarding payment options, recently disputed in a public protest against Bukeleโ€™s Bitcoin bill.