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Bitcoin as Legal Tender in El Salvador: A Case Study
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Well articulated. The author has picked few areas that deserve furthur thoughts around adopting cryptocurrency as a legal tender. The lack of anti-financial crime measures, like Know Your Customer and transaction monitoring, present a major risk of increased illicit financial flows, especially when converting cryptocurrency to fiat currency, not only in El Salvador but also in Central African Republic (where Bitcoin-backed cryptocurrency has been launched) and few other countries. Transparency and accountability must be established.
– Ahsan Habib, Anti Financial Crime Practitioner in Canada
This insightful article thoroughly examines El Salvador’s adoption of bitcoin, offering a nuanced perspective on the legislative, economic, and environmental aspects of this pioneering move. The author adeptly navigates through the complexities, presenting a well-rounded analysis of both positive outcomes and existing challenges. The strategic use of geothermal energy for bitcoin mining is particularly noteworthy, reflecting a responsible approach to environmental concerns. I look forward to reading more articles from this author, especially on blockchain-based technology, as their analysis brings clarity to complex financial experiments and contributes significantly to our understanding of the evolving landscape.
The composition is eloquent and unveils the intricacies surrounding Chivo’s challenges. Despite the setbacks, I staunchly support this initiative, recognizing the government’s earnest efforts to establish Bitcoin as legal tender. While some may perceive Bitcoin adoption in El Salvador as imprudent, I believe it educates people on the expeditious possibilities of remittance. Anticipating more insightful articles from the author in the future, shedding light on the intricate facets of crypto currency.
Insightful analysis. While Bitcoin is a familiar topic, much remains unknown about its adoption. Eagerly anticipating the author’s writings on blockchain issues. Beyond anti-financial crime measures, consider socio-economic impacts, financial inclusion, and job opportunities. Transparency is pivotal for nations embracing this shift, emphasizing the need for comprehensive understanding.
It has been over two years since El Salvador officially recognized bitcoin as legal tender, and the inception of Bitcoin dates back near 15 years or more. However, there seems to be a lack of substantial advancements in integrating crypto currency on a global scale similar to traditional fiat currencies. I’m curious to understand why there has been limited progress in achieving widespread acceptance of crypto currency as legal tender globally. If the author could find a moment in his busy schedule to shed light on this matter, I, as a humble reader, would greatly appreciate the clarification. I extend my apology in advance for any inconvenience.
The question you raise is indeed a significant concern. I believe that scalability is the main hindrance to the global acceptance of crypto currency (CC). Although I acknowledge that CC is currently the best option for transactions between far-remote parties, such as traditional remittance transfers or international trade where instant receipt of money is not feasible (although sight LC requires instant payment, today’s bankers are often reluctant to make an instant payment, which is the reality). However, while a remittance or L/C payment typically takes at least 3 to 21 days or more, a CC transaction can be completed within minutes to hours (not more than half a day).
Nevertheless, in domestic usage; e.g. hand to hand transactions; the scalability of CC is somewhat time-consuming due to the validation process required to make transactions tamper-proof by validators. Without validation, a transaction of CC is essentially worthless. Therefore, domestically, individuals often prefer fiat currency over CC.
While Satoshi Nakamoto is famous for the invention of CC, I believe that what he has provided us with is “Blockchain” rather than CC. Nonetheless, researchers are continuously striving to reduce transaction execution times. I have already proposed a new type of CC called “Digital Bill,” which is designed to alleviate scalability issues and ultimately achieve zero transaction execution time at the sender’s end. However, this proposal does not resolve the issue at the recipient’s end. Therefore, more like-minded researchers are needed to collaborate in addressing this scalability problem. I am hopeful that one day, we will present an approach where scalability issues in CC transactions will be nonexistent.
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I would like to clarify that this article is intended as a case study and is not specifically tailored for crypto trading purposes. While discussions related to trading and investment in cryptocurrency are indeed valuable, as well as recommendations for specific platforms or resources for learning crypto trading, I kindly request that we should avoid delving into these topics within this particular context.
I must appreciate your understanding and cooperation.