All adult citizens in El Salvador will receive $30 worth of Bitcoin when they download and register the government cryptocurrency app called Chivo, President Nayib Bukele announced while unveiling details on how the nation will become the first to make Bitcoin legal tender.
Chivo is slang for “cool” in the Central American nation, which is trying to encourage its citizens to use cryptocurrency in order to minimize use of the U.S. dollar. The dollar will still be used as legal tender.
The U.S. dollar has been the official currency in El Salvador since 2001, when the country abandoned its own currency because more than 20 percent of its citizens lived abroad and sent dollars back home regularly.
President Bukele said a “bitcoin law” would come into effect on Sept. 7. He hopes that will attract many investments and improve citizens’ buying power.
“Why create this law? Because Bitcoin has a $600 billion market capitalisation globally and if we do this, investors and tourists who own Bitcoin will come to the country and benefit Salvadorans and the economy,” he said.
There has been widespread concerns that Bitcoin use might become mandatory in El Salvador, but Bukele reassured citizens that the “use of bitcoin will be optional,” and salaries and pensions will continue to be paid in U.S. dollars.
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Consumers can also pay businesses with Bitcoin from their Chivo wallet if the vendor accepts Bitcoin or just with dollars as usual. The app will be able to convert Bitcoins immediately to dollars, according to Bukele.
Finance Minister Zelaya said he assured the International Monetary Fund (IMF) that El Salvador would not abandon the U.S. dollar and replace it with the cryptocurrency.
“We gave our official position to the IMF. We have been emphatic. We are not replacing the U.S. dollar as legal tender in El Salvador,” Zelaya told reporters.
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