President Nayib Bukele of El Salvador has recently passed a bill that will accept Bitcoin as legal tender in the country. This is a huge step forward in cryptocurrency’s move towards mass adoption and is the first step that any country has taken into making Bitcoin an official currency.
This will also force governments to take crypto more seriously, from magical internet money to a legitimate form of legal tender and store of value. The bill is also a huge step towards crypto’s financial revolution on the world stage and could encourage further decentralisation and grow DeFi on a global scale.
As the US dollar is one of the fiat currencies used in El Salvador, Bitcoin could sever the Federal Reserve’s grip on El Salvador’s economy and encourage other countries, especially in South America, to decentralise their economies away from central banks. Bitcoin has also been championed as a safer alternative to the native currencies of politically unstable or economically volatile countries, such as Venezuela.
The bill has already influenced the likes of Paraguay to create their own crypto friendly bills that promotes the use of crypto in business and finance. The congressman behind it, Carlos Rejala, plans for a second bill, mirror’s El Salvador’s bill making Bitcoin legal tender in the country.
El Salvador is definitely not the first country to show strong acceptance towards crypto. Ethiopia has recently partnered up with Cardano to provide digital identity for students and teachers across the country.
While news for companies like Visa or Tesla accepting Bitcoin is extremely significant for the crypto community, as it is an indication to mass adoption, it is nowhere near the scale of a country’s adoption. Such moves before simply encouraged people to shift towards crypto, in this case it will force people to.
Although it is still unclear how this move will be executed in practice, the rise of crypto ATMs and crypto visa/credit cards from CEXes, or centralised exchanges, could spearhead the means to how crypto is exchanged in El Salvador, as well as encourage the development of technologies that make the medium of exchange cheaper and easier.
This move could also encourage El Salvador to create further laws to make the country a safe haven for crypto, which would be phenomenal for business development and investment from big corporations and countries with strong economies.
While this may not result in new price discovery for Bitcoin in the short term, it provides further confirmation that crypto is here to stay and grow in the long run.