What is the rationale for using Bitcoin? How is El Salvador mitigating the risks?
The story so far: On June 9, El Salvador became the first sovereign nation to make a cryptocurrency legal tender. The law pushed by its 39-year-old President, Nayib Bukele, passed with 62 out of 84 votes. It mandates that Bitcoin should now be accepted as a valid payment by all establishments, except those that do not have the technical wherewithal to do so. This puts the digital currency that does not answer to any government monetary policies on the same footing as the country’s primary currency, the United States dollar.
Why is the U.S. dollar the currency in El Salvador?
El Salvador fully ‘dollarised’ its economy in 2001. Countries adopt the U.S. dollar as their official currency for several reasons, such as when their local currencies fail (for example, Zimbabwe, which saw inflation in multimillion percentages), or to take advantage of the stability that it offers and attract investments….