El Salvador: Bitcoin as Legal Tender

Separating Fact from FUD

Usually when a press release detailing “Pro-Crypto Government Body Proposes Bitcoin Legislation”, the media reacts just like a bunch of bedroom investors, spouting the usual sentiments of “BTC to the moon”, “the dollar is dead”, “RIP gold standard”, and so on. It’s hype and should be ignored, just as you would with FUD. They’re equal opposites.

But, when a country, say, for example, El Salvador, becomes the first nation in history to legitimize Bitcoin as ‘legal tender’, well then even this seasoned cynic begins to feel those flourishes of “Wen Lambo?”.

El Salvador and Bitcoin

That’s right, the Central American nation of El Salvador has signed into law new legislation that allows Bitcoin to coexist with its national currency, the U.S. dollar. Now that Bitcoin is legal tender, it can be accepted as a form of payment for absolutely anything that the U.S. dollar can in El Salvador. Furthermore, for a nation with poor banking infrastructure and a GDP that is significantly supported by remittance payments (almost a quarter of the nation’s GDP), the introduction of Bitcoin and other crypto services could genuinely transform the nation.

Outside Criticism

The move has drawn some criticism and garnered plenty of praise. Though it has complicated dealings with some rather large entities, namely the International Monetary Fund (IMF) who were already in talks with the nation as El Salvador sought to be part of a $1 billion program.

Now, the IMF and the World Bank are declining to assist the nation in their quest to fully implement Bitcoin as legal tender, although it should be noted that they are not against Bitcoin or cryptocurrencies in general.

So, what happens next? Well, businesses and industries in El Salvador have a 90-day period to prepare for the adjustment. The news has of course drawn a great deal of attention from the cryptocurrency industry who is most certainly relishing this revelation. If it works, we could see other nations follow suit.

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