Bitcoin cryptocurrency trading has been circulating on the globe for quite some time now. The world is divided in half when it comes to supporting Bitcoin. Controversies seem to stick to it like glue. However, despite all the odds El Salvador shocks the world by adopting bitcoin as the country’s legal tender. On 9th June 2021, President Nayib Bukele declared El Salvador as the first nation in the world to approve Bitcoin cryptocurrency legal tender. With 62 out of 84 votes, the county’s parliament decides in favour of legally adopting bitcoin. The
cryptocurrency development will bring financial inclusion, tourism, international investment, innovation and economic development in El Salvador, says their President. He voiced, that the plan is to build a bitcoin mining hub in the country. He even went further and offered citizenship to people who had invested in at least 3 Bitcoins. He assured; the proposition would not be forced on anyone as the use of Bitcoin will be optional for an individual.
This decision is warmly welcomed by global cryptocurrency enthusiasts. They believe that the legitimization of Bitcoin will open a whole new world for them. Some even believe this could be a major catalyst for Bitcoin in the upcoming years. Speculations are circulating about other nations accepting Bitcoin very soon. The global market will now pay more attention to El Salvador and Bitcoin at the same time. According to sources, many countries have started legal procedures regarding cryptocurrency. Here, in this article, we will throw light on the future global acceptance of Bitcoin.
● DIRECTIONS OF LEGAL FRAMEWORK TO REGULATE CRYPTOCURRENCY IN IRAN: Following the Bitcoin legal tender in El Salvador, Iranian President Hassan Rouhani has given direction to regulate the framework on cryptocurrencies. After the four-month blanket ban on Bitcoin mining, the country has finally decided to come up with guidelines. President Rouhani believes that these guidelines will maintain transparency in Bitcoin investments and discourage illegal trading. An economic board has been formed to promote safely accessible crypto on a larger scale.
Iran seems to have the same motive behind the decision, like El Salvador. And that is to grow its untapped economy and increase the share of its flat currency. Cryptocurrency can prove to be a boost for stagnant economies like Iran. Stat says Iran provides about 4.5% of all Bitcoin hash rates and has given licenses to about 50 mining farms last year.
● PANAMA TO FORMULATE CRYPTOCURRENCY BILL IN JULY: Just after El Salvador’s groundbreaking decision, opposition politicians in Panama seek permission to make crypto legal in their country. Opposition congressman of Panama, Gabriel Silva wants to present a bill that will accept Bitcoin legal tender in the country. According to him, this bill will aim to make tax incentives on crypto-related industries. He voiced that El Salvador’s approach is positive, ambitious and interesting and Panama should provide a positive competition for them.
During this month Gabriel with his team will gather votes from Lawyers, Bitcoin enthusiasts, government officials, cryptocurrency development company and many more. By early to late July, he would present his proposition to the ruling body.
● ACCEPTANCE OF GENERAL MOTORS: Following Tesla’s lead regarding Bitcoins, General Motors too refused to accept cryptocurrency as payment. Back in February, the company showed no interest regarding the Bitcoin perspective. However, during a call at the end of March the General Motors CEO, Mary Barra changed her response. She voiced that the company has no problem accepting Bitcoins if their customers demand so.
“Certainly, we want to make the whole buying and ownership experience as easy as possible”, says their Chief executive. The Tesla CEO, Elon Musk also voices the same. He, in an interview with CNBC, states that the prospect of Tesla accepting Bitcoins as payment is certainly good. Many investors believe that more such big brand names will come forward accepting their lead in the near future. With the connection of Bitcoins with such global brands, the entire economic scenario of the business world will change in no time.
● NO BAN ON BITCOIN IN NETHERLANDS: Pieter Hasekamp, the director of the Netherlands Bureau for Economic Policy Analysis (CPB), threw light on the ultimate crash of the crypto bubble, a few days ago. He took on paper and urged Netherland officials to ban Bitcoin in the country, before the collapse. In reply to Pieter’s article, the Dutch Finance Minister, Wopke Hoekstra states that monitoring Bitcoin activity will be better than an outright ban. He states further that a unilateral ban of a single country in Europe would have a very limited effect. Focusing on monitoring and regulation would be more acceptable. After the acceptance of El Salvador, the decision will probably not change anymore. Rather it can accelerate towards more promotion of Bitcoin cryptocurrency.
Like the Netherlands, several other countries are against the banning of Bitcoins. Their standpoint could be clearer in the future.
● POSSIBILITY OF PARAGUAY TO BE THE SECOND: El Salvador’s decision to make Bitcoin legal tender was applauded by several Latin American countries including Panama, Argentina, Brazil and Paraguay. Carlos Rajala, a prominent lawmaker of Paraguay is now proposing the legislation of Bitcoins in his country. He took to Twitter on Thursday and announced that Paraguay’s congress will probably follow El Salvador’s decision. He wrote that if this legislation is passed, it will accept Bitcoin, ether, Shiba Inu and chills as currency. He states that the aim of this legislation is to make Paraguay a hub for crypto investors and the draft legislation will be published on the 14th of July, 2021.
