The adoption of the Bitcoin standard by the nation states has begun. El Salvador will be the first country to declare BTC legal tender. The announcement was made recently; the crypto space and its industry are still processing its effects.
Despite being a relatively small country, El Salvador could have an effect similar to that of MicroStrategy’s ingestion of BTC. At that moment, a domino effect caused one of the largest periods of BTC adoption by publicly traded companies.
As El Salvador’s head of state Nayib Bukele said through his Twitter handle, Bitcoin has a market capitalization of $ 680 billion. If 1% of that number is invested in this country, their GDP could grow by 25%, according to Bukele’s calculations.
After a violent civil war, El Salvador introduced the dollar as its official currency. Many went into exile or emigrated to other countries with better economies. This had two consequences for the country: It is dependent on the stability of the US dollar, although concerns about rising inflation of this currency seem logical for the country to promote an alternative.
The second consequence is that many people receive referrals. Around $ 6 billion will be paid to a third party to process the transfers. Bukele claims that the introduction of BTC will benefit 1 million low-income families and increase their income “billions of dollars every year”. Bukele said:
On the flip side, Bitcoin will have 10 million potential new users and will have the fastest growing opportunity to send $ 6 billion in wire transfers annually.
Further data presented by the head of state show that around 70% of the country’s population do not have a bank account. However, many have access to a smartphone. Bitcoin will be a tool to create financial inclusion and support economic growth. People will be able to save, invest, access credit, and their transactions will be secured through the BTC network.
One small step for Bitcoin, one giant step …
Many countries around the world shared these conditions. Many wondered how long it will be before other heads of state notice the benefits of the Bitcoin standard. In the United States alone, local government officials, senators, congressmen and congressmen, and other government officials have celebrated the announcement.
Caitlin Long, a Wyoming State-appointed Blockchain Select Committee member and a 22-year-old Wall Street veteran, believes El Salvador’s decision could open a back door for US banks to deal with Bitcoin.
1 / THREAD ABOUT A HISTORIC DAY in #bitcoin: The President of #ElSalvador publicly announced his support for legislation to make #BTC legal tender. * IF * it became law, it would have many side effects. Steel yourselves through a great fight on this likely coming thohttps: //t.co/BrrNxaLzpZ
– Caitlin Long (@CaitlinLong_) June 6, 2021
Lange made it clear that “legal tender” is a commercial law term that means that citizens can offer an asset in exchange for an obligation to pay for a property. She added:
The legal tender is the key to commercial law, which is THE basis of every legal system (…). Bitcoin is treated as “indefinite intangible value,” which means lower costs or lower market prices, but when it is a foreign currency, the mark-to-market is valued up and down.
This means that BTC can be added to the company’s coffers without a company having to face a “criminal accounting”. BTC could be treated like any other foreign currency. Thus, more companies could benefit from the introduction of BTC. Long added that the cryptocurrency could be treated as money, stating:
This means that Bitcoin would have a special status in banking systems around the world. Banks would probably treat it like any other foreign currency. #Bitcoin * CAN * receive preferential back-door treatment as part of banks’ capital requirements.
US Business Law Perspective. If El Salvador actually continues and recognizes Bitcoin as legal tender … Bitcoin will then become “money” according to UCC § 1-201 …. 🧐 https://t.co/CQLZhXt2XE
– Andrea Tosato (@Andrea_Tosato) June 5, 2021
At the time of writing, BTC’s price action remains choppy and is trading at $ 36,140. The cryptocurrency is in the middle of its current level. There is a lot of uncertainty over the coming weeks, with many anticipating further downside moves, but the impact of the recent announcements could be short-term and kickstart the rally again.
BTC is moving sideways on the daily chart. Source: BTCUSD Tradingview