Recently, a few days ago the leader of El Salvador makes bitcoin as a legal tender. And, with this El Salvador BECOMES THE FIRST COUNTRY TO DO SO.
How it came to this decisions and what are its implications??
During, pre Columbian period, the cocoa was used as a reference value for exchange between peoples. And, after the conquest of Spanish, it starts using Real coin and later on was replaced by Macao or Morlaco and then came the farm token which was basically a private type of exchange as it was given basically by the landowners to the workers in the farm which they used for buying from the stores from the same farm.
Then, Colon was the only legal ender till January 01, 2001, but later on US dollar was accepted as legal tender wth the colon running in parallel.
HOW IT CAME TO THIS DECISION?
The interest in cryptocurrency in El Salvador can be traced back to several years especially in the field of academics and the trading. Despite, the fact that cryptocurrency is new.
However, there is a noteworthy precursor to the use of Bitcoin in El Salvador: The bitcoin beach protect (https://www.bitcoinbeach.com/) located in El Zonte.
I n 2009, they started to create a sustainable ecosystem for its use at the grass root level with large anonymous donation of Bitcoin.
The project trained people on use of applications for micro-payments using Bitcoin in places like restaurants, saloons, grocery stores etc.
Likewise, they also transferred it to the families, and many teenagers.
The growing fame of the project due to its disruptive initiative led many of its promoters quickly came into contact with El Salvador government which led to the rapid evolution from the local initiative to a national one.
DEBATES:
Unlike dollarization, when there were rumours before its introduction and a heated academic and political debate had already begun around it, this time there were n oany such indications other than a few visits by Jack mallers to the Bitcoin Beach project and it tied a deep friction between followers and the critiques. Some says that it will lead to the economic collapse while, other says it s the solution to all the economic problem.
OUTLOOK:
Well, it is quite difficult to forecast what will happen in the short term or medium and long term as it is still in the beginning face. Once the bill has been passed, the process of rolling it out must start, which will include a detailed regulation. The reaction of international financial system should also be expected especially IMF with whom the country is negotiating an agreement of US 1.2 billion dollars.
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