The first country to adopt Bitcoin as a legal tender, what is El Salvador’s current situation?
El Salvador, a country located in the northern part of Central America, was once known worldwide for its magnificent volcanic landscapes and passionate Latin culture. However, in addition to its natural beauty and cultural charm, El Salvador has recently attracted global attention for a unique reason—its bold take in the field of Bitcoin. As the first country in the world to adopt Bitcoin as legal tender, El Salvador has also sparked interest and discussion among crypto investors worldwide. So, how exactly has Bitcoin changed this country and the lives of after El Salvador announced it as a legal currency?
The Origin of the Relationship Between El Salvador and Bitcoin
The relationship between El Salvador and Bitcoin can be traced back to June 2021, when Salvadoran President Nayib Bukele announced Bitcoin as a legal tender, hoping to address financial exclusion and improve economic efficiency. Before this, El Salvador’s currency was the US dollar, but the country faced many financial issues, including high remittance costs, poor financial inclusion, and inflation.
Bitcoin was seen as a potential solution to these problems. Its decentralized and global nature allows it to bypass the traditional financial system, providing a new financial option for those unable to access traditional banking services. Moreover, as a limited supply crypto asset, Bitcoin could also help El Salvador address inflation and currency depreciation. Declaring Bitcoin a legal tender, meant Bitcoin enjoys the same legal status as the US dollar in El Salvador, allowing people to freely use Bitcoin for transactions and payments, which also improved the convenience and economic efficiency of international remittances.
For this purpose, El Salvador also enacted legislation, with its “Bitcoin Law” explicitly stating that the country “is obligated to promote financial inclusion of its citizens to better guarantee their rights.” Additionally, classifying Bitcoin as legal tender means that Salvadoran citizens holding Bitcoin or profiting from it are exempt from capital gains tax.
The Financial Revolution Bitcoin Brought to El Salvador
For over 6 million Salvadorans, the introduction of Bitcoin is not just a new payment method but a financial revolution, bringing equality in financial services. Before this, about 70% of Salvadorans did not have a bank account or credit card, unable to enjoy the most basic traditional financial services.
The proliferation of participation directly in financial activities through smartphones, thereby enjoying convenient cryptocurrency services—which fundamentally also promotes the improvement of financial inclusion. This decentralized cryptocurrency system breaks the monopoly of traditional banks, allowing more people the opportunity to participate in the global economy.
Furthermore, El Salvador’s reliance on the US dollar as legal tender meant its monetary policy was indirectly affected by US economic policies. The introduction of Bitcoin, to a certain extent, provided El Salvador with another possibility for economic autonomy, though this comes with the risk of Bitcoin price volatility.
The Global Significance of El Salvador’s Move
El Salvador’s successful experiment with Bitcoin not only has profound implications for the country but also provides a case study for the world. Currently, many countries and regions’ populations face similar predicaments to El Salvador, that is, lacking access to basic financial services. The spread and application of cryptocurrencies offer a new solution for these populations, with trading platforms contributing to the proliferation of cryptocurrencies in the third world.
CoinEx, as a global cryptocurrency exchange, provides a safe and seamless gateway for the proliferation and application of cryptocurrencies, allowing more people to enter the crypto world easily. CoinEx focuses on creating a fair crypto trading environment, allowing users from all countries and regions to enjoy professional, simple, and secure crypto trading services via the platform. Adhering to one of its core concepts of “simplifying complexity,” CoinEx simplifies the complex crypto asset trading process into a smooth trading experience.
As of now, CoinEx offers over 900 crypto assets and more than 1300 trading markets, allowing assets from any chain to be smoothly swapped. Meanwhile, by promoting cryptocurrencies and blockchain technology, CoinEx also provides millions globally who cannot enjoy traditional financial services with a new path to financial freedom.
Summary
Bitcoin’s application in El Salvador is not just a financial revolution but also a social transformation. It has proven to the world the enormous potential of cryptocurrencies in promoting financial inclusion and economic growth. As more countries and organizations pay attention to and explore the application of cryptocurrencies, this financial revolution led by El Salvador will continue globally, bringing hope and opportunities to more people.
The emergence of crypto asset trading platforms like CoinEx also provides an entry for more global financial enthusiasts into this field, helping more users from various countries and regions to easily and freely access more trading and investment possibilities.
Disclaimer: This is a paid post and should not be treated as news/advice.
