What’s the deal with bitcoin being legal tender in El Salvador?
Does it mean every shop has to take bitcoin, or is it up to the shops to decide? Honestly, it seems a bit off to think the first scenario would be true since not all businesses will have the tech to handle it, like a tiny grocery store. If it’s the second case, I doubt many places will choose to accept it.
And does this mean that stuff in El Salvador is priced in satoshis?
They're forced to accept it if the customer says so, that's what a legal tender means. Say for example that you want to buy several cups of coffee; if you want to pay Starbucks with the LN, they can't deny it. That doesn't mean that you're also forced to pay it if you own BTC. It's the buyer's decision that's left; the sellers in El Salvador accept Bitcoin by law.
I'd really want to be in El Salvador right now, just to see how things look like. We're definitely writing history.
I'm no lawyer, but if I understand it correctly: Yes, the merchants are pretty much forced to receive bitcoin, but they're not required to keep the BTC. They can automatically convert the BTC to USD (through whatever software they're using) if they want to stay away from the volatility.
I've read about the government providing a specific software for the merchants, though they're not forced to use it. They can use other non-custodial wallets.
This is something that we need to follow but it doesn't look like it is happening soon if we are to take what was said in this article as true,
https://www.coindesk.com/el-salvador-commerce-secretary-bitcoin-wont-replace-dollar
There are still a lot of things to be ironed out and I bet that most citizens will take a bit of time to adjust with BTC.
edit:
ok after reading the posts below. i withdraw my original post thinking it was just about remittance.
(bad intel from people in el salvador a week ago thinking its just a remittance gimmick)
alot has changed in the last 2 days. it seems el salvador is really going full on bitcoin train.
definitely gonna book some vacation time and go there and buy some property now
I often hear news related to BTC payments in El Salvador, but it's lacking if you can't experience it firsthand if you don't visit there. we only receive information based on survey results that say so. so please excuse if this speculation does not match the actual situation in El Salvador.
they are free to choose to make payments with the two alternatives provided, not all buyers have BTC in their wallets. so this can be a panic so that buyers are more sensitive to these payments. where they will gradually start trying to use BTC. even then I'm not too sure.
as @BlackHatCoiner said, we should go there and experience the atmosphere firsthand at least buy a few cups of coffee and pay with BTC.
cheers
That's not what legal tender means. There is no law in the U.S. that requires someone to accept legal tender for payments.
In the U.S., "legal tender" generally means that it must be accepted for payment of taxes and repayment of debts. It comes from this:
However, the law in El Salvador specifically states that bitcoins must be accepted for any payment (except by people who are unable to do so).
Keeping it very simple, A legal tender generally means that the Seller has to accept the payment from the buyer in form of cryptocurrencies if he denies payment, he is not entitled to any payment then. But this generally happens in countries that have just one legal tender particularly their own currency, In the case of El Salvador, they don't have their own currency and have two forms of legal tender, so ideally even if a person rejects payment in BTC but is willing to accept payment in USD, he shall still be entitled to that payment. Because when both of them are legal tenders then it's just based on your convenience.
More importantly legal tender means that if someone pays BTC to the other person, this would be an adequate consideration in the eyes of law, therefore a contract will be established between both parties.
According to Wikipedia, legal tender is defined as a coin or a bank note that is recognized by the court of law as a way to monetary debt. So in the context of El Salvador making bitcoin a legal tender, it doesn't necessarily mean that bitcoin is used for everyday currency but they can be used and is recognized in the country.
Yes!a generally accepted coin is known as a legal tender,and making Bitcoin to be a legal tender today can be possible,the only problem is that some government of some countries fight it,some ban it from existence.countries like Nigeria,the government of that country banned it from existence,but it is been used the more in that country now.
If Bitcoin were to be generally accepted in all the countries,without the government of some countries fighting or banning it,it would have been very good.
The difference between legal tender and other payment system is that it is backed by the law the land. It is legally approved for every one to accept it in that country and once it is a law, refusing to accept it is a crime or an offense already and that is the major difference. You can't force someone to use or accept the use of some payment notes like cheques for example, you can only make it an option but money iself can't be rejected to be used that is the meaning of legal tender.
According to google if you search legal tender, you get this kind of definition
And in Nigerian system
Really good question that I think is overlooked by most people.
From my understanding, if the debtor wants to settle their debt in a court of law through bitcoin, then the creditor cannot possibly come back and say that they haven't been paid.
But in practice I'm sure that there will be merchants that deny BTC, although if the customer decides to insist paying, I don't see a reason why it can't be done.
Yes and no. Not sure how it's in other countries, but at least in the US there's the... loophole, I guess? that while legal tender must be accepted to settle debt, a business can deny service based on a would-be customer's payment method. That's why it's perfectly legal for stores to not accept cash and go cashless only: If they don't provide you with a service or product, there's no debt to settle in the first place.
I'll leave it as an excercise for the reader what this implies about the value of fiat currencies.
Products definitely don't need to be priced in satoshis and I think that most if not all are still in terms of USD.
It's just that people are able to always get out of a transaction paying with BTC - the merchant can't technically refuse.
I'm sure that practically it's a bit different since not every single transaction ends up in court, but this does allow much greater adoption to happen.
Yes from what you said, that is buttressing the choice of the financial service or payment system to use. For jurisdiction that have opened a choice that is used in the country or mode(s) of payment or receiving payment, yes there should be a choice to choose from. For example from what you said, the receiver who sold product to customer may have choice of payment mode (base on the convenience) if they don't want physical cash and want e-banking transfer or if cryptocurrency, that's if the country is adopting cryptocurrency. But where the country has not adopted any other mode and only cash/fiat then the legal tender comes into it to be must for acceptance. That is how I understand legal tender, nobody can refuse it not to be money if the law has made it so.
I believe that it is a little wrong to say that in El Salvador, for the first time, bitcoin was recognized by the state as legal tender. Cryptocurrency becomes legal tender on the territory of a particular state when a law or other equivalent regulation is adopted stating that this cryptocurrency or cryptocurrency as a whole is officially recognized as a means of payment and the procedure and conditions for its circulation in the territory of the state are established. In other words, cryptocurrency is being legalized on the territory of this state. At the same time, the cryptocurrency will go along with the national currency, but it is not mandatory for acceptance by all individuals, institutions and organizations.
In the case of El Salvador, for the first time, bitcoin became the national currency, that is, in addition to the fact that it became an official means of payment, like the national currency, it is mandatory for acceptance and settlement on the territory of this state.
I think shops do not have the right to refuse to accept bitcoin because this would be similar to refusing to accept the national currency of any country, for example in France shops do not have the right to refuse to accept the French franc because it is the national currency of the country, now bitcoin in El Salvador has become the national currency and no shops have the right to refuse to accept Pay with bitcoin, but of course they have the right to convert bitcoin to any other coin if they want to. I think the real test of Bitcoin on the ground has just begun.