Is El Salvador ready for bitcoin to become legal tender?

El Salvador’s ‘bitcoin law’ comes into effect next month, making it the first nation to adopt a cryptocurrency as legal tender. So what does this mean for its people, asks Brian McGleenon

Sunday 29 August 2021 23:19
<p>Caught in the middle of this experiment are the people of El Salvador</p>

Caught in the middle of this experiment are the people of El Salvador

Since US president Richard Nixon took the world off the “Gold Standard” in 1971, global finance has been powered by the fiat monetary system, where money is not backed by anything and created by central banks out of thin air. Therefore, officialising bitcoin as a sovereign currency will have far-reaching consequences and both proponents and opponents are watching eagerly from the sidelines to see how the gamble unfolds. However, caught in the middle of this experiment are the people of El Salvador, and, with only days to go before the law's execution, information about the law is scarce and preparations on the ground are minimal.

The world's major economies are now on the offensive against bitcoin. China has banned it outright and the US plans to choke it into submission with excessive regulatory interventions. The world’s preeminent cryptocurrency emerged from obscurity in January 2009 when the anonymous Satoshi Nakamoto “mined” the first coin of this revolutionary medium of exchange. Since that “genesis block” was first forged bitcoin has grown to be regarded by some as an existential threat to nation-states and global financial institutions. As world trade, social interaction and employment increasingly move online, it seems natural that the virtual world we inhabit for most of our waking hours has an indigenous monetary system and that digital assets, property and even artwork can be allocated specific value.

President Nayib Bukele of El Salvador surprised both the centralised capitalists of global finance and the decentralised anarcho-capitalists of the crypto-sphere when in early June he announced that his country would adopt bitcoin as legal tender. The baseball-capped millennial chose the Miami Bitcoin Conference to make his announcement before sending any proposed legislation to El Salvador’s congress. This sowed the first seeds of suspicion back home that his radical plan was more PR stunt than hard policy.

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