It seems things are finally starting to look up for bitcoin as El Salvador has announced that it plans to make bitcoin a legal tender in the country. This would make the country the first in the world to formally accept and adopt bitcoin in their economy. A not-so-similar announcement came from Tesla earlier this year as well when the company announced that they would start accepting bitcoin for their cars.
Tesla, however, backtracked putting a focus on the environmental concerns that come hand in hand with bitcoin. It will be interesting to see how El Salvador handles the situation. The announcement came yesterday from the country’s president Nayib Bukele who claimed that “In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy”.
Mr. Bukele also said that the cryptocurrency could be the fastest way to transfer 6 billion dollars a year in remittances, with them making up about 20% of the country’s gross domestic product or GDP. Mr. Bukele tweeted about the news as well which you can see below.
This decision could cause a surge in bitcoin prices as this could mean up to 10 million potential users for the currency. It’s unclear how El Salvador would handle the environmental drawbacks if its population starts bitcoin mining. Around two million Salvadorans live outside the country and send around $4 billion back to their homes each year. Making bitcoin a legal tender could make transferring these remittances pretty easy and convenient.
Mr. Bukele further explained his reasoning saying that “70% of El Salvador’s population doesn’t have a bank account and work in the informal economy”. He said that adopting cryptocurrency would help grow the country’s economy, provide access to credit, savings, investments, and secure transactions.
The news spells good news for bitcoin investors as this surely would cause the currency to surge in price. We just hope Elon Musk doesn’t post another meme.