El Salvador has formally recognized bitcoin as legal tender, making bitcoin-as-a-payment a reality in the country. El Salvador's legalization of Bitcoin (BTC) has opened up new payment possibilities for its inhabitants, with fast-food giant McDonald's apparently accepting Bitcoin payments via the Lightning Network.
Journalist Aaron van Wirdum broke the news on Tuesday after visiting a McDonald's shop in El Salvador and being given a printed QR code that directed him to a Lightning Network billing page. As of 2019, McDonald's had 19 outlets in the Latin American country.
Lightning is a layer-two payment mechanism that aims to increase the scalability of Bitcoin transactions. Despite its success as an investment asset, Bitcoin's use as a medium of trade has been limited. Satoshi Nakamoto's whitepaper defining Bitcoin as electronic cash in 2008 focused on bitcoin payments. (It's worth noting that “cash” and “gold” were used interchangeably in Nakamoto's forum posts and correspondences.)
If El Salvador aspires to achieve widespread adoption of Bitcoin payments, the Lightning Network will certainly be crucial. Beyond immediate transactions, El Salvador's Bitcoin bet might pay off by expediting international remittances, raising citizen wealth, and recruiting crypto-focused enterprises to the country.
El Salvador's Bitcoin Law went into effect on Tuesday, resulting in a classic case of "buy the rumor, sell the fact" for markets. Between Monday and Tuesday, the BTC price plummeted 19 percent, reaching a low of $42,900.
President Nayib Bukele said on Monday that his government had made its first Bitcoin purchase. The government had 550 BTC in its reserves as of Tuesday.
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