Bitcoin: the spark has ignited
In just 12 years since its inception, we have seen Bitcoin become legal in a sovereign state. El Salvador is now the first sovereign country to adopt Bitcoin as the country’s official currency. Simply put, this means that all businesses are required to accept Bitcoin as a form of payment. The government will set up a fund of 150 million dollars at the Development Bank as a firewall to compensate for the monetary instability that could hit traders.
What is remarkable is that El Salvador, while already having the dollar as its official currency, decided that this was not enough. The government decided it wanted something better. Perhaps because most of the population is outside the banking system. The vast majority of the population of El Salvador does not have a bank account while working in the underground economy. However, now with Bitcoin people will be able to access it, simply by having a cell phone. And it’s not just that. Much of the money entering the country from remittances, perhaps up to 40%, does not reach legal recipients as it is lost along the way, through intermediaries.
It is no coincidence that local citizens immediately embraced the app of “Strike”, a digital apps company, to build a modern blockchain-based financial infrastructure, which quickly became the most popular mobile app. popular of the country.
President Nayib Bukele said: “Economic integration is not only a moral imperative but also a way to grow the country’s economy by providing access to credit, savings, investment and transactions. secure ”. According to him, “if 1% of the total value of Bitcoin is invested in El Salvador, it will increase the country’s GDP by 25%”.
Bitcoin will gain millions of potential new users, residents of the country, and could be the fastest growing way to transfer billions of dollars a year in immigrant remittances to El Salvador. In addition, it is not at all unlikely that there will be a large movement of companies in the country. “Strike” will certainly relocate some of its operations there and is unlikely to be the only one. The real estate market will become more accessible to Bitcoin holders.
Adopting Bitcoin as the official currency, even of a small country, is very likely to bring about big changes. It not only has symbolic or psychological implications, but also political and legal implications. In international trade with El Salvador, Bitcoin should now be treated at the same level as any official currency of other banks around the world.
Businesses and citizens are obliged to accept it if it is offered against payment in exchange for the delivery of goods, products, services. It should be noted that under US law, currency “is a medium of exchange approved or adopted by a national or foreign government”.
The acceptance of Bitcoin by a sovereign state as an official currency makes it easier in legal and accounting terms for companies or banking institutions to include it in their treasury. Central banks can keep it as part of their foreign exchange reserves.
Bitcoin deniers claimed that with Bitcoin people couldn’t buy anything. Now it is proven that they can buy more and more things around the world. In 2021, as has been officially announced, Visa – Mastercard will be connected to the personal wallet of cryptocurrencies, in the same way that they are connected to the bank account that we have in euros. Therefore, people will buy whatever they want with a bitcoin linked card. Literally everything and everywhere.
At the same time, citizens are starting to pressure politicians in other Central and South American countries to follow El Salvador’s example. Many MPs from Argentina, Brazil, Paraguay, Panama, Colombia, Mexico, Nicaragua have changed their photos, now appearing with lasers in their eyes.
The acceptance of Bitcoin as an official currency by a country has provoked different reactions around the world.
Bitcoiners took this for granted, of course, as a very positive event. They believe that Bitcoin has the potential to improve the standard of living of the people of El Salvador. That their expectations have been confirmed that cryptos could change the world for the better.
On the other hand, critics of Bitcoin have taken the acceptance of Bitcoin as the official currency as something indifferent or even silly. Others were annoyed that Bitcoin was recognized by an official state while claiming that the corrupt system that has kept El Salvador poor and underdeveloped supports a president who they claim is populist and only cares international publicity and power, without really believing in the potential of Bitcoin.
However, the fact is that the existing banking system was not able to protect the people of this country from excessive poverty. The country seems to be looking for an alternative proposal and seems unwilling to stay in the current monetary regime.
The difference in perspective on Bitcoin between its supporters and critics once again seems chaotic. But the point is, the wider acceptance of cryptocurrencies is happening much faster than one might imagine. It remains to be seen whether the latest development in the acceptance of Bitcoin as the official currency in a country is a spark that may turn into a fire that in the future may turn into a conflagration.