When did El Salvador create the Bitcoin Law?
El Salvador, a Central American country, recently became the first country in the world to adopt Bitcoin as legal tender. Right now, bitcoin in El Salvador can be used as a medium of monetary exchange. It became the first country since the crypto currency was launched to embrace it openly. This comes amid a great spike in popularity as well as the shared values of many cryptocurrencies.
When did El Salvador create the Bitcoin Law?
President Nayib Bukele proposed to accept cryptocurrencies. The proposal was accepted by Congress on June 8, 2021, much to the pleasure of cryptocurrency advocates. Despite concerns about the potential effects on El Salvador’s agreement with the International Monetary Fund, lawmakers voted 62 out of 84 in support of the initiative to develop legislation to accept bitcoin.
Why was Bitcoin adopted as legal tender?
The usage of bitcoin provides a way for Salvadorans living abroad to send remittances back home. El Salvador still does not have its own currency, but rather uses the American Dollar.
A remittance-driven economy
El Salvador’s economy is heavily dependent on remittances. Remittances are money sent home from abroad, and they make up around 20% of the country’s gross domestic product (GDP).
This is due to the fact that more than two million Salvadoreans live outside the country. Each year, they send back more than $4bn (£2.8bn).
Perplexities related to the Bitcoin Law
What can be the consequences of adopting bitcoin? Some people have manifested apprehension given the fact that nobody knows exactly how the crypto will behave as a proper currency. And more than an analyst has expressed perplexity to such an early adoption. There’s still many people across the world who don’t know much about cryptocurrency, and experts fear it would be hard for them to clearly understand the characteristics of the currency without a proper education. Other people fear that this law may create economic instability in the nation and may take the country back to 2001, when the El Salvadoran government decided to use the American Dollar as its official currency in order to achieve economic stability. Its adoption didn’t result in any significant growth, as El Salvador’s economy has grown at a slower pace ever since. Curiously, El Salvador’s growth rates were higher in the decades before the dollar adoption.
However, the majority of experts believe that adopting Bitcoin will improve the economy. It will help increase the remittances coming abroad, due to them being an important part to the country’s GDP.
We are just starting to scratch the surface of the relationship between cryptocurrencies and large institutions. The truth is that we live in the crypto era, and it’s only a matter of time before cryptos and blockchain systems will be used worldwide on a daily basis. This is the reason why we created the WEWE Global project. Do you want to take part in this journey? Join us!
