A Momentous Event
On June 4, 2021, Miami, Florida, a cryptocurrency conference – Bitcoin 2021 was held. And in that same conference, the president of El Salvador, Nayib Bukele, appeared in front of all attendees via a ZOOM call. There he announced to anyone that he plan on submitting a bill that would make Bitcoin a legal tender.
True to his words (which are rare among politicians) President Nayib Bukele did indeed submit a proposal to the EL Salvadorian Congress. And then on Tuesday night, June 8, 2021, congress voted and 62 out of 84 lawmakers vote in favor of adopting Bitcoin – making El Salvador the only country in the world that recognize Bitcoin as a legal tender.
Bitcoin’s use as a legal tender will start 90 days later which mean that on September 6, 2021 El Salvadorian could use Bitcoin to buy any product and avail services in the country.
Good Intention, Bad Choice of Cryptocurrency
Without a doubt, El Salvador’s move to make Bitcoin a legal tender put them in the history book as the first country that recognize cryptocurrency as a legal tender. And with El Salvador as precedence, I believe that other countries would follow suit especially if one considers that several countries are experimenting on digital currencies, China being a good example with their Digital Yuan.
Honestly, I have nothing but praise for President Nayib Bukele’s bold vision for his country. The fact that he acted fast after making his announcement proved just how much he believed in the potential of cryptocurrencies, and what cryptocurrency could do to improve the financial situation of his country.
President Nayib Bukele had good intentions when he adamantly submits the bill to congress to make Bitcoin a legal tender despite possible repercussion from the International Monetary Fund. This could be seen on a tweet after congress voted in favor of his bill. The tweet states:
"It will bring financial inclusion, investment, tourism, innovation and economic development for our country,"
President Nayib Bukele believed that Bitcoin would improve the financial situation of his country – pushing the country to a more positive economic development – a sentiment that countless supporters of cryptocurrencies shared, myself included.
That said I do take serious issue on one particular matter – his choice of cryptocurrency.
Bitcoin Won’t Make a Good Legal Tender
Bitcoin is not a bad cryptocurrency per se. After all it won’t reach its current height if it was. But as a legal tender that would be used by an entire country with a population 6.5 million, I think Bitcoin is a bad choice.
And here’s why.
Absurdly High transaction Fee – Bitcoin’s transaction fees are absurdly high. Its average transaction fee is $8.257 (as of June 23).
Slow Transaction Speed – Bitcoin has a scalability problem. With a block size of just 1 megabyte transaction on the Bitcoin network is worryingly slow in comparison to other network like that of Bitcoin Cash.
Volatility – This is a problem that all cryptocurrencies faces not just Bitcoin and probably wouldn’t be solved unless it falls into the control of the governments and becomes centralized which is against the principles of decentralization that almost all cryptocurrencies championed. That said, it the problem of correlation could be solved then other cryptocurrencies wouldn’t be too affected if the price of Bitcoin changed on the whims of whales.
Security – Bitcoin is very difficult to hack but that doesn’t make it impossible to hack. Decade since it was first introduced about a million (around 980,000 as of 2017) Bitcoin had been stolen from exchanges through hacking and scams. According to an Investopedia article, 2019 alone about $9 million worth of cryptocurrency, mostly Bitcoin are lost every day. Technically, it wasn’t the fault of Bitcoin itself but by exchanges with horrible security and by gullible users.
Limited Use – Although Bitcoin could be used to purchase goods and services, its horrendous transaction fees, and slow transaction speed makes it a horrible choice for a legal tender and limits its uses to big transactions like buying car or other properties. As for smaller transactions like, Bitcoin is pretty much unusable. No, don’t misunderstand; I’m not saying that Bitcoin couldn’t be used for smaller transactions. Technically it could but would you really use Bitcoin for a $10 transaction? I won’t. The transaction fee alone would make that $10 transaction to $13 or more. It’s just isn’t worth it.
What Cryptocurrency Would Make Good Legal Tinder?
Pretty much every other cryptocurrencies besides Bitcoin and Ethereum would make for a good legal tender. Yes, even DOGE, as absurd as it may sounds, would actually make a better legal tender to Bitcoin for the sole reason that the transaction fee was absurdly small in comparison to Bitcoin. Of course, DOGE won’t be my first choice of legal tender as that honor goes to Bitcoin Cash (BCH).
Bitcoin Cash, by all account is much, much better cryptocurrency compared to Bitcoin. The transaction fees are a lot cheaper, transactions are a lot faster, it is more secure, and it has unlimited uses. Besides that, Bitcoin Cash is the cryptocurrency that Satoshi Nakamoto, the developer of Bitcoin had envisioned.
No. I’m not claiming that Bitcoin Cash is the perfect cryptocurrency – far from it. Bitcoin Cash like Bitcoin has it flaws one being its correlation to Bitcoin that would affect its value whenever the value of Bitcoin changes. But compared to Bitcoin, Bitcoin Cash deserved to be a legal tender of El Salvador (and possibly other countries as well) more so than Bitcoin.
And considering that one of the main uses of cryptocurrency in El Salvador was for remittance, I believed that El Salvadorians could save more on transaction fees and send more money to their love ones if they use Bitcoin Cash instead of Bitcoin. Honestly, I find it baffling that President Nayib Bukele would chooses Bitcoin instead of other more practical cryptocurrency like Bitcoin Cash. But that’s just my opinion.
Anyway, that’ all for now. And if you so chooses please show your support by liking or upvoting my articles. Thank you for reading and I wish everyone a pleasant day.
FIN~
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My other articles: https://read.cash/@beastion
Image source: Pixabay
Truthfully, even BCH is a little slow for POS transactions (unless the retailer accepts 0 confirmations). DigiByte has 15 second block times and low fees for instance.
The great thing about BCH is how large the ecosystem is. Also, if a country does adopt BTC as legal tender, very little (if any) infrastructure change would be needed to add BCH and take advantage of its benefits. For better or worse, BTC will remain most people's entry point into crypto for the foreseeable future.