The discussion of adopting BTC as a legal tender has been going on in El Salvador for the last few years. Finally, the country made a bold and aggressive move on the 7th of September in 2021, announcing that BTC is the national currency alongside the USD.
You may visit the https://bitcoin-code.app/ website to get the best trading calls and use of artificial intelligence available on the platform. Furthermore, the country finalized a budget of $80 million to spread awareness and use cases of the new national currency by offering a signup bonus in the chivo wallet, the official government-approved wallet of El Salvador.
The country is also planning to drastically cut its taxes for the fintech companies and the population. This decision has a lot of implications that can be highly positive, but indeed it’s a bold move from the government to take BTC mainstream. Let us look at how this decision would affect BTC adoption in El Salvador and worldwide, along with other implications.
What Is The Reasoning Behind This?
Bitcoin trading in El Salvador has been increasing month over month for the last two years, so it was not a surprise when the Central Bank of El Salvador decided to give best-in-class technology to its citizens and make it legal tender as well. At the same time, the country is trying to create a joint platform for cryptocurrency and traditional finance to amass a financial system that can handle tomorrow’s technological innovations.
The government of El Salvador is serious about making El Salvador an international leader in Blockchain technology and fintech, so this decision seems to be implemented towards that end. Furthermore, this move reflects that since it would help all the cryptocurrency companies working in El Salvador, there would be no risk of stiff penalties or taxes to trade/exchange digital currency.
Geothermal Energy Use for mining in El Salvador
The president of El Salvador, Nayib Bukele, said that the country would use geothermal energy to mine cryptocurrencies. However, in the opinion of many, it is better to use green energy for mining to make them more profitable and productive simultaneously.
How Does The Currency Work?
The government has already started converting all banknotes to favor a new national digital currency. In addition, it has even announced a welcome bonus to every citizen who uses bitcoin in their purchase from El Salvador national shopping portal. All this quickly happened so that people could be interested in bitcoin and hold its value as much as possible. According to the government, BTC is the future of fintech and blockchain technology in El Salvador.
Many companies want to operate in El Salvador and trade via BTC rather than USD, but due to regulations and conversion issues, they can’t do it. Now that country has a national currency that is equal to USD, it will help or attract more businesses to the fintech sector.
Along with this announcement, the government has also decided to cut down taxes for blockchain-based companies so they can do business smoothly. With all this being said, this announcement has created a positive outlook toward cryptocurrency adoption in El Salvador, and we can expect a sudden surge in bitcoin trading volume soon in South America.
A Whole New Bitcoin City backed by bitcoin bonds
Bitcoin city is the recent announcement by the government of El Salvador; the entire theme of this city will be based upon BTC and will be devoid of any taxation scheme. Instead, government bonds back the project, and a government bond auction will raise the funds required for this massive project. In addition, this city will have bitcoin ATMs, hotels, shops, and homes that one can purchase via bitcoin with low-interest rates.
The city’s flagship project will be a cryptocurrency university with state-of-the-art facilities for educational purposes, research centers, fintech labs, and more. There are a lot of other planned features as well, like the Bitcoin sports complex, Ocean Park for entertainment, and more. The entire project is expected to cost around $1 billion, but that amount could increase based on demand and interest from the public.
El Salvador has acquired attention from foreign investors
Even though there were restrictions on cryptocurrency trading and bitcoin in El Salvador earlier, the recent developments and increased awareness have helped to shed light on El Salvador as one of the good places for blockchain, fintech, and cryptocurrency companies.
The sudden bitcoin boom in El Salvador over the last few months have earned the attention of foreign investors like Chinese billionaire Li Xiaolai, who is planning to invest $10 billion in El Salvador. His proposal includes real estate, energy and mining, and other projects. Another big news was that IMF’s chief Christine Lagarde visited El Salvador to discuss how they can make this country an international hub for fintech and blockchain.