Vanuatu has become the first country in the world to accept the cryptocurrency Bitcoin for an investment grant of citizenship.

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It means investors who meet requirements for the nation's citizenship programme can buy citizenship for US$200,000 ($280,000), or the equivalent in the cryptocurrency.

At its current value, Vanuatu citizenship would cost about 42 Bitcoins. One Bitcoin is currently trading at US$4800.

Under its citizenship program, successful applicants who meet investor requirements can choose to make payments using the cryptocurrency. The Government of Vanuatu, in a statement, confirmed support for crypto payments to the chairman of the investment organisation, the Vanuatu Information Centre - which describes the island nation as a "beautiful, remote, tax-free tropical paradise."

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The information centre handles citizenship by investment applications to the Development Support Program.

It is believed to be the first citizenship by investment programme in the world to allow Bitcoin payments.

Managing Director of the Vanuatu Information Centre (VIC) Network James Harris said cryptocurrency transactions were traceable.

"There remains some suspicion surrounding the use of cryptocurrency in financial transactions, and some fears that it can be related to undesirable activities.

"In fact, the opposite is true, as cryptocurrency exists in a fully traceable ledger where the entire history of its creation and trading is visible."

VIC chairman Geoffrey Bond said there had been attempts in the past to allow citizenship by investment payments using Bitcoin but these efforts did not attract government approval.

"However in this case, the Government of Vanuatu has explicitly expressed a desire to be at the forefront of adopting new technologies, officially encouraging the VIC to receive payments in Bitcoin."

Payments will be processed via an Australian currency exchange.

Vanuatu passport holders, as members of the Commonwealth of Nations, can travel to 113 countries.