What does El Salvador’s Bitcoin Adoption Mean for the Global Crypto Markets?
El Salvador became the world’s first sovereign nation to adopt bitcoin (BTC) and make it a legal tender in 2021. Since that time, President Nayib Bukele’s administration has not looked back, despite criticism from the International Monetary Fund (IMF) and members of opposition political parties.
Bitcoin (BTC) and El Salvador
In a landmark event for the entire distributed ledger technology (DLT) industry, El Salvador, a Central American nation led by Nayib Bukele, took a bold step into the super volatile world of crypto in June 2021, when a supermajority of the Salvadoran Congress approved Bukele’s bitcoin legal tender bid.
At the time, a total of 62 out of the 84 members of El Salvador’s Congress voted in favor of the #BitcoinLaw Bill proposed by President Bukele and his team. The near-flawless victory of the bill triggered widespread excitement in the hearts of crypto enthusiasts in various jurisdictions as well as Salvadorans who understood the unlimited possibilities that come with bitcoin (BTC). In addition to making Bitcoin a legal tender, El Salvador own 1,801 bitcoins. If you want to know how much they are worth in INR, check here BTC to INR.
“I believe bitcoin is God’s gift to El Salvador and to the rest of the world. Thank you for your courage in making this happen! Fix the money, fix the world. Bitcoin is for the people!” tweeted @timothy_skim at the time.
It’s worth noting that before the integration of the world’s flagship crypto into its economy, the United States dollar was the primary legal tender and the official currency of El Salvador.
According to research reports by Statista, as of 2011, only 14 percent of Salvadoran adult citizens had access to a bank account or mobile money service account. And by 2017, that number had increased to a mere 29 percent of the population.
Bitcoin Ushers in Unlimited Possibilities
Just like in several jurisdictions across the globe, a vast majority of Salvadoran people still do not have access to financial services in 2022.
However, with bitcoin (BTC) the people of El Salvador now enjoy financial inclusivity, costless remittance payments, and more.
In August 2021, Bank of America, one of the largest financial institutions in America, came out in public to support El Salvador’s bitcoin legal tender project, highlighting the numerous benefits the revolutionary digital currency would bring to the country.
It’s worthy of note that remittances represent almost 25 percent of El Salvador’s GDP. The Bank of America says it believes in bitcoin’s potential to slash remittance fees for Salvadorans, while also triggering a significant increase in the disposable income of residents.
In addition, the bank says it sees a future where the country’s bitcoin adoption will attract more foreign direct investment (FDI) on account of it becoming a major bitcoin mining hub.
Despite the unlimited possibilities that El Salvador’s bitcoin legal tender project brings to the country, the IMF still does not see the move as a reasonable one and has urged the country to quickly reverse the plan.
It is expected that many more nations will turn to bitcoin in the coming years, as they begin to understand its benefits better. For instance, Bitcoin has given the Ukrainian government a lifeline during the invasion by Russia.
India has ditched initial plans to ban bitcoin and has placed a 30 percent capital gains tax on crypto transactions. Now, Indians can buy, sell, store bitcoin and other cryptocurrencies via cryptocurrency exchange in India without worrying about getting punished by authorities.
