El Salvador’s dangerous gamble on bitcoin

El Salvador’s dangerous gamble on bitcoin

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Is it cool to adopt cryptocurrency as legal tender? El Salvador thinks so. On Tuesday, the small Central American nation became the first in the world to adopt bitcoin as an official currency. Taxes may be paid in the cryptocurrency and merchants must accept it alongside the US dollar, the national currency since 2001, if they have the technology.

A network of cash dispensers will allow users to convert bitcoin into dollars free of commission, backed by a $150m government fund. Salvadorans will receive a free $30 in a digital wallet called Chivo — “cool” in local slang.

Nayib Bukele, El Salvador’s authoritarian president, thinks the move will promote foreign investment and make it cheaper for expatriate Salvadorans to send home billions of dollars of remittances. The haste of the project is remarkable. Bukele announced the plan in early June. Three days later, his supporters in Congress passed a brief law late at night allowing the adoption of bitcoin within 90 days.

Crypto enthusiasts are excited by Bukele’s boldness. A campaign on social mediainvites supporters to buy $30 in bitcoin en masse on Tuesday to support El Salvador’s move.