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Which was the first country in the world to accept Bitcoin as legal tender?
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Answer: Option C — El Salvador
Detailed Solution
El Salvador, a small country in Central America, became the first country in the world to adopt Bitcoin as legal tender (official currency). Its Bitcoin Law was passed in June 2021 and came into force on 7 September 2021, under President Nayib Bukele. Bitcoin was used alongside the US dollar, which El Salvador had adopted as its official currency in 2001.
Key points:
- Under the law, businesses were required to accept Bitcoin as payment, and taxes could be paid in Bitcoin.
- The government launched a digital wallet app called "Chivo" and gave each citizen who signed up USD 30 worth of Bitcoin.
- The government also bought Bitcoin for its reserves and announced plans for a "Bitcoin City" powered by geothermal energy from a volcano.
- The move was criticised by the International Monetary Fund (IMF) and the World Bank because of Bitcoin's extreme price swings and the risks to financial stability and consumer protection.
- In January 2025, as part of a loan agreement with the IMF, El Salvador amended its law so that accepting Bitcoin became voluntary for businesses, and it is no longer compulsory legal tender in the same way.
- The Central African Republic became the second country to adopt Bitcoin as legal tender, in April 2022, but it reversed this decision in 2023.
About Bitcoin:
- It is the first and best-known cryptocurrency, a digital currency that works without a central bank, using a technology called blockchain.
- It was created in 2009 by a person or group using the name "Satoshi Nakamoto".
- The total supply of Bitcoin is limited to 21 million coins.
In India, cryptocurrencies are not legal tender. Since 2022, a 30% tax on income from virtual digital assets and a 1% TDS on transfers apply. The Reserve Bank of India has launched its own central bank digital currency (CBDC), the "e-Rupee" (digital rupee), in pilot form since 2022.
Why not the other options?
- ✗The Central African Republic was the second country (2022), and later reversed it.
- ✗Venezuela launched its own oil-backed cryptocurrency, the "Petro".
- ✗Japan recognised Bitcoin as a legal method of payment in 2017, but not as legal tender.
Quick tip
Remember: First country with Bitcoin as legal tender = El Salvador (7 September 2021, President Nayib Bukele); second = Central African Republic (2022, reversed 2023); India's CBDC = e-Rupee.
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Firsts in India & World — Preparation
This question tests your understanding of Firsts in India & World, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers the first persons and events in India and the world: the first Indian to win a Nobel Prize, the first woman to hold major offices, the first to climb Everest or reach space, and India's first institutions, newspapers, railways and satellites. It also covers the largest, longest, highest and smallest records in India and the world. These are pure memory questions, so revise them as short lists by theme: first women, first in sports, first in science and space, and first in governance. Be careful with the exact wording, such as 'first Indian' versus 'first person of Indian origin', or 'first woman President' versus 'first woman Prime Minister', since options are often designed to exploit this. Practise the firsts in India and the world questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.