El Salvador Just Adopted Bitcoin as Legal Tender. Here's Why Other Countries May Follow Suit
El Salvador is the smallest country in Central America, smaller than the Commonwealth of Massachusetts, and yet it just did something very big. This week it became the world’s first country to adopt Bitcoin as legal tender, marking a huge turning point for the cryptocurrency.
It could also potentially be a turning point for El Salvador and its citizens, 70% of which are unbanked. Anyone with a cell phone can be his or her own bank when you add Bitcoin, and fortunately for El Salvador, mobile penetration is unusually high for such a low-income country.
Under the new law—which was proposed by President Nayib Bukele Saturday evening, near the end of the Bitcoin 2021 conference in Miami—the U.S. dollar will continue to bpe El Salvador’s currency, but all businesses will now have to accept payment in Bitcoin unless they lack the technology to do so.
A common refrain at Bitcoin 2021 was that Bitcoin “fixes everything.” Although no one had El Salvador in mind, they may as well have.
Cash Is Trash
Besides acting as a store of value—a type of digital gold, as some have called it—Bitcoin exists entirely outside the traditional banking system. El Salvador’s central bank cannot “print” more Bitcoin; nor can its government stop a transaction from happening.