Bitcoin Plunges On Day El Salvador Becomes First Nation To Make Cryptocurrency A Legal Tender

Written by Paul Sacca on
El Salvador makes Bitcoin the official currency of the nation, value of BTC plummeted but rebounded.

El Salvador has become the first country to accept Bitcoin as legal currency. Starting on Tuesday, businesses in the Central American country can accept the popular cryptocurrency as a legal form of payment, joining the U.S. dollar as the country’s principal mediums of exchange.

Aaron van Wirdum, a journalist at Bitcoin Magazine, said he was able to pay for a breakfast at a McDonald’s in El Salvador’s capital city with Bitcoin.

“Just walked into a McDonald’s in San Salvador to see if I could pay for my breakfast with bitcoin, tbh fully expecting to be told no,” he tweeted on Tuesday. “But low and behold, they printed a ticket with QR that took me to a webpage with Lightning invoice, and now I’m enjoying my desayuno traditional!”

To jumpstart the Bitcoin movement in the country, the El Salvadoran government offered $30 in Bitcoin to every citizen in the country who register with the nation’s digital wallet called “Chivo.”

Salvadorian taxi driver Daniel Hercules told BBC, “I’ve accepted Bitcoin for about two months since I knew this was coming. I just had someone pay me $40 in Bitcoin for a fare to the airport but it’s rare. Only around 10% of customers prefer to pay with Bitcoin.”

Hercules admits that converting Bitcoin into the U.S. dollar costs 10%, so he is using the digital coins like a savings account, but worries about the cryptocurrency crashing.

Despite the potential of more countries like El Salvador using Bitcoin as an official legal currency, Bitcoin’s price plunged on Tuesday morning. In the span of less than an hour, BTC tumbled from $50,750 to $42,830, according to Coinbase. Bitcoin fell as much as 17%, its lowest level in nearly a month. However, the price rebounded a bit, jumping up nearly $5,000 in 15 minutes.

Bitcoin’s wild sell-off affected other cryptocurrencies, as other digital coins were down as much as 23% on Tuesday. Ethereum was down 13%, XRP plunged 23%, Cardano lost 17%, and Dogecoin fell 18%, according to CoinMarketCap.

The swift decrease in Bitcoin price opened up a buying opportunity for El Salvador. Nayib Bukele, El Salvador’s President, wrote on Twitter that the country is “buying the dip,” and added 150 new digital coins. El Salvador now holds 550 BTC, which is now worth approximately $25 million.

“He also thanked the International Monetary Fund, or IMF, for helping his country ‘save a million in printed paper’ on his government’s Bitcoin purchase,” Cointelegraph reported. “For context, the IMF has come out against El Salvador’s Bitcoin foray. Its warnings about El Salvador’s initiative may have contributed to the recent bout of market volatility.

On Monday, Bukele warned there would be a “learning curve” for the country adopting Bitcoin, but said the nation “has the right to advance towards the first world.”

“Like all innovation, the process of #Bitcoin in El Salvador it has a learning curve. Every road to the future is like this and not everything will be achieved in a day, or in a month,” Bukele said. “But we must break the paradigms of the past. El Salvador has the right to advance towards the first world.”