El Salvador Becomes the First Country to Legalize Bitcoin

The ever-increasing rise of the popularity of cryptocurrency has got many people thinking if it should be used as a legal form of currency. There seems to be no shortage of cryptocurrencies to choose from, with many new cryptos arising every year.

The governments of some countries have carried out campaigns to restrict the use and trading of cryptocurrencies. One such country is China, where the government has imposed certain restrictions to reduce the number of people using and trading cryptocurrencies on apps and sites like https://bitcoin-rush.org/.

While this is going on, El Salvador became the first country in history to legalize the use of the biggest crypto. The government passed the law on Wednesday, 8th of June, recognizing Bitcoin as a legal form of currency.

The country’s congress voted 62-22 to bring the law into being. According to the president of the nation, he stated that “The purpose of this law is to regulate Bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out.” His statement was posted on his Twitter.

Source: scmp.com

After El Salvador decided to take this step, the value of bitcoin jumped by 13%. However, bitcoin is still significantly below the record level of $ 64,829.14, which was reached in April. Proponents of bitcoin, who have long viewed this digital coin as a viable alternative to official national currencies, welcomed El Salvador’s move.

According to the law passed by the country, people in the country can use bitcoin for business and retail purchases and tax contributions. The law also prevents capital gain tax on Bitcoin exchanges.

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Despite this new law, El Salvador will continue to use the US dollar as the “reference currency. The exchange rate between Bitcoin and the dollar will be established freely by the market.

The law further states that “Every economic agent must accept Bitcoin as payment when offered to him by whoever acquires a good or a service.” The only exceptions are businesses or retailers without access to tech devices that access cryptocurrencies.

The law contains a cost that protects business owners that don’t want to hold on to Bitcoin because of the volatility. Businesses can take advantage of the trust that will be created in the central bank of the country. This trust will affect the volatility risk of Bitcoin and convert it to US dollars.

Bukele also stated in another tweet that “El Salvador’s proposed Bitcoin Law makes clear in several places that the government will provide resources to ensure that Salvadorans can be trained in the use of Bitcoin and gain access to the technologies (e.g. smartphones, software, bandwidth) necessary to use it.”

The government of El Salvador plans to construct a new mining hub for Bitcoin within the country with the help of volcanic energy obtained from a well built artificially by man.

Bitcoin is famous for its volatility.

Source: vulcanpost.com

Bitcoins value is known for its high volatility, with prices either skyrocketing just as they did when they reached a new peak of $64,000 in March or dipping spontaneously.

As of Wednesday last week, the value of Bitcoin increased to over 10% with the announcement of El Salvador.

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Cryptocurrencies the new currency

Source: pexels.com

While other countries like India and China are trying to restrict Bitcoin and other cryptocurrencies, it is still only a matter of time before some countries follow the same pathway as El Salvador.

The crypto world took a turn for the better earlier this year when Coinbase was listed on the US stock market. This contributed to Bitcoin reaching record peaks.

According to many analysts, despite the recent dip in the value of Bitcoin, it is only a matter of time before it reaches a new peak. Will these drive nations towards accepting cryptocurrencies? The age of our traditional currencies is indeed coming to an end. Digital currencies will soon become the new norm in the coming years.

Cryptocurrencies have their drawbacks, but there are many more advantages.

  • Transparency and neutrality

Bitcoin comes with blockchain and each one individually the transaction, as well as any information related to it, is always available to everyone in blockchain, but the protocol is encrypted, so it is impossible to manipulate.

  • Inflation

There is no way you can put inflation and cryptocurrencies in the same sentence, because it has absolutely no effect on them, just as neither the central bank nor the government has any influence on cryptocurrencies.

  • Portability

Unlike physical money, which is very complicated to transport if it involves large sums, you can even take bitcoin to a USB stick. Sending money is like sending an email. It does not require much time, there are no highs compensation, and money pass from one person to another without intermediaries, and all it takes is internet access.

  • Security and control

Source: theweek.in

Because digital currency users control their transactions, it helps to maintain security. No one can withdraw money from your account without your knowledge and consent and no one can steal your payment information. The identities and personal information of the user are always protected, as none of the above is must disclose in order for payment to be made.

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To prevent cryptocurrencies from having any downsides, we will say that one of the biggest drawbacks is that they do not fulfill any of the basic functions of money, which is the main reason why they are not a generally accepted means of exchange or a measure of value.

In addition, we can not but look at the volatility of the currency, because it is the main reason why many are reluctant to invest.

If a bank account is hacked, banks are there to provide cover, which is not the case with cryptocurrencies. So once you lose them, don’t expect to regain them. It is for this reason that it is important to provide a secure crypto wallet to store your digital money.

Final thoughts

It is believed that many countries will follow in the footsteps of El Salvador, but until that happens, a lot of time will pass because there are many regulations that must be resolved. In any case, we will not be much mistaken if we say that the time of cryptocurrencies is yet to come.