By Landon Manning
In a worldwide first, the Central American nation of El Salvador has made a major bitcoin (BTC) announcement. The Republic of El Salvador, the smallest nation in Central America with a population of some 6.4 million, has made a splash in global headlines by announcing on June 9 that the country would be the first to make bitcoin legal tender. With current president Nayib Bukele’s party possessing a supermajority capable of passing this proposal through the legislature, this measure is set to take effect 90 days after the bill’s success.
The reveal of this bold new plan has sent shockwaves through the international community, with enthusiasts and naysayers jumping at the opportunity to explain how the small nation is setting itself up for failure, or is making a radical new leap that could change everything.
The law stipulates that businesses must provide the ability to conduct all transactions in bitcoin, unless they are unable to acquire the technology necessary to do so.
Smaller-scale experiments to do this have already been carried out with great success. The village of El Zonte on the Pacific coast has been host to an experiment in Bitcoin technology for nearly two years now, with hundreds of working families seamlessly integrating the convenience and advantages of Bitcoin into all the small transactions of daily life. After all, in a country where more than 70% of people don’t have bank accounts, how “inaccessible” can a decentralized platform really be?
This comes to the heart of the issue with El Salvador’s acceptance of bitcoin as legal tender: the fact that the nation’s only other legal tender is the U.S. dollar. Since 1892, the country had minted its own currency, the colón, but then-president Francisco Flores got rid of this currency in 2001.
In a development that is already being picked up by international press, the announcement came only a few days after U.S. Vice President Kamala Harris snubbed El Salvador on her tour of Central America. With President Bukele publicly thanking China for the millions of COVID-19 vaccine doses sent to El Salvador, commentators are wondering whether this turn toward the future of digital currency is explicitly a move against the world’s existing financial institutions. One thing is certain, the International Monetary Fund (IMF) is not happy with the move, threatening to call off loans that have historically been used primarily to keep small nations buried in ever-growing debt.
In further news, Bukele has also already made moves to cut off one of the most popular refrains against Bitcoin, namely its electrical consumption and environmental impact. El Salvador sits in a very geologically active part of the globe, with several active volcanoes and geothermal power plants, and Bukele has offered the services of these plants to jump-start a local Bitcoin economy.
With state-backed green energy, El Salvador seems primed to jump to the top of the world of Bitcoin on both ends, both producing new bitcoin and plugging in mass amounts of people into the world of decentralized currency. Whatever the results of this experiment are, it’s sure to color the direction of the entire world cryptocurrency movement as it moves confidently into the 2020s.
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