El Salvador becomes the first country to adopt Bitcoin as legal tender (in addition to the US dollar) through a law that Congress approved, which is scheduled to go into effect as of September 7, 2021. The authorities of El Salvador are offering their citizens the amount of 30 dollars to register in a digital wallet to encourage its use; it was also reported that the dollar accounts will remain in the same currency and that the payment of pensions and salaries will continue to be paid in US dollars.
The Presidency of that country has announced that it will initiate a nationwide campaign to publicize everything related to the implementation of the law that approved the adoption of Bitcoin as legal tender; training workshops will be held for companies on Bitcoin transactions, and at the same time, the government will try to improve Internet and mobile phone service, to encourage the population to use this cryptocurrency. Likewise, it is warned that those companies that, due to technology, cannot receive electronic payments will, unfortunately, be excluded from the law.
Reasons why El Salvador decided to adopt Bitcoin
Among the main reasons that led El Salvador to make the decision to adopt Bitcoin as “legal tender” are the following:
Attract foreign investment
By adopting Bitcoin legally, the country will be able to attract foreign investments more easily, especially from companies that have a large part of their assets in Bitcoins; in addition to attracting companies related to the crypto and blockchain sector, all these actions are necessary to strengthen the economy of a country, in addition to the fact that this flow of investment will give an additional boost to domestic consumption, increase GDP, create more jobs, generate more jobs and the country’s economy will be more dynamic.
Promote financial inclusion
According to various studies, more than 70% of citizens do not have access to the traditional banking system or simply do not have an account in a bank; through the adoption and legalization of Bitcoin, more Salvadorans will access different high-end financial products and services. Quality (for example, the various alternatives offered by Fintech). This will allow more people to access loans, credits, investment funds, etc.
Although the prices of cryptocurrencies can be volatile in the short term, in what corresponds to the long term, they have shown a great capacity to conserve their value (and even increase it), especially in the case of Bitcoin, in this way it is incentivized long-term savings, good financial habits and building a personal and family wealth.
Cradle of innovation
Being a “pioneer” country in this type of initiative, El Salvador will have the advantage of being an “ideal” place for different companies and businesses related to the crypto and blockchain sector, which will have all the conditions (and legal support) to develop and create new products and services related to Bitcoin and blockchain technology.
What do you think about this topic? What other reason do you think El Salvador had to adopt Bitcoin as legal tender?
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