El Salvador has been making international headlines recently. This comes following a move that no one expected. During the 2021 Bitcoin Conference, the country's national leader unveiled a very interesting plan. The plan is going to make El Salvador the first country ever to adopt Bitcoin as a legal tender.
The international event was held at the Mana Wynwood Convention Center in Miami. It was a great opportunity to make such an announcement. The news were shared in the form of a video broadcast.
Nayib Bukele, the country's president revealed his intention to legalize the cryptocurrency. This makes El Salvador the first sovereign republic in the world to make Bitcoin a legal tender alongside the U.S. dollar. The leader of El Salvador also intimated that the country has partnered with digital wallet companies. This to construct Bitcoin based infrastructure for the region.
Considering this was the world's largest Bitcoin event yet, this announcement came as a surprise. Most circles across the world were shocked by the announcement. This can be seen in the rapid price movement bitcoin made right after the announcement. This movement was mostly influenced by Elon Musk's Bitcoin coverage and by China's attacks on mining.
Making Bitcoin a Legal Tender
The latest news of the congress approving the presidents decision came as a surprise. The landmark decision was reflected in the legislative votes. 62 out of 84 voted in favor of designing new cryptocurrency infrastructure. This is to facilitate widespread bitcoin adoption within the country.
The latest events appear to raise some concerns too. Some are worried of potential ramifications of the program with the international Monetary Fund. The country's president has expressed a very strong belief in the virtual currency. Many expect that this will go a long way and that the disruptive currency will transform lives. Considering that El Salvador lacks its own currency, it makes sense why the president has so many good things to say about his expectations.
President Bukele has made a lot of claims about the benefits of the Bitcoin adoption. He claims that in the short-term, more jobs will be created in the country. He also noted the unique opportunity for financial inclusion across various formal economies.
The need for financial inclusions in El Salvador cannot be understated. More than 70% of the country's population does not have a bank account. This means that most people operate within the informal economic sector.
Bitcoin promises people increased access to a normal financial sector with normal services. This includes affordable credit, savings, investment programs and secure monetary exchanges.
In a twitter post, the president of El Salvador went on to further assert his administrations commitment. The president noted that he is considering the sustainability of Bitcoin mining significantly. He noted that he directed the state-owned renewable energy firm to establish a plant for Bitcoin Mining. This will create a clean and affordable energy source for people looking to establish mining farms in the country.
While most supporters of the cryptocurrency are quick to support El Salvadors decision, there are more things to consider. Quite obviously, the main concern is bitcoins stability. As the coin is at risk of significant price fluctuation, the country could also be at risk. Another concern that remains is the lack of financial policies surrounding bitcoin. The country will need to implement an advanced cryptocurrency policy for the plan to work.