On Saturday, August 28, 2021, a Chivo Bitcoin automated bank teller machine (ATM), was installed at the Multiplaza Mall, San Salvador, El Salvador. As part of its plan to legalize the token, El Salvador installed Bitcoin ATMs. This allowed citizens to convert cryptocurrency into dollars and withdraw the cash in cash.
Following the tweets, bitcoin's price rose to $52,681.85 and was trading at about $12:16 AM. ET Tuesday.
He wrote that "our brokers will be purchasing a lot more as deadline approaches"
These tweets were published a few hours apart. Based on the bitcoin price at time of tweets, the total amount of digital coin purchased was approximately $20.9 million
Monday's tweets by President Nayib Bukele revealed that 400 bitcoin had been purchased in total. This is the first step of a larger push to include the digital currency into the country's balance sheet.
El Salvador purchased approximately $20.9 million worth bitcoin one day before officially adopting the most popular cryptocurrency in the world as its legal tender.
These posts were made hours before El Salvador's June bitcoin law went into effect on Tuesday. El Salvador will be the first country to recognize bitcoin as legal currency. It will also work with the U.S. dollars. The world's critics and supporters will be closely watching this unusual experiment to see how it turns out.
Bukele's announcement is a significant milestone in bitcoin. El Salvador is now officially the first country that has added bitcoin to its balance sheet.
However, the policy has been criticized across the country. The Central American University surveyed nearly 70% of Salvadorans and found that they disagree with the decision by the government to accept bitcoin as legal currency. Many people were also confused about how to use the digital currency.
El Salvador's supporters claim that the move is a sign of growing acceptance of bitcoin, and that others could follow suit. According to the bitcoin law, the Salvadorian government hopes that it will increase financial inclusion in a country where 70% of citizens don't have access to traditional financial services.
According to the World Bank, more than 24% (or the money that is sent home by migrants) are important for El Salvador's economy.
The legislation allows prices and tax contributions to be displayed in Bitcoin. Also, exchanges in bitcoin are exempt from capital gains tax.
El Salvador has launched Chivo, a wallet app that citizens can sign up with their national ID to use bitcoin transactions. In an effort to accelerate adoption, users will be eligible for $30 worth bitcoin when they sign-up.
The Congress of El Salvador approved a law last Tuesday to establish a fund of $150 million to facilitate bitcoin-to-dollar conversions.
Bitcoin's volatility is a concern, which raises questions about its effectiveness as currency.
Philip Gradwell, chief economist of data platform Chainalysis said that Bitcoin is not intended to be an exchange currency so this was an early experiment.
"I believe the principal use of El Salvador will be in remittances, people using it for wealth preservation and maybe even to compete with the dollar in the country."