El Salvador became the first country in the world to accept bitcoin as a form of payment and considers it a legal tender.
Policy makers in the country voted “overwhelmingly” in favor of Bitcoin to become a Law, receiving 62 of the legislature votes out of total 84 votes.
The price of bitcoin increased by 5% to $ 34,239. 17, shortly after the vote.
Why?
Earlier on Wednesday, the President Nayib Bukele had sent the bill to the country’s Congress for a vote.
“The purpose of the act is to regulate bitcoin as a legal tender, with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out,” the law reads.
The price in malls and other stores can be shown as bitcoin and transactions or taxes may be payable in digital currency, and the exchanges of bitcoins is not going to be subject to capital gains tax.
How?
Bitcoin is well known for the wild price swings that have prompted critics to suggest that it is not likely to be suitable in order to be an effective currency.
It is still not clear how El Salvador plans to eventually shift to using bitcoin as a form of payment.
The exchange rate with the dollar is going to be “freely determined by the market, because” the law has proposed to do so. At present, it is the official currency of El Salvador (the Dollar).
The law also states that the state shall provide for the training and education needed, and the mechanisms to allow the public to accept bitcoin transactions.”
Digital Modes Of Payment In El Salvador
According to the Bitcoin Team, about 70% of the population of El Salvador does not have access to traditional financial services.
Cryptocurrency is seen as a way of increasing economic integration.
Bukele submitted the law to Congress after he announced last week that El Salvador struck a partnership with digital wallet company Strike, to build the country’s modern financial infrastructure using bitcoin technology.
