El Salvador and Bitcoin: Legal Tender or Compulsory Tender?

David Birch, the author, adviser and investor in digital financial services, has recently posted an article on Linkedin, ‘Why would anyone think it is a good idea?’. His piece was about El Salvador’s decision to make Bitcoin legal tender or, in David’s words, ‘compulsory tender’. His argument is that shop keepers could always have accepted Bitcoin, but now they have to.

The devil, of course, is in the detail. The discussion in the chat around David’s post pointed out that merchants can be paid in Bitcoin but receive the funds automatically in US dollars, meaning that this ‘compulsion’ is of no consequence. The law says, ‘Art 7. Every economic agent must accept bitcoin payment when offered to him by whoever acquires a good or service’. but Art. 12. provides exemptions from this requirement to those who ‘do not have access to the (necessary) technologies’.