The President of El Salvador wants Bitcoin to be recognized as legal tender.

in #bitcoin3 years ago (edited)

Nayib Bukele, El Salvador's dictatorial president, wants to make Bitcoin official tender.

The proposed bill, which was unveiled to much fanfare at the Bitcoin 2021 conference in Miami yesterday, has sparked speculation that Salvadorans would soon be able to pay for their groceries with Bitcoin.

Bukele tweeted today that the bill will make sending money back to El Salvador cheaper and faster for migrants.

According to him, only 30% of Salvadorans have bank accounts, making remittances in fiat currencies prohibitively costly. Remittances account for 21% of the country's GDP, therefore it's a significant concern.

However, there may be less to this one than the hype suggests. According to George Selgin, director of Cato's Center for Monetary and Financial Alternatives, declaring Bitcoin as legal cash has nothing to do with remittances or payments.

Bukele's assertion is explained by El Salvador's recent monetary history. El Salvador's national currency, the colón, was falling under hyperinflation at the turn of the century.

El Salvador declared the US dollar to be legal tender in order to save the economy. The following year, El Salvador began to phase out the colón, and the dollar has reigned ever since.

Selgin stated, "[President] Bukele is attempting to do with Bitcoin what El Salvador accomplished with the currency in 2001."

There's no need to worry because the country has already abandoned its native currency in favor of the dollar.

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By fostering decentralized banking and abolishing the country's central bank, Bukele is unlikely to meet the demands of Bitcoin maximalists.

According to Selgin, the switch to Bitcoin may avert any fines from the Biden administration.

Bukele removed his political opponents from the country's legal system last month. On June 3, the Salvadorian congress, which is dominated by Bukele's party, enacted a measure extending the president's influence over the central bank and taking away the private sector's ability to push for central bank board members' election.

ARTICE PARAPHRASED FROM https://decrypt.co/72892/el-salvadors-president-wants-bitcoin-to-be-legal-tender-heres-what-that-means

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