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Is Bitcoin Actually Reliable Enough to Be Known as an Official Currency?

1 25 1
24.08.2021

El Salvador’s move to turn Bitcoin into a legal tender created a sense of optimism for market improvement for those who have a close eye on cryptocurrencies. The president of El Salvador, Nayib Bukele, sent the “Bitcoin Law" to the Legislative Assembly on June 9. It takes effect in September, hoping to turn El Salvador into a utopia of Bitcoin lovers.

Passing the Bitcoin Law may indicate the desire of a former businessman and a current president to make El Salvador a leading country in adopting cryptocurrencies as a legal tender. However, the initial excitement around this law has now subsided, and we can take a wise and analytical look at the Bitcoin Law in El Salvador.

According to the law, “every economic agent must accept Bitcoin as payment when offered to him by whoever acquires a good or service,” and “all obligations in money expressed in USD, existing before the effective date of this law, may be paid in Bitcoin.”

The truth is, El Salvador is not the first country that is allowing its people to use Bitcoin for regular payments. Since 2010, when a software programmer paid 10,000 Bitcoins for two pizzas, until today, Bitcoin has been a common currency for specific payments — especially for those who do not want their payments to be tracked.

El Salvador has never had a stable economy and is now one of the poorest countries in Central America. By accepting Bitcoin as a legal tender, the government intends to create an economic stimulus. However, this ambitious program does not seem to be as it sounds. Here’s why.

Related: It is a bad idea for El Salvador to accept Bitcoin as legal currency ...

El Salvador is a small economy in Central America with a population of 6.5 million, and it has one of the lowest GDP rates in the world and its region. The country started to adopt the US dollar in 2001 as its official currency. Before beginning the dollarization process, the Colón was their currency since 1892. Other neighboring countries, such as Panama and Ecuador, also adopted the US dollar, intending to reduce........

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