Why Bitcoin Declared Legal Tender Could Have Major Implications

The adoption of the Bitcoin Standard by nation-states has begun. El Salvador will become the first country to declared BTC a legal tender. The announcement was made recently; the crypto space and its industry are still processing its impact.

Although a relatively small country, El Salvador could trigger a similar effect as when MicroStrategy included BTC into its treasury. At that moment, a domino effect caused one of BTC’s biggest adoption periods by public companies.

As Nayib Bukele, El Salvador’s Head of State said via his Twitter handle, Bitcoin has a $680 billion market cap. If 1% of this number it’s invested in this country, according to Bukele’s calculations, their GDP could grow by 25%.

After a violent civil war, El Salvador adopted the dollar as their official currency. Many went into exile or migrated to other countries with better economies. This had two consequences for the country: it relies on the U.S. dollar stability, with concerns about rising inflation in this currency seems logical for the country to promote an alternative.

As a second consequence, many people receive remittances. Around $6 billion are paid to third parties to process the remittances. Bukele claims that by adopting BTC, 1 million low-income families will benefit and will increase their incomes “in the equivalent of billions of dollars every year”. Bukele said:

On the other side, Bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances.

Further data provided by the Head of State indicates that around 70% of the country’s population are unbanked. However, many have access to a smartphone. Bitcoin will be a tool to create financial inclusion and help economic growth. People will be able to save, invest, access credit, and their transactions will be secured by BTC’s network.

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