Nayib Bukele, the young millennial president of El Salvador, rose to worldwide fame in the past few days with his major move on cryptocurrency, especially Bitcoin. The small Central American country has now become the world’s first to adopt a cryptocurrency as a legal tender.
With crypto fans worldwide cheering the president on and talks of volcanic energy usage, there is a lot that is going on in the Bitcoin world. Let’s take a quick glance at what actually is going on in here.
On Wednesday, 9 June 2021, El Salvador Congress approved President Nayib Bukele’s proposal to embrace cryptocurrency as a legal tender.
A legal tender is a validated form of money used for payment of the debt and also recognised by the law of the land. Out of a total of 84, the proposal saw a majority of 62 in its favour as lawmakers voted to create a law to adopt Bitcoin.
President Bukele said that Bitcoin can be advantageous due to its potential to help Salvadorans living abroad to send remittances back home. He added that it will bring financial inclusion, investment, tourism, innovation and economic development for El Salvador.
After the Bitcoin Law was passed, he also promised that the use of Bitcoin is totally voluntary and optional, and government guarantees convertibility to dollars at the time of transaction. This would be ensured through a USD150 million trust created at the country’s development bank BANDESAL.
After this news spread, IMF reacted to it with a warning and was apparently not pleased with the country’s move. IMF has warned of various implications of using cryptocurrency, especially Bitcoin, for day to day transactions. An IMF team was also set to meet with Nayib Bukele, as it weighs another relief package for the country amid its recovery from the Covid-19 pandemic.
IMF spokesperson Gerry Rice has said that adoption of Bitcoin as legal tender has raised various questions regarding possible macroeconomic, financial and legal issues that need a careful, in-depth analysis.
After the Bitcoin Law, Bukele said that embracing the cryptocurrency will generate jobs and help provide financial inclusion to thousands outside the formal economy. A part of this agenda was Bitcoin mining, a process that has proven to be lucrative for thousands across the globe in past few years.
After the recent questions raised about Bitcoin mining’s environmental impact, thanks to maverick billionaire Elon Musk, Bukele has come up with a solution. Bukele has a complete plan to mine Bitcoin with renewable energy and prevent environmental damage. He has directed El Salvador’s state-owned geothermal electricity company to develop a plan for mining sing volcanic energy. He also shared visuals from a well that may become the center of a new Bitcoin mining hub, showing steam shooting out of it.
The idea’s supporters see it as a hope for the country where over 50% adults don’t have a bank account. Many are also seeing it as a new way to attract foreign investment and become a hub for cryptocurrency entrepreneurs, which could help boost the local economy.
On the other hand, volatility surely may pose a risk. Over the past few months, Bitcoin price skyrocketed to new all time highs of around USD65,000, and then saw a steep fall. In just the past week, Bitcoin’s value was as high as USD38,200 and as low as USD31,428. These fluctuations are what become Bitcoin’s weakness in its aim to become a viable alternative to bank currencies or FIAT money.
What remains to be seen is how all of this pans out for Bukele, El Salvador, volcanoes, crypto market, and crypto lovers worldwide, in the future. For more updated news and bulletins about blockchain and cryptocurrency, keep reading AlShorts- Short News in 30 seconds.