El Salvador has become the first country to adopt bitcoin as legal tender. The price of bitcoin was up 5% shortly after the vote.
"The market will now be focused on adoption through El Salvador and whether other nations follow," said Richard Galvin (Digital Asset Capital Management). "This could be a key catalyst for bitcoin over the next two to three years."
El Salvador will, according to the law, "promote the necessary training and mechanisms so that the population can access bitcoin transactions”.
We have asked our experts about the impact it will have on the crypto market in the coming months. Dive into vetted comments below to wideeyed your understanding of the move.
We have asked 1235 Experty community members questions related to "Bitcoin as Legal Tender in El Salvador - impact on the crypto world and future implications". We have received many valuable replies, the best ones (based on Experty community feedback) you can read below.
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UX Researcher and Designer
What impact could BTC as a legal tender have on the crypto market in the coming months?
Two days after El Salvador bomb news, both Paraguay and Mexico publicly stated that they were following the same path. Beyond the importance of adoption by the world's governments, it is the answer for those who have always been against bitcoin. Bitcoin will undoubtedly continue to rise since institutional money has not stopped entering and for more dips that we see throughout the remainder of the year, the fate of bitcoin will continue to be upward In the coming months, I predict that many more people will join, and not only in bitcoin, but it will be the entrance to the entire crypto-market where DeFi will also begin to take on a greater role. And if in the end, the environmental impact can become a justification for its non-use, then there is no need to worry because the 2030 Agenda is already within the plans of the crypto community.
Karthikeyan RamachandranBusiness Analyst /Blockchain Enthusiast
What impact could BTC as a legal tender have on the crypto market in the coming months?
In April 2017, when Japan enacted a law to provide legitimacy to digital currencies, bitcoin from the sub 2k level went on to reach 20K by Jan of 2018. With a GDP of 25 billion USD, El Salvador is nowhere near Japan with a GDP of 5 trillion USD, however with a law of making Bitcoin a legal tender, it has certainly caught the world's attention. But it cannot be argued that other countries to follow soon. To begin with, since 2001 El Salvador never had an independent monetary policy or a currency of its own and is using USD as its legal tender. So merely adding another currency to its list of legal tenders was much easier. This may also pave way for the countries already using pegged currencies to move towards Bitcoin or stable coins such as USDC or USDT. But for the bigger economies shifting to Bitcoin means losing their control over monetary policy aka printing currencies. So they will be more hesitant and resistant to adopt decentralized cryptocurrencies. That's the reason why countries like Venezuela and Iran even after US sanctions have not started using Bitcoin in a big way though they had tried to create their own cryptocurrencies. When more countries especially in Latin America showing eagerness, the focus will also shift towards the security of the bitcoin network with the recent rumor of the FBI hacking the network to retrieve the ransom paid by the Colonial Pipeline may act as a damper. So El Salvador can become a case study on how to make citizens adopt cryptocurrencies and impart cybersecurity knowledge if it succeeds in its mission. On the Bitcoin price front , the news is definitely bullish. Now the Bitcoin will have more acceptance and more banks will be ready to deal with it. We can expect to be traded in currency markets openly. Also, the El Salvadoran move could make it very difficult for other countries to ban Bitcoin as no country has ever banned legal tender of another currency. Definitely, Bitcoin along with stable coins will be in demand near future. Hope for the moon. ( Salvadorans can enjoy the moon without worrying about the capital gains tax)
Offelia OggA farm and a laboratory that utilize blockchain technology for genetic purposes.
What impact could BTC as a legal tender have on the crypto market in the coming months?
That is a great news for bitcoin and crypto industry in general. Crypto adoption officially have begun. The economy consists of supply and demand but behind the economy peoples are standing. And if government gives green light for some stuff it means a lot. It means that all categories of citizens belonging to certain social formations will gain access to bitcoin, will use it in everyday life, thereby expanding the possibilities of its adoption. If speaks about the impact on the price. I think it will rise through the time. Bitcoin is the type of assets that is so unique as gold or silver, has limited emission, transparency and the only one truly decentralized. I love bitcoin.
