Bitcoin surges ahead of major change to El Salvador economy

Bitcoin has shot to new heights ahead of one country’s controversial cryptocurrency decision. But not everyone is convinced.

Salvadorans march to protest against the economic measures adopted by the government. Picture: Marvin Recinos/AFP

The price of bitcoin has surged ahead of El Salvador’s decision to turn the cryptocurrency into legal tender.

Over the weekend, the digital coin pushed above the $US51,000 ($A68,500) mark.

At time of writing, the world-leading cryptocurrency was selling for $US51,788.90 ($A69642.92) per coin, according to CoinMarketCap.

That’s not too far behind bitcoin’s all-time high on April 13 of $US63,314 (about $85,000).

The last time bitcoin was around $US51,000 ($A68,888) was in the middle of May.

It then fell to $US31,796 (around $42,000) on July 18, but over the last two months has been slowly rising.

The coin rose by 5.4 per cent in the last week and is now up 26.3 per cent in the last month.

Its spike in price has been credited to a number of factors including El Salvador and Facebook throwing its weight behind it.

Bitcoin hasn’t been worth this much since May. Picture: Ozan Kose/AFP

On Tuesday, bitcoin will become legal tender in El Salvador, the first country in the world to do so.

That means that if someone wants to pay in bitcoin, retailers will have no choice but to accept it.

El Salvador’s president Nayib Bukele is a huge bitcoin enthusiast. He has a pair of laser eyes on his Twitter profile at least – which indicates he is bullish about the digital coins.

In June, El Salvador voted to become the first nation in the world to adopt bitcoin as legal tender.

With 62 out of 84 possible votes, politicians voted in favour of the move to create a law to adopt bitcoin for everyday use.

Army veterans march to protest against the implementation of bitcoin in El Salvador. Picture: Marvin Recinos/AFP

The bill will allow the famously volatile digital currency to be used for many aspects of daily life, from property purchases to tax contributions.

The law comes into effect on September 7.

Some think this will make more people buy into bitcoin.

To encourage citizens to jump on the bandwagon, the El Salvador government even haded out $30 in free bitcoins to anyone who signs up for its national digital wallet, known as Chivo.

And what’s even more radical, foreigners who invest three bitcoins into the country – currently a whopping $US150,000 ($A200,000) – will be granted residency, according to Fast Company.

However, not everyone is a fan of the move.

The International Monetary Fund (IMF) is worried about the coin’s volatility and has warned that it could destabilise the El Salvador economy.

Over the weekend, citizens protested against the change, citing fears of economic instability.

A woman uses a bitcoin app at a store in El Zonte, La Libertad, El Salvador on September 4, 2021. Picture: Marvin Recinos/AFP

FACEBOOK EMBRACES CRYPTO

To top off the excitement surrounding bitcoin and crypto in general, tech giant Facebook has waded in, further buoying the market.

Last week, Facebook executive David Marcus told Bloomberg that the social media platform was creating its own digital wallet to facilitate non-fungible token (NFT) transactions.

While this doesn’t directly affect bitcoin, it still adds to the cryptocurrency hype.

Bitcoin’s biggest rival, ethereum, does use NFTs and the announcement also sent its price skyrocketing.

Over the weekend, it soared to nearly $US4000 ($A5400).

At time of writing, the second most valuable crypto was selling for $US3,926.63 ($A5280.57) per coin.

Facebook has fully bought into the cryptocurrency market as it is working on its own coin, which will be known as “diem”.

The plan is to launch diem and the digital wallet at the same time to encourage usage.

Facebook faced backlash from regulators when it first announced its plans for the coin. The creators behind diem have since become an independent company, however it is still heavily backed by Facebook.

However, at this point it is unclear when the coin or wallet will launch.