On Tuesday, El Salvador became the first country to adopt Bitcoin as its national currency, starting a radical currency experiment that could pose a risk to a fragile economy.
President Naib Bukler announced on Monday night that his government had purchased another 200 bitcoins before El Salvador officially adopted the currency. El Salvador now has 400 bitcoins, which are worth nearly $21 million at current trade levels.
As of Tuesday, bitcoins will be used as the legal tender of El Salvador along with the U.S. dollar. Bukele said on Twitter that as the deadline approaches, the country’s brokers “will buy more.”
A interesting and exciting start to see just how crypto will work in everyday life and also it being recognized as an actual currency of a country. It’s still too soon to tell but El Salvador could and I say this very carefully could be the front runner into becoming a very wealthy nation that surpasses other first world countries GDP’s thanks to Bitcoin. If you think about it Bitcoin is only valuable as long as the currency itself has a use. Well if you incorporate it into every day lives and also make it easier and safer to keep them regular currency then by popular demand it will be used more making the coin more valuable. Sure currency traders will say that it’s the same as any exchange rate on currency like the U.S dollar to Japanese yen but can you think of a currency that started as a 0.1 and is now worth $46,000 (at the time of writing this) because I cannot.
Bukele, who came to power in 2019, announced plans to start using bits in June. A law has been passed designating Bitcoin as legal tender stipulates that all “economic entities” will accept cryptocurrency as a method of payment. It also said that Bitcoin can be used to pay taxes. 4,444 Salvadorans will be able to download “Chivo Wallet”, an application created by the government that will provide people with $30 in Bitcoin to promote their use.
“The process of El Salvador #Bitcoin has a learning curve. Every step towards the future is like this. We will not achieve everything in one day or a month,” Bukele tweeted. “But we must break the past paradigm.”
Some citizens have accepted this technology, while others are cautious. Trading Bitcoin is not difficult. But Blanca Estela Ponc says she prefers cash.”Bitcoin is a new thing, we don’t have enough information”, Blanca states
The issue economists and governments are having following El Salvador’s lead is that
“When Bitcoin rises and falls, how do we know what we are collecting in taxes? How do we plan expenses? Remember, in April, Bitcoin broke through $65,000 and then fell by nearly half. This is a problem that the Ministry of Finance will solve. It is not easy,” IMF President Kristalina Georgieva (Kristalina Georgieva) said recently.
At the end of July, Moody’s Investors Service pushed El Salvador’s debt rating to junk, on the grounds that ” The quality of policy development has deteriorated”, including the government’s decision to adopt Bitcoin as legal tender. Moody’s stated that the country is still vulnerable to the financial crisis, which may jeopardize the government’s ability to repay creditors from January 2023.
Please keep in mind this article is based on opinion and there is no factual evidence that El Salvador is or will be what is stated in the article it is a mere projection that could happen.