If you look at the tiny nations like the Bahamas and El Salvador, they have emerged winners of two vital races surrounding digital money. The former has issued a digital currency to its central bank, while the latter has allowed its population to use Bitcoin as their legal tender. Thus the country allowed people to use Bitcoin for making any payment freely, and most importantly, no one can refuse to pay in BTC. We can see both nations coming up with their race in the digital currency domain. The race for having a virtual currency from the central bank has been for a while but Bitcoin becoming a legal tender is a recent phenomenon. In many ways, we can see the race of BTC as a legal tender having considerable opportunities in the coming future. However, at the moment, it is playing in an empty field. It is good to see how the country is now taking up its policy of making BTC its legal tender. You can explore more about crypto trading on www.chesworkshop.org
Check the background
Before we check the meeting of this nation with Bitcoin, we need to understand the background first. Bitcoin came in 2009 by a man known as Satoshi Nakamoto as an alternative to the issues like recession that hit the world hard the same year. The whole idea was to develop a separate currency and a payment system allowing cryptography without needing a banking system and central bank. They came up with the idea to shun the traditional money and replace it with crypto assets. It is done only to survive issues like global recession and other issues like inflation. However, the governments and central banks had their reasons to reject it. Bitcoin and other coins went with ignorance and less importance until 2018, when Facebook introduced its crypto known as Libra. It was designed with the idea of developing a stable digital currency. With this, the central banks were seen exploring the concepts of working around banked-based digital currencies. Then came the coin in the Bahamas, backed by its central bank.
If you check the experiment of El Salvador in the pursuit of following the digital currency trend, it seems unique and exciting. The country has allowed Bitcoin along with USD, which is the official currency, since 2001. We have seen the country enabling a privately issued BTC to circulate over the USD, and it has remained the currency of the country since 2001. They also have their currency, and later, it accepted USD. Their native currency is known as Salvadoran Colon, which was named after Christopher Columbus. If you find the economy having high inflation, you can choose the idea of adopting stable currencies like USD, by which you can find the inflation going back to the US. The country witnessed average inflation of 14% and 4% by 2000 and 2020, respectively. Now, we see a few more nations are on the verge of following in El Salvador’s footsteps. These include Zimbabwe and Venezuela.
The impact of BTC Decision
It is interesting to see how quickly the decision was taken. On 5th June, we saw the President of the country – Mr. N Bukele, talk about the benefits of the digital currency – BTC. He tweeted about the same and indicated including it in the financial world. Soon a proposal came from the President when he presented a draft of a bill proposing to Congress about making BTC a legal tender. He planned to do it in three months, and thus in September, the bill then came. Bitcoin in El Salvador was the legal tender out there. The approval was done in June, and then came the exercise and formalities required to make the coin an official legal tender in the market. So, it was a quick decision, and the implementation part was also instant. You can compare this tiny nation with nations like India, where you have more people in this domain, yet the country has no clarity on trading in crypto.
The country has witnessed a revolutionary decision by announcing Bitcoin as its legal tender. It has come up as an example before the entire world sets upmarket trends. Thus it would be fair to say that it is a small victory for Bitcoin lovers in the market. It is likely to grow fast in the coming time.