Bitcoin Becomes Legal Tender
El Salvador has become the first country to adopt bitcoin as a legal form of payment. The Bitcoin Law was passed by a “supermajority” of lawmakers in the Central American country’s Congress, with 62 out of 84 votes in favor.
The Bitcoin Law states, “The purpose of this law is to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.” Prices in El Salvador may now be shown in bitcoin, citizens can make tax payments in bitcoin, and bitcoin investors will be exempt from capital gains tax.
Also, according to the Bitcoin Law, around 70% of El Salvador’s population lacks access to traditional financial institutions. The cryptocurrency is viewed as a tool for expanding financial inclusion. How will El Salvador begin rolling out its new currency? Well, it’s currently unclear how the country will introduce Bitcoin to the population.
Because of the tremendous volatility of cryptocurrencies, many countries have been cautious about embracing them. In April, Bitcoin nearly reached $65,000 but has plunged by almost 50%. But despite the erratic price fluctuations of Bitcoin, the cryptocurrency is still up over 230% in the past year. Several reasons have contributed to Bitcoin’s growth, including more interest from institutional investors and giant corporations like Tesla and Square purchasing bitcoin.
Will more countries follow El Salvador’s lead in making Bitcoin a form of legal tender? Or will countries avoid the rollercoaster of a ride that is Bitcoin?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.