MIAMI – El Salvador seeks to introduce legislation that will make it the first sovereign nation in the world to adopt bitcoin as legal tender, along with the US dollar.
In a video feed to Bitcoin 2021, a multi-day conference in Miami that is billed as the largest bitcoin event in history, President Nayib Bukele announced El Salvador’s partnership with the digital wallet company, Strike, to build the country’s modern financial infrastructure using bitcoin technology.
Strike founder and CEO Jack Mallers said this will become the “shot heard around the world for bitcoin.”
“What is transformative here is that bitcoin is both the largest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential fiat currency inflation shocks, ”Mallers continued.
Speaking from the main stage, Mallers said the move will help unleash the power and potential of bitcoin for everyday use cases in an open network that benefits people, businesses and public sector services.
El Salvador is a predominantly cash economy, where approximately 70% of the people do not have bank accounts or credit cards. Remittances, or money sent home by migrants, represent more than 20% of El Salvador’s gross domestic product. Established services may charge 10% or more in fees for those international transfers, which can sometimes take days to arrive and sometimes require a physical pickup.
While details on how the implementation will work are still awaited, CNBC is told that El Salvador has assembled a team of bitcoin leaders to help build a new financial ecosystem with bitcoin as a base layer.
“It was inevitable, but here already: the first country on the way to converting Bitcoin to legal tender,” said Adam Back, CEO of Blockstream.
Back said he plans to bring technologies such as liquid and satellite infrastructure to make El Salvador a model for the world.
“We are pleased to help El Salvador on its path towards adopting the Bitcoin Standard,” he said.
This is not El Salvador’s first step towards Bitcoin. In March, Strike launched its mobile payments app there, and it quickly became the number one downloaded app in the country.