In a recent Bitcoin 2021 conference in Miami, Nayib Bukele, President of El Salvador, announced through a video that he is proposing a bill to recognize bitcoin as legal tender. If the bill gets approved, El Salvador will become the first sovereign country to adopt bitcoin as legal tender.
El Salvador’s President Nayib Bukele Partnership with Strike
In Bitcoin 2021, a multi-day conference in Miami, El Salvador’s President Nayib Bukele, in a video broadcast, announced a partnership with digital wallet company Strike to build the modern financial infrastructure using bitcoin technology.
Strike, an app developed and owned by Zap, allows anyone to send money instantly, with no fees, anywhere in the world. Jack Mallers, President of Zap, mentioned that his company is working with Nayib Bukele to implement a plan.
In a video, Jack Mallers, founder of the Lightning Network payments platform Strike, mentioned that this would be “shot heard around the world for bitcoin.”
“What’s transformative here is that bitcoin is both the greatest reserve asset ever created and a superior monetary network. Holding bitcoin provides a way to protect developing economies from potential shocks of fiat currency inflation,” added Jack Mallers.
Focussing on some benefits of bitcoin, Mallers said that the move would release the true power of bitcoin for day-to-day uses on an open network that may benefit individuals, businesses, and public sector services.
El Salvador’s Economy
El Salvador is largely a cash-based economy, where roughly 70% of the population does not have bank accounts or credit cards. Also, El Salvador is financially an unstable country. The number of remittances, or the money sent home by migrants, accounts for more than 20% of El Salvador’s gross domestic product.
To improve the economy’s financial stability, the 39-year-old Bukele claimed that his plan might have short-term benefits for thousands of unbanked individuals. He also believes that it will also lead to the creation of a large number of jobs in the country. In support of that, El Salvador has assembled a team of bitcoin experts to help build a new financial ecosystem with bitcoin as the base layer.
Many bitcoin leaders like Adam Back, Chief Executive Officer of Blockstream, plan to contribute technologies like Liquid and satellite infrastructure to make El Salvador a leader in Bitcoin. He stated, “It was an inevitability, but here already: the first country on track to make bitcoin legal tender.” Later, he added, “Another milestone for Bitcoin and El Salvador. We’re pleased to help El Salvador on its journey towards adoption of the Bitcoin Standard.”
However, it is not El Salvador’s first move into bitcoin. In March, Strike launched its mobile payments app, and it was used by a large number of El Salvadoreans and became the number one downloaded app in the country. Mallers clarified that Zap believes that it is most affected by central bank monetary inflation.
Jack Miller’s Strike, a payments app built on Bitcoin’s Lightning Network, has been on the ground in El Salvador this year, with Mallers claiming to onboard 20,000 Salvadorans a day during the app’s peak activity in the country.
The company is making an effort to smooth cross-border payments. “We want to make cross-border payments free. We want to solve the remittance problem for places that need it the most,” Miller added.
He said Zap would be opening a headquarters in El Salvador in partnership with Adam Back, Chief Executive Officer of Blockstream. In the coming months, Strike expects to enter several more markets. He believes that once governments see the benefits of Bitcoin technologies like Strike on financial efficiency and inclusion, it becomes clear that they will seek to follow in El Salvador’s footsteps.
Countries Where Crypto Usage is at Peak
According to Statista Global Economic Survey, cryptocurrency’s usage is rising, with 33% of Nigerians using cryptocurrencies. In fact, a third of Nigerians have said that they have used cryptocurrencies. The second and third highest rates of cryptocurrency use in the survey were recorded in Vietnam with 21% and the Philippines with 20%, respectively. Whereas 16 % of respondents in Peru and Turkey said they used cryptocurrencies, while in Europe, Switzerland, and Greece, lead with an adoption rate of 11 %.
On the other hand, Japan, known as one of the most crypto-friendly countries, was placed among the countries with the least number of cryptocurrency users and owners. Only 4% of Japanese respondents said they had experience with crypto products. Overall, cryptocurrencies are becoming popular and being acknowledged as a cheaper solution to sending money across borders.