Bitcoin is a digital currency that is on everyone’s mind nowadays. It is not legal in most countries, but recently, El Salvador has legalized it, which has shocked all over the world. You can visit yuan-paygroup.com for better online trading and earning easy money. If you are still unaware of this spicy news, you can read the following paragraphs and understand better.
El Salvador becomes the first country to make bitcoins legal.
There have been several confusions related to the legalization of bitcoins. Some people believed that it should be legalized, whereas some think it shouldn’t, but no country has legalized it. The latest news is coming from a small country in Central America; El Salvador. On 9th June, a bill passed in the country’s parliament, which made it the first country to legalize bitcoins. 62 votes out of 84 supported legalizing bitcoin, which took the world with a shock.
It doesn’t have any monetary policy
El Salvador is a small country, and it doesn’t have any of its own when it comes to monetary policies. So, with no monetary policy, it is obvious that it also doesn’t any currency of its own. There is no local currency of El Salvador, which is the primary reason behind the step they took, bypassing the new bill in the parliament. The country ran on the US Federal Reserve since 2001 and US Dollar as its primary currency. The economy of El Salvador was controlled by the central banks of the US, and it had started affecting the economy of El Salvador.
So, to minimize the interference and control of the central banks, it was necessary to introduce a digital currency that is decentralized and cannot be controlled by any central bank or authority. And when we talk about a cryptocurrency with such features, there is no better option than bitcoins. So, the government proposed the bill in parliament and got the majority of votes. However, the President of the country said that bitcoin would not fully replace the dollar, but it will float in the market alongside their primary currency, the dollar. Experts believe that it will bring no change in the economy and the market. It may not bring any major changes in the economy of El Salvador, but it has surely brought the country into the trending news as it is the first country where the dollar and bitcoins are both legal currencies and exist together.
Much more than a currency
The biggest reason behind El Salvador adopting bitcoin is its incredible technology. Its adoption is more motivated by the investment boost and the increase in the growth it will provide the country with. The President of the country took Twitter and said that it would be a great boost for the youth of the country as modern technology will enhance their intelligence and will boost young talent and innovative ideas. Moreover, it will also attract crypto investors and companies to the country, which will be a great boost for its economy.
The Economy of El Salvador is going through bad times, and the legalization of bitcoin will surely blow some strength into it and will help it in recovering and growing in a better place. In the year 2020, the country set up a Trust Fund for raised funds that can be used in the Covid crisis and help the people. The strange thing is that the country will use $150 million from the same fund to purchase and sell bitcoins after legalizing them.
Impact of bitcoin on remittances
Remittances are one of the primary sources of income for the GDP of El Salvador, as it brings over $6 million every year. A massive portion of the population of the country doesn’t even have a bank account. So, with bitcoin being legalized, it will surely have a tool on the remittances as if intermediaries get involved in it, they will charge over 20% as their portion. Moreover, with the increase in cryptocurrency inflow and outflow, El Salvador will also have to focus on money laundering and make KYC requirements compulsory. Bitcoin may attract more entrepreneurs and investors to the country, but it will also bring several issues that the government will have to address quickly.
