Crypto twitter has been buzzing for a while now. What looked like an uphill task and an impossible goal just came to life. Bitcoin; a nationally accepted currency! Satoshi wouldn’t be less proud! Not CBDCs or USDT, it’s all the shady bitcoin creator ever wished for. The shadowy super coders might have won this round. One city at a time, bitcoin and cryptocurrency seems to be hitting it big in the adoption race. You’ll easily get blown away by how much bitcoin has fought to get to the current stage. Global relevance and an unspoken flexibility. Satoshi’s vision is just one of the goals of blockchain technology; it used to be the only goal.
Located in central America, El Salvador’s seven million citizens can now legally transact with bitcoin as a nationally recognized medium of exchange. Merchants have since updated their payment options while the government has developed an efficient wallet and bitcoin ATMs have been positioned around the country. Hailed as the new hero of bitcoin and decentralized payment, Nayib Bukele and his government announced this development and have since accumulated over five hundred bitcoins as the country takes its place in history.
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This move have expectedly been met with mixed reactions; despite applause from the rest of the crypto space, Salvadorians have since hit the streets with protests against their government’s decision; a decision which will see bitcoin penetrate the core of an over $40 billion GDP economy. The people’s fear steams from bitcoin’s volatility and presumed support for economic foul play. The former was put into play almost immediately as the crypto space shed $300 billion with an hour with bitcoin falling below $46,000. This crash means an over 10% loss for El Salvador, having bought 200 bitcoins at $52,000.
Built on top of a ‘fragile’ economy, El Salvador’s bitcoin project would worry anyone who genuinely cares about the nation. Like a double-edged sword, adding bitcoin to the nation’s reserves could swing the nation towards any angle. Financial foul play aside, volatility of the bitcoin type is a very interesting event, one most countries dread. On the bad side, A 10% loss within an hour? Well, a solid economy is in a better position to deal with such, not one hanging on a thread with seven million citizens at stake.
Cryptocurrency corrections and crashes are brutal; when it blows hot, a 30% loss across all board isn’t far-fetched. We’ve seen this happen countless times, recovery might be sudden or slow. For a currency in routine use, this could cause several inconveniences for merchants. Fiat has shown an even worse volatility; negative most times, but this is usually on the long term and short-term variations are usually manageable. This is however, not the case with bitcoin and cryptocurrencies. Imagine constantly changing price of commodities in response to bitcoin’s ever-changing value? Not seemingly sustainable. Protesters probably considered this before taking to the street; even if they are not right, they are far from wrong…regardless.
On the brighter side; bitcoin has posted incredible gains over the last decade. In contrast, the dollar has dwindled over this same time frame. With unlimited inflation, value of dollar and other fiats has crumbled. Putting bitcoin on the nation’s reserves at current prices could turn out to be of huge profits for the country on the long run. El Salvador has since purchased over five hundred bitcoins at an average price of $49,000; considering bitcoin’s end-of-year $100,000 target gets realized, this will mean a 100% profit. For an economy like El Salvador’s, this means a lot.
Tech-wise, the country has unarguably made the right decision. For a country whose citizens live majorly off funds sent from outside the country, grave losses in redemption and exchange spillage abound. Western union charges are incredible! Considering the stress of redeeming the sent funds, technology like bitcoin would delight Salvadorians. Bitcoin presents a faster, flexible and a more economic medium of sending and receiving funds across distances. It also saves the cost of fiat printing and offers a more portable financial management technology.
El Salvador places itself at the fore front of an economic and technological revolution. Bitcoin’s journey to global adoption has taken a big push thanks to her decision. But the result of this is still uncertain. The apocalypse or the saviour we’ve all waited for? Well, 50:50. Like an experimental animal, El Salvador will showcase the benefits and detriments of bitcoin at a national level. Feasibility of accepting cryptocurrencies as a means of payment in the rawest form will be shown by bitcoin’s adventure in the central American country. The end result of this decision will go a long to determine whether other countries will follow suit or stay away, including El Salvador. If Bukele and his team succeeds, bitcoin will be on the track to gaining worldwide acceptance and El Salvador taking coming to prominence too.
The rest of the world is watching. The end justifies the means. It’s exciting what comes out of this. Bitcoin’s success means the same for the rest of this space and just as everyone else, I am getting impatient!
Read our article on bitcoin’s chances of fixing the world’s economy.
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