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Nation adopts Bitcoin as legal currency

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El Salvador has became the first country to adopt Bitcoin as legal tender, although it suffered teething problems when the government had to unplug a digital wallet to cope with demand.

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President Nayib Bukele said using bitcoin will help Salvadorans save $US400 million ($A541 million) a year on commissions for remittances while giving access to financial services to those with no bank account.

However, the poorest may struggle to access the technology needed to make Bitcoin work in El Salvador, where nearly half the population has no internet and many more only have sporadic access.

The change means businesses should accept payment in Bitcoin alongside the US dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.

In the run-up to the launch, the government installed ATMs that allow Bitcoin to be converted into US dollars and withdrawn without commission from the digital wallet, called Chivo.

But Salvadorans trying to download the wallet yesterday found it was unavailable on popular app stores.

Bukele tweeted that the government had temporarily unplugged it in order to connect more servers to deal with demand and blamed Apple Inc, Google and Huawei’s app download platforms for the delay. The wallet was later available from Huawei.

Polls indicate Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of US dollars in value in a day.

Ahead of the launch, El Salvador bought 400 Bitcoins worth about $US20 million, Bukele said, helping drive the price of the currency above $US52,000 for the first time since May.

Hours later, however, Bitcoin had weakened and last traded down 8.84 per cent at $US47,327.32.

Ethereum, another crypto currency, fell 10.52 per cent to $US3,537.62, while crypto exchange Coinbase Global slid 3.96 per cent after reporting delays in some transactions on its platform.

-AAP

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