BTC is about to take another step towards “world domination” and work is currently underway to establish this asset firmly in El Salvador. Things have set in motion in an effort to ensure the success of this pioneering step, but under all the pomp and fanfare, there is also resentment, restlessness and fear.
A bold move by El Salvador
On June 8, the legislature of El Salvador approved the Bitcoin law and granted BTC the status of legal tender. The El Salvador government passed the law with effect from September 7 and introduced a number of plans to facilitate this transition. As the launch date approaches, completion plans are underway for the development of Chivo, a national digital wallet with a feature that allows Bitcoin to be converted to dollars. To encourage the use of digital assets, the government is distributing $ 30 in BTC to users using this application.
200 BTC ATMs have been installed across the country and banks are trying to prepare for launch on September 7. The Legislative Assembly has launched a $ 150 million fund to hedge the US dollar exchange, and speculation is circulating that the amount could be significantly increased.
President Nayib Bukele stressed the importance of the transition and said it would improve cross-border payments and also believed in attracting other international investors. The leader also announced that BTC transactions would not be subject to capital gains tax, and unveiled plans for the country to become a center for BTC mining using geothermal energy from volcanoes located in the country.
The enthusiasm that erupted after the announcement of the country’s transition to Bitcoin has faded and in some areas has receded and pessimistic voices are growing. Some of them mainly mention asset volatility as a negative attribute that threatens the BTC market.
The decision to adopt Bitcoin could significantly complicate the negotiation of loans from international agencies, and the International Monetary Fund has already warned of the potential pitfalls of switching to BTC as legal tender. Some analysts believe the law was not well thought out and lawmakers did not conduct sufficient public inquiries.
In addition, considerable protests have erupted in the country against this move, with the already mentioned extreme volatility and the fear that the BTC may serve as a tool for money laundering being mentioned as the main reason for the protesters’ displeasure. On the other hand, it must be said that the vast majority of the country’s population do not understand BTC, and the government still has a lot of work to do to explain this.
Why is this step so important? El Salvador is the first country in the world to use Bitcoin as legal tender and could potentially influence other countries to start using digital assets as a legal currency. This could cause a chain reaction to the global acceptance of cryptocurrencies, which in turn can trigger a massive price BTC rally, where the current price of around $ 50,000 will seem incredibly low.