El Salvador will give every adult citizen $30 in bitcoin, provided they download and register the government’s cryptocurrency app, known as Chivo, according to President Nayib Bukele.
The nation’s 39-year-old president made the announcement late Thursday during a televised presentation where he tried to explain what will happen when El Salvador starts treating bitcoin as legal tender after Bukele’s so-called “Bitcoin Law” takes effect on September 7.
“What we are doing is encouraging the use of bitcoin and encouraging the use of this system, which is going to generate the multiplication of money in the economy,” President Bukele said on Thursday according to a machine translation of his speech from Spanish to English.
Bukele spent an hour trying to explain why he was investing so much government money into handing out bitcoin to Salvadorans as his country becomes the first in the world to treat bitcoin as legal tender. The president showed off graphics of the new app that will allow people to trade their bitcoin for U.S. currency or hold bitcoin. The crypto wallet app, which hasn’t been released yet, is coming to iOS and Android soon and will reportedly be compatible with other bitcoin wallets.
El Salvador’s official currency is the U.S. dollar and rumors have been swirling that future wages and pensions might be doled out in bitcoin, but President Bukele did his best to calm those fears, assuring Salvadorans that they’ll still have access to dollars. The rumors likely stem from the transition of El Salvador’s colóns currency to U.S. dollars in 2001 when bank accounts were all forced to switch.
“Wages and pensions will continue to be deposited in dollars. There has been a bit of dirty campaign on the issue that wages are going to be paid, or pensions will be paid in bitcoin. This is not the case,” Bukele said.
“Both wages and pensions will continue to be paid in dollars. Dollar bank accounts won’t be converted to Bitcoin, as if we got dollarization when our bank accounts in colóns were converted into dollars. In this case it won’t be like that. Dollar accounts will continue to be in dollars,” Bukele said.
The president’s presentation was streamed on YouTube.
Bitcoin is currently trading at $34,399, up roughly 3.3% over the past 24 hours. But the cryptocurrency is still down 8.51% from where it was a week ago, and down a whopping 38.82% from where it was three months ago.
Will El Salvador’s experiment with bitcoin work? Only time will tell. But with bitcoin’s wild volatility it’s hard to see how the economy won’t get absolutely crushed when bitcoin’s price plunges.