Hello, all, so we are back with another blog. This time, we will share some information related to digital currency. And this blog is especially for those who want to gain some knowledge about cryptocurrency. This blog is all about EL SALVADOR BECOMES, THE FIRST COUNTRY TO ADOPT BITCOIN AS LEGAL TENDER
On Tuesday, El Salvador became the first country to adopt bitcoin as its official currency. But what exactly does this mean? What was the reason behind this step, and how will it impact the citizens of the nation? We will be finding answers to these and many similar questions in this blog.
Adopting Bitcoin as a legal tender
Adopting Bitcoin as a legal tender means that from now onwards. It can be used to pay for goods and services throughout the country. It’s recipients are legally obliged to accept it alongside the U.S. Dollar, which has been the national currency of the country for the last two decades.
The scene slowly started unfolding when El Salvador’s president, Nayib Bukele. Tweeted on Monday announcing that El Salvador had bought its first 400 bitcoins in two tranches of 200 and promised more were coming.
However, a recent opinion poll showed that 6.5 million people reject this idea and claim to continue using the U.S. dollar. This gives us a clear indication that a significant portion of the country is not very happy with this decision. It is quite skeptical about the volatile nature of cryptocurrency, which is quite understandable. It is because of the ups and downs the crypto market has seen in recent months. For example, between 8 June and 15 June, its value swung between $32,462 and $40,993.
The criticism about bitcoin
The opposition has also criticized the government. For its move and blamed them for taking the decision autonomously without taking the opinion of the public. Jose Santos Melara, who also took part in a protest by several hundred people in the capital San Salvador last week, stated, “This bitcoin is a currency that does not exist. A currency that will not benefit the poor but the rich. How will a poor person invest (in bitcoin) if they barely have enough to eat?”
On the other hand, Mr.Bukele is quite optimistic about the future of Bitcoin. On the other hand he is also trying to take continuous steps to make people believe so as well. The government is installing more than 200 bitcoin teller machines also. He has promised $30 for each citizen who adopts the currency in the Chivo digital wallet. But early on Tuesday, when Salvadorans tried to download the digital wallet. They found it was unavailable on popular app stores. Then Bukele tweeted that the government had temporarily unplugged it to connect more servers to deal with demand.
The benefits of bitcoin
Another point to be noted is that not all citizens are opposing this adoption. “It’s going to be beneficial … we have family in the United States, and they can send money at no cost, whereas banks charge,”
Reina Isabel Aguilar, a store owner in El Zonte Beach, some 49 km (30 miles) southwest of San Salvador, is known as Bitcoin Beach. El Zonte aims to become one of the world’s first bitcoin economies.
The remittance business is considered one of the key factors that pushed the govt, towards taking this step. Remittance depends upon electronic transfers through commercial banks’ payment systems. These banks charge hefty fees for using this infrastructure and the benefit of a safe and reliable international network. Also, the people who don’t have a bank account are one of the prominent beneficiaries of this decentralized money transfer system. Bukele stated regarding the same, “It will help Salvadorans save $400 million a year on commissions for remittances while giving access to financial services to those with no bank account”.
International bodies such as the World Bank, International Monetary Fund (IMF), and Inter-American Development Bank have also expressed concerns about El Salvador’s bitcoin adoption. The United States has urged El Salvador to ensure a “regulated,” “transparent,” and “responsible.”
Use of bitcoin to protect itself from “malign actors” such as hackers seeking ransom money. The last factor is quite imperative because, over the years, people have been skeptical and fearful of the fact that cryptocurrencies might be for generating funds for illegal purposes.
All in all, this step of adopting a decentralized currency as a legal tender might prove to be a revolutionary one if the govt. It can achieve what it is claiming to. But the probability of the decision backfiring is also not negligible, looking at the reluctance of the local citizens and the volatile nature of Bitcoin.
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