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- Bitcoin was given the legal tender status in El Salvador on Wednesday along with USD as the countries’ main currency
- JP Morgan lauds President Nayib Bukele’s efforts but fail to gauge the economic benefits in the short run
- Countries similar to El Salvador in population, size and financial system may adopt Bitcoin as a legal tender
Digital currencies did not receive the attention a year ago but El Salvador became the first country to adopt it as a legal tender. Banking institutions would have declined if such a thing could happen in the previous two years but it seems many countries could follow suit.
JP Morgan in its report has stated that it is not a regression change and poised to be growth oriented for the country. Its citizens require a fast, smooth and transparent payment system and Bitcoin offers just that and much more.
The bank further remarks a trend that could ensue as countries would like to replicate El Salvador’s successful implementation of Bitcoin in its country. Furthermore, the move is now compared to the dollarization process that was undertaken over 21 years ago as stability concerns will reduce similarly.
Relations hurt
It is a matter of time before we see if the process of implementation is smooth and whether it hampers the country’s political relationships or not. It is poised to enter into a credit program with the International Monetary Fund (IMF) that has expressed its concerns keeping in mind the country’s legal issues and economic turmoil.
The Bank of International Settlements has termed it as a unique experiment that will see several mechanical implications. JP Morgan stresses upon the Domino Effect which states that others will also follow El Salvador and its financial system.
MicroStrategy was the first public firm that had added Bitcoin to its treasury and continues to remain a public flag bearer of digital currencies. The implementation will be smooth for countries with a small population that requires a fast and cost-effective remittance system.
Environment friendly mining
After the congress announced the Bitcoinization of El Salvador the President had more in store for its citizens. Mining Bitcoin will now be feasible once energy from volcanoes is used to fasten the process.
Bukele stated that it will have zero emissions from the energy used and 100% efficient. A geothermal electric company situated in the country will set up a plant with BTC mining facilities.
The president is proud of the new found 95 MW of pure energy well that is present in the country. Chinese authorities and Elon Musk may now breathe a sigh of relief as they were concerned about harmful effects cryptocurrency mining has on the environment.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