Hussein HashishBlockchain academic & analyst.
What impact could BTC as a legal tender have on the crypto market in the coming months?
Satoshi Nakamoto, the pseudonymous creator of Bitcoin envisioned it as a globally accessible financial service. As is the case with most of the developing nations, 70-80% of the population do not have access to simple financial services let alone a bank account. Things most of the developed or Western World take for granted. For the developed nations, Bitcoin is mostly seen as a speculative asset and a means to diversify their investments, but for citizens of less developed nations, it is a means of exchange & a store of value. Citizens of nations hit hard by hyperinflation and run by rogue central bank governors and corrupt monetary policies, adopt Bitcoin because it is a clear way to store their wealth and escape the grasp of authoritarian rule. According to EL Salvador's Bitcoin legal tender official decree, there were several considerations that led to such a decision, three points caught my eye; Article III: Approx. 70% of El Salvador's population do not have access to traditional financial services Article IV: The state recognizes its obligation to facilitate financial inclusion for all citizens and fulfill their basic rights Article V: Choosing a digital currency which value is determined by free-market criteria. -------- The primary aim is to provide financial inclusion for all. Adopt a currency that is not controlled by anyone, but accessible to everyone. El Salvador & countless other nations use the USD as legal tender, but have all suffered from the US foreign policies & Bitcoin has finally provided a way out. I can think of many other nations who share the same issues and would benefit from such a move but I would not rush to assume that others will immediately follow as authoritarian rule and politics come into play and when it comes to money & power, the stakes are higher than ever. We are witnessing global shifts in power & central banks of China, the EU & USA are all in a race to launch their very own digital currencies for global financial control. Bitcoin is a decentralized, permission-less, borderless global financial system that offers people an accessible means of exchange & trusted store of value. China, US & EU are aware of its power & it is only a matter of time until they succumb to the fact that it is here to stay and there is nothing they can do about it to prevent other nations to adopt it as legal tender. The crypto market is at its very early days, with a market cap of a mere $1.5 Trillion. Every day more use case & applications are built on the same technology powering Bitcoin, Blockchain. Such news coming out of El Salvador only fuels Bitcoin's power and resilience against false narratives that claim Bitcoin & cryptocurrencies are a scam and will only drive more adoption.
Advocate Anthony WilliamsBlockChain Polymath
What impact could BTC as a legal tender have on the crypto market in the coming months?
A small step for Bitcoin (the cryptocurrency), a giant leap for humanity! The system of the "modern nation-state" started with the Treaty of Westphalia (1648 AD); It's taken them 373 years (From the year 1648 to the present year 2021) to begin to empower their (poor) citizens. As an accountant, I can confidently tell you that "state-issued money" is the underlying basis for every relationship between the citizens of a state and with the state itself. And as a lawyer, every day I see this in the Courts, that every lawsuit is settled in "state-issued money". So, the impact of the present event of "Bitcoin becoming Legal tender (state-issued money) in El Salvador" on the crypto world and our future is " the change in the basis of the language of Power (Law) and the language of Business (Accounting), which was Standards set by the few (Politics) now to Standards set by many (Software Code)". I look forward to this future...
Fuad SahinCyber Security, Blockchain and 3D Printing
What impact could BTC as a legal tender have on the crypto market in the coming months?
This move could mark the beginning of an open battle between global currencies. The US Dollar dominance is being attacked on 2 fronts, first is the chines CBDC and second crypto currencies, especially Bitcoin. In my opinion this fight is already going behind closed doors, now it is an open and viewable. The outcome depends on whether and when more countries rapidly join El Salvador. The IMF will likely try to intervene for the US and the more countries participate the harder the intervention. If these smaller countries plagued by currency problems accept BTC as store of value, the ripple effect could be huge. Basically BTC value is based on trust and mining so accepting BTC as payment is like saying we trust it at least as much as the US Dollar. Longer down the road this could result in many more and larger countries switching to El Salvador’s approach.
