El Salvador bets on bitcoin

On September 7, 2021, El Salvador will be the first country in the world to recognise bitcoin as legal tender.

As a bonus, they’re giving every citizen with their country’s wallet $30 USD worth of bitcoin.

Side note I found kinda fun: their wallet is called Chivo (meaning ‘Cool’ in English).

Why did El Salvador choose bitcoin?

At the moment, El Salvador uses the US dollar as their legal tender, which keeps them somewhat beholden to the US in terms of monetary policy (Forbes explains this bit much better than I can!). USD will still be legal tender, but from Tuesday, bitcoin will be too.

Many of their citizens receive money from relatives who might be working overseas (particularly the USA). Sending this money via traditional channels can be quite expensive, with every man and his dog taking his chunk along the way (and it sometimes takes days for the money to arrive).

With bitcoin, using the lightning network, the money could arrive more quickly, and the fees could be much smaller.

El Salvador will certainly get a buzz from being the first country to ‘legitimise’ bitcoin – and hopefully its residents see some benefits from additional investment. How long this will last for, is anyone’s guess. But it could be the start of big things for crypto in general, and bitcoin specifically.

If El Salvador shows that bitcoin can work well, other countries may follow suit.

The Reddit Army

Reddit loves a cause. Call it the hive mind, call them a bunch of degenerates (r/wallstreetbets and GameStop made headlines across the world earlier this year – summary here), but whatever you call it, there’s definitely people power there.

Many subscribers on r/bitcoin seem to be keen to buy $30 each of bitcoin on Tuesday to celebrate El Salvador’s news.

If they do, along with the excitement in El Salvador, we might see the price surge (though it might then fall soon after). Over time, if there’s more adoption, we might see less volatility in the price overall.

Either way, it’ll be exciting to see what happens on Tuesday.

Want to know more?

• Find out more about how to buy bitcoin in Australia.
• Find out more about crypto exchanges.