El Salvador embraces Bitcoin as Legal Tender
Why Latin American countries are the first to adopt cryptocurrencies.
When the announcement was made at the Miami Bitcoin Conference about El Salvador legalizing bitcoin as a fiat currency, the energy was off the charts. Everyone was standing and cheering while Jack Mallers was on stage crying tears of joy.
We have come a long way from the days of internet faucets giving bitcoin away for free.
The hype around El Salvador continued as Bukele released the tweet below, with bitcoiners extremely excited about the chance to make the first nation into a citadel.
But what is it about Latin America that makes it so prime for bitcoin adoption?
There are many reasons but to put things into perspective, below is an art piece featured at the Miami Bitcoin Conference, a trash can filled with Venezeulan Bolivars.
For countries going through inflation, bitcoin is the simplest option to hedge. For those in Latin America, investment in digital currencies isn’t a plot to get rich, it’s a safety net against becoming poor. Although bitcoin skeptics favorite argument is that “it’s too volatile,” Bitcoin’s volatility is usually to the upside. With its monetary policy written into open source software code, there is no government that can arbitrarily print more. There is no single entity that can devalue the purchasing power by inflating the supply. Bitcoin is fundamentally better money than most government backed currencies.
Another reason Latin America is so open to Bitcoin is because of many countries’ dependence on remittances. Family members working abroad have always been able to send funds back to their home country but not without a hefty cost. There was a time when the maximum remittance fee for sending money into Venezuela was 56%… this is theft.
For El Salvador, remittances make up a large part of their GDP, receiving roughly $6 Billion annually with intermediaries charging fees of 10–20%. Doing the math, El Salvador’s remittance transaction costs will be reduced by $250 — $500 million. Allowing the people to keep more of their hard earned money.
More than two dozen countries have chosen to use the dollar as their main currency to protect against inflation. However, the money printing problem of the federal reserve (which is about to add $6 trillion more to its balance sheet, a value ten times greater than the bitcoin’s market cap) is going to affect the standard of living in these nations. There aren’t many options for financial and monetary independence except Bullion and Bitcoin. It is commonplace for countries to hold gold as a reserve, we find that in the 21st century technology is providing options for nation states who value independence from global power structures.
Paraguay is now the second country to propose a bill to make Bitcoin legal tender. The effect this decision has on a country’s circumstances is to be revealed and only time will tell what benefits and ramifications these governments will encounter by embracing sound money.
Businesses like ECI who understand bitcoin and the hope and options that it provides have led the way in accepting cryptocurrencies for real estate. If interested in the Latin American options that ECI offers, be sure to ask them how you can pay in bitcoin, bitcoin cash, monero or ethereum.
I will keep you all updated on the progress of El Salvador’s initiative, especially their residency, payable in bitcoin.
Article initially released August 1, 2021 on Escape Artist Insiders Magazine