Why Other Nations Will Adopt Bitcoin Like El Salvador
On the 7th of September 2021, the president of El Salvador (Nayib Bukele) announced that the Nation would be adopting Bitcoin as a legal tender. Following the announcement, Panama also indicated an interest in making the flagship currency a legal tender. Many speculations have been flying as to when other nations will follow suit.
Why Other Countries will Adopt Bitcoin
Bitcoin has proven to be too hard to ignore. Given the rise in popularity of blockchain and crypto over the years, it is expected that more Nations will want to adopt the digital asset. Here are a few reasons why more countries will embrace Bitcoin.
The Asset of the Century
The asset that performed most over the last ten years was none other than Bitcoin. Bitcoin rose from around $5 to $69k before plummeting to the $41 k region. Despite its ups and downs and high volatility, the bigger picture reveals just one direction for the flagship crypto. Up!
This is one of the reasons why President Bukele chose to adopt the digital asset. For nations thinking long term, embracing Bitcoin may be one of the best-calculated bets in their financial ecosystem. When more citizens of a country invest for the long term, the chances of having a greater cumulative net-worth are higher.
Bitcoin Complements Traditional Finance
One of the main reasons El Salvador adopted Bitcoin was to make foreign remittances cheaper for the citizens of the Nation. According to data from NewScientist, 20% of El Salvador’s GDP comes from remittances received from family members of Salvadorians. High transaction costs usually accompany this. Bitcoin was made a legal tender to make foreign remittances cheaper and more convenient for its citizens. Countries with similar issues like Paraguay will likely follow suit if the decision statistically proves beneficial for El Salvador.
CBDC — A sign of Partial Acceptance?
Some crypto analysts see the concept of CBDC as a slow way of embracing crypto. Central bank digital currencies are not cryptocurrencies. However, the idea of CBDCs mirrors cryptocurrencies. These digital currencies seem to be a means to test the waters. Currently, 87 different countries worldwide are already making plans to embrace CBDCs. In time, they will embrace blockchain as well. And what comes after embracing blockchain? Adopting Bitcoin, of course!
The relevance of Bitcoin and other crypto assets in the current financial system is quite debatable. Critics argue against the volatility of the asset, making it unsuitable as a store of value. However, Bitcoin has proven to be more beneficial than needless. With upgrades in blockchain technology, more Nations will eventually come to terms with blockchain and finally embrace cryptocurrencies.