Hey! Did you know that?
The first state in the world to use bitcoin as legal tender will be El Salvador. The legislative assembly approved with 62 votes out of 84 the bill proposed by President Nayib Bukele, announced to the world with a video message at the Miami Bitcoin 2021 industry conference a few days ago. The exchange rate will remain loosely pegged to the dollar and the market and, from now on, people will be able to pay taxes in bitcoin, prices will be able to be displayed with the "₿" symbol next to the dollar symbol, every economic player will have to accept bitcoins if offered and currency exchanges will not be subject to capital gains taxes, like any other currency.
About 20% of the national GDP comes from migrants' remittances, on which traditional money transfer services charge fees of up to 10%, taking some time from sending to receiving. To allow people to circumvent this mechanism with instant and peer-to-peer transactions, the government of San Salvador has partnered with Strike, a digital micropayment platform with an app, which will provide digital wallets where cryptocurrency can be stored and spent. The transaction system is that of the lighting network, a superstructure based on smart contracts for the verification of private keys between the two parties to the exchange and off-chain with respect to the blockchain. All this makes it possible not to pay commissions for bitcoin mining, recording only the final state of the wallets and enabling the scalability of the mechanism, freed from the global physical limit of 7-8 transactions per second typical of the underlying 'blockchain'.
However, there is a "negative side": in a country where 70% of the population does not have access to traditional financial services, such as a bank account or a credit card. The state will therefore promote "the necessary training and mechanisms so that the population can have access to bitcoin transactions", reads the text of the law drafted in Spanish and English, the official local currency being the US dollar (on Tuesday the exchange rate with bitcoin is around 33,900 dollars).
This was a very ambitious and very brave choice by the country, what will be the fate of El Salvador now?
Let me know in the comments what you think about it!
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