The government of El Salvador has announced that every citizen will receive $30 worth of Bitcoin as the country seeks a greater role for the cryptocurrency within the country.
Last month it was revealed that the Central American nation would make Bitcoin legal tender within the country, one of the first nations on Earth to do so. The US dollar is El Salvador's other legal tender.
All citizens will be able to get the Bitcoin using a Bitcoin app that they can download to their phone.
The government has however assured people that salaries and pensions will still be paid in US dollars.
President Nayib Bukele, who started the move towards crypto, believes that Bitcoin use could generate billions in extra income for the poor nation. This is because many El Salvadorians live and work in the US and send money back each month to their families. However, the money sent in dollars usually comes with high transaction fees, as high as 20%. With Bitcoin, people can send their money to El Salvador without these fees being taken.
El Salvador has used the US dollar as its official currency since 2001, when it replaced the Salvadorian 'colon'. The key reason for this move was that using the US dollar meant that many economic issues that face Latin American countries, such as high inflation, could be avoided or at least negated. It also meant that the country was free from speculative attacks on their currency from investors or hostile foreign states. In many ways, the adoption of Bitcoin is again an attempt to stabilise the economy of El Salvador, which was wrecked by decades of civil-war and create business opportunities within the country.
Critics say however that Bitcoin is extremely difficult to use in day-to-day settings, can be complex, and can wildly fluctuate in price. They also state that Bitcoin has a huge damaging effect on the environment. At present, Bitcoin utilises more energy than the entire nation of Portugal.
[h/t: Forbes]
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