In June 2021, President Nayib Bukele said he would introduce legislation to make Bitcoin legal tender in El Salvador. The Bitcoin Law was passed by the Legislative Assembly of El Salvador on 9 June 2021, with a majority vote of 62 out of 84. Bitcoin officially become a legal tender on 7 September 2021, ninety days after the publication of the law in the official gazette.
As part of the law foreigners can gain permanent residence in El Salvador if they invest 3 Bitcoin into the country. The implementation of the law has been met with protests, with the majority of the country being against using Bitcoin as legal tender.
Remittances have had positive and negative effects on El Salvador. In 2005, the number of people living in extreme poverty in El Salvador was 20%, according to a United Nations Development Program report. While Salvadoran education levels have gone up, wage expectations have risen faster than productivity. This has led to an influx of Hondurans and Nicaraguans who are willing to work for the prevailing wage. Also, the local propensity for consumption has increased. Money from remittances has increased prices for certain commodities such as real estate. With much higher wages, many Salvadorans abroad can afford higher prices for houses in El Salvador and thus push up the prices that all Salvadorans must pay.
So far El Salvador has been the only nation to do this after struggling with economic problems for decades. Most others have simply ceded jurisdiction and use the US dollar for settling payments. Several nations now use the US dollar. China and a few other nations are more seriously looking at digital currencies but at the end of the day this is not wise as it cedes jurisdiction in an nonrecoverable manor. The US government evidently holds bitcoin and so far they have not divested of it at all. Perhaps they are hoping for a large appreciation to improve the value of the holdings.
Bitcoin seems to rise and fall with stocks and the NASDAQ in particular.