The cryptocurrency sector and the wider economic community continue to praise Salvador’s historic move Recognize Bitcoin as legal tenderThe Central American country has become the first country in the world to do so, and this move has also prompted a small number of other Central and South American countries to take action. Towards the same possibility.
Unsurprisingly, this move caused waves in the cryptocurrency community, Bitcoin (BitcoinSupporters of) especially emphasized the importance of legislative changes in promoting the adoption of cryptocurrencies. Some critics have emphasized the potential mandatory implications of the law, which has increased the attractiveness of the situation, but the overall response has been positive.
After Salvadoran President Nayib Bukele announced during the 2021 Bitcoin Conference in Miami that the country’s Congress would vote on the new legislation, things moved quickly. A few days later, as the El Salvadoran Legislative Assembly voted in favor of the new law on June 9, Buckler’s plan to make Bitcoin a legal tender became a reality.
The president of the country went a step further when instructing state-owned electricity producer LaGeo to start work Explore the possibility of powering Bitcoin mining Utilize the country’s abundant geothermal energy. At least a day later, a new geothermal well was drilled and Bukele said it will power Bitcoin mining facilities in the near future.
Our engineers just told me that they dug a new well that will provide about 95MW of 100% clean, zero-emission geothermal energy from our volcano
Start designing a complete #Bitcoin Mining centers around it.
You see that what comes out of the well is pure water vapor pic.twitter.com/SVph4BEW1L
-Nayib Bukele (@nayibbukele) June 9, 2021
This move even Immortal on the Bitcoin blockchain Published by the mining company Poolin, it includes the headline of the Salvadoran newspaper, which reads “asamblea aprueba la ley bitcoin”, which translates as “Parliament approves the bitcoin law”, entering block 686,938 mined earlier this week. This is reminiscent of Satoshi Nakamoto, the pseudonymous founder of Bitcoin, including the headline news in the Bitcoin genesis block of The Times on January 3, 2009, “A second bailout for banks is about to be carried out.” “
Booker also has Promise to help Bitcoin users Immigrating to El Salvador, while touting the benefits of BTC, no longer need to pay capital gains tax. As things in El Salvador develop at an extremely rapid rate, it is worth looking at the broader response of the cryptocurrency community and the impact of the newly passed legislation.
Overview of El Salvador’s Bitcoin Law
The El Salvador Congress voted to pass President Buquer’s “Bitcoin Law”, which recognizes Bitcoin and the U.S. dollar as legal tender. Out of 84 votes, 62 votes agree to the new legislation.
The law will allow citizens Pay for goods and services with Bitcoin, Bukele also stated that the Salvadoran government will guarantee that Bitcoin can be converted into U.S. dollars in any particular transaction.
This was achieved through a US$150 million trust established by the Bandesar Development Bank of El Salvador. Essentially, if they wish to receive U.S. dollars instead of BTC, the government will buy BTC from locals.
The point of contention is Article 7 of the legislation, which requires suppliers or businesses to accept Bitcoin as a payment method for customers because it is now legal tender. The monetary economist and historian George Selkin raised important concerns about Articles 7 and 13 in a post on Twitter. Suggest They are mandatory because they will force all Salvadoran merchants and companies to accept BTC as a means of payment.
Article 7 states: “When anyone who obtains goods or services provides Bitcoin to him, every economic entity must accept Bitcoin as payment.” Article 13 states: “All existing before the effective date of this law All monetary obligations expressed in U.S. dollars can be paid in Bitcoin.”
The famous economist said that the move was a “victory of Bitcoin”, but he questioned whether it was a “victory of freedom” because these articles will force Salvadoran companies and suppliers to accept BTC whether or not they are willing. Serkin believes that Articles 7 and 13 “compliance with the’fiat currency’ regulations” and essentially “undermine the free choice of currency, rather than promote it.”
“This is a (relatively) rare example, not only in the settlement of outstanding debts, but also in the spot transaction, which has been forced to bid. Therefore, it violates the principle of currency selection. Article 7 not only allows merchants to accept BTC payments, They are also forced to do so, even if they prefer to pay in U.S. dollars (or other methods). Few countries have such strict legal tender laws. This was the last resort of desperate governments in the past.”
The economist called on supporters of cryptocurrency and Bitcoin to unite to oppose and condemn these specific provisions in the law. His criticism has been widely recognized and provided a healthy perspective on a situation that has received many positive reports.
The wider community praises El Salvador’s move
Although Serkin’s argument raises some sharp questions about El Salvador’s new currency law, it appears to be positive for the country’s rapid acceptance of Bitcoin as legal tender.
