Bitcoin is now an official currency in El Salvador, alongside the US dollar.

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Bitcoin becomes an official currency in El Salvador alongside the US dollar

Will more countries follow suit and accept Bitcoin as legal tender?

Due to its unpredictable price volatility, many have questioned whether Bitcoin is suited for use as a common currency. For example, Bitcoin has gained over 14 percent in the last 24 hours as a result of the news. El Salvador’s acceptance of Bitcoin, if nothing else, might be an instructive case study regarding the feasibility of Bitcoin as a conventional currency.

El Salvador has become the first country to formally recognise Bitcoin as legal money.

The Bitcoin Law was enacted by a supermajority of the Salvadoran Congress, with 62 lawmakers voting in support of the proposal.

According to the Bitcoin Law, products pricing can now be shown in Bitcoin, and tax contributions can be paid using the virtual currency. Furthermore, Bitcoin exchanges will be exempt from capital gains tax. The legislation also specifies that the market would determine the exchange rate between Bitcoin and the US dollar, the country’s second recognised currency.

El Salvador is located in Central America, bordered by Honduras on the northeast, Guatemala on the northwest and the Pacific Ocean to the south. According to Statista, El Salvador had a GDP of $27.02 billion in 2019.

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In April, the world’s largest cryptocurrency by market cap hit an all-time high of more than $64,000 but has since lost nearly half of its value.

Image credit FabrikaSimf

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