On Wednesday El Salvador became the first country to adopt Bitcoin as official legal tender.
This is a landmark day.
The Legislative Assembly of El Salvador voted to pass a bill that declared the world’s largest cryptocurrency by market capitalisation as legal tender, as per the Communications Secretariat of the Presidency of the Republic of El Salvador.
The bill received 62 out of 84 votes.
It may be the first, but El Salvador certainly won’t be the last country to adopt Bitcoin.
A number of larger, more powerful nations are attempting to suppress or slow down the inevitable shift to global, digital currencies.
Yet El Salvador has made history in backing the largest cryptocurrency, now recognising it as official legal tender, to become a true crypto frontrunner.
We can fully expect other countries to follow El Salvador’s lead. Low-income countries have long suffered from weak currencies that are exceptionally vulnerable to market changes, thereby sparking rampant inflation.
As such, most developing countries rely upon major ‘first-world’ currencies, like the U.S. dollar, to complete transactions.
Yet, depending on another country’s currency can lead to often very expensive problems.
As an example, a stronger U.S. dollar will impact the economic prospects of emerging markets, as developing countries have taken on such a high degree of dollar-denominated debt in recent decades.
Yet by adopting a digital currency, these developing countries have a currency that isn’t influenced by market conditions within their own economy, nor directly from just one other country’s economy.
Furthermore, as Bitcoin operates globally, it is more widely impacted by global economic changes.
Financial inclusion could be boosted for individuals and businesses in developing countries thanks to cryptocurrencies, as they can sidestep the prejudices of traditional banks and other financial services providers.
Of course, there will be critics to El Salvador’s move, likely those based in wealthy countries.
Nevertheless, I think this pioneering approach to solving complex issues should be championed.