Bitcoin-as-a-payment is becoming reality in El Salvador after the country formally recognized the cryptocurrency as legal tender.
In an interview with local media, Javier Argueta, the legal counsel to the Presidential House of El Salvador, clarified the obligations of businesses the day before the country’s controversial Bitcoin Law recognizing BTC as legal tender took effect.
The legal counsel to the President of El Salvador has stated that businesses are mandated to accept Bitcoin from customers — but they are able to choose whether or not they will receive BTC or U.S. dollars once the transaction is settled.
El Salvador’s recognition of Bitcoin (BTC) as legal tender has opened up new payment options for its citizens, with fast-food empire McDonald’s reportedly accepting payments in the cryptocurrency through Lightning Network.
Journalist Aaron van Wirdum broke the news Tuesday after he visited a McDonald’s restaurant in El Salvador, where he was presented with a printed QR code directing him to an invoice page on Lightning Network. McDonald’s had 19 locations across the Latin American country as of 2019.
Lightning is a layer-two payment protocol designed to make BTC transactions more scalable. Although Bitcoin has succeeded as an investable asset, its adoption as a medium of exchange has been limited. Bitcoin payments were at the core of Satoshi Nakamoto’s 2008 whitepaper describing BTC as electronic cash. (Interestingly, Nakamoto’s forum posts and correspondences used “cash” and “gold” synonymously.)
Lightning Network will likely prove invaluable if El Salvador hopes to achieve the mass adoption of Bitcoin payments. Beyond immediate transactions, however, El Salvador’s Bitcoin gambit could prove successful by streamlining global remittances, increasing the wealth of its citizens and attracting crypto-focused entrepreneurs to the country.
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El Salvador’s Bitcoin Law officially came into effect on Tuesday, proving to be a classic “buy the rumor, sell the fact” event for markets. Peak to trough, the BTC price crashed 19% between Monday and Tuesday, reaching a low of $42,900.
President Nayib Bukele confirmed Monday that his government had purchased its first Bitcoin. As of Tuesday, the country held 550 BTC in its reserves.