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El Salvador Becomes the First Country to Officially Declare Bitcoin as Legal Tender

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“This is the shot heard ’round the world for Bitcoin,” Jack Mallers could be overheard saying throughout the Bitcoin Miami conference held this week.

In a historically unprecedented move, the small but proud country of El Salvador has legally declared Bitcoin as legal tender early on Wednesday of this past week.

The new El Salvadorian Bitcoin law is an ambitious yet brilliantly simple model. The proposed (and passed) El Salvadorian Bitcoin proposal emphasizes minimizing risks that traditionally accompany cryptocurrency investing.

Plus, the government has gone so far as to even guarantee the convertibility in exact dollar value precisely at the moment of the transaction!

Legislative Assembly Passes Pro-Crypto Regulation

“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” Bukele said at the Bitcoin 2021 conference in Miami on Saturday, shortly after posting similar sentiments to his Twitter account.

With congress in El Salvador approving legislation to officially allow the crypto-OG known as BTC to act in a capacity as legal tender, the future-minded country is now the first country in the world to go this far with adopting a pro-crypto policy.

The El Salvadorian legislative assembly and their vote fulfill a promise President Nayib Bukele made over the weekend to introduce the bill, which calls for the approval of cryptocurrency to be a viable form of payment in the Central American country.

The law will officially take effect 90 days after its formal publication. The Central Bank and financial system regulators will also publish the rules of implementation.

The New Ideas Party Receives Overwhelming Support

The New Ideas Party holds a supermajority in the new congress seated May 1. The New Ideas Party is the choice political platform of the young El Salvadorian president and the party that ensured his successful election.

However, an alleged concentration of power, attacks on critics, and open disdain for checks on his power have raised concerns about the path El Salvador will take going forward.

Still, through all of these seemingly bearish factors, Bukele has a broad base of support, in part due to the utter failure of the countries traditional parties, and many can attest to the current paries tried-and-tested ability to provide benefits, in at least the short term.

Throughout the week leading up to the official announcement, the El Salvadorian president even repeatedly stated that the adoption of BTC as legal tender would increase financial inclusion, investment, tourism, innovation, and spur economic development. 

Considering that at least 70% of El Salvadorian population does not have a bank account and works in the informal economy – BTC will vastly improve financial inclusion for a more open and equitable economy.

Final Thoughts

Other countries in the region, including Venezuela and the Bahamas, have introduced digital currencies, although none have adopted the original cryptocurrency itself (not yet, anyway).

Although the markets have remained relatively calm in reaction to this historical event, it remains in the belief of the author that an impending chain reaction is on its way.

Realistically, one must ask themselves: how many countries can make the push to do this, or something similar, before the floodgates are open?

Only time will tell – until then, stay tuned, stay safe, and stack those Satoshis!

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