El Salvador has big plans for Bitcoin: the Central American country seeks to become the first to declare Bitcoin legal tender and pave the way for wider adoption of Bitcoin among its population of 6.5 million.
The efforts are led by Nayib Bukele, a Salvadorian businessman and the country's president, and were announced by Strike founder and CEO Jack Mallers at the Bitcoin 2021 Conference in Miami.
“Next week, I will send to congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands” in the El Salvadorian economy, Bukele shared in a pre-recorded message.
El Salvador currently uses the U.S. dollar as its national currency; a large part of the country's population has no bank account. With many Salvadorians living overseas, reliance on remittance companies is particularly high, which often comes with high fees.
The proposed bill reads that "in order to mitigate the negative impact from central banks, it becomes necessary to authorize the circulation of a digital currency with a supply that cannot be controlled by any central bank and is only altered in accord with objective and calculable criteria."
While detailed information on the bill is yet to be revealed, Bukele has previously asked a number of firms developing Bitcoin infrastructure projects to pledge their support should El Salvador go through with the idea and become the world's first nation to embrace Bitcoin as part of its economy.
Among the firms that have promised their support to El Salvador are Bitcoin infrastructure firm Blockstream and payment application developer Strike.
In a letter of commitment to President Bukele provided to the BTC Times, Blockstream CEO Dr. Adam Back and CSO Samson Mow, wrote, "The Government of El Salvador has a unique opportunity to be the first country to make Bitcoin legal tender and a reserve asset. This is a historic undertaking that will provide prosperity and incredible opportunities for generations to come."
Besides the provision of the Blockstream Satellite infrastructure the firm has established to ensure world-wide Bitcoin network synchronization even in the event of internet outages or shutdowns, Back and Mow pledged support via Bitcoin mining operations and energy management, the modernization of El Salvador's financial infrastructure, and advice on cold storage solutions.
Strike's Jack Mallers wrote a similar letter of commitment, in which he said that "moving fast and first will generate outsized value capture for El Salvador."
Mallers further elaborated that "as the first country to make bitcoin legal tender, El Salvador will attract the biggest names and smartest engineers in Bitcoin, cryptocurrencies, and adjacent technologies to help turn El Salvador into a shining economic success story and an example for other countries to replicate."
Should El Salvador commit to the undertaking, Strike would establish its headquarters in the country, provide Bitcoin and Lightning infrastructure and support the development of further infrastructure projects, as well as advise the government on purchase and custody solutions.
If President Bukele's bill is approved, El Salvador will become the first country in the world to accept Bitcoin as legal tender, setting a precedent on the global stage.