El Salvador accepting Bitcoin as legal tender

Earlier in the year the El Salvadorian government unanimously voted to pass a law to begin accepting Bitcoin as legal tender for goods and services in the country. It has had widespread commentary from people in favour of btc as a currency and those that are not. However, the small number of citizens that are objecting comes from the uncertainty of the new digital economy. Uncertainty that can be overcome through small business education regarding bitcoin payments to ensure the government and its citizens are on the same page. The government, led by Nayib Bukele has set up a $150M fund that from the 7th of September will be used to convert bitcoin to U.S dollars for any businesses that don’t want digital currency exposure and instead convert directly to USD. As the purchasing power of the dollar continues to decline it is anticipated that most vendors will hodl their bitcoin as awareness and adoption continues to grow in El Salvador. The official bitcoin wallet is called Chivo and each adult citizen will receive $30 of bitcoin. This will allow people to test sending and receiving btc and then transact higher volumes through their business once they are comfortable with the process. The Chivo app is compatible with other bitcoin wallets and users don’t have to use it exclusively, however the main benefit is that it will be fee free. Hundreds of ATMs have been installed and education outlets for those new to bitcoin and are looking for more information about the initiative. El Salvador is the first country in the world to use bitcoin as legal tender and they certainly won’t be the last with many neighbouring countries watching the implementation with a keen eye with the opportunity to also follow El Salvador’s lead. The country is expecting a jobs boom from the innovative technology, and they are already attracting entrepreneurial talent from offshore. In 2019 there was $5.9B in remittances sent from Salvadorians living around the world back to their native country to family members. The fees that global money transfer firms make by taking a clip of each transaction is astronomical. Bitcoin fixes this, with the peer-to-peer nature cutting out time and cost associated with global money transfers.

Boomers misunderstanding of bitcoin

The video above highlights the boomer effect. That is book smart and experienced economists chiming in on what they think Bitcoin is and how it works, but with an obvious digital asset knowledge gap. A dismissive attitude towards the new digital financial age where they hold on to historic methods that aren’t adaptive. There is now endless Bitcoin education websites and a person who has a title as a financial professor can no longer plead ignorance to the innovative technology. Hanke is correct in the fact that it would be more expensive if you were to receive bitcoin, then go to an ATM to withdraw USD to pay for goods or services due to the high ATM fees. However, as the interviewer correctly points out, the exact point of using bitcoin as a currency cuts out the step of having to withdraw USD. The goods and services are paid for in bitcoin from a smart phone with a bitcoin enabled wallet.  

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