El Salvador’s Bitcoin Day: A one-off or many?

Thanks to El Salvador’s daring move, digital money looms large on global policymakers’ radars.
In a historic first, El Salvador, a small Central American country, adopted Bitcoin as its legal tender on Sept. 7. It is clear that September 2021 will be next to January 2009 in the history of digitization of finance. The Bitcoin Day was the first time a sovereign nation made a decentralized digital asset their national currency. This brought joy to millions around the world. It was a success. El Salvador, a nation of less than 7 million, has long abandoned its claim to monetary sovereignty. It switched to the United States dollar in 2001, removing the colon, its national currency, which had been in use for over a century. It made a lot more sense as the colon, El Salvador’s national currency, was no longer in use for over a century, was replaced by the United States dollar. The polls that showed a low support for Bitcoin (BTC), suggest that many Salvadorans don’t understand the new payment method and are not comfortable with it. However, the launch of the payments infrastructure was not as smooth as expected. The Chivo wallet, which is run by the government, was down for several hours. Some retail workers didn’t know how BTC payments could be processed. The president took over customer support duties shortly after the launch. Some retail workers were reportedly unable to process BTC payments. Bart Mol, founder and host of the Satoshi Radio podcast, tweeted along his journey from Chivo ATMs that didn’t work to successfully performing Lightning transactions to pay for pizza and coffee at separate retail locations.The overall feeling, Mol concluded, was that of “witnessing history.”International responseInstitutions of the global financial system seem less excited. Since the adoption of El Salvador’s Bitcoin Law in early summer, the International Monetary Fund has been passive aggressive. If this experiment proves to be successful, perhaps the IMF and other global financial institutions will change their tune? This prospect is not supported by some legal professionals. Cointelegraph Markets Pro subscribers were invited to a Discord “ask Me Anything” session last week. Cointelegraph general counsel Zachary Kelman stated that the main reason for El Salvador’s opposition to Bitcoin adoption was not transparency or the environment. The real reason is the threat crypto poses the established global banking system. These international bodies are unlikely to be broadly supportive of Bitcoin, so I doubt they will. However, other nation-states are closely watching. It is true that El Salvador’s position in the region as the leader in remittances and its previous experience with outsourcing the national money function overseas make for a rare combination. While El Salvador’s position as the region’s remittances leader and its previous experience in outsourcing the national money function to a foreign currency make for a rare combination, it could encourage other countries to take Bitcoin seriously as a payment infrastructure. Cointelegraph spoke with Amanda Wick, chief legal affairs officer at Chainalysis blockchain analytics firm Chainalysis. Wick said that cryptocurrency is an ideal technology to send remittances and is well-positioned to service remittance-heavy countries: “Many citizens in El Salvador don’t have access to traditional financial services. This could increase financial inclusion. These factors could provide clues into the potential countries that may follow their lead. These are popular use cases in Latin America, Africa, and Southeast Asia, according to our research.

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