President Nayib Bukele in the Legislative Assembly building in San Salvador, El Salvador, in June. Photo: Camilo Freedman/Bloomberg via Getty Images
El Salvador bought its first 400 bitcoins on Monday, and President Nayib Bukele pledged to buy "a lot more" ahead of adopting the cryptocurrency as legal tender.
Why it matters: El Salvador will become on Tuesday the first country to formally adopt bitcoin — marking the "biggest test" the digital currency has faced in its 12-year history, per Bloomberg.
By the numbers: 200 bitcoins had a market value of about $10 million as of Monday night, bitcoin.com notes.
The big picture: El Salvador's legislature voted in June to make bitcoin legal tender.
- The digital currency will be used alongside the U.S. dollar, the nation's official currency.
Of note: The World Bank in June rejected the government of El Salvador's request to help the government implement bitcoin, citing environmental and transparency concerns.
How it works: The government will provide a bitcoin wallet, called Chivo, which will be pre-loaded with $30 in digital currency for users who've registered with a Salvadoran national ID number.
- "Businesses will be required to accept the digital coin in exchange for goods and services and the government will accept it for tax payments," Bloomberg notes.
What to watch: "Crypto is sexy but untested and complicated especially for a country like El Salvador,” Stifel Nicolaus & Co. managing director Nathalie Marshik told Bloomberg.
- "It’s extremely risky, and there is the question of, is the Bandesal fund big enough? The regulations look like the law, put together really quickly. It’s a big question mark."
Go deeper: El Salvador moves into bitcoin