Many well-known cryptocurrency and Bitcoin advocates see this initiative as an important step towards wider adoption and acceptance of this superior cryptocurrency as a store of value and payment method. Paul AdoinoThe CTO of Bitfinex told Cointelegraph that he believes this move will be an important step towards financial freedom:
“The acceptance of Bitcoin as legal tender by El Salvador represents what we have always said: Bitcoin is practical and a viable alternative to legal tender. When we witness the implementation of digital currency, I believe we will see Bitcoin’s Significant progress. This is a big step for human financial freedom and an important moment for Bitcoin.”
Humayun Sheikh, CEO of Fetch.ai (a company that builds artificial intelligence for blockchain), emphasized the importance of first-mover advantage and suggested that countries like El Salvador will attract companies and individuals working in the cryptocurrency field, and Added: “A few countries adopting Bitcoin or even buying Bitcoin as a wealth reserve will increase their wealth and provide a positive incentive for the adoption of cryptocurrency.”
Jeffrey Wang, head of Amber Group Americas, responded to Sheikh’s point of view in a communication with Cointelegraph, emphasizing that favorable regulatory measures are a key way to attract cryptocurrency and blockchain-focused companies: “The biggest cloud covering the crypto industry is Uncertainty of regulation, so taking quick action now to accept it as a country may be an important advantage in attracting capital and talent to your country.”
Wang also stated that the rapid changes that are taking place in the country can serve as a realistic test case for Bitcoin’s adoption as legal tender and may become a catalyst for the country to become a center of cryptocurrency business. Flourish:
“By accepting it early, countries like El Salvador can help boost the domestic economy by welcoming industries started by miners, where they can use’clean’ energy while addressing the environmental impact of miners’ use of electricity. Seeing it will also be A good early test case [Bitcoin] Used as a medium of exchange. “
Ardoino also emphasized the role that cryptocurrencies can play in helping Central and South American countries deal with the long-term economic problems that plague their currencies and people: “Bitcoin resonates for the benefits it may bring to the tragedies we have witnessed. South America. The economy. It should not underestimate its potential to bring financial freedom to the region.”
What can we expect in the short term?
With the passage of the new Bitcoin law in El Salvador, there is now a strong interest in the short-term changes that will be felt in the country and beyond. Sebastian Ramirez, head of business operations at bitFlyer USA, told Cointelegraph that a large number of ordinary people may reduce their suspicion of Bitcoin and begin to see it as a viable alternative to existing solutions, and Think of it as a better store of value.
Ramirez also pointed out that El Salvador’s legal changes may remove some barriers to entry, such as paying taxes when using Bitcoin. He also acknowledged that legal changes may not cause an immediate change in perceptions in this country and other regions:
“The vast majority of people may still feel that they are not smart enough/uncomfortable to use Bitcoin and take the risks. I don’t think most locals will benefit from this change in the short term, but as the space grows and Bitcoin Become more stable, it will become a huge choice.”
Wang admitted that there may be some initial problems, because the country’s suppliers and companies still need to build the necessary infrastructure to start accepting BTC. In addition, given the increasing use of cryptocurrencies as a store of value, people may be reluctant to use their BTC for daily purchases: “I think for most people, they hold BTC for the potential long-term price appreciation , So using it to buy today’s bread can double in a week, but the opportunity cost is too high.”
The International Monetary Fund sends out red flags
The speed at which El Salvador passed its historic Bitcoin law made it difficult for major financial and economic regulators to respond or intervene.Nevertheless, the The International Monetary Fund raised some concerns Around this move at a press conference on June 10.
IMF spokesperson Gri Rice said, Will consult with the government of El Salvador. The International Monetary Fund has been negotiating with the country provide More than $1 billion in financing: “The adoption of Bitcoin as legal tender has raised many macroeconomic, financial and legal issues that require very careful analysis. Therefore, we are closely monitoring developments and will continue to consult with the authorities.”
Some people in the international community have also questioned the timing of Bukele’s move to quickly adopt Bitcoin as legal tender along with the U.S. dollar. The latter has already service Since 2001, it has become the reserve currency of Central American countries.
Ramirez expressed his opinion on the timing of this move: “The main reason here is to race to become the Bitcoin hub in Latin America.” He added: “This announcement put El Salvador among the best and attracted a lot of foreign interest. Other Latin American countries left behind have applied pressure.”
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Sheikh believes that “as a public relations initiative, time may be to adapt to the Bitcoin Miami conference.” He further stated that timing may also affect China’s sustainable development, and the Chinese government has begun to take a tougher stance against Bitcoin mining operators:
“At the time of the announcement, China’s coal mining business was hit and the excess mining hardware needed to be relocated. El Salvador has abundant renewable geothermal energy and is expected to benefit from these developments and improve the image of Bitcoin mining as a’dirty’ process. .”
Nevertheless, all eyes are now on El Salvador and Central America. The country is laying the groundwork for the adoption and widespread use of Bitcoin as a means of payment, and has pledged to build the necessary infrastructure to promote large-scale Bitcoin mining operations driven by clean geothermal energy.