El Salvador Prepares to Launch Bitcoin as Legal TenderPublished September 12, 2021 by Elana K
As of September 7, bitcoin will be legal tender in El Salvador. The new law is provoking a wide spectrum of support and criticism.
El Salvador is preparing to become the first country to adopt bitcoin as legal tender (in addition to its official currency, the US dollar). Once the law goes into effect on September 7, goods and services in the country will be able to be purchased with bitcoin.
Of course, the decision has drawn its fair share of support and criticism (mainly the latter). The Bank of America recently enumerated some of the benefits of adopting cryptocurrency as legal tender: it can reduce the cost of cross-border transactions, offer digital options to the country’s many citizens who don’t use banks, and attract foreign investment.
More recently, however, critics of the new law have become more vocal. They say that the volatility of bitcoin won’t be good for the economy (even though the country is tying it to the dollar exchange rate), and it can also jeopardize El Salvador’s $1 billion program with the International Monetary Fund (IMF).
The IMF itself has made a general statement that there are many pitfalls of legalizing cryptocurrency, especially for economies that are unstable.
Protestors have taken to the streets against the new law, saying it puts everyday investors at risk and is far too dangerous a move for a country that’s already saddled with poverty and corruption.
While the act of legalizing bitcoin is a significant breakthrough for the cryptocurrency industry, El Salvador will need to take extra precautions to make sure that its critics’ worst fears don’t come true.
If it goes well, El Salvador will be a pioneer among international countries and may pave the way for others to consider legalizing cryptocurrency. If the new law isn’t successful, El Salvador will become a cautionary tale for those who wish to take cryptocurrency further in the future.