While cryptocurrencies have proven quite pervasive in recent years, they still remain an outlier for many countries as far as accepting it as legal tender. That scenario has not changed of late, but may do so in the coming months as El Salvador is contemplating the acceptance of Bitcoin as legal tender alongside the US dollar.
It would make the Central American nation the first country in the world to do so and potentially set an interesting precedent when it comes to the legitimacy of cryptocurrencies moving forward.
The plan is still in the early stages, however, but a big advocate for the move is President Nayib Bukele, who is proposing a bill to make Bitcoin legal tender in the country.
“Next week I will send to congress a bill that will make Bitcoin a legal tender,” noted Bukele at Bitcoin 2021, an event that was held in Miami over the weekend. He also announced that the government of El Salvador and digital wallet firm Strike would be working together to bring the plan to fruition.
“What’s transformative here is that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation,” added Strike founder, Jack Mallers.
While the bill is yet to be passed, it is believed that it will see little opposition as Bukele’s party holds the majority in the country’s Legislative Assembly.
If it does indeed pass, it will be interesting to see how Bitcoin will be implemented. As CNBC notes, which originally reported the story, the crypto could be used in the case of money transfers for migrant workers, which represents 20 percent of the GDP in El Salvador. Currently, the process of transferring the money is a lengthy one, and Bitcoin could streamline the process.
That said, the volatility of crypto still remains a sticking point for many and does not always present a stable resource such as gold. As such, should the value drop suddenly, those relying on money transfers solely via Bitcoin could potentially see them receive far less money than they were expecting.
It therefore remains to be seen how the adoption of Bitcoin will be handled in El Salvador, as other nations watch to see whether it is a viable solution within their own governments and economies. With a handful of countries already looking to make cryptocurrencies illegal within their border, it looks like El Salvador is bucking the trend.