El Salvador to Use BitGo Wallets as Bitcoin Becomes Legal Tender
The law making Bitcoin legal tender in the country came into effect today.
- Bitcoin has become legal tender in El Salvador.
- The country's official Chivo digital wallet will be provided by crypto custody firm BitGo.
- El Salvador bought more Bitcoin after the asset tumbled in value today.
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El Salvador made Bitcoin legal tender today. The country has also announced that BitGo will be its digital wallet provider.
Bitcoin Becomes Legal Tender in El Salvador
El Salvador has made history today as the first country to use Bitcoin as legal tender.
To facilitate the country’s Bitcoin adoption, the Salvadoran government has developed a Bitcoin and U.S. dollar digital wallet called Chivo. Forbes has reported today that Chivo’s application programming interface and security platform will be provided by the digital asset custody provider BitGo.
Founded in 2013, BitGo has quickly become one of the highest valued blockchain companies globally, offering multi-signature wallets and custody services for Bitcoin. In May, the cryptocurrency investment firm Galaxy Digital finalized plans to acquire BitGo for a record $1.2 billion, marking the first $1 billion deal in the crypto industry.
Speaking on El Salvador’s Bitcoin adoption, BitGo CEO and co-founder Mike Belshe commented:
“Digital assets look so different from what we’ve seen with other types of money, and so people wonder about how [they] fit in, but this is an opportunity to build financial freedom for the people of El Salvador.”
In addition to providing the Chivo wallet, Belshe stated that BitGo had developed a small commercial relationship with El Salvador’s central bank, but exact terms were not disclosed.
Those using the BitGo-backed Chivo wallet will be able to transfer Bitcoin and U.S. dollars between wallets free of charge but will incur a fee when moving funds to non-Chivo wallets. However, the Chivo wallet has faced criticism for being custodial, meaning that BitGo will store funds on behalf of users, similar to a centralized crypto exchange. Custodial wallets are popular among less experienced crypto users as they don’t require users to safeguard private keys.
To encourage the use of the new wallet, Salvadoran president Nayib Bukele announced in June that every adult citizen who downloads the Chivo wallet would receive a free $30 worth of Bitcoin. However, Bitcoin dipped over 10% below $47,000 today, meaning the airdrop would have a value closer to $27. The leading crypto has slightly recovered since the crash, with President Bukele revealing that the government used the opportunity to accumulate more coins. The country currently holds 550 Bitcoin, he wrote on Twitter.
It appears the discount is ending 🥲
Thanks for the dip @IMFNews. We saved a million in printed paper.
— Nayib Bukele (@nayibbukele) September 7, 2021
The path to Bitcoin adoption in El Salvador has not been easy. Shortly after the bill making Bitcoin legal tender was approved in the Salvadoran congress in June, the opposition party filed a lawsuit against the motion but was ultimately unsuccessful. More recently, in August, anti-Bitcoin protests erupted in the country’s capital, with protestors expressing concerns over Bitcoin’s price volatility and its use in criminal activities.
Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.