On 7 September 2021, also known as “Bitcoin Day” in El Salvador, Bitcoin became legal tender in the small Central American. Bitcoin advocate Jack Mallers called this day “One small step for Bitcoin, one giant leap for mankind.”
So how did we get here?
It all started on June 5 when Zap Solutions (a Bitcoin payments startup that uses the Lightning Network) Founder and CEO Jack Mallers — who helped with drafting the bill — made the announcement at Miami’s Bitcoin 2021 conference.
During his talk, an emotional Mallers presented a recorded video message from President Bukele and read out a small passage from the proposed bill. Mallers went on to say that his firm would be opening an innovations centre in El Salvador with the help of Blockstream.
At approximately 06:05 UTC on June 9, this proposed bill got passed by the Legislative Assembly (with 62 out 84 voting in favor of it).
Then, on June 25, Reuters published a report that said El Salvador President Nayib Bukele had announced during a national address on Thursday (June 24) that “Bitcoin Law” would become effective on September 7.
Here are a few highlights from that speech (as reported by “La Prensa Gráfica”, one of the country’s most popular daily newspapers):
- The English translation of Article 7 of the Bitcoin Law states: “Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.” However, the president said assured the people of El Salvador that “nobody has to receive bitcoins if they don’t want them”.
- Pensions and salaries will continue to be paid in U.S. dollars.
- Bank account balances will remain in U.S. dollars (i.e. not get converted to Bitcoin).
- The president pointed out that Article 7 of the Bitcoin law that those who do not have the technology to accept Bitcoin do not have to accept it. The English translation of Article 7 states: “Those who, by evident and notorious fact, do not have access to the technologies that allow them to carry out transactions in bitcoin are excluded from the obligation expressed in Art. 7 of this law. The State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.”
- The government is building an electronic wallet called “Chivo” that will be able to hold both USD and BTC. This mobile app will be available for downloading from the iOS and Android app stores from September 7. Any El Salvador citizen who registers the wallet (which will require entering their Unique Identity Document number and cell phone number, as well as submitting to a face scan) can receive $30 worth of Bitcoin from the government (but it seems that they can choose to opt out and receive this amount in USD instead). The president said that “those 30 dollars are to promote the use of bitcoin and to encourage people to download the App”.
- The Chivo wallet will allow withdrawals at ATMs (but it is not known yet what the commission will be).
- The Development Bank of El Salvador (Bandesal) will guarantee automatic convertibility, which means that businesses that get paid in BTC can choose to receive USD.
Well, yesterday, Mallers, who is a strong proponent of Bitcoin’s Lightning Network and is spending a lot of time in El Salvador to help the country with its transition to Bitcoin, said that although Bitcoin Day might be “one small step for Bitcoin”, it is “one giant leap for mankind”, and proceeded to tell his over 164K Twitter followers why he felt this way.
In the remaining tweets of this thread, Mallers explained further why yesterday was such an important day. Near the end, he told the story of how he had been managed earlier in the day — via Bitcoin’s Lightning Network — send some funds from his U.S. bank account to a Salvadoran friend nearly instantly and without having to pay remittance fees.
Also, in one tweet, he embedded a video of a lady in a local branch of Starbucks paying for mineral water using his company’s Bitcoin Lightning payment app Strike, which was launched in El Salvador on March 31.
Yesterday, Aaron van Wirdum, a journalist who works for Bitcoin Magazine, who is currently visiting San Salvador (the capital of El Salvador), reported that he had paid for his breakfast at McDonald’s with Bitcoin.
Bitcoin payment processing startup OpenNode announced that they are partnering with MacDonald’s in El Salvador to allow their branches in that country to accept BTC payments via the Lightning Network.
Also, yesterday, Mario Aguiluz, Chief Sales Officer at IBEX Mercado, said that he had paid for his coffee at a branch of Starbucks in El Salvador with Bitcoin and joked that he does not come to regret this decision in the years to come just like “Bitcoin Pizza Guy” (as you might know already, on 22 May 2010, Laszlo Hanyecz, a Florida-based software engineer, paid 10,000 bitcoins for two Papa John’s pizzas).
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.