El Salvador Becomes First Bitcoin Nation as 70% of Country Remains Unbanked

With over $20 million in Bitcoin, the El Salvadorian government is set to put the basis of their already crumbling economy on the back of the world’s most sought-after cryptocurrency. President Naykib Bukele took to Twitter over the weekend to boast about his country’s unprecedented economic shift in a time when 70% of residents lack access to traditional financial services.

In a country where roughly half of its population has no internet access, the government has released a state-sponsored app (called Chivo Wallet) that will allow its citizens to buy goods using Bitcoin the government owns. Mostly dominated by the US Dollar, the local economies of El Salvador will now be forced to accept Bitcoin as legal currency.

Each citizen who uses Chivo will be given $30 worth of Bitcoin to jumpstart the spending.

The move has faced backlash from all different types of groups including economists, politicians, and investors. The world is watching to see if this shift in currency will help pull the country out of its troubles, or if it is more public relations posturing — at the expense of the El Salvadorian economy.

The United States top official in El Salvador, Jean Manes, referred to the nation at a press conference Saturday as “a democracy in decline” as the move is just one of a handful of that technically increase the power of the federal government in the small country. Manes compared Bukele to the likes of Hugo Chávez, using his notoriety with the population to cover up a strategic economic collapse and dismantling of democracy.

The El Salvadorian embassy did not immediately respond to a request for comment.

The value of Bitcoin dropped by 15% against the US dollar on the day of its debut.