Back in June, we reported that El Salvador, the tiny Central American nation known as the home country of many of the migrants who wind up asking for amnesty at the southern border of the US, would become the first country in the world to recognize bitcoin as an official legal tender.
That was weeks ago. Now, the El Salvadoran government is preparing for its new era of relying on bitcoin as its primary means of transacting by installing 200 bitcoin ATMs - which are already popular in the US and in Europe.
President Nayib Bukele shared his plans for the bitcoin rollout via social media on Sunday.
Bukele, who is the principal figure behind the country's push to adopt bitcoin, said El Salvadorans will soon be able to convert their bitcoin to US dollars immediately once bitcoin is recognized as legal tender. To help facilitate this, there will be 200 bitcoin ATMs and also 50 bank branches capable of allowing them to swap their crypto for fiat, and vice-versa.
The "Chivo ATMs" (named after the government's official bitcoin wallet, also called "chivo", which is a slang term for "cool") will eventually be "everywhere" Bukele said, allowing El Salvadorans to withdraw cash or make deposits 24 hours a day without paying commissions or paying any fees. The app will also allow Salvadorans abroad to send money - both dollars and bitcoin instantly to their relatives in El Salvador, saving them the hefty commissions that companies like Western Union demand. Fee-free remittances are expected to save the country some $400MM per year.
Transactions will be commission free, he said, adding that there will also be 50 financial branches across the country for withdrawing or depositing money.
Those who refuse to use bitcoin will still have the option of using the US dollar, which will become the country's other official currency.
"What if someone doesn't want to use Bitcoin?" said Bukele. "Don’t download the [Chivo] app and continue living your normal life. Nobody is going to take your dollars...Someone can always queue up at Western Union and pay a commission."
Bukele first announced his plans to make bitcoin legal tender at the Bitcoin 2021 conference in Miami. The bill swiftly passed through the country's legislative assembly, and is now slated to take effect on Sept. 7.
On that day, Salvadorans will be able to download the government-backed Chivo digital wallet, and enter their ID number and receive $30 in bitcoin, according to comments from Finance Minister Alejandro Zelaya, who delivered an interview on a local TV station Monday. The government has also created a $150MM fund to back Bitcoin-to-dollar conversions, he said.
To help further strengthen El Salvador's crypto economy, Bukele has also asked a state-owned geothermal power company to make its facilities available to bitcoin miners.
With crypto prices back on the rise, might the start of El Salvador's big experiment have an impact on crypto markets? Or will Salvadorans overwhelmingly prefer transacting in US dollars instead of the digital currency?