The first one or a one-off?

On September 7, El Salvador, a small country in Central America, became a historic first Adopt Bitcoin as legal currency.

The true meaning of how people all over the world exchange value and the meaning they give to the concept of currency on this day will take a long time to be concretized and fully understood. However, it is already clear that in the history book of financial digitalization, September 2021 will appear after January 2009.

Surrounded by controversy, protests, rugged infrastructure deployment-what else? ——At the same time, it is also the joy and optimism of millions of people around the world who look at this great experiment with hope. Bitcoin Day marks the first time that a sovereign country has used decentralized digital assets as their national currency. After all, did it succeed?

political backgroung

El Salvador is a country with a population of less than 7 million, and it has long given up on monetary sovereignty. In 2001, it abandoned the national currency Cologne, which had been in use for more than a century, in favor of the U.S. dollar. This move has great practical significance, because the proportion of remittances in the country’s gross domestic product exceeded 16% at its peak-a large part of which came from Salvadorans in the United States.

At the time, the actions of the then President Francisco Flores Pérez sparked protests and were condemned by critics, calling them undemocratic and allegedly benefiting bankers and the wealthy.

Twenty years later, 40-year-old President Nayib Bukele (Nayib Bukele) took power in a party called “New Ideas”, adding a new chapter to the currency saga of El Salvador—this time, with another This kind of foreign currency supplements the borderless foreign currency circulating in the country.

Just like 20 years ago, Strong opposition to the Bitcoin law. However, the same Polls Indicates a lack of support for Bitcoin (Bitcoin) As a new payment method shows that a large number of Salvadorans have limited understanding of what it is and how it will affect their lives.

In addition, in many cases, dissatisfaction with Bitcoin may be related to dissatisfaction with Bukele. Although Bukele has a high support rate, he is still a divisive figure with its so-called authoritarian tendencies. concern Some international observers.

All in all, there are good reasons to believe that in El Salvador, there is no strong ideological opposition to the concept of decentralized finance, and any current resistance may further dissipate the adoption curve if the implementation proves to be ultimately successful.

Hustle and bustle on the ground

At the same time, the hasty rollout of payment infrastructure is expected to be far from seamless.Government-operated Chivo wallet Dropped for a few hoursAccording to reports, some retail workers do not know how to process BTC payments. Soon after the launch, the president himself assumed the role of customer support. Tweet Update of the wallet service status.

However, overall, according to those who have witnessed El Salvador taking the first step as a Bitcoin country, things started to level off soon after the turmoil began. Bart Mol, founder and host Satoshi Nakamoto podcast, Tweet During his journey to Chivo ATMs where he has never been able to successfully execute lightning transactions to pay for pizza and coffee at different retail locations.

Moore concluded that the overall feeling is “witness history.”

International response

The institutions of the global financial system seem to be less excited.The International Monetary Fund has Passive attack The Bitcoin law on El Salvador has been passed since the beginning of this summer. Perhaps, if this experiment produces favorable results, the International Monetary Fund and other global financial institutions will appear?

Some legal professionals are skeptical of this prospect.During the Discord “Ask Me Anything” (AMA) meeting Cointelegraph Markets Pro Subscribers last week, Cointelegraph’s general counsel Zachary Kelman, believes that global financial institutions are unlikely to use Bitcoin as their national currency:

“The established reasons (environmental, transparency) against El Salvador’s adoption of BTC are not real reasons. This is a threat that encryption poses to the established global political order and banking system. Therefore, I think these international institutions will never broadly support Bitcoin. .”

However, other nation-states are paying close attention. It is true that El Salvador’s position as a leader in remittances in the region, combined with its early experience in outsourcing national currency functions to foreign currencies, forms a rare combination. Most other countries have higher thresholds, even if they can assemble political momentum to make decentralized currencies legal tender.

Nonetheless, the potentially beneficial effects of El Salvador’s move may prompt other countries to take Bitcoin more seriously as a payment infrastructure. Amanda Wick, the legal affairs director of Chainalysis, a blockchain analysis company, told Cointelegraph that cryptocurrency is an ideal remittance technology, so it can serve well in economies that dominate remittances:

“Many citizens [in El Salvador] No access to traditional financial services, which may promote financial inclusion. These drivers can give us insight into which countries might follow suit. We found in our research that these have become popular use cases in Latin America, Africa, and Southeast Asia, especially. “

Accelerated reporting by other countries Central Bank Digital Currency Research ProjectTo promote the definition of encryption Legal status in Ukraine, And discussions on legalizing cryptocurrencies Alternative payment methods in Panama Both can be seen as the continuation effect of El Salvador’s bold initiative.

related: Slow start: crypto regulators lag behind the blockchain industry

Obviously, not every nation-state can accept Bitcoin as their national currency, but almost everyone was prompted to reassess their status on the world’s digital currency map on September 7.

Regardless of the results of the El Salvador experiment, this pioneering example of a Central American country has pushed cryptocurrency onto the mainstream political agenda, which it can achieve without the recognition of sovereign states.