On June 9, 2021, El Salvador became the first country to officially classify Bitcoin as a legal currency. Salvadoran President Nayib Bukele had proposed to recognise the world’s oldest and arguably the most popular cryptocurrency as legal tender and the country’s lawmakers agreed. Bukele said the move would make it easier for Salvadorans abroad to send money home. Terming it “history!”, Bukele had then tweeted, “The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress. 62 out of 84 votes!”
The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress.
62 out of 84 votes!
— Nayib Bukele ???????? (@nayibbukele) June 9, 2021
On August 23, the president said that El Salvador was installing 200 ATMs ahead of adopting Bitcoin on September 7
Many expected that more countries would immediately follow El Salvador’s move as curiosity and interest in Bitcoin and other crypto coins like Ethereum and Dogecoin had been rising rapidly.
Status of legal tender
But, except for El Salvador, no other country has so far given Bitcoin, or any other cryptocurrency, the status of a legal tender. In many of these countries, like the US, Canada and India, trading in these virtual currencies is allowed. Some like China and Russia, however, are against allowing trading in cryptocurrency.
One of the major reasons for yet not legalising cryptocurrency as legal tender could be their highly volatile nature and the unpredictability of the disruption that they may cause. It could also be possible that governments around the world may be waiting for the underlying blockchain technology to mature before giving a sovereign backing to this form of currency.
Legalising Bitcoin as legal tender will mean businesses must accept Bitcoin as a payment method, alongside the fiat currency – such as the US dollar, Indian rupee etc. Bitcoin, a computer-generated digital asset created through a process called “mining”, has seen large fluctuations in value over the years. In April, it had reached its life-time high value around $65,000 (around Rs 48 lakh at the current exchange rate). But lost the gains in a market crash the next month. Since then it has recovered but not enough to reach the peak yet.
Still, many corporations, including Tesla CEO Elon Musk, see a huge potential in cryptocurrency. Some businesses like restaurant chains, delivery services and online stores have begun accepting payments in Bitcoin. Musk once said he sees cryptocurrency as a future currency of the Earth. In spite of that, his electrical vehicle-making company has reversed its decision to accept payment in Bitcoin.
There are more people invested or trading in cryptocurrency today than ever before. According to market research firm Finder, the top five countries with the largest ownership of cryptocurrency are in Asia, and 30 per cent of people polled in India said they held cryptocurrency.