Bitcoin is now an official currency of El Salvador – here’s what that means

Just a heads up, if you buy something through our links, we may get a small share of the sale. It’s one of the ways we keep the lights on here. Click here for more.

El Salvador now has a second national currency, as it adopts Bitcoin alongside the US dollar. That’s after months of preparation after the country passed the “Bitcoin Law” back in June of this year.

Part of that preparation involved the government buying 400 Bitcoins, worth around $21 million with the current pricing. Seen as a solution for the low adoption of bank accounts in El Salvador, Bitcoin will make it easier for ex-pats to send money back to family, or to spur economic growth in the country.

If you’re wondering how sending money back to family is going to help, we’ve got the skinny. Currently, 24-percent of the country’s gross domestic product is made from such transactions. By using Bitcoin, the government hopes that more of that money will end up in the buying power of the population, and not be swallowed up by bank fees.

Only thirty percent of the country has a bank account, so improving access to financial tools is a necessary step for the country’s growth.

While the Bitcoin Law is praised by cryptocurrency fans, it might not be the right move long term. Moody’s downgraded El Salvador’s debt rating in response, and the IMF has some issues about the destabilization effects of an inherently volatile currency.

With El Salvadorians now able to do things like pay taxes in Bitcoin, as well as all shops being required to accept it, the eyes of the world will be watching what could be an important test case for cryptocurrency’s mainstream adoption.

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

Editors’ Recommendations:

• AMC thinks people want to pay for movie tickets and popcorn with Bitcoin in 2022
• The creator of Dogecoin says cryptocurrency is a scam to help the rich get richer
• Coinbase users can now buy crypto with their PayPal account
• Visa will soon allow you to pay with crypto anywhere its cards are accepted

Joe Rice-Jones

Maker, meme-r, and unabashed geek with nearly half a decade of blogging experience at KnowTechie, SlashGear and XDA Developers. If it runs on electricity (or even if it doesn't), Joe probably has one around his office somewhere, with particular focus in gadgetry and handheld gaming. Shoot him an email at joe@knowtechie.com.