At the Bitcoin 2021 conference, Salvadoran President Nayib Bukele announced that he is preparing to send a bill to Congress that will make Bitcoin a legal currency in the country. If this bill is passed, the country will become the first country to adopt Bitcoin as legal tender.
El Salvador is seeking to introduce legislation make it the first sovereign nation in the world to adopt bitcoin as legal tender, alongside the US dollar. Bukele touted the potential of digital currency to enable the most disadvantaged Salvadorans to access a legal financial system, help Salvadorans living abroad easily send money home, and enable job creation.
"Next week, I will send a bill to Congress that will make Bitcoin legal tender," Bukele said in the video posted at the Bitcoin conference. Analysts say Bukele, a 39-year-old right-wing populist who came to power in 2019, has a vast majority of 56 out of 84 seats since a landslide victory in the legislative elections last March. This means that the bill is likely to pass.
The Salvadoran president is convinced of making bitcoin legal tenderl will solve many economic and social problems of the country.
"It will improve the lives and futures of millions of people," said Bukele.
According to these accounts, by using Bitcoin, the amount received by more than a million low-income families will increase by the equivalent of billions of dollars every year. This is not the first time that El Salvador has embarked on bitcoin. In March, Strike launched its mobile payment app there, which quickly became the most downloaded app in the country.
While Bukele is excited about his project, some are concerned about factors such as bitcoin volatility and the disruptions it can induce in today's financial system. In fact, although central banks around the world reacted to bitcoin with fascination, they were initially reluctant to embrace cryptocurrencies due to their extreme volatility. Bitcoin, for example, lost more than half its value at the beginning of the year, after hitting a record high of more than $ 60,000. Other cryptocurrencies, which are rarely traded, are even more volatile, going up and down like seesaws.
This often happens based on speculation or meme tweets from Tesla CEO Elon Musk. Your comments greatly influence the value of these coins. However, the rise in popularity of cryptocurrencies has led the US Federal Reserve to become very interested in the limits of the traditional dollar, especially when it comes to payments and money transfers that can take several days. Bitcoin transactions take place almost instantly. Cryptocurrencies don't require a bank account either. They are kept in digital wallets.
Esto could help people from the poorest communities, like many in El Salvador, but also to minority communities in countries around the world, to have better access to their finances. Lael Brainard, a member of the Board of Governors of the US Federal Reserve, championed last month a secure digital currency, backed by the central bank, that could create a more efficient payments system and extend financial services to Americans. that have been neglected by traditional banks. China is already testing that coin.
In May, Federal Reserve Chairman Jerome Powell announced that the central bank would release a document this summer en outlining the board's thinking on the benefits and risks associated with a digital US dollar.
Although cryptocurrencies like bitcoin are digital, a central bank's digital currency would be fundamentally different from current cryptocurrencies, as it would still be controlled by a central bank rather than a decentralized computer network. While volatility can sometimes be an advantage, power consumption is always an issue.