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This year El Salvador became the first country in the world to legalize Bitcoin as a means of payment, according to the latest reports. The reactions in the capital San Salvador were mixed. Some hoped the new currency would increase wealth and financial opportunity, while others hesitated.
With Bitcoin now officially legal tender in El Salvador, citizens can pay with it almost anywhere, companies have to accept it, and even taxes are paid in Bitcoin. This initiative then got many countries from Latin America to support the idea of legalizing Bitcoin, including Paraguay, Mexico and Panama.
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This year was another wild trip in Bitcoin land. After a period of stagnation following the collapse of the 2017 hype, Bitcoin prices have soared to new heights. It was a yo-yo effect.
The news of the introduction of Bitcoin in El Salvador was groundbreaking for everyone. Statistics did not exist until El Salvador, but that could explain the fall of the next nation’s domino.
In this article, we are going to examine different possible country adoption methods for bitcoins.
First, let’s define legal tender to make things clearer as our discussion progresses.
What is “legal tender”?
Within a given political jurisdiction, legal tender refers to money that is legally recognized. The legal tender fulfills all economic functions of money and some more, such as facilitating monetary policy and currency manipulation.
The use of other than current legal currencies as money is fundamentally prohibited according to the law on legal tender.
Here are the three methods of adoption, as explained in a Bitcoin Magazine article:
El Salvador is a great example of this method of adoption. Nayib Bukele, President of El Salvador, cited numerous factors that could be used as data points in their top-down takeover: a remittance-based economy, negative migration numbers, reliance on monetary policies they don’t control, and a population without bank details, to name just a few. Every argument is logical, and solving every problem is beneficial for the whole country.
As countries try to fix the holes in their sinking moneyships or avoid the wrath of sanctions, these data points are likely to be consistent for top-down methods.
Bottom-up adoption will be in countries with medium to high levels of corruption, neutral migration numbers, medium to high urban populations, active social media, and high smartphone penetration. It is the preferred approach for any free market or self-governing person, but it can also be the most difficult to implement. Governments that are reluctant to accept the hybrid method are likely to avoid enacting Bitcoin laws for political reasons. The hybrid process is discussed below.
Countries and governments that have the most to lose in terms of economic power, geopolitical influence, and unbridled spending budgets will face the toughest opposition. Free markets will, of course, choose an open, math-based monetary policy, but governments would almost certainly try to convince the public that this is not in their best interests.
To combat disinformation, social media and mobile usage will be crucial. The free market will move closer to Bitcoin, but governments will be forced to choose between asking for, reluctantly accepting, or fighting against Bitcoin acceptance. This deployment strategy could leave countries stagnant for an extended period of time.
Higher inflation rates, unstable monetary policy, modest smartphone penetration, active social media, and lower GDP per capita are possible characteristics of such a country that will adopt this introductory method.
A large enough public is supporting the hybrid rollout to encourage a forward-thinking government to grab the move and make Bitcoin law. A government can take the momentum and claim Bitcoin’s success by riding the wave of adoption early on. The free market will already have rewarded acceptance, innovation and education.
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