Dian Adrianie SutedjaDoctor
What impact could BTC as a legal tender have on the crypto market in the coming months?
Bitcoin can help boost the economy in different countries. Blockchain technology is a technological innovation that is constantly evolving to try to overcome the problem of centralization. Any juicy News in this month after bad Campaign Elon Musk and China FUD. First, Twitter CEO Jack Dorsey will work with financial company Square Inc to make Bitcoin mining environmentally friendly, because many have criticized Bitcoin mining as not being environmentally friendly. Second, the government of El Salvador, as stated by the President of El Salvador Nayib Bukele at the conference, will make Bitcoin a legal currency. This is the first time a country will use Bitcoin as a legal tender. Interestingly, the currency of El Salvador so far is the US dollar. Developing country problems such as low digital financial inclusion, foreign investment problems and high inflation problems will be well resolved by Bitcoin adopting blockchain technology. No less unique is the plan that the BitMEX platform will partner with a space robot company to actually put Bitcoin on the moon, according to the Bitcoin jargon "to the moon" which means to fly high to the moon. With some good news above, all of these things will continue to grow and increase the demand for Bitcoin. The falling Bitcoin price is a good opportunity to take advantage of the opportunity to buy Bitcoin at a cheaper price than a few months ago. The existing Bitcoin innovation and the willingness of the Government of El Salvador to legalize bitcoin, will make Bitcoin have a higher demand so that Bitcoin has the potential to rise back to a higher level in the future.
Nikodem ZegzdaBusiness Consultant.
What impact could BTC as a legal tender have on the crypto market in the coming months?
Longterm it will be remembered as a game changer for Bitcoin adoption. First country not only adopt bitcoin as legal tender but also as unit of account. What is more, until now, the US dollar was the official currency in El Salvador. That means that you may find products in shops & services priced not only in USD but in Bitcoin as well. This will draw attention of other countries to BTC and start wider adoption around the world.
Kingsley IzimahPartner
What impact could BTC as a legal tender have on the crypto market in the coming months?
Making Bitcoin a legal tender in El Salvador will surely boost the legitimacy and international acceptance of the currency for all forms of transactions.
Fredrich EbBlockchain and Crypto Project Consulting
What impact could BTC as a legal tender have on the crypto market in the coming months?
Bitcoin, before August 2020, suffered from an appalling lack of a dependable price floor that could have triggered it's mass adoption much earlier. But the turning point came for it when Micheal Sailor of Microstrategy bought into it (https://www.microstrategy.com/en/bitcoin/bitcoin-for-corporations) Ever since its first transaction, and block, bitcoin was wholly in the hands of mostly price speculators who held it for a while and sold it the moment the first couple of dollars in profits was turned. These speculators were purely profiteers who didn't care about what a good strategy for Bitcoin's mass adoption should be, so, with their crave for quick profits denied the coin that all important build up of a price floor. Which was why we can see it record a crash of between 30% to 80% at times, and most businesses refusing to accept it as a medium of exchange. All that would soon become a thing of the past as we have started to see institutions like Microstrategy, other high net worth companies and individuals owning bitcoin. The concrete fortification of this price floor would come when countries, like El Salvador just did, begin to adopt it as a legal tender. That means bitcoin will seep through the nation's commercial and economic fiber triggering it's smooth and unprecedented mass usage. So, welcome to bitcoin mass adoption. But remember a whole lot of it is still in the hands of speculative retail, so, expect it's price to split rise and fall in the short term. This may very well be slow, but make no mistake about it, a progressively higher and stronger floor is been built for Bitcoin henceforth.
Summary
It is clear that the adoption of bitcoin in El Salvador has given it an increased legitimacy and more countries could follow its footsteps within a short period of time. Bitcoin will now be used more as a mode of payment rather than an investment or commodity.
However, a majority of experts don't think El Salvador is likely to generate volatility on the markets in the short term and it would take time for its financial system to adopt bitcoin; but when they do, some other countries are likely to follow the suit.
This is not a financial advice. Please do your own research and consider the risks of trading cryptocurrencies.