El Salvador’s President Nayib Bukele announced during the Bitcoin 2021 conference that he plans to introduce a bill that would make Bitcoin legal tender in the country. The text of the document will be published this week. The announcement sparked widespread excitement at the conference, but market response was low.
On his Twitter account, Bukele changed his image from normal to laser-eyed, a meme often used by Bitcoin supporters. The President of El Salvador said:
“We hope that such a solution will be just the beginning in creating a new space within which innovative minds will shape the future of finance, and could potentially help billions of people. This call will heard throughout the cryptocurrency world. Bitcoin is not only the best reserve asset, but also a great money network. Bitcoin holdings can help developing countries hedge against currency inflation risks”.
Jack Mullers, founder of Strike, a payment platform based on the Lightning Network solution, reportedly advised him. He also became the organizer of the presentation, and announced that his company Strike is opening its headquarters in El Salvador, in partnership with Blockstream.
According to him, the country is already working with Bitcoin companies and platforms to identify logistics solutions for the transition to cryptocurrency.
The bill still needs to be considered by the country’s legislature.
But experts don’t doubt its quick approval, since the political party Bukele controls this body.
Their approval would make El Salvador the first country to adopt the Bitcoin standard.
Digitalization of the payment system of El Salvador
El Salvador has abandoned the national currency since 2001 and uses the US dollar. El Salvador’s economy is now heavily dependent on cash. To a large extent, from the funds that the citizens of the country who are abroad send home. This money accounts for about 20% of the state’s GDP. However, as we can see, the authorities are going to digitalize the payment system.
Recall that there are already local communities in the country that have built the bitcoin economy.
In this Latin American country, cryptocurrency is very popular among the population. Last year it became known that many residents of the village of El Zonte don’t use bank cards (70% of the population of El Salvador doesn’t have a bank account). They prefer to pay for goods and services with Bitcoin.
Also, President Bukele said that the recognition of Bitcoin would make it easier for citizens of the country working abroad to send money home. “In the short term, this will create new jobs and help attract thousands of people outside the formal economy to the financial world”.
At the same time, famous Bitcoin enthusiast Mike Novogratz said that Bitcoin poorly suited for payments. But excellent as an asset for investment and savings.
Monetary authorities in various countries show conflicting perceptions of cryptocurrencies. Some oppose their production on the territory of the country, since this increases the load on the energy system. Others see cryptocurrencies as a threat to the stability of the national financial system. And others are looking at the possibility of issuing a state digital currency.
As we can see, the El Salvadorian authorities are loyal to the idea of converting Bitcoin into a legal tender in the country. The corresponding bill will be discussed by the parliament as early as next week.