Sunday, August 1, 2021

El Salvador Opening the Path for Crypto Adoption

The biggest recent news in crypto is, of course, the action in El Salvador. The country is taking definitive steps towards making Bitcoin an official currency, and while the implementation will be somewhat complex, there are many elements to this policy that should have investors and crypto fans across the world excited.

A Major Step Toward Mainstream Adoption of Bitcoin

In many ways, this represents a step towards Bitcoin’s original vision of becoming a world currency with day-to-day use that helps bank the unbanked. Much of El Salvador is impoverished, and access to traditional banking services is limited. This is especially true when you consider the fact that El Salvador has a mix of urban and rural residents with unique needs. That means any banking solution needs to be flexible enough to accommodate all of those needs, accessible enough for everyone to be able to use it, and powerful enough to ensure El Salvadoran citizens and businesses can work with it anytime and anywhere. Clearly, the government believes that Bitcoin has the potential to get that done.

This represents an unprecedented step forward for crypto in terms of adoption. In the past, cryptocurrency hasn’t always had the best reputation when it comes to adoption. Use by mainstream merchants has been limited, and some companies announced that they would accept crypto, only to walk back on that decision later. The most notorious example is Tesla from earlier this year, who flipped from taking Bitcoin to abruptly refusing to take Bitcoin as payment for their vehicles. The outsize media influence of Elon Musk and his companies meant that this caused a wave of disruption in crypto markets. For a world government to announce that they would allow their citizens to use crypto for purchases is on a different level. So far, most government attention to crypto has focused on attempts to regulate it or on efforts to suppress mining. El Salvador is embracing crypto in stark contrast to much of the rest of the world.

How Will Cryptocurrency Adoption Change El Salvador?

Aside from the benefits of using crypto in day-to-day life and the attraction of creating a national experiment for crypto acceptance, the El Salvador move is also a play to make the country a new hub for crypto innovation. What better place to experiment with new coins, new layers, new apps, and other engaging projects than the country that has opened itself to crypto more than any other? For crypto enthusiasts, El Salvador can become a kind of Silicon Valley, where innovation and collaboration kick off new and fascinating work. El Salvador would benefit from having crypto innovators and entrepreneurs move to their country and set up shop, so it is a win-win for everyone. The innovative projects that this could make possible might be exactly what the crypto space needs in order to inspire more adoption by larger nations and regions around the world.

It is certainly an interesting time to be involved with crypto. The next year or so will be a major point of transition as El Salvador gets the proper infrastructure, policies, and tools in place to make this change a reality. It won’t happen overnight, and it is almost certain to take longer than the country expects, but it was never going to be easy for the first country to take the first step towards making crypto an official currency. The many different benefits and areas for growth that will arise from El Salvador’s bold action will bring even more attention to crypto at a time when people, businesses, and governments are looking for new solutions and wondering if crypto might be able to provide them.

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