Bitcoin prices were on the rise on Monday following news over the weekend that El Salvador’s president is planning to submit a bill that, if passed, would make the cryptocurrency legal tender in the Central American country.
President Nayib Bukele’s bill is expected to make it past the El Salvador’s legislative assembly, where his Nuevas Ideas party holds a firm majority, and will likely make the country the first in the world to adopt Bitcoin as a world currency and hold it in its reserves.
#Bitcoin has a market cap of $680 billion dollars.
If 1% of it is invested in El Salvador, that would increase our GDP by 25%.
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.
— Nayib Bukele ???????? (@nayibbukele) June 6, 2021
While the immediate benefits of adopting Bitcoin as legal tender are currently unclear, the move may provide a boost to the 70% of El Salvador’s citizens who do not have a bank account, as well as potentially reducing the reliance of the country’s economy on US dollars and other fiat currencies issued by central banks around the world, many of whom have increased inflationary pressures by printing large amounts of cash during the coronavirus pandemic.
El Salvador’s move also runs in direct contrast to the attitude of many established central banks such as the US Federal Reserve and the Bank of England, who instead are focusing on the potential benefits of Central Bank Digital Currencies (CBDCs) in a bid to create a centralised, state-backed alternative to existing cryptos.
In mid-afternoon trading in London on Monday, Bitcoin was up 1.7% in the last 24 hours at US$36,649.