Bitcoin as a Legal Tender-What Other Countries Can Learn from El Salvador

El Salvador broke the records by being the first country in the world to upgrade Bitcoin to legal tender. And this happened some years after its natural currency collapsed in 2001. While El Salvador might have made the right move, many things about Bitcoin are still in the dark. No one knows all its potential drawbacks, which makes BTC primarily regarded as a prototype technology. Also, this will put a smile on thousands of investors trading Bitcoin on renowned crypto platforms like Bitcoin 360 Ai trading site

Recently, a second country expressed its desire to legalize Bitcoin cryptocurrency within its borders. The Central African Republic, a country in sub-Saharan Africa, noted that it was planning to integrate Bitcoin into its developing economy. With trends like this emanating worldwide, experts are now wondering to what extent cryptocurrency can be successful. 

We’ve also seen several people discussing the possibility of making Bitcoin the ultimate means of transaction globally. You should note that most of the hypes about BTC technology have never undergone any tests. This hype is primarily speculation, so we still need time to learn more.

So, how practical is it to make Bitcoin a legal tender in El Salvador? Are there any valuable lessons other countries can learn? Indeed, despite the technology being experimental, El Salvador has many things to smile about regarding it. At the same time, there are various challenges countries must be ready to confront for seamless implementation. Here are primary points to note from El Salvador’s case.

Developing the Necessary Infrastructure is Key

Imagine you want to open a carwash business. What are some of the things you’ll need before you start? First, you’ll have to buy a reliable washing machine and other vital equipment. Additionally, you’ll have to ensure a stable power supply in the area for powering your devices. Most importantly, your clients must be able to access the facility easily. 

If the road to your carwash location isn’t good enough, you’ll ensure its renovation to give clients an easy time. The same things apply to legalizing Bitcoin. Any government intending to make BTC a legal tender must first build the necessary digital infrastructure. For example, internet connectivity must be flawless and available all over the country. 

Besides providing a reliable internet connection, countries must work on electric power distribution. Even though this can’t attain a 100% implementation, it’s essential to have a significant portion of the population connected to the national grid for efficient operations.

An excellent internet connection and a reliable power supply make transactions possible, regardless of location or time of the day.  

A Government-Provided Digital Wallet Works Best

A digital wallet is electronic equipment such as a hard drive that allows people to store Bitcoins safely. Also, some wallets are in the form of applications enabling people to send, store, or receive BTC. 

A government-issued Bitcoin wallet, as in El Salvador, brings uniformity and makes it easier to regulate secure transactions. The other necessity is including the Bitcoin-US dollar interconversion functionality. And this will make international trade more seamless and affordable to everyone.

Making Bitcoin a Legal Tender Suppresses Inequality

In a country like El Salvador, less fortunate citizens can’t enjoy comprehensive financial services as their educated counterparts. And this means that they become underbanked and poorer as time goes by. Additionally, most people depend on international remittances from relatives working abroad for survival.

So, incorporating Bitcoin into the economy enables citizens to receive and spend money from foreign countries more easily. Moreover, they’ll spend less on processing costs because BTC technology sends funds on a peer-to-peer network, thus eliminating the Intermediary financial institutions.

The Bottom Line

Even though upgrading a cryptocurrency like Bitcoin to a legal tender has numerous advantages, it comes with some challenges too. For example, the technology’s transaction capacity is still limited, compromising its capabilities to handle massive traffic. 

BTC also experiences unprecedented price fluctuations, making it unsuitable for value storage. Legalizing Bitcoin suppresses inequality among the citizens. Countries must establish the necessary infrastructure before making Bitcoin a legal tender for a successful implementation.