Back in 2021, El Salvador became the first country to adopt Bitcoin as official legal tender. It was a turning point, with many people either praising or condemning the move. Lately, governments have cracked down on Bitcoin. And the current political climate, in the United States and elsewhere, could have a huge impact on how we talk about El Salvador and the cryptocurrencies it adopted.
Since El Salvador is so closely intertwined with the US politically and economically, any shifts in these arenas can have a huge effect. It will be interesting to see how El Salvador’s decision pays off, and whether other countries follow suit.
El Salvador’s Bold Move
El Salvador made a splash when it adopted Bitcoin as an official currency. The unprecedented decision stands to benefit many of its citizens.
According to PwC, around 70% of the population of El Salvador lacks access to a bank account. On the other hand, there are 9.94 million cell phone connections in the country, or among 156.5% of the population. Therefore, transitioning to a monetary system that only needs a smartphone app to work could be highly advantageous.
Additionally, remittances constitute over 20% of the country’s GDP, according to the World Economic Forum. Given how much money goes to fees for international wire transfers, Bitcoin could be an attractive alternative.
El Salvador adopted Bitcoin as its national currency mainly to combat poverty and aid unbanked citizens. The government hoped to improve economic opportunities for citizens, allowing them access to digital currency through their smartphones. This would connect them with financial s
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Author: Virginia Valenzuela
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