El Salvador purchased $21 million of bitcoin as it becomes the first country to make it a legal currency

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September 8, 2021: -On Monday, El Salvador has purchased $20.9 million worth of bitcoin one day before it formally adopts the most popular cryptocurrency of the world as legal tender.

In a series of tweets, President Nayib Bukele has disclosed that the country had purchased a total of 400 bitcoin, the first step in a more significant push to add the digital currency to its balance sheet.

The tweets were posted a few hours apart. Based on the bitcoin price in the tweets, the digital coin purchased totaled $20.9 million.

“Our brokers will be buying a lot more as the deadline approaches,” he wrote.

On Monday, the price of bitcoin rose following the tweets and was trading at around $52,681.85. The posts came hours before El Salvador’s bitcoin law, which was passed in June, took effect Tuesday. El Salvador is the first country to accept bitcoin as a legal currency, working alongside the U.S. dollar. Proponents and critics in the world will be watching to see how this unprecedented experiment plays out.

Bukele’s announcement marks a significant milestone for bitcoin. El Salvador is now the first country to have officially put bitcoin on its balance sheet and hold it in its reserves.

But the policy has drawn criticism across the country. Almost 70% of Salvadorans surveyed by the Central American University disagreed with the administration’s decision to adopt bitcoin as legal tender. Many were also unsure of how to use digital currency.

Supporters of El Salvador’s move say that it indicates a growing acceptance of bitcoin and that other countries could follow. According to the bitcoin law, the Salvadorian government hopes to boost financial inclusion in a country where nearly 70% of citizens do not have access to traditional financial services.

According to the World Bank, remittances, or the money sent home by migrants, are essential for the economy, accounting for above 24% of El Salvador’s gross domestic product.

The legislation allows prices to be displayed in bitcoin, tax contributions to be paid with the digital currency, and exchanges in bitcoin will not be subject to capital gains tax.

El Salvador launched a wallet app called Chivo, which citizens can sign up for a national ID to transact using bitcoin. Users will receive $30 worth of bitcoin when they sign up in a push to speed up adoption.

Last Tuesday, the Congress in El Salvador passed a law to create a $150 million fund to help facilitate conversions from bitcoin to U.S. dollars.

But bitcoin is known for wild volatility at times, raising concerns about its effectiveness as a currency.

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