El Salvador to Become First Country to Make Bitcoin Legal Tender
To facilitate the actualization of the move, the government of El Salvador is partnering with Strike, a lightning network mobile payments app that has recently launched in the country.
The President of the Republic of El Salvador Nayib Bukele has issued a statement about his intention to make Bitcoin a legal tender in the nation. In a pre-recorded streamed at the 2021 Bitcoin Conference which held in Miami, the president described his plans to send a bill to the nation’s Congress so Bitcoin can become a legally recognized means of exchange in the Central American country.
The 39-year-old president, whose approval ratings have steadily remained above 90% despite global concerns about the concentration of power in his office, and his open disdain for checks and balances in government described the potential of the idea to help move El Salvador forward.
According to the president, the move will help in the interim to generate jobs and improve financial inclusion for the thousands in the country who belong to the informal economy.
Bitcoin is a decentralized digital currency that runs on blockchain technology. It was launched in 2009 and allows individuals to buy, sell and carry out business transactions without needing an intermediary like a bank or financial institution.
From $0.0008 when it first launched, the price of Bitcoin went beyond $60,000 in April when Tesla Inc (NASDAQ: TSLA) invested about 1.5 billion dollars in the cryptocurrency. In May, it crashed by up to 40% and the current price at the time of writing according to CoinMarketCap was $36,067.78.
Actualizing the Rollout of Bitcoin in El Salvador
Chances are high that the bill if proposed to Congress will scale through easily. This is because Bukele’s party, New Ideas, has a supermajority in Congress making it all the more likely that any bill from the president would not face significant opposition from any quarters.
To facilitate the actualization of the move, the government of El Salvador is partnering with Strike, a lightning network mobile payments app that has recently launched in the country. According to the founder of the company Jack Mallers, more than 70% of the vibrant population in El Salvador does not have an account with any bank and belongs to the informal sector of the economy.
Mallers stated that adopting a digital currency as legal tender will make El Salvador’s payment system the safest, most efficient, most inclusive and globally integrated open payment system in the world.
Many more countries look to be exploring a move along this line with digital currencies touted to be the future of the financial sector. Some countries like China have even gone further and are already beta-testing their digital currency. Several financial analysts think that blockchain technology, the technology on which most digital currencies are being deployed will become very useful should countries decide to roll out the digital version of their current paper currencies.
However, critics of this movement believe that the high volatility of digital currencies will prevent their adoption as people will be wary of losing value due to fluctuating coin prices.
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