El Salvador is the first country in the world to use the cryptocurrency Bitcoin as a legal tender in national law. After Bitcoin becomes legal tender status, the law stipulates that transactions between anyone and enterprises can use Bitcoin without rejection. But in fact, due to the huge volatility of Bitcoin prices, extremely high prices and long transfer times, most Salvadorans have never used Bitcoin, and now this economic reform has basically failed.
Congress, led by El Salvador’s ruling party, recently approved a confusing reform of Bitcoin law that removes the word “currency” when referring to Bitcoin, but still calls Bitcoin legal tender.
Of course, these are not the main point. The main point is that in accordance with the requirements of this reform, El Salvador has canceled the obligation to accept Bitcoin in transactions and debt payments. This means that in the future, El Salvadoran companies and individuals will have the option to use Bitcoin in transactions instead of being forced to accept Bitcoin.
The reason for this reform is El Salvador's debt problem. The International Monetary Fund (IMF) requires that the country must cancel Bitcoin's legal tender status in order to obtain US$1.4 billion in financing. In order to obtain this loan, El Salvador had to agree to the IMF's request.
At present, in addition to purchasing Bitcoins, the El Salvador government is also building a power plant in the crater to mine Bitcoins. El Salvador also plans to continue to use various funds to purchase more Bitcoins for storage.
Related articles: