Bitcoin has achieved a new milestone. As of September 7, the cryptocurrency has become an official currency in El Salvador alongside the US dollar. This makes the Central American country the first to do so.
Minutes before midnight, El Salvador President Nayid Bukele tweeted that the country was about to “make history”. The country has purchased 400 Bitcoins, which is about Php90.4 million when directly converted to Philippine pesos.
It’s said that Bitcoin will make it cheaper and more convenient for migrants to send money back home to El Salvador. That’s quite substantial since remittances are 24% of the country’s gross domestic product.
They are also hoping that Bitcoin could help people have easier access to financial services. As per Strike CEO, the digital finance company that helped the government with the Bitcoin Law, 70% of El Salvador’s population still doesn’t have a bank account.
However, considering the currency’s volatile history, there are still fears that it could harm the people of El Salvador and the country’s economic stability. If you remember, Bitcoin had an all-time high of USD60,000 back in April, until it crashed instantly cutting its value to half.
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El Salvador’s move contributed to Moody’s decision, a rating agency, to demote the country’s debt rating. The International Monetary Fund also warned them about the possible bad effects of using Bitcoin as a legal tender.
After the move, Bitcoin’s value dropped by 11.1%. Analysts say that it’s possibly due to investors who bought the rumor of El Salvador’s more and are now selling.