Can Bitcoin become real-world currency? All eyes to El Salvador
Having laser eyes in your DP means you are interested in cryptocurrencies. Nayib Bukele, the president of El Salvador, has got himself a pair of laser eyes in his twitter profile. El Salvador became the first and foremost country in the world to legalise Bitcoin tenders, and with this, the 40 years old president of El Salvador has proved his crypto enthusiasm.
The parliament of El Salvador passed the proposal of Bukele on June 9, and it will start to take effect from September 2021. It was just a few days earlier Bukele announced his plan for legalising the tender for Bitcoins. Some Bitcoin enthusiasts have taken this as the first step towards a broader future. But there has also been criticism at the same time. Due to the rapid fluctuation in the monetary value of cryptocurrencies, things have become sceptical for cryptocurrencies, and this has given them the option to question the decision taken by the president of El Salvador.
The price volatility of cryptocurrencies is not a matter of joke. From the beginning, the crypto market faced wild ups and downs regardless of the fact that it has obtained so much popularity over the years. And specifically, this has been the most significant matter of concern for people. Over the weeks, the price of Bitcoin has gone through some rapid changes getting as high as US 58000 dollars and falling to US 31428 dollars. No government would like to have this much price volatility in the currency of their country.
Even if you want to consider the use of bitcoin as an alternative to the existing fiat currencies, this weakness (price volatility) won’t let you do so. And this is by no means a speculative investment.
What is a Bitcoin legal tender?
Using BItcoin is already legalised in most countries. If you are willing to pay for something using Bitcoins and the receiver or the seller of the product/services is ready to accept bitcoins as the means for payment, then it is fine.
Establishing bitcoin as a legal tender would mean that a payee will have to take bitcoin. Just like the new legislation has stated, “every economic agent must accept Bitcoin as payment when offered to him by whoever acquires a good or service”.
In 2001, El Salvador replaced its own currency to adopt the US dollar as its legal currency. Therefore, El Salvador won’t have much to lose when adopting a second currency as a legal tender. And not to mention they won’t lose seigniorage, i.e. the value of the currency and the cost to produce and distribute them.
