Satoshi Nakamoto, a Japanese tech-head alongside his group, introduced the first-ever cryptocurrency concept in 2009, naming it bitcoin. Nick Szabo, the inventor of intelligent contracts, conceptualized cryptocurrency just like bitcoin and named it bit gold before bitcoin. The inventor of bitcoin defined bitcoin as an electronic cash system and not an investment asset in bitcoin’s white paper.
However, people started to use bitcoin as an investment and as a method to make money. Industries started to realize the application of bitcoin as a payment method after it arrived in the mainstream market. Undeniably companies like Microsoft started to accept bitcoin as a payment method in 2014 but still was not that popular in terms of a transaction method.
Recently the company has started to accept bitcoin payments such as Tesla Motors, Microsoft, Starbucks, and many more. So if you want to get profitable results in your bitcoin trading venture, check the weed profit system for more details. All the more, El Salvador even adopted bitcoin as a legal tender. Here is everything you should know about how El Salvador‘s adoption of bitcoin as a legal tender did affect the market value of bitcoin. So without wasting any further ado, let’s have a glance.
Why Did El Salvador Accept Bitcoin as a legal tender?
Undeniably, bitcoin is an excellent cryptocurrency with some robust technologies, but people prefer using bitcoin as an investment asset as bitcoin returns are exceedingly high. In addition, El Salvador has taken a step towards revolution by adopting bitcoin as a legal currency. Now El Salvador is the first-ever country to have two legal currencies, the first is Dollar, and the second is bitcoin. But why did El Salvador accept bitcoin as a legal tender? Let’s find out.
Remittance: remittance is the amount of money that Salvadorans working abroad transfer to their families. So, in a nutshell, remittance is the extent of international transfers in which laborers and workers who are working in other countries and hailing from El Salvador transfer to their families. The fact that might stun your amount of remittance in El Salvador in 2020 was $6 billion; you read it right.
You can estimate the transaction fees for such an international transaction. To reduce the transaction fees of remittance, El Salvador decided to adopt bitcoin as a legal tender. Since bitcoin is decentralized and there are no middlemen in the complex, the transaction fees for international and domestic transactions are exceedingly low.
Economy: adopting bitcoin as a legal tender will correspondingly boost the economy of El Salvador. You are familiar with the fact that bitcoin mining refers to the process of burning new bitcoins to existence. You can perform bitcoin mining with any possible energy source, and the higher authorities of El Salvador are working on geothermal plants for bitcoin mining.
If the country succeeded in using the energy of volcanoes in these geothermal plants, mining bitcoin would be straightforward and cost-effective. All the more, several organizations from different regions will invest in such plants.
How did El Salvador’s adoption of bitcoin as a legal tender affect the market value of bitcoin?
Bitcoin is a decentralized cryptocurrency which means higher authorities and federal banks are not backing up bitcoin. Due to the decentralization aspects of bitcoin, its store value is compassionate and fragile. After accepting bitcoin as a legal currency in El Salvador, there was a sudden drop in the market value.
As per rich sources, El Salvador’s specialized bitcoin wallet named Chivo gave a sign-up bonus of $30 to every El Salvador. Moreover, almost every Salvadoran has claimed and used the bonus in the form of bitcoin. Therefore, it is one of the prominent reasons why the store value of bitcoin slumped.
However, adopting bitcoin as a legal tender will increase the store value of bitcoin in the long term. Higher authorities of El Salvador are continuously buying bitcoin units to give sign up to the Salvadorans. All the more, it will correspondingly increase the rate of employment in El Salvador. Higher authorities of El Salvador are developing innovative approaches to give maximum liquidity to people using bitcoin as payment.
In a nutshell, yes, the adoption of bitcoin as a legal tender did affect the market value of bitcoin.