Bitcoin becomes legal tender in El Salvador… What happens next?
El Salvador made history on June 8th, when it voted to make Bitcoin legal tender — becoming the first country in the world to do so.
The nation’s president Nayib Bukele made the proposal directly, which was then passed by the Salvadoran congress with a supermajority of 62 out of 84 possible votes.
The legislation means businesses in El Salvador who are technically able to accept Bitcoin will be compelled to do so as payment for goods and services going forward.
Bukele predicted the move would have a slew of positive impacts for El Salvador, including the provision of financial services to the 70% of the population who are unbanked, as well as forming a catalyst for increased innovation and tourism.
The move received widespread plaudits, particularly from Latin America where politicians from Argentina, Brazil, Paraguay and Panama were quick to announce their support.
Panama Congressman Gabriel Silva tweeted a rallying cry to anyone interested in helping to build a proposal to be put to the Panama Assembly: “This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies. We will be preparing a proposal to present at the Assembly. If you are interested in building it, you can contact me,” he said.
In Paraguay, Congressman Carlitos Rejala took things a step further, saying on Twitter that he will be introducing a similar bill to the country’s National Congress on July 14th.
Rejala believes the bill will attract cryptocurrency mining companies, allowing them to pay in crypto, store digital asset profits in local banks and take advantage of Paraguay’s cheap hydroelectric energy.
Dominos began to fall further north too. In the US state of Texas, Governor Greg Abbott signed a law compelling Texas to create a master plan for expanding the blockchain industry in the state. “Blockchain is a booming industry that Texas needs to be involved in” he said.
However, it hasn’t all been one way traffic. In fact, it seems anyone hoping for a new wave of global blockchain adoption will be swimming upstream for a good while yet.
Former US President Donald Trump labelled Bitcoin “a scam”. “I don’t like it because it’s another currency competing against the dollar,” he told Fox Business.
Also Justin Urquhart-Stewart, co-founder of Seven Investment Management gave an equally damning verdict on Bitcoin. Speaking to the BBC, Urquhart-Stewart said: “Bitcoin is dangerous because it’s trying to create a level of credibility to unreliable and wholly unfounded value.
“Quite often, unsophisticated punters are drawn in at the wrong time to something they think they can make a quick buck on — to them, it doesn’t matter what it is, whether it’s Bitcoin or GameStop or AMC, it’s something you can bet on” he said.
Perhaps more concerning for blockchain devotees, is that El Salvador has already hit a major roadblock on its way to implementing its own Bitcoin revolution. The World Bank has rejected a request from the Central American nation for assistance with the rollout of Bitcoin acceptance in the country. This setback has thrown doubt on El Salvador’s ability to meet its own deadline for the nationwide acceptance of Bitcoin across the nation within three months.
“While the government did approach us for assistance on Bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings” the World Bank told the BBC.
These first moves towards Bitcoin adoption at national levels however, offer a tantalising preview of what could be to come, should more dominos begin to fall. Set against a backdrop of increasing regulatory clampdowns in the UK, US and China, it is clear that battlelines are being drawn — with neither side showing signs of backing down any time soon.
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