El Salvador

On September 7, 2021, El Salvador became the first country in the world to make Bitcoin legal tender — giving it the same legal status as the US dollar, which had been the country’s official currency since 2001.

President Nayib Bukele announced the move at the Bitcoin conference in Miami months earlier, to a standing ovation from thousands of Bitcoin holders. The practical implications were significant: all businesses were required to accept Bitcoin as payment, the government launched a digital wallet called Chivo, and every citizen who signed up received $30 in Bitcoin.

The international reaction was mixed at best. The IMF warned of financial risks. Rating agencies downgraded El Salvador’s debt. Protesters took to the streets in San Salvador. Economists published papers about the dangers.

Bukele pressed ahead. The government began buying Bitcoin with state funds, eventually accumulating over 2,500 coins. He announced plans for a Bitcoin city, funded by Bitcoin bonds. He moved aggressively to position El Salvador as a Bitcoin destination for businesses and investors.

The results have been genuinely mixed. Tourism increased. Some businesses embraced the Chivo wallet. International remittances — which represented around 20% of El Salvador’s GDP — found a new, cheaper channel through Lightning Network.

But adoption among ordinary Salvadorans remained uneven. The Bitcoin city plans moved slowly. The IMF continued to press for changes.

What El Salvador proved definitively: a nation-state could make Bitcoin legal tender, the sky didn’t fall, and the conversation about Bitcoin as sovereign money shifted permanently.

Tomorrow: what actually happened in El Salvador day-to-day.

— The Daily Bit