El Salvador Gives $30 of Bitcoin to Citizens to Encourage Usage
President Nayib Bukele of El Salvador tripled down on the country’s new legislation making Bitcoin legal currency and offered $30 worth of the Bitcoin to citizens signing up a digital wallet.
El Salvador intends to create its own Bitcoin wallet called Chivo, which is a slang term for “cool” in El Salvador. The president said during a national address on that the $30 will be deposited into the wallet of any citizen who downloads Chivo and registers as a user with a valid phone number and ID number.
The legislation making Bitcoin legal tender will go into effect on Sept. 7.
Bukele, a 39 year old Bitcoin bull, reiterated his belief that using the cryptocurrency will help improve capital flow into the country, boost consumption and decrease the expense of transaction fees for the millions of El Salvadorans working overseas. However bank accounts in US dollars will continue to be in US dollars, and salaries and pensions will also continue to be paid in US dollars.
“Why did El Salvador approve this legislation? How about because Bitcoin has a $600 billion market cap globally and as a result, investors and travellers who own Bitcoin will come to the country and increase Salvadoran tourism as well as the economy,” Bukele exclaimed.
Customers will be able to pay for goods and services with Bitcoins from their wallets for items listed in dollars. If the business owner wants to accept payment in dollars, they can simply click a button in the Chivo app to convert the Bitcoins immediately to dollars, according to Bukele. Converting the currency “will be completely optional. The dollar will continue to be legal tender,” Bukele said.
The Chivo wallet will be able to be downloaded in September and it will be compatible with other Bitcoin wallets, Bukele said.
El Salvador will provide free instruction for businesses on Bitcoin transactions and strive to improve Internet and mobile phone resources to encourage the cryptocurrency’s widespread use. Businesses that are not currently technologically able to receive electronic payments will be excluded from the legislation.
Their are those that have some resistance to the plan. Fitch Ratings said that the laws implementing Bitcoin as legal tender will increase regulatory risks for banks and financial institutions, including the risk of potentially violating international anti-money laundering and terrorist financing laws.
The International Monetary expressed disdain for the move while the World Bank denied an inquiry from the El Salvadoran government to assist with Bitcoin establishment. Bitcoin weakened 4.4% to $33,338 upon news of the rejection.