During a televised speech on Thursday, El Salvador President Nayib Bukele said that adult citizens will be offered $30 of Bitcoin to those who will install and register the country’s new cryptocurrency app, Chivo. This impacted a 5% jump to Bitcoin.
El Salvador is bordered by the Pacific Ocean to the south, Guatemala to the west, and Honduras to the northeast is located in Central America. This move makes El Salvador the first sovereign nation to formally adopt cryptocurrency. Bitcoin will assume the status as legal tender alongside the US dollar, not as a replacement for it.
According to Mr. President, the government will create its own Bitcoin wallet named Chivo that translates “goat” in English. It is known to be compatible with both Bitcoin and Dollars. According to Mr. President, it is available on both Android and iOS platforms.
“This law is made to generate employment, to generate investments, and at no moment will it affect anybody, like opponents have tried to say with their dirty campaign,”Nayib Bukele said in his speech
Not only that! According to Bloomberg, Mr. President stated the government will provide training for businesses on Bitcoin transactions and seek to improve Internet and mobile phone penetration to encourage cryptocurrency’s use. Businesses that are technologically unable to receive e-payments will be excluded from the law.
The crypto app Chivo could be used to make purchases at stores in Bitcoin or to take out dollars from certain ATMs, This law-making Bitcoin legal tender will enter into force on Sept. 7 and after that, it will benefit citizens to pay taxes in Bitcoin after the law takes effect.
This sounds cool to the general public and CryptoCurrency investors but the World Bank rejected a request from the government while IMF International Money Fund has also criticized this move. Apart from these centralized authorities and the general public, it has a lot of risk factors.
On Bloomberg, Fitch Ratings said in a report Thursday that the legislation establishing Bitcoin as legal tender would increase regulatory risks for financial institutions, including the potential of violating international anti-money laundering and terrorist financing standards.
Ransomeware attacks, phishing, etc are getting common these days, for the past few months we have seen Facebook Data leak that even included Mark Zuckerberg’s data. Binance getting hacked and many lost a lot of money. Colonial pipeline being attacked by hackers not only that Mcdonald’s also had a data breach, a few days ago. The majority of big names are being targeted yet Mr. Nayib Bukele didn’t state anything about its security.
A rushed implementation of the new alternative payment system platform will affect financial institutions’ management framework for operational, cyber/ransomware, currency and liquidity risks.Rolando Martinez – A Reputed Analyst
Whereas, Bukele for his part, is optimistic.
“Are there benefits? Yes, lots,” he said. “Are there consequences? No, none.”
A few months ago, Wall Street Analysts predicted that Bitcoin will reach $100,000 but instead of increasing it had a massive dip. Now, it has a value of about $30,000 which is quite less than it was expected to be.
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