Who would have thought a small country from Central America with a bit over 6 million inhabitants will adopt Bitcoin as a currency? I bet no chart and analyst has forecasted that. It’s Official: El Salvador’s Legislature Votes to Adopt Bitcoin as Legal Tender.
With 64 out 82 votes, the law proposed by Nayib Bukele to adopt Bitcoin has been passed, all he needs now is to sign it. Will he do that?... I guess so, and I also believe that many other countries will follow suit. For the moment Paraguay comes to my mind that seems to be stepping on the same path and there are a bunch of others as well that I read about on twitter recently.
But sir, Bitcoin is volatile, how are gonna merchants handle volatility?
Quite simple...
“If there’s an ice cream parlor, he doesn’t really want to take the risk, he has to accept bitcoin because it’s a mandated currency but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account, when he sells the ice cream, he can ask the government to exchange his bitcoin to dollars. Of course he can do that in the markets also but he can ask the government to do it immediately.”
-Nayib Bukele, president of El Salvador
The trust that will be created at the Development Bank of El Salvador will hold $150 million to deal with volatility and merchants that can't afford it(the volatility) and need cash more than Bitcoin. I believe that in a decade from now that fund won't even exist, but for now as the new payment method is greased in they have a buffer for that.
According to Binance seems that the president of El Salvador will encourage mining as well. Now, I first hard of this president of El Salvador just a couple of days ago, but this man has accomplished so far what most of the planet hasn't. Bitcoin as a legal tender...
Wasn't designed as such by the inventor himself, Satoshi Nakamoto? I guess it was. As funny and odd it may seem, although Bitcoin is gradually turning into a store value, its purpose was somehow right from the beginning to be used for purchasing ice cream. A question that might arise right now is: what about fees and transaction speeds? Well, I guess that's when the lightning network kicks in.
Even if having Bitcoin as a currency won't be much of a success in El Salvador there are always crypto alternatives at hand. At least this country has made the step forward in adopting crypto as a legal tender in their country. Some others will probably follow. I doubt China will do that as it's against its communist totalitarian dogma, but some European ones will for sure follow suit.
I don't think the US will rush to follow El Salvador's example, but who knows, maybe they will at least change perspectives. Bitcoin came out of nowhere, but it's here to stay. I'm 100% sure about that. Considering the social crisis that humanity is currently going through there are definitely gonna be more and more individuals moving their savings and earnings into crypto.
Crypto is the ultimate panacea that we've had so far for a corruptly designed global monetary system. At this point the price doesn't even matter anymore and there's no doubt that it's here to stay.
Thanks for attention,
Adrian