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El Salvador becomes the first country in the world in which bitcoin becomes a legal tender cryptocurrency, but not without controversy

The Legislative Assembly of El Salvador has approved this morning the law that converts bitcoin into legal tender in El Salvador. The country becomes the first in the world to offer such support to the cryptocurrency.

Nayib Bukele, president of El Salvador, already announced his intentions a few days ago, and now that proposal has become a reality, although not without controversy. Among other things because forces businesses and companies to accept bitcoin as a means of payment when this cryptocurrency is not designed to replace or be an alternative to fiat money.

El Salvador makes history in the world of cryptocurrencies

According to Diario El Salvador, the approval came after the favorable opinion of the financial commission. The use of bitcoin, they add, “will not affect the monetary integration law that allows the use of the dollar., a currency that will have bitcoin as a reference whose use as legal tender will be up to 90 days after the regulation is published in the Official Gazette. “Bukele celebrated the decision a few minutes ago on his Twitter account:

The exchange between bitcoin and the US dollar will be freely established by the market, but also all prices may be expressed in bitcoin and all tax contributions can be paid in bitcoin.

One of the provisions of the preliminary draft sent by Bukele to the Assembly specifies as “Every economic agent must accept bitcoin as a form of payment when it is offered to him by whoever acquires a good or service.“.

That means that those providing products and services, even in small businesses, will be forced to accept bitcoin as a means of payment. In the preliminary draft it is indicated in Art. 7 that “the State will provide alternatives that allow the user to carry out transactions in bitcoin”.

Even so, it is added in Article 12 of the draft, “are excluded from the obligation expressed in Article 7 of this law, those who by a notorious fact and obviously do not have access to the technologies that allow executing transactions in bitcoin “.

Controversy and uncertain future for the implementation of the law

The approval of bitcoin has had an uneven reception on Twitter, where the positions found were clear. While crypto believers celebrated this historic milestoneCitizens of El Salvador – a country in which Bukele holds almost absolute power – criticized that this law was much less important than other measures that should be approved in other areas.

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Bitcoin only supports 7 transactions per second, a number that makes it highly undesirable as a traditional payment currency.

The proposal does not mention other cryptocurrencies, something that is remarkable especially considering that bitcoin is not properly designed to act as legal tender when making payments: the number of concurrent transactions that it supports is very low, which probably makes the implementation of this measure complex.

It is therefore difficult for businesses to operate in an agile way with bitcoin as legal tender – something in which transaction fees also pose a problem – and the measure will probably end up giving legal support to its already frequent use as a store of value.

In the factual draft Nayib Bukele explained how “approximately 70% of the population does not have access to traditional financial services“Cryptocurrencies have precisely been a way for the unbanked population to have an alternative when it comes to accessing financial services.

The plenary session and voting they were broadcast through YouTube, but an interview with the president was also broadcast through Twitter Spaces in which Jack Dorsey was present, who has been defending the cryptocurrency market in general and bitcoin in particular for years.

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