El Salvador recognising #Bitcoin as legal tender is an important milestone.
Here are my personal thoughts on some the potential (including unintended) consequences of this news. Time for a thread!
#BitcoinMiami #BitcoinMiami2021 #cryptocurrencies
Here are my personal thoughts on some the potential (including unintended) consequences of this news. Time for a thread!
#BitcoinMiami #BitcoinMiami2021 #cryptocurrencies
Background
Lets not forget that El Salvador has 6.4m ppl with 70% unbanked, 20% living in extreme poverty and 16% of GDP consisting of remittances, mainly the US.
Also, the country uses the U.S. Dollar as its legal currency since 2001 and ⅔ of exports go the US.
Lets not forget that El Salvador has 6.4m ppl with 70% unbanked, 20% living in extreme poverty and 16% of GDP consisting of remittances, mainly the US.
Also, the country uses the U.S. Dollar as its legal currency since 2001 and ⅔ of exports go the US.
Some positives:
1- Bitcoin as a legal tender - this is a world first. Japan came close in 2017 when it recognized it as a means of payment but still treats it as an asset and not as legal tender which has a specific legal definition.
1- Bitcoin as a legal tender - this is a world first. Japan came close in 2017 when it recognized it as a means of payment but still treats it as an asset and not as legal tender which has a specific legal definition.
2 - Lightning Network - this news will bring more much deserved attention to the Bitcoin Lightning Network, which is a layer 2 solution that makes possible small and fast transactions in a way that would not be feasible for the regular Bitcoin network.
3- Good for El Salvador - this will bring much needed investments and brownie points from the global crypto community. Puts the country on the map. Very bold move from @nayibbukele
Some considerations:
1) Choice of Bitcoin - whilst great for Bitcoin maxis, would using USD stable coins been better if the real goal is financial inclusion and facilitating remittances. The US$6b a year is coming mainly from the US in USD to El Salvador that already uses USD.
1) Choice of Bitcoin - whilst great for Bitcoin maxis, would using USD stable coins been better if the real goal is financial inclusion and facilitating remittances. The US$6b a year is coming mainly from the US in USD to El Salvador that already uses USD.
2) Problems for local banks - this news will raise concerns from correspondent banks. Lets not forget that the Marshall Islands (another country that has US dollars as legal tender) was threatened to be cut off from the global finance when it looked to introduce its SOV coin.
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