After an overwhelmingly successful vote, El Salvador is now the first nation to accept Bitcoin as legal tender. Following a push by President Nayib Bukele, the small Central American country declared that Bitcoin will join the U.S. dollar as their official currency within 90 days. Bukele believes that Bitcoin’s global presence will help bolster El Salvador’s economy, which relies heavily on remittances from migrant workers. President Bukele and Strike CEO Jack Mallers are working closely to integrate Bitcoin with the national economy.
El Salvador hopes that this move will transform the country into a hub for cryptocurrency development. Yet, persistent problems may stall or prevent that goal – with El Salvador rating near the top for international crime statistics including homicide. Although Bukele’s government has made great strides to reduce these analytics, some suspect it may be due to direct collusion with local gangs. Citizens of El Salvador remain split on the adoption of Bitcoin, with some worrying it will help fund suspected corruption.
El Salvador: Cryptocurrency Adoption in Central America
In the wake of El Salvador’s lightning-fast adoption push, other leaders in Central and South America voiced their approval. Argentina, Brazil, Panama, and Paraguay all expressed an interest in following suit – albeit without the complete control of the government necessary to convert immediately. The race is on to establish cryptocurrency hubs across the world, as more nations realize the potential of digital currencies.
Traditional offshore hubs, including Malta, Seychelles, and the British Virgin Islands already offer favorable conditions for majority-digital companies. This new rush of countries seeking to adopt Bitcoin intends to integrate the technology with their economy – rather than simply facilitating work done elsewhere.
The Curious Case of Venezuela
While El Salvador can claim the title of first use of Bitcoin as legal tender, it may not be the first country to use it as its national currency. Venezuela, suffering from international sanctions and a collapsing economy, relies heavily on cryptocurrency as a form of payment. Venezuela established its national cryptocurrency in 2018 – the Petro – but it now appears mostly defunct.
The average citizen uses a variety of popular cryptocurrencies to circumvent U.S. sanctions and avoid the near valueless local currency. In a country struggling to maintain its footing, these cryptocurrencies provided a lifeline – allowing citizens to work and earn globally, thereby drastically increasing their spending power. Although unfortunate for Venezuela, their situation remains one of the best use cases for cryptocurrency to date.