Big news from a small country

The exclusive news of a small Central American country is global news. In El Salvador, Bitcoin can be used to pay for everything soon. On June 9, 39-year-old President Nayib Bukele (Nayib Bukele) submitted a bill to Parliament to make Bitcoin legal tender. The bill was passed by an overwhelming majority of votes. This Central American country is now the first country in the world to make Bitcoin legal tender.

The new law is good news for the residents of the country. After this new law is put into effect 90 days later, the world’s attention will definitely be focused on this development. Bitcoin lovers are happy because they think this is a big step towards a world where everyone can use digital currency to pay. There are still many questions about how this will work in practice.

The country’s current currency, the US dollar, will also remain valid, but soon every local greengrocer and supermarket will also have to accept Bitcoin as payment, just like tax authorities and other government agencies. The 90-day period is intended to prepare the country for the transition.

El Salvador is a very poor country, 70% of the population does not have access to traditional payment services. If people have an Internet connection, this will quickly change the country and arrange courses for citizens who find the encrypted world is too complicated. The government believes that digital skills should not be a reason to be excluded.

Many Salvadorans make money in the United States. Part of their income is sent to relatives in their home country on a monthly basis. These transfers are not free, because there is always a commission to be paid. Workers abroad always see part of their hard-earned cash disappearing in the pockets of Bank of America, which facilitates their transactions. Bitcoin has no commissions because cryptocurrencies are decentralized and do not require bank intervention.

But can coins that can fall or rise by 20% in value within a day really be used as a payment method? The current value of a bitcoin is half of the record value in April (more than 60,000 US dollars at the time, and today it is approximately 29,595 US dollars). This means that retail sellers who pay for their turnover in Bitcoin must sell twice the price when the price drops to avoid financial losses. President Booker recognizes this risk. The China Development Bank has reserved 150 million U.S. dollars in a specially set up account to absorb exchange rate risk. The Bukele government also guarantees that anyone can immediately convert Bitcoin into U.S. dollars if they wish. El Salvador is also negotiating a $1.3 billion rescue plan with the International Monetary Fund (IMF) to reduce its budget deficit and debt burden.

Source link

Recommended For You

About the Author: