While some political and corporate leaders have been eager to invest in and adopt cryptocurrencies, others are entirely hostile. Turkish President Tayyip Erdogan recently declared outright war on the Bitcoin network. President Erdoğan: "We Are At War" President Erdoğan expressed his opposition to Bitcoin in a meeting with Turkish students this Saturday. The event comes after one of them asked if the country's central bank would adopt cryptocurrencies. Erdogan responded with total rejection: "We have absolutely no intention of embracing cryptocurrencies. On the…
El Salvador’s President Nayib Bukele has announced plans for his country to adopt Bitcoin (BTC) as the legal tender. Furthermore, the President affirmed that he would send a bill to the Senate seeking to make BTC the country’s legal means of exchange.
Mr. Bukele’s party and allies hold a majority of 56 out of the total 84 seats in the Senate. Analysts, therefore, suggest that the bill will likely pass.
BTC, El Salvador’s Optimistic Future
Speaking at the Bitcoin 2021 conference, Mr. Bukele expressed optimism that the move will draw crypto investors to his country. Again he saw BTC as the avenue through which El Salvador could launch into an optimistic future.
The President revealed that his country has partnered with Strike to actualize the adoption. Strike’s CEO Jack Mallers confirmed that Mr. Bukele’s government had contacted them to help set up the project.
They (Strike) were participating in it to help the Salvadorans.
Mixed Reactions To Bukele’s Announcement
The president’s remarks elicited mixed reactions from social media users. TRON‘s founder Justin Sun agreed that El Salvador’s move would pull more crypto investors and entrepreneurs into the country.
Avanti Bank’s CEO Caitlin Long applauded the announcement terming it historic. Others to support the move included MicroStrategy’s chief and BTC crusader Michael Saylor and Binance’s Chanpeng Zhao.
On the flip side, others expressed pessimism about the move. They pointed out the South American country’s insecurity and corruption as key factors that would hinder such migration.
Ditching The Dollar for BTC
Defending the move to ditch the Dollar for BTC, the President said it would enhance financial inclusion. He said 70% of Salvadorans are out of the formal economy. Thus shifting to BTC will enhance access to credit, savings, and investments while securing transactions.
Apart from prompt settlement times, BTC doesn’t require physical bank accounts. Instead, the funds are held in digital wallets. The removal of the need for physical bank accounts increases access to many financially poor.
To Bukele, financial inclusion isn’t a moral imperative only but a means of growing the economy.
BTC’s Adoption Will Spur Growth
Additionally, he argued that the investment El Salvador would attract will lead to economic growth. He held that the country’s GDP would grow by 25% by attracting just 1% of the $680 billion BTC market cap.
Again BTC will be essential to growing the country’s foreign remittances. Approximately a quarter of the country’s GDP comes from remittances from abroad. This amounts to over $6 billion annually.
BTC’s adoption will eliminate fees paid to intermediaries when receiving funds. Consequently, more than a million low-income income Salvadoran families will benefit.
The Case For CBDC’s
The increasing popularity of cryptocurrencies has led governments to rethink their payment systems. As a result, many are in various stages of conceptualization of Central Bank Digital Currencies (CBDC’s) to replace their fiat ones.
Recently Lael Brainard, of the Federal Reserve Board of Governors has called for a safe CBDC that’ll expand financial services to Americans underserved by banks. Last month, Jerome Powell, Federal Reserve Chairman, stated that the bank would publish its thinking on the pros and cons of a digital US dollar.