El Salvador, a country located in Central America, is the first country to adopt Bitcoin as its legal tender legally. The American country began its adoption of bitcoin in 2019 in Bitcoin Beach, located in El Zonte. Mike Peterson, a wave surfer had teamed up with fellow resident Jorge Valenzuela to transform the small coastal town into an economy built and powered by cryptocurrency.
This plan had hit the limelight as the president of the nation announced his Bitcoin Law not long after, during a cryptocurrency conference in June 2021. Passing this law, El Salvador became the first country to make and accept Bitcoin as a legal tender and payment method. During the conference, President Bukele proclaimed that “El Salvador is trying to initiate the construction of a country built for the future.”
About a week ago, El Salvador hosted 44 Central Bank representatives from powerful countries around the world. These countries included Egypt, Nigeria, Ecuador, Panama, and other outstanding nations. In a tweet on Sunday night, President Bukele stated “to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country.”
Even if El Salvador isn’t the very first country to adopt cryptocurrency as a legal tender, this simple move alone promotes the country’s reputation as a forerunner of the cryptocurrency movement. Amidst the current regression cycle (dip) in the crypto market, El Salvador has kept on pushing for decentralization. However, the International Monetary Fund (IMF) has declared a warning to countries interested in following El Salvador’s lead.
The IMF deems the act of adopting cryptocurrencies as legal tender as being too risky for an intangible asset. Irrespective of that, the Central African Republic (CAR), took a bold step and adopted the cryptocurrency, making it an official currency alongside its existing currency CFA franc. To back this move, the minister of the digital economy for CAR, Gourna Zacko, mentioned in a statement declaring the country’s move “With Cryptocurrency, there is no more control of the Central Bank.”
So Why the Move?!
There are lots of reasons behind the seemingly irrational and risky moves these several countries have adopted. However, these countries have stated that they understand the risks and are willing to take responsibility on account of themselves. For El Salvador, picking up Bitcoin to replace or be used alongside their national currency is a solution to receiving money from anywhere around the world.
Aside from that, most of these countries view it as a chance to obtain new technology, while boosting the growth of their various country’s economies. Since adoption, President Bukele has reported a 30% growth in tourism, irrespective of a loss amounting to more than $40 million during this current regression cycle. This doesn’t seem to deter any of the countries either way; rather, it seems like a very good time to accumulate and invest more in cryptocurrency.
However, international bodies like the IMF have kept on pushing El Salvador to drop their adoption act. That, however, brings us to ask the question of why it was picked up over the US Dollar in the first place. First of all, using the US Dollar is accepting Centralization and limits the use of web 3 and virtual technology, according to the various statements of Central Banks in different countries.
Also, the use of a pegged or neutral currency doesn’t allow for investing. Since there are no tangible interests provided to users who deposit or use the US Dollar, it seems to be limited in that aspect. However, with Bitcoin, users can have their physical cash safe, while earning tangible interest whenever they hold the cryptocurrency in their digital wallet. It is also more secure, fast, and friendly compared to using the US Dollar.
Top 10 Countries Adopting Bitcoin as Legal Tender, and their Potentials
So! Now that you know the reason behind several countries visiting El Salvador, and their unanimous decision to accept Bitcoin as legal tender, let’s discuss these countries.
Nigeria (GDP $432 Billion)
First on our list is one of the most popular countries in Africa. Nigeria boasts of an outstanding GDP that rivals that of other European countries. Although the country recently banned the use of cryptocurrency in performing transactions, they seem to have an interest in blockchain technology. However, government bodies have not issued any complementary statement to address the acceptance of blockchain technology in the country.
Egypt (GDP $363 Billion)
Egypt is another popular country in the northern area of Africa. Although the Library of Congress identified the famous country as one of nine countries with an absolute ban on cryptocurrency since November 2021, they seem to be making moves by following El Salvador’s steps. Egypt is a fast-growing country known for tourism and exports; if the country is capable of ignoring certain religious beliefs and issuing the use of cryptocurrency, it could evolve beyond that of other African countries.
