June 12 2021

Giant Stride: El Salvador Adopts Bitcoin as Legal Tender. The Beginning of a New Dawn for Crypto?

El Salvador Adopting Bitcoin Pros/Cons

8 min read

<para-blog> In a bold move, El Salvador has written its name in the pages of history as the first country to adopt Bitcoin as a legal tender. With an overwhelming majority of 62 out of 84 votes in Congress, the cryptocurrency is now officially recognized in the country and can be used legally for transactions within the country. <para-blog>

The president, recognizing the relevance of crypto in facilitating cross-border transactions, noted that this new accomplishment would make it easier for citizens to send money home from abroad. While also helping to boost different sectors in the economy and attracting waves of investments.

With the new bill, businesses in the country are now mandated to accept Bitcoin as a legitimate currency for transactions. The government has hinted at plans to ensure businesses not willing to accept Bitcoin are provided for via the Development Bank of Salvador. The bank is purposely set up to act as a backstop for those types of businesses where they can instantly exchange Bitcoin for dollars.

<text-h2>Is this a trend other countries will follow?<text-h2>

Considering this is the first time a country is giving such recognition to a cryptocurrency, it may be too soon to predict whether other countries will jump on board immediately. Although central banks in different countries are looking to develop their own digital currencies, there are still several speculations and levels of uncertainty from the general public. Thus, there are tendencies El Salvador will be under close observation by other countries and authorities. This is to see how the country successfully implements the bill practically and how they mitigate the risks associated with crypto price volatility.

This however, gives opportunity to understand the dynamics of crypto regulation and areas that need to be improved on.

<text-h2>What does this mean for the Crypto space?<text-h2>

Earlier in May, the crypto market took a huge downturn with the price of Bitcoin dropping below $30,000 , and several other altcoins also experiencing a drastic plunge. Although the market may be on a recovery path now, the event triggered uncertainty and doubts in the market. With many questioning whether that was the beginning of the end of crypto.

However, on the flip side, we have been seeing more advancement in the fundamentals of crypto, mainstream adoption from major financial institutions and development of new tech frameworks to facilitate growth in the industry. These developments have gone a long way in helping to counter the negative speculations in the industry and facilitating increased trust in the future of crypto and DeFi.

Read more on the state of crypto industry

With this new move by El Salvador in adopting Bitcoin, if implemented successfully, there is a certainty that it will raise more positive speculations as it takes crypto towards greater global mainstream adoption.

While it may be too early to give details about the dynamics of Bitcoin as a legal tender because this is the first of its kind in the history of cryptocurrencies, this new bill certainly gives the crypto space a positive outlook. We perhaps will be seeing more countries welcoming the idea and a proper establishment of DeFi globally.

Since the advent of Bitcoin, followed by other altcoins, players and investors in the industry have continued to foster technological developments to ensure their mainstream adoption. El Salvador has taken a giant leap in this direction and has inspired further confidence that the future is certainly going crypto.

We at CDzExchange believe this marks yet another momentous shift towards the adoption of crypto and comes with it more demand for DeFi. It’s only a matter of time before decentralized crypto derivatives will explode.

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