El Salvador could be the first country to accept Bitcoin as legal currency

The criptomonedas have become increasingly important in recent months. More and more companies endorse its existence and value. Some countries are even considering using this model to generate the digital version of their currency, others are instead banning its use. Now, in a further step in the development of this technology, El Salvador could become the first country to accept Bitcoin as legal currency.

According to information released by CNBC, the president of El Salvador, Nayib Bukele, announced that he will propose a bill that will make Bitcoin legal tender along with the US dollar. The reason, said the president in a video, is that: In the short term, it 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 to push humanity at least a little bit in the right direction.

The intention of this initiative, in the words of the founder of Strike, Jack Mallers, Bitcoin will help countries like El Salvador to protect themselves against "possible shocks" of inflation for traditional currencies.

Furthermore, specialists consider that the reason behind this idea is that migrant money transfers represent around 20% of El Salvador's gross domestic product and often include high transaction fees, as well as long transactions. delays. Bitcoin and other cryptocurrencies could make those transfers more practical and immediate.

The president of the country also explained that much of the money that arrives from the United States is lost by intermediaries, but with the use of Bitcoin the amount received is maintained so it has the potential to improve the lives and future of millions. He also said that a way to grow the country's economy, providing access to credit, savings, investment, and secure transactions.

And adoption and acceptance shouldn't be a problem considering that citizens have shown that they like digital payments as the Strike app became one of the most popular apps in the country when it launched last March.

Challenges and disadvantages

However, there is still a challenge, the main one is that Bitcoin is not backed by a stable resource such as gold or by the government of a large country. That means that, like other cryptocurrencies, it is very volatile. In fact, large spikes and drops are often linked to events that would be considered minor elsewhere. That means a resident with a Bitcoin transfer to make ends meet could be left with nothing if the value falls without warning.

Even so, it is pointed out that it is quite likely that the bill will be approved because Bukele's party controls the Legislative Assembly of El Salvador.

If the move is successful, it could give Bitcoin and other cryptocurrencies another foothold in the mainstream financial world by facilitating business with an entire country. But even with this, Salvadorans may still have to deal with exchange rates and other annoyances, especially considering that other countries are unwilling to support and formalize digital currencies.

Finally, the country is also opening the doors to entrepreneurs with projects related to cryptocurrency technology.

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