Things did not go smoothly.
Exactly what that means in practice remains to be seen.
Read on for a breakdown of the issues and context.
Why did El Salvador adopt Bitcoin?
As a poor country with relatively few natural resources, El Salvador has long struggled with economic instability.
Lacking its own official currency, the country previously used US dollars as its only currency.
(Bitcoin will not replace the US dollar, but will serve as an alternative.)
But El Salvador is a sovereign nation, not a US territory.
How might Bitcoin help El Salvador?
Adding Bitcoin as a second official currency could benefit an economy that depends heavily on remittances.
Nearly one-quarterof El Salvador’s GDP comes from remittances.
This is money that Salvadorans working in other countries send back home.
In theory, using Bitcoin as legal tender gives El Salvador more economic autonomy.
And, on a practical level, it reduces the cost of money transfers.
Sending dollars from the US to El Salvador currently requires intermediaries who charge transfer fees.
Sending that money via Bitcoin could mitigate those fees.
Another benefit is the digital nature of Bitcoin.
What are the risks?
Is El Salvador the first country to do this?
El Salvador is the first country in history to adopt a cryptocurrency as a legal tender.
What’s been the reaction inside of El Salvador?
The plan has not been popular.
Nearly half said they knew nothing about Bitcoin.
Foreign investors and financial institutions have also been skeptical.
In July, Moody’sannouncedit downgraded El Salvador’s rating, in part, due to the Bitcoin plan.
How are things going so far?
Bitcoin’s first morning as a legal tender was a rollercoaster ride.
In a tweet, President Bukeleasked usersto verify that things were working.
