The pace of innovation in #crypto is unprecedented. Development is lightning fast, and the disruptive trends therein are far-reaching.
But that is secondary following news out of the multi-day Bitcoin 2021 Conference in Miami, Florida.
In a recorded speech, Nayib Bukele, the President of El Salvador, the smallest country in South America and perhaps the most monetary-policy liberal—, spearheaded their effort to make Bitcoin the country’s legal tender.
And it was not mere talk or politics.
The country’s Congress went forward and approved the president’s proposal.
El Salvador has partnered with one of the world’s leading digital wallet providers, Strike, to make arrangements to actualize this proposal.
For #cryptocurrency fans, the combination of the economic state in El Salvador, Bitcoin’s properties, and the country’s track record make for pulsating developments set for the next few weeks.
The question in everyone’s mind is this: What could have triggered Nayib to go the Bitcoin route?
Already, the country made the USD a legal tender, and it has been in use since 2001.
Bitcoin is a whole different proposition. Why now?
Nayib, fortunately, had the answers for this.
El Salvador depends heavily on remittances. Up to 25 percent of the country’s GDP is sent over from abroad, mainly the United States.
By adopting #Bitcoin, the president reckons it will help spark economic activity and supercharge development. Bitcoin, the president further discovers, will be the fastest way to remit $6 billion sent to El Salvador every year.
This measure is particularly critical considering the state of affairs after the CoVID-19 pandemic. El Salvador wasn’t spared as the contagion measures instituted by the country and the rest of the world affected the country’s resources adversely. His orders to contain the pandemic were harsh and naturally got heavy criticism, especially for instituting a stay-at-home order and detaining citizens who flouted the rule.
Outside of economic recovery, the president has novel ideas, incorporating technology to save time and costs of suffrage. Specifically, President Nayib wants to eliminate the needless charges middlemen impose on remittance.
Like the rest of the developing countries where families and the economy by extension rely on remittance, fees charged can be impactful relative to living standards, affecting money circulation.
This problem can be immediately resolved if Bitcoin and the distributing power of blockchain are factored in.
Unlike legacy systems, Bitcoin’s transactions are cheaper and instantaneously settled. After a few minutes, transactions are approved.
Moreover, users need not have bank accounts, nor do they have to submit privacy-busting details to intermediaries.
All they would need is a Bitcoin wallet (free) and an internet connection.
After that, they can cash out as needed, use the coin to store value, or, better yet, pay for goods and services using the currency.
To prime this, there will be no capital gains tax imposed on Bitcoin. What this means is that every other time a user pays using BTC, even converting to cash, that transaction will be considered free as a legal tender.
The evolution of Bitcoin from a “community” currency to El Salvador potentially adopting it as “legal tender” will be the beginning of a paradigm shift.
There are reams upon reams of papers describing, reiterating, and exploring how cryptocurrencies are better than fiat and legacy payment systems.
Blockchain-based cash systems are superior in every imaginable aspect. More so, as a community-focused payment system launched at a depth of the GFC—a time etched in history as when banks messed up the global economy, destroying lives—Bitcoin—and cryptocurrencies, in general, will promote financial inclusion.
Estimates say over 70 percent of the El Salvadoran population doesn’t have a bank account.
And it is hard to see why.
Registering for a bank account isn’t beneficial, considering the low savings rate—and intrusive—submission of personal data despite advances in technology.
Adopting Bitcoin is the perfect bridge conveying the majority to the formal economy, helping El Salvador what would be a prosperous future with a steady, time-tested financial infrastructure.
The good news in all this move is the decision to welcome crypto investors in the country. For instance, El Salvador will give crypto entrepreneurs immediate permanent residence. Real Estate investors who are tired of Vostro-Nostro accounts and high fees charged by banks would directly invest in some of the country’s prime real estate along their sandy white beaches.
Looking back, the Bitcoin timeline looks interesting and full of opinion gyration:
Bitcoin was first rejected as a farce and fad.
Then Ross Ulbricht found its utility with the Silk Road.
Heavy-hitting investment banks and Fortune 500 companies endorse Bitcoin
El Salvador now has BTC as legal tender.
Indeed, the future looks bright and super #bullish for BTC!
Another reason to HODL!!