El Salvador became the first country in the world to approve bitcoin as legal tender for its citizens; this decision was promoted in the first instance by the president of the nation, Nayib Bukele, and was subsequently ratified by Congress.
Of course, the bill approved in El Salvador is not without criticism and detractors, largely by a core of journalists and people who understand little about the benefits of the decentralized economy, and on the other hand, by others who do support the implementation of Bitcoin, but they do not fully agree on the ways used by the executive to promote its adoption.
Part of the controversy is because the legislation obliges entrepreneurs, stores, and all-natural and legal personnel in the country to receive Bitcoin as a payment mechanism, an imposition that some people consider negative. With all this and this, they approved the bill with 62 out of 84 votes; among other things, it also contemplates that the country’s taxes can be paid in bitcoin; only “are excluded from this obligation those who, as a notorious and clear fact, do not have access to the technologies that enable bitcoin transactions.”
Bukele’s advisers and people close to him and his proposal assure that close to 70% of the population are not included in the banking system and that this would help Salvadorans to send remittances to the country without intermediaries taking half of the money; in fact, the latter mentioned is proven because, in 2016, a survey by the Central Reserve Bank revealed that 77% of Salvadorans do not have a savings account and that only 61% have at least one product among savings accounts, credit cards, some types of insurance, and pension fund.
“Bitcoin has a market value of $680 billion,” the president posted on Twitter on Saturday after the announcement. “If one percent of that money were invested in El Salvador, our gross domestic product would increase 25%.” Although it is true that the bill on Bitcoin seems to have been approved drastically and with few revisions, and despite some legal gaps contemplated in it, in the long term, the initiative of the Salvadoran president is successful, as shown by the studies, more than half of the population of El Salvador does not currently have access to formal banking, which encourages informality and makes it difficult for a large sector of the population to be included in economic systems that allow their social leverage.
The Bitcoin Law will undoubtedly have to go through a series of reforms over time to adapt to the needs of the country and comply with a series of guarantees for its citizens; however, the most important thing is that a first step has been taken to begin to solve the problem of lack of access to financial products for a large part of the country’s population, which may provide citizens with tools and increase foreign investment, as well as the mobility of large companies linked to cryptocurrencies to the Salvadoran nation, which without a doubt can cause significant economic growth in the country. The massive adoption of bitcoin in the nation is also an important opportunity for innovators, small merchants, and entrepreneurs to export their products and services to people anywhere in the world.
What do you think about this topic? Do you think that the Bitcoin Law in El Salvador manages to adapt to the needs of its citizens?
If you want more information about Mercury Cash and cryptocurrency management, you can contact us or write your query below (comments section).
Image by Ekaterina Bolovtsova via Pexels.com under Creative Commons license.