It's official: El Salvador has become the first country to accept Bitcoin as legal currency.
The necessary legislation was passed in June and is now in effect. President Nayib Bukele called the moment historic.
The new legislation effectively means that Bitcoin is equal to El Salvador's legal fiat money, which is the U.S. Dollar. Salvadorans can use Bitcoin legally for cash payments. Businesses operating in the country must accept Bitcoin payments if they have the technology.
Bukele also tweeted that the country had purchased 400 bitcoins, totaling $20.3 million.
El Salvador's decision to accept Bitcoin is noteworthy for many reasons. It will give Bitcoin more legitimacy as a worldwide currency and could allow Salvadorans to send remittances abroad at a lower cost. Bitcoin transfers usually cost several dollars regardless of how much is transferred. However, Bitcoin's volatility can cause problems for users. Bitcoin's price fluctuated sharply on many occasions, sometimes in just hours.
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It is notable that El Salvador has decided to purchase bitcoins. The country's fate is tied to Bitcoin prices, which are known for soaring and falling rapidly over short periods. Moody's Ratings has already downgraded the country's credit rating following the passage of the Bitcoin law.
Bitcoin's price rose dramatically in the past 48 hours, rising from approximately $50,600 to $52,900 each coin. However, it has since fallen to $50,800.