Juanjo Benitez Rickmann, the CEO of Bitcoin confirms that they have been working with Mr Rajela. He states that they were working together to make Paraguay a Crypto-friendly country that avails the benefits of renewable inexpensive energy made from hydroelectric. He even went further to say that, the introduction of Bitcoin in Paraguay will attract more foreign investment and the prospect of increasing its currency value will be prominent.
● THE INDIAN PERSPECTIVE: With El Salvador’s decision, India too is likely to change its standpoint on cryptocurrencies. The previous government regulation was very negative and hostile towards Bitcoins. But now the scenario has changed. Some sources claim that now India will affirm Bitcoins under asset class. This decision will make cryptocurrencies more acceptable for the citizens. Recently, rapper Raftaar made headlines for becoming the first Indian artist to accept payment through cryptocurrency. With such prominent name involvement, the crypto sector in India will start flourishing very soon.
The categorization of Bitcoins under asset class will call upon the need for a regulatory body. Market regulator Securities and Exchange Board of India (SEBI) will play the role of the regulatory body. India’s crypto sector is hopeful for the Cryptocurrency Regulation bill that is likely to be introduced in the monsoon Parliament.
The world of cryptocurrency app development looks very prominent after El Salvador’s acceptance. The industry is hopeful that it will soon reach every country on the planet. The need for physical currencies will diminish over time and the world will start dealing with virtual money. Despite having such a prominent future, El Salvador’s decision also received a lot of negative responses.
● FORM THE PERSPECTIVE OF ECONOMISTS: A big percentage of economists believe that cryptocurrencies are not suitable to be used as real currency. They believe that the crypto bubble is only short-lived and can bring any economy to ruins. They argued that dealing with Bitcoins needs a lot of luck and that it is impossible to happen as a national currency. The world has experienced the burst of the Dutch tulip bubble. Hence, they state that the world doesn’t need repeated disasters anymore. The crypto money is extremely volatile and may not be available during the time of emergency. They further proclaimed that El Salvador could have used Bitcoins directly without adopting them as the national currency.
● WORLD BANK REJECTION; El Salvador planned to officially introduce Bitcoins in the county’s economy 3 months after declaration. They approached the World Bank to assist them in the process. However, the World Bank rejected their request on the grounds of transparency issues. The World Bank replied to AFP and said, “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings”.
Along with the World Bank, the IMF is also against El Salvador’s decision. They state that the adoption flagged concerns regarding macroeconomy, financial and legal issues that need proper analysis. Gerry Rice, the IMF spokesperson states that El Salvador’s decision is potentially risky for a nation.
When we are discussing the future prospect of Cryptocurrencies, we need to have a complete understanding of them. Analyzing the advantages and disadvantages will give us a clear idea about them. Every country, company or individual needs to know these facts before deciding to invest in Bitcoins or any other Cryptocurrency.
● ADVANTAGES OF BITCOINS:
1. The cause of the declining value of many currencies is inflation. But cryptocurrencies like bitcoins are released with a fixed value. This in turn increases the market use and demand and helps resist inflation.
2. Currencies like bitcoins are governed by individuals themselves. There is no third-party regulation involved.
3. These currencies are recorded by miners on their software. Since these crypto miners get paid for recording the transactions, they try to maintain transparency in their job.
4. Cryptocurrencies can be transformed into many real currencies like Dollars, Rupees, Euros and many more. This swift transfer of money into different wallets encourages currency exchange and minimum transaction fees.
5. They are very easy to access and very few legal barriers are on them. Which facilitates minimal verification and easy transfer of funds.
6. These currencies could be great options for sending money across borders with no charges.
● DISADVANTAGES OF BITCOINS:
1. The biggest problem with cryptocurrencies is their scalabilities. Although the number of coins available and numerical value is increasing day by day, these currencies are not very accessible. The infrastructure regarding the speed of transactions still needs a lot of attention. Unless Bitcoins solve their accessibility issues many individuals will feel hesitant to invest in cryptocurrencies.
2. The number of illegal activities that take place in the system is a cause of concern. With the developments of digital technology cases, the cyber breach is increasing exponentially. We have witnessed many ICO breaches costing millions of dollars to the investors.
3. Crypto money is extremely volatile and its algorithm changes within minutes. Many investors believe the crypto niche to be a bubble, which can burst anytime.
4. Crypto mines need a lot of computation. Electric charges are very high considering the mines are highly energy-dependent. These can have very adverse effects on the environment. Mining bitcoins needs high technology which can increase the carbon footprint tremendously. Sources attest that China is probably going to take legal actions against Bitcoins because of the environmental issues.
5. Cryptocurrencies cannot be transferred into many flat currencies. Transferring them forcefully will cause extra transaction fees. Many investors do not use crypto because of this issue.
6. The lack of regulation of Bitcoins is also a major concern. The Bitcoin globe is absolutely unsecure at the current time. You can earn and lose a lot at the same time. This uncertainty is definitely not healthy for a nation if they are considering using it as currency.
There is no doubt that the use of bitcoins will increase, given El Salvador’s decision. People will now look at cryptocurrencies differently than before. The entire world is looking forward to El Salvador’s performance with Bitcoins in the near future. One this is for sure; it is either going to give the country’s economy a massive boost or it would be a complete disaster. People around the globe have divided opinions regarding the usage of Bitcoins. But we all know; time could be the best judge of it. After knowing about all the speculations, we just have to wait and watch what other nations come up with.