On Wednesday, El Salvador became the first country to adopt Bitcoin as official legal tender.
It is a milestone day.
El Salvador’s Legislative Assembly voted to pass a bill declaring the world’s largest cryptocurrency by market capitalization as legal tender, according to the Communications Secretariat of the Presidency of the Republic of El Salvador.
The bill received 62 votes out of 84.
It may be the first, but El Salvador certainly won’t be the last country to adopt Bitcoin.
A number of larger and more powerful nations are trying to remove or slow down the inevitable shift to global digital currencies.
Yet El Salvador has made history by supporting the largest cryptocurrency, now recognizing it as official legal tender, to become a true forerunner in crypto.
We can fully expect other countries to follow suit in El Salvador. Low-income countries have long suffered from weak currencies which are exceptionally vulnerable to market fluctuations, causing soaring inflation.
As such, most developing countries rely on major âfirst worldâ currencies, such as the US dollar, to conduct transactions.
However, depending on the currency of another country can lead to problems that are often very costly.
For example, a stronger US dollar will impact the economic outlook for emerging markets, as developing countries have taken on such a high degree of dollar-denominated debt over the past decades.
Yet by adopting a digital currency, these developing countries have a currency that is not influenced by market conditions within their own economy, nor directly by the economy of another country.
Additionally, since Bitcoin operates globally, it is more widely affected by global economic changes.
Financial inclusion could be enhanced for individuals and businesses in developing countries through cryptocurrencies, as they can bypass the prejudices of traditional banks and other financial service providers.
Of course, there will be criticisms of El Salvador’s decision, likely those based in rich countries.
Nonetheless, I think this pioneering approach to solving complex problems should be championed.