Currently, various Egyptian individuals and companies keep trying their hands at blockchain technology. However, the actual use of cryptocurrencies is what has been banned. Despite that, Coindesk reports that user registration on CEX.IO in early January grew by 250%. However, as mentioned earlier, the ECB is still yet to issue a crypto licensing framework or guideline, despite prohibiting the trading, dealing, or promoting of cryptocurrencies without one.
Bangladesh (GDP $324 Billion)
Bangladesh is one of the nine countries that are hostile to the use of Bitcoin and cryptocurrencies in general. The country issued its first warning against the use of Bitcoin and other cryptocurrencies in 2014, they mentioned the risks involved in trading the token and how it ruled against the Foreign Exchange Regulation Act, 1947. Trading bitcoin also violated its Money Laundering Prevention Act, 2012.
There have been so many talks about this move, but with the country’s involvement with El Salvador’s cryptocurrency conference, it is clear that the government is still in speculation. If Bangladesh chooses to incorporate Bitcoin into their national treasury or as a legal tender, their gains would be endless. Also, if their fear and reason for banning crypto are tuned to corruption and money laundering, then it would be easier to participate in the use of cryptocurrency with grand audits, e.g. Monero. Either way, crypto is the best solution.
Pakistan (GDP $264 Billion)
Pakistan is also one of those countries planning to place a permanent ban on Cryptocurrency. However, with their delegates being one of the invitees to the cryptocurrency summit held in Bitcoin City, there seems to be a temporary hold in the decision-making process. Last year, The News International reported that a high court in Pakistan issued a permit for a committee to explore the use of cryptocurrency.
The group was also tasked with providing information on the risk assessment and whether it was advisable under Pakistan’s legal system. This year, upon the committee’s findings, the government of Pakistan plans on banning cryptocurrency. However, with the presence of Sima Kamil, the head of the above-mentioned committee, there might be a change of heart towards cryptocurrencies.
By adopting Bitcoin, Pakistan has the potential to grow a stronger economy devoid of corruption and theft. It also provides an avenue for regular citizens to gain massive returns on investments or fiat received through accepting bitcoin as payment. The possibilities are endless, and growth in the GDP ratio is just one of them.
Morocco (GDP $113 Billion)
Morocco is a fast-growing economy in Africa, and currently, a report was released that they are considering the legislation of cryptocurrencies as legal tender. Bank Al-MAghrib views Bitcoin as a means of solving the problems associated with the use of cryptocurrencies. They hope to introduce the use of Bitcoin amongst others to their country without any potential risk involved.
Kenya (GDP $99 Billion)
Kenya is another African giant that is considering jumping into the crypto space by accepting cryptocurrency payments alongside their local currency. Recently, the Central Bank of Kenya released its statement on cryptocurrency becoming its legal tender and requested the public’s opinion on the new move. A deadline of May 20th was issued, and with the look of things, they might as well adopt cryptocurrencies immediately.
Ecuador (GDP $99 Billion)
Although El Salvador might be the first country to adopt cryptocurrencies as a legal tender, Ecuador has long been in the digital asset game. Ecuador is known as the first country to produce its digital currency- which instigates a more detailed jump into the use of already established cryptocurrencies.
Dominican Republic (GDP $79 Billion)
The Dominican Republic is in the middle of signing a law that makes bitcoin a legal tender. However, they have also indicated that virtual currencies aren’t backed by the bank; hence, they are not legal under Dominican law. However, the government and central bank are currently looking for a way to tweak the adoption of the currency without faulting their constitution.
Ghana (GDP $72 Billion)
Although Ghana might be Nigeria’s rival when it comes to electrical power and educational system, they seem to be left in the dark when it comes to adopting new technology. The country plans on joining with other countries at El Salvador’s conference. However, there hasn’t been any open statement concerning the adoption of crypto as the country’s legal tender.
Angola (GDP $63 Billion)
Angola plans on implementing the use of crypto as an investment scheme. However, there is no open statement about its use as a legal tender. Because fellow African countries have begun making moves that might signal the issuance of virtual legal tenders, they might begin theirs sooner or later.
Written by: Narender Charan