In an unexpected announcement, the country of El Salvador plans to accept Bitcoin as a legal tender. Amongst the international governmental disapproval of Bitcoin, this push by El Salvador may be the first step to wider regulatory adoption of cryptocurrency.
El Salvador is currently in the process of drafting legislation to congress that will enable Bitcoin to be used as legal tender. This means that the El Salvadorian Government will accept Bitcoin as a satisfactory monetary payment for any debt. If this legislation is passed, El Salvador will be the first country in the world to officially recognise Bitcoin as a real form of currency that has value.
El Salvador’s President, Nayib Bukele, announced that this development will be performed in conjunction with the digital wallet company, Strike. This partnership is said to build El Salvador’s modern financial infrastructure and develop the country’s economy. Moreover, Strike’s founder, Jack Mallers, has noted that this initiative may go on to benefit similar countries as Bitcoin can be used as a store of value “to protect developing economies from shocks of fiat currency inflation”. This impact of hyperinflation can be brutal and has already impacted countries such as Venezuela and Turkey.
However, despite the widespread excitement, 70% of El Salvador’s people do not have bank accounts or use credit cards. This may pose an issue as to Bitcoin’s everyday adoption, especially by the older generations. Although, Strike has previously operated in El Salvador, launching a mobile payments app there, which quickly became one of the countries most downloaded apps.
Regardless of the intended use, this proposed legislation may cement Bitcoin as the currency of the future.
