First Country To Make Bitcoin Legal Tender
Once his country was considered the most dangerous country in the world. Because the murder rate here was the highest in the world. Talking about cryptocurrency, Some other countries had also shown interest in declaring cryptocurrency as a legal tender. Meaning that people can use Bitcoin in their day-to-day activities. The difference between declaring something ‘ legal ‘ and ‘legal tender’ is that many countries have declared Bitcoin to be ‘ Legal ‘ But declaring it as ‘ legal tender ‘ means that if you make a payment in Bitcoin, the other party cannot reject the Bitcoin. it is written in their new legislature.
And the Government has repealed the capital gains tax on the exchange of Bitcoin. How will it work in reality? There are now legal tenders in EL Salvador. One is their currency. And two, Bitcoin is now a local tender in their country. Will the price be written in two currencies on the price tags? No, this does not mean this. Because Bitcoin is a highly volatile currency. they’ve come up with a simple solution for this as well. they’ve said that they will have the prices in US Dollars. and the conversion rate between the US dollar and Bitcoin at that time. Will be used to calculate the amount that needs to be paid in Bitcoin.
There is an exception to this law. the people who do not have the technology to accept Bitcoins, don’t need to accept Bitcoins. But at the same time, the government has also said that they will provide necessary training and mechanisms to the people. So that people may carry out transactions on Bitcoin. But what will happen when you pay someone in Bitcoin and in the time that the transaction takes, the price of Bitcoin fluctuates rapidly? To avoid this, the EI Salvador government has created a trust of 150 million, that will guarantee the convertibility of Bitcoin to Dollars at the time of transaction.
The government has decided to do this So that people are not forced into doing something they don’t want to do. by doing this, the adoption of Bitcoin by the people in the country will be organic. Why did EL Salvador choose Bitcoin only? Perhaps because Bitcoin is the most popular cryptocurrency. but if some country wants to make some other cryptocurrency their legal tender then they will need to consider some factors. the biggest disadvantage of Bitcoin is that it takes a long transaction time.
To avoid this problem, their government has decided to use a Strike-based Bitcoin Wallet App. it was very essential to incorporate. In the law, it is also mentioned that mobile carrier companies should have the Government wallet on all the devices that they sell. But what are the challenges that EL Salvador will have to face here? And what are the points of criticism of this decision? the first point. Several experts believe that the majority of the people in their country will not use Bitcoin in their day-to-day life. Why? Because if there is an expectation of a future increase in the price of Bitcoin, if people believe that the value of Bitcoin will increase in the future, then they wouldn’t want to spend Bitcoin.
On the other hand, if there is an expectation in the market that the price of Bitcoin will fall. Then why will anyone want to accept Bitcoin? So it may be quite difficult to overcome this challenge.
For this reason, some people believe that instead of choosing Bitcoin, EL Salvador should’ve chosen some other cryptocurrency.
the second point of criticism is the harmful environmental impact of Bitcoin mining. Because Bitcoin is based on an old blockchain, the system of blockchain designed at the time was so energy consuming and energy wasting that a lot of energy and electricity is used for mining Bitcoin.
this was the reason why the world bank refused EL Salvador’s request. This problem could have been easily avoided if EL Salvador had chosen some other cryptocurrency instead of Bitcoin. Some people are even more pessimistic about EL Salvador’s decision. So now a question arises, despite so many concerns and challenges, why did EL Salvador make this decision? Let’s look at it from their perspective.
First, their President believes that because of this decision, there will be an increase in Financial Inclusion in the country. And jobs will be generated.
Second, he believes that their GDP will increase because of this decision.
Third, Another direct benefit of making cryptocurrency a legal tender in EL Salvador is in Money Remittance.
