Wednesday started a good day to the crypto-enthusiasts because the President of El Salvador, Nayib Bukele, announced that Bitcoin is officially legal tender on their country. It was because sixty-two members of the legislature agreed and voted in favor of the bill while nineteen of them opposed it and three were abstention.
This bill is mandatory and the businesses will accept Bitcoin as a payment for their goods and services...
...BUT what if an individual doesn't want to take the risk of the volatile market? The government will act as a “backstop” so they can still use it as a payment.
How can the El Salvadorians do it? Let us borrow what Bukele said.
“If there’s an ice cream parlor, he doesn’t really want to take the risk, he has to accept bitcoin because it’s a mandated currency but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account, when he sells the ice cream, he can ask the government to exchange his bitcoin to dollars,”
“Of course he can do that in the markets also but he can ask the government to do it immediately.”
Now, the question is, how about the fees? How's the transaction? At this point, the best coin to be an alternative—and should be adopted—is Bitcoin cash (BCH)...
...why?
As what the whitepaper said, the main vision of Satoshi Nakamoto is to make a peer-to-peer electronic cash that can be useful in daily transactions. However, we all know that Bitcoin core has a higher fee compared to Bitcoin cash. According to BitInfoCharts, Bitcoin has 0.00013 BTC or an approximately $4.7 USD average transaction fee while Bitcoin cash has only 0.000015 BCH equivalent to $0.0092 USD.
In addition, the Bitcoin core has also a slower transaction because of its block size which is 1 MB which is smaller than Bitcoin cash's block size that is ranging from 8 MB to 32 MB which can handle more transactions compared to Bitcoin.
Imagine that you are buying an ice cream that costs $2 USD and you will pay ≈$4.7 USD for the fee, isn't it funny? You paid the fee higher than the cost. On the other hand, if we will use Bitcoin cash, you will only pay ¢ents for fee that is obviously much lower than Bitcoin.
Furthermore, Bitcoin cash will bring everyone a digital cash payments compared to Bitcoin which is more likely focused on the store of value that makes it as a digital gold which is opposing the original whitepaper.
Conclusion
As a final analysis, this announcement is considered as a “good news” for crypto-enthusiast because who knows that this will be the beginning of the real vision of Satoshi Nakamoto, right?—It is to use cryptocurrency as a digital payment when there is no middle man or banks. Hopefully other countries will also adopt cryptocurrency as a legal tender and create a domino effect in the world.
Moreover, the main thought of this content is based on reality and not to hate Bitcoin and Bitcoin Maximalists. A big institution can probably afford the fee of Bitcoin but how's the small and normal people?
To end this, let us know what Bukele said, “In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy and in the medium and long term we hope that this small decision can help us push humanity at least a tiny bit into the right direction.”
They are also eyeing on Bitcoin Mining, do you think it will be worth it? Or it will end up like on Tesla?
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Published: June 9, 2021
The new law in El Salvador doesn't make the use of other altcoins illegal so ask such people can accept payments in other altcoins as well but other altcoins won't be legal tender so it will have to be a deal between both parties seller and buyer.
In El Salvador, the whole population will use custodian services and not on-chain payments which means that hackers will hunt for BTC liquidity in those apps. I am pretty sure soon enough people in El Salvador will learn why you don't trust custodian services when the first news comes that say wallet of satoshi or strike was hacked and all Bitcoin are lost.