El Salvador Becomes First Country To Make Bitcoin Official Currency
El Salvador will become the first country in the world to make Bitcoin official legal cash on Tuesday, according to a statement released by the government on Monday.
iexclusive News Nigeria reports that the country has begun building Bitcoin ATMs in preparation for its adoption, allowing citizens to convert bitcoin into dollars and withdraw cash.
This came after lawmakers voted in June to legalize cryptocurrency.
Despite the fact that the Central American country believes the legislation will benefit its economy, many of the 6.5 million residents who have little or no understanding of how bitcoin works have opposed it since it was revealed, while others have welcomed it.
Other countries will follow suit, according to Nigel Green, CEO of deVere Group, a financial services group.
Other countries, particularly those in Central and South America, will be waiting with bated breath to see if the experiment succeeds in stabilizing El Salvador’s weak economy, according to Mr Green.
He did agree, though, that President Nayib Bukele’s decision to use cryptocurrency alongside US dollars as a national currency would be risky.
Salvadorans gathered to the streets last week to protest the potential dangers.
According to him, the hazards include “the likelihood that El Salvador would run out of dollars” and “institutions, such as the IMF, may not see a country that has accepted Bitcoin favorably.”
Mr Green, on the other hand, praised the move, saying that the country had “chosen to be dependant on a major first-world currency, the US dollar, to execute transactions, but this reliance on another country’s currency comes with its own set of, often very costly, problems.”
He also emphasized the Central American country’s dependency on dollars due to its inability to produce its own currency, stating that the US Federal Reserve’s money-printing strategy will not aid its economy.
“As a result, El Salvador will have to borrow or earn the money it requires,” he explained. “A rising US dollar has the potential to cripple emerging-market economies like El Salvador’s.”
“Central banks around the world have been depreciating their currencies,” he continued, “while Bitcoin’s supply is not only limited, but new coins are also mined at a decreasing rate.”
On the plus side, he thought El Salvadorans would “find their new chosen currency offers them more purchasing power when they buy from abroad.”