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Why has El Salvador officially adopted bitcoin as its currency?

 

  El Salvador has officially adopted bitcoin as legal tender. Draft legislation may soon lead Panama down the same path, while China, the US and the UK are investigating launching their own cryptocurrencies. Here’s what you need to know.

Why are countries adopting bitcoin?

President Nayib Bukele hopes bitcoin will alleviate El Salvador’s prickliest economic problems: citizens sending money home from abroad account for up to a fifth of the country’s GDP, but they have to pay high transaction costs, and 70 per cent of people have no bank account. Bitcoin enables quick, cheap payments across borders, and doesn’t require banks.

Every Salvadoran has been gifted $30 in bitcoin (the US dollar is the nation’s other official currency) and can now shop or pay their taxes with it. Companies must accept it by law, but are permitted to instantly swap all bitcoin to dollars once received. A Panamanian congressman has now proposed legislation that would see the country follow in El Salvador’s footsteps

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