Bitcoin becomes legal tender in El Salvador

El Salvador has become the first country to accept Bitcoin as legal tender, sparking further debate about both the opportunities and dangers of cryptocurrencies.

A of 7 September, businesses and consumers will be allowed to accept and use the digital coins as payment in the South American country.

As part of the announcement, the country's government is also issuing a new digital wallet app, which will initially come with $30 (£22) in Bitcoin to every citizen who downloads it. There are also reports that there will be more than 200 new cash machines installed across El Salvador that enable dollars to be converted into Bitcoin.

However, not everyone is onboard, as recent protests in the capital, San Salvador, have shown. Many feel that the new interest in crypto is a tactic being used to distract from widespread scrutiny of the government and its policies.

There are also concerns that the digital coin isn't fully understood throughout the country. A recent study by the Central American University (UCA) found that only 4.8% of people knew what Bitcoin was and how it was used. What's more, over 68% of those questioned said they disagreed with using it as a legal tender.

A number of governments, such as China, have moved in the opposite direction with policies aimed at restricting the adoption of cryptocurrencies and calling for it to have increased regulation. Bitcoin, in particular, has a history of volatility, with dramatic rises in value and sharp declines. Over the last year alone, its value has jumped from $10,000 for a single coin to a high of $63,000 in April 2021. It has since fallen by half, sitting at around $30,000 in July this year.

Off the back of the decision by the El Salvador government it is thought that the value of Bitcoin has risen to around $51,000. On Tuesday, Reddit users began buying $30 worth of Bitcoin in support of the El Salvadoran government.