El Salvador Uses Bitcoin
El Salvador uses Bitcoin
Copyright 2021, Steve Burgess
El Salvador has just passed the law to turn Bitcoin(BTC) into legal tender, which is the first country to do so. Similar things were done in 2001. At that time, the US dollar replaced the name of Christopher Columbus, the official currency for more than a century.
Interestingly, the US dollar is a stable currency, so it was adopted. The bill was passed to stabilize El Salvador’s economy. Bitcoin joined the US dollar to become legal currency, but it is difficult to find an unstable financial platform. BTC is famous for its sharp volatility. Although its life cycle is shorter than 10 years, its value rises sharply.
How did El Salvador adopt BTC?
Several things come together. Seventy per cent of Salvadorans do not use banks. Either selectively or not. Many people in El Salvador earn their income through remittances from American families or friends. In fact, 2.5 million Salvadorans live and work in the United States, sending $4.5 billion to their families and friends in their home countries, but it takes a lot of expense and delay to bring this money home.
An important part of the adoption story was born in El Zonte, a tourist village in El Salvador. Mike Peterson, a surfer and owner of a small San Diego chain, spent quite a long time with his family in El Zonte during the off-season. The anonymous Bitcoin millionaire heard about Peterson’s philanthropy in El Johnt and offered Peterson a $100000 Bitcoin gift for him to distribute there.
Peterson cooperates with local people in El Zonte to establish Bitcoin Beach organization to improve the financial situation of local people, and encourages shopkeepers, employers and others to accept Bitcoin as the payment without banks in this town. It takes half a day to visit the bank, but accessing the application on their mobile phone is more or less instant. In addition, an ATM(the only one in the village) is installed to handle Bitcoin transactions.
The second is covid-19.
The tourism industry in that country collapsed, as did the local economy in El Zonte. Peterson began to distribute about 35 dollars to 500 villagers and received their support. At present, about 90% of El Zonte residents regularly interact with Bitcoin.
Nayib Bukele, President of El Salvador, discovered the weakness of Bitcoin and found that Bitcoin was promoting the National Legislative Department to pass a bill to make Bitcoin a new coin in this field together with the US dollar. One line worthy of attention in the bill passed: “; in order to increase national wealth and benefit the largest number of residents, it is necessary to authorize the circulation of value digital currency that fully conforms to the free market standard;
As of September, Salvadorans can use Bitcoin to buy goods and services in any Salvadoran enterprise(except some enterprises that have no ability), and pay taxes with Bitcoin.
Here, we may want to know the sustainability of the money that needs so much electricity to produce. It is speculated that the amount of electricity needed to produce a Bitcoin is equivalent to the energy demand of American standard households for two months or that of Salvadoran households for more than six months. This is one of the first countries to recognize natural forests as living entities in the “Natural Rights” signed by the National Assembly of El Salvador.
Geothermal power generation
Well, I have an answer. President Bukele announced the establishment of a clean geothermal power station operated by “100% clean, 100% renewable and zero emission energy from our volcanoes”. Unless coal or atoms are burned and rivers are classified, the project will establish Bitcoin mining in the country, which will run on the existing power of the earth’s own thermal generator.
although some people worry that the extreme fluctuations of Bitcoin(which can be said to be volcanic eruption) will seriously damage the economy of El Salvador. The legislators of El Salvador expect that the economic policy and the cheap energy of crypto mining will attract investment and provide more financial resources that 70% of Salvadorans could not obtain before.
In addition, it is designed to facilitate remittances. Remittances account for about 20 per cent of the country’s gross domestic product.
Due to the fluctuations in the value of Bitcoin, President Barker announced that he would provide a fund of 150 million dollars so that people could immediately convert Bitcoin into dollars. Some people worry that El Salvador will become a refuge for criminals who want to launder money there.
Take it away!
In order to promote the Bitcoin conversion in El Salvador, the government is making a Bitcoin Digital Wallet called Chibo(Salvadoran slang “cool”). Each Salvadoran citizen who uses it can get 30 dollars.
Of course, there are potential obstacles, as only 45 per cent of El Salvador’s population has access to the Internet.
Can El Salvador overcome these potential problems and become a Bitcoin power? Will El Zonte become the birthplace of El Salvador’s successful wave of surfing cryptocurrencies, realizing a 360 degree future and freeing many people from poverty? Or will this be a difficult journey that will eventually lead to economic collapse? Time will prove everything.