Today is a big day for cryptocurrency supporters. It is the day that Bitcoin becomes legal tender in El Salvador!
On Monday the president of El Salvador, Nayib Bukle confirmed that his government has purchased 200 BTC and intends to buy $150 million US dollars worth to use as a fund to facilitate conversions from BTC to USD.
The government will provide every citizen with the equivalent of $30 USD in BTC through a state provided digital wallet. People will be able to spend this or convert it back to dollars at one of 200 Bitcoin ATM's which are being installed across the country.
Merchants will be able to receive payment in Bitcoin and will be able to convert this into USD if they wish by using this digital wallet.
There is also a movement among Bitcoin supporters on reddit for everyone to buy $30 USD of Bitcoin today to mark this event and hopefully push up the price.
El Salvadors own currency the 'Saldorvian colon' was replaced by the US dollar in 2001, now 20 years on Bitcoin will become legal tender too and be used alongside the dollar.
El Salvador also announced that it intends to mine Bitcoin using geothermal energy from volcanoes and has said that this will be 100% clean, green, renewable energy and also very cheap.
Bitcoin is often criticized for using a lot of resources and being bad for the enviroment, could it be the case though that Bitcoin mining drives innovation as miners are always looking for cheap, innovative ways to use energy and therefore look for ways to do this more efficiently.
The people of El Salvdor are divided regarding the adoption of Bitcoin as legal tender. Many people are protesting that they do not know enough about it and that it is exposing people to unnecessary risk.
Nayib Bukle belives that Bitcoin will give the economy a boost and that El Salvadorian people who are living abroad will much more easily be able to send money to their familes at home using Bitcoin, which would then be used in the wider economy.
This is certianly a big event, the first country to adopt Bitcoin as legal tender! This move has been criticized by the 'International Monetary Fund' warning of dire concequences, however the 'Bank of America' has said that Bitcoin could 'streamline remittances, promote digitization and give people greater choice' and also that it could 'attract investment and digital currency miners'
Remmitances account for as much as 24% of El Salvadors GDP and a large chunk of that is made up of transaction fees. The use of Bitcoin could reduce these fees significantly.
This all sounds good so far but I personally am a little concerned about the way that the use of Bitcoin is being encouraged. It seems quite far removed from the way Bitcoin was intended to be used. Bitcoin was designed to be decentralised and give people back their financial sovereignty, however the people of El Salvador, in order to use Bitcoin for every day use will need to sign up to use a state created digital wallet and verify their identity to comply with KYC regulation. This is hardly 'financial sovereignty in my view'.
Bitcoin is the best known cryptocurrency and maybe this is why the El Salvador president decided to adopt this crypto coin, however being the best known crypto coin does not mean that it is the best.
The way Bitcoin is designed with the small block size means that it will become more difficult to mine and transaction fees will begin to increase over time, to the point that it makes it unusable without solutions such as the 'Lightning network' which banks are known to be heavily invested in. Bitcoin rather than being an alternative to the banks seems to be working in tandem with them.
Bitcoin Cash is a fork of the original Bitcoin which opted to increase the block size, which makes for faster and cheaper transactions more suited for everyday use. The developers of Bitcoin Cash believe that this more in line with the original vision of 'Satoshi Nakamoto' the anonymous creator of Bitcoin intended.
Bitcoin Cash can be used directly at a number of merchants worldwide which can be found here.
Hopefully Bitcoin cash can become a currency in its own right and not need to rely on state issued digital wallets.
With the cheaper transaction fees and faster transactions it certianly has the potential to do so.
I believe that BTC should now be regarded more as a store of value than digital cash.
BCH is designed to be used and spent freely without the need for a third party.
A useful app for accepting BCH payments for your buiseness is the Bitcoin cash register app. If you want to see how it works check out the video below.
It remains to be seen how the experiment to use Bitcoin in El Salvador will unfold, but we will soon find out!
I hope you enjoyed this article, if you wish you can check out my other articles here.
https://read.cash/@onlymythoughts
Article is my own
Pictures courtesy of pixabay
Video: Youtube
Newsworthy! thank you for sharing it here. This kind of news isn't usually heard. Whew, at first it is a wow that a country like El Salvador has recognized the beauty of cryptocurrency like Bitcoin. However, yeah, there's the negative side of it, it won't be decentralized anymore but would be controlled by the government. You can't hide your money anymore in crypto. Nonetheless, there are other cryptos around like Ethereum and the others. What would you think?