Last Updated: 8 September 2022
It is one year since the bitcoin law came into force in El Salvador. On 7 September 2021, the digital internet currency became an official means of payment in a country for the first time ever.
A lot has happened since then. But a lot happened before that too. Three months before the bitcoin law went into effect, President Bukele came out with the scoop.
At the Bitcoin2021 conference in Miami, he addressed the crowd in a video message. Together with Jack Mallers from Strike, they had a master plan: to make bitcoin a legal tender.
With President Bukele’s enormous popularity, this was an easy job. The bill was drafted, sent to parliament and passed within days. Three months later, on 7 September, the law went into effect.
— Nayib Bukele (@nayibbukele) June 9, 2021
Legal Tender Day
On the day in question, the impact of the law became visible. Large companies immediately joined in. McDonalds, Starbucks, PizzaHut and Wendy’s all accepted bitcoin. The Chivo wallet and ATMs were also launched, allowing locals to receive and exchange bitcoin for dollars for free.
Why did El Salvador choose bitcoin? There were roughly three reasons:
- The Central American country used the colon until 2000, but had been dependent on the policies of US central banks for two decades; they use the dollar.
- 70% of the population did not have a bank account. Downloading a bitcoin wallet is a snap.
- 25% of gross domestic product (GDP) came from abroad. However, getting this money to the relatives of the diaspora was expensive. MoneyGram and Western Union were making tons of money, while citizens had to pay 10% or even 20% of the business in fees.
Meanwhile, the country has bought 2,381 BTC from the market and a plan called Bitcoin City has also been announced. The plan is to raise $1 billion in investment with Volcano Bonds, half of which will be invested directly back into bitcoin.
The IMF and the World Bank were critical of the plan, everyone in the country could get $30 worth of bitcoin for free, and non-profits such as MyFirstBitcoin created a furore. Companies such as Paxful, IBEX Mercado and OpenNode have found their niche in the economy and the country’s banks are creating their own bitcoin wallets.
Furthermore, there are two or three meetups every week for crypto fanatics and El Zonte is busier than ever.
Interviews and conversations
Is everyone using bitcoin – now a year later? No.
Does everyone – now a year later – have a bitcoin wallet? Not by a long shot.
Is everyone – now a year later – using bitcoin for remittances? Far from it.
On Bitcoin Focus you can read how it is done now. Editor Arnold talked to merchants at markets about their take on bitcoin.
Still, you can survive on bitcoin if you want to. And all sorts of bitcoin companies and initiatives have been started. Tiankii and Torogoz are two great local examples. We also spoke to Enrique of DienteZonte, a bitcoin dentist.
Did you lose track of how things went on 7 September a year ago? Watch our documentary and enjoy a bit of bitcoin history!