Are countries ready to accept Bitcoin as legal tender yet?

Highlights

  • On 7 September, El Salvador became the first country to use bitcoin as a legal tender.
  • Post the lanch, thousands of protesters took to streets to protest against the new currency.
  • Many other countries, like Panama, Honduras, and Guatemala, are currently exploring similar opportunities.

Ever since El Salvador President Nayib Bukele introduced Bitcoin as a legal tender on 7 September, many other countries and experts have been tracking the movement with keen eyes. The government not only announced sops like offering bitcoins worth US $30 to the citizens who signed up for Chivo, the national digital wallet, it is also promised foreigners residency who were willing to invest three bitcoins in the country, which is around US $1,40,000.

The launch itself ran into trouble in just an hour after the Chivo app stopped working due to overload. In fact, President Bukele himself tweeted about the Chivo app’s problem after users complained of failed download and not receiving the promised US $30 from the government.

Also read: Crypto crash & Murphy’s law: The recent dip shows correlation

Despite the technical problems, the citizens seemed not ready to embrace cryptos. Thousands of protesters took to streets to show their unwillingness to accept Bitcoin as legal tender. On 15 September, protesters were seen destroying Bitcoin ATMs shouting slogans ‘No AL Bitcoin’ (No to Bitcoin) and   have taken to the streets in El Salvador, angry at the introduction of Bitcoin as its legal tender.

Other countries in the league

Till date, except for El Salvador, no other nation has come forward to make cryptocurrencies as a legal tender. Most countries have just allowed trading in these virtual currencies. Countries like China and Russia are even trying to cut down or regularise the trading.

Are countries ready to accept Bitcoin as legal tender yet?

Some neighbouring Latin American countries have got a template on launching a cryptocurrency as a legal tender. All the countries are treading carefully after the El Salvador debacle and many countries are in the phase of deliberations. In fact, Panama almost immediately followed the suit and a day later after El Salvador, Panamanian Congressman Gabriel Silva introduced a bill named the Crypto Law to explore the opportunity of regulatory and fiscal feasibility of launching the coin. Panama believes that with the adoption of cryptocurrencies can create jobs and will foster a greater transparency.

The Central banks of Honduras and Guatemala too are eyeing digital currencies. They are in the phase of studying the digital currencies with an aim to introduce them in a secure digital way. Work is already undergoing as we speak as the Central American Monetary Council, which brings together central bank authorities have formed a taskforce to understand the crypto.

Also read: Which countries are planning legalisation of Bitcoins?

In Brazil, the citizens are in fact, supporting the move and according to a survey done by Sao Paulo-based financial education website Valor Investe, of 2,700 respondents from Latin American countries are in fact in favour of El Salvador.

Several other countries around the world too are in the testing phase of CBDCs and wouldn’t want to repeat the mistakes conducted by El Salvador.

Hurdles around the move

The cryptocurrency market should, in fact, be pleased that finally that more countries are finally gearing up to Bitcoin and other cryptos. This would mean positive signs especially considering that Bitcoin is at the cusp of Eighth Golden Cross moment. This should give the market enough momentum and encouragement to others.  

Having said that, the Central Banks of various countries need to conduct a proper study and regulatory checks need to be in place as the crypto market is largely unregulated at present. Investors at the end of the day want their money to be safe and as the central authorities need to make sure that there is no case of crypto frauds. For now, the feasibility of cryptocurrencies taking over fiat looks a distant dream, but El Salvador has shown the way.

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