Headlines across the globe we're plenty as El Salvador's president Nayib Bukele legalised Bitcoin as tender across the country which made the cryptocurrancy legal tender, meaning shops and traders would have to accept to cryptocurrancy as payment for goods and services. You can read the initial media report Here
However, El Salvador's bitcoin move has not been met with the same excitement from policy and financial experts as users. With many Bitcoin supporters excited at the news and what it will mean for Bitcoin in the future many have condemned the policy position. El Salvador is alleged to be currently exposed to corruption, financial problems and political instability. Many are afraid that this legislation will cause further issues for the nation and on the back of El Salvador's legalisation other South American nations too are "giving the people what they want". Apparently that includes Dodgecoin...
Furthermore Atricle 7 of the legislation brought criticism as it is a move that forces traders to accept bitcoin regardless if they want to or not. The example provided by Nayib was that if a lady was selling flowers or fruit on the side of the road she would be requires to accept bitcoin. A move that Liberals are calling against the basic freedom's of people and markers. You can read more Here
World Bank against El Salvador's decision
El Salvador recently sought support from the world bank to assist its implementation of bitcoin as a legal tender. The move prompted the World Bank to decline the offer based on transparency and environmental concerns surrounding the mining and transaction process being not transparent enough and the requirement of due process to be developed prior to the legalisation as tender. You can read more Here
El Salvador also approached the IMF for support who is not against the legalisation as tender however did provide the commentary that El Salvador suffers a significant amount of macroeconomic issues prior to launch.
With the current situation up in the air it is unlikely El Salvador will meet its target of having Bitcoin a legal tender within 3 months.
Legal Challenge
Not all citizens of El Salvador are welcoming of the Bitcoin legalisation and have sought assistance from the nation's opposition party, Farabundo Marti National Liberation Front (FMNL).
The FMNL has launched a legal dispute stating the move is against the nation's constitution and unlawful. Further adding to the President's issues is a recent study conducted by the Salvadoran Chamber of Commerce and Industry that saw 80% of respondents stating they would NOT accept bitcoin as payment.
A citizen by the name of Oscar Artero stated that the law was designed to "loot peoples pockets" with El Salvador's current political and economic issues which even the United States declaring some of Nayib's policies as corrupt it's still to be seen what the outcome for El Salvador will be. You can read more Here
The court case hasn't received a date for hearing as yet but it will be an interesting development as the days go on.
Given the global pressure that will likely arise and internal disputes around Bitcoin as a legal tender it is anyone's guess if the legislation will remain.
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Good points! I never thought it could be that easy, and i expect more problems down the road. But time will tell. I hope for the best, but not sure if El Salvador was the best thing to happen for crypto in general.
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Bitcoin is not ready for mainstream adoption just yet in my opinion. There are so many things that require to be addressed such as the mining. Imagine being paid in Bitcoin when it was 60k now its 50% less. How would merchants pay their bills.
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Nice summary of the situation. I would be surprised if adopting any cryptocurrency as legal tender would be a smooth ride but in a country that is "alleged to be currently exposed to corruption, financial problems and political instability" you'd think it would be even harder.
On the other hand, this is all so ground breaking maybe it's just what the country needs to solve those problems.
Time will tell . . .
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Good points and perhaps it will do more good than bad. Considering the country earns most it's income from remittance it would definitely help getting rid of middle men and women.
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I hope so. That would be a fantastic result. 😁
!ENGAGE 20
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When the big banks and the IMF turn you down... talk to Michael Saylor.
This is a good look past the bull rhetoric. Thanks.
Well I was half expecting this issue since most customers probably don't understand how to use a wallet properly. I do think a gradual change would of been far better to ease people into crypto.
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Correct but if say for an example and not saying this is ture you're the President with a wallet full of Bitcoin and you want to Pump it...
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Of course it could be conflict of interests. I think the entire plan wasn't completely thought out and they should of eased into it while teaching people how to use it.
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Yeah but they probably wanted to be the first, long history between South America and North America. They've been trying to out do each other for years. Doesn't seem to always work.
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My understanding is that vendors will be required to accept Bitcoin as payment "if it is technically possible". If the vendor does not accept credit card, it's pointless to require payment by Bitcoin.
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Everyone with a phone can accept bitcoin. Everyone with a phone can not accept credit cards.
The devil is in the detail.
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You say that. But, not everybody has a smart phone. Feature phones are still popular in Latin America. But, never mind that. I don't expect that the Bitcoin implementation will be heavy-handed towards merchants as it is made out to be.
Interesting article. I expected that El Salvador would have to endure many slings and arrows for this move, and we cannot expect the opposition party to support anything the in power regime does, that is how politics works. As for banks and the IMF, they are also not impartial commentators also. You do make some good points about volatility, ease of use and education, as the learning curve for cryptocurrency can be steep. But we must remember also that simple wallets exist, you don’t need to understand everything about technology to use it and most importantly, that when you decouple from fiat, the value of crypto in fiat becomes less important and actually creates stability, instead of exposure to instability of prices of goods and services. However I agree that this road towards Bitcoin as practical usable currency nationwide will not be an easy journey, and as Bitcoin Beaches and other microcosm experiences have shown, there is a lot of work and education involved in transitioning from fiat to crypto. But the benefits to these economies are amazing, if the transition is planned and corruption and sabotage are limited or eliminated.
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