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Remittances, inflation and politics are the three main reasons for countries that want to follow El Salvador’s example by adopting Bitcoin.
El Salvador’s decision to officially make Bitcoin legal tender within its borders has caused some controversy.
While some locals expressed their dissatisfaction, many well-known personalities of the crypto industry appreciated this step. For example, Michael Saylor, CEO of Microstrategy and crypto enthusiast, assessed this step as “extraordinary” and “shook up the world.”
But it remains to be seen whether this will be the beginning of a successful monetary revolution or another attempt by a leading political figure seeking to win power and support.
Alexander Heptner, Chief executive Officer of the BitMEX cryptocurrency derivatives exchange, recently shared his opinion on El Salvador’s decision. He noted that this initiative can be beneficial both for the state and for ordinary citizens. The main thing, in this case, is not to be afraid of changes.
The executive director added that he expected to see an attack on El Salvador from the top, which heads the current financial system. We are talking about the World Bank, Moody’s Investors Service and various regulators. However, as Heptner noted, critics do not recognize the fact that it is the waving countries that are leading the world in introducing decentralized digital currencies and payments.
Moreover, he made a small prediction that in 2020 at least five more countries will also accept Bitcoin as a means of payment.
Money Transfers and Bitcoin
A significant percentage of people coming from countries such as El Salvador work abroad to send funds to their relatives and thereby provide them with a better lifestyle at home. And although the leading companies providing monetary services “rip people off” with high fees and slow transactions, the introduction of blockchain can bring this graph of costs to naught. Bitcoin and its negligible fees, but at the same time fast transactions will be the ideal solution to the current problem.
It is curious that everything that has happened in the traditional financial world over the past thirty years has happened in the cryptocurrency industry in just two years.
The next reason is the risk of rising inflation after the consequences of the COVID-19 pandemic. It goes without saying that developing countries will face much greater difficulties than countries with advanced economies. And when inflation begins to shake the financial network, people usually look for alternatives to fiat currency, for example, Bitcoin. As a proof of this statement, we can give an example of the financial situation of the company.
Since inflation in Turkey has exceeded 15 percent this year, the spread of cryptocurrencies has increased dramatically. In response, Turkey quickly banned the use of cryptocurrencies for goods and services, but now inflation is 19.25 percent.
Many other famous names were also behind the idea that the main cryptocurrency could be a successful defense against the economic crisis. Billionaire Paul Tudor Jones III and Don Fitzpatrick is one of those who believes that the maximum amount of Bitcoin of 21 million coins may be the best tool against the mass printing of fiat currency, which central banks continue to implement.
Politics and Bitcoin
Bitcoin is not just a digital currency. It is also a technology, a means of saving and, according to many, a representation of the future financial system. Thus, politicians will be interested in positioning themselves as progressive, populist thinkers of the new century if they decide to make cryptocurrency an official means of payment.
Nevertheless, leading politicians may try to increase their popularity not due to what they have achieved throughout their work, but because of Bitcoin, which has already gained worldwide recognition.
“This will not be a love letter to President Salvador Bukela, who is betting his political future on the successful implementation of this policy. Of course, I support this policy, but I think that in the long term there is a risk of too much merit to people in the crypto space,” Alexander Heptner shared his opinion.
Subsequently, he expressed the opinion that if a politician who plays a significant role in the adoption of BTC fails as a leader, this can automatically damage the image of a leading digital asset.
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