The government of El Salvador has economically baptized Bitcoin, making it a legal tender in the nation. That brought some cheers to the world of coins because hedge funds, investors and market makers can safely domicile their “wallets” in El Salvador knowing that if anything bad happens in other places, they can recover by exchanging for El Salvador currency.
El Salvador becomes the first country to adopt bitcoin as legal tender, with 62 votes approval out of 84. President Nayib Bukelet welcomes the so-called “Bitcoin law” and described this as a historical moment with a “supermajority”.
President Nayib Bukele announced this adoption on Twitter and said this is a historical moment. The so-called “Bitcoin law” was motioned on early Tuesday. Prior to the adoption, Bukele stated that it would require “every economic agents” to accept Bitcoin (BTC) payments and urge businesses to accept payments in cryptocurrencies
Yet, Bitcoin and cousins have real challenges as competition heats us. China is moving with the e-yuan. And today, the U.S. Senate Banking Subcommittee on Economic Policy plans to hold a hearing titled, “Building A Stronger Financial System: Opportunities of a Central Bank Digital Currency”. If the e-dollar emerges, expect more alternatives to Bitcoin.
But it is not just the US. The nation of Ghana is coming along: “The Bank of Ghana (BoG) is moving towards the introduction of a central bank digital currency (CBDC) experiment. This was announced by the governor of the central bank, Ernest Addison, who was speaking during a news conference in Ghana’s capital, Accra. It was announced at the press conference that the BoG was in the advanced stages of creating a CBDC.” Nigeria has also hinted at a digital currency. Jack Dorsey, Square and Twitter CEO, brought some cheers on the idea of a hard wallet to safely hold coins.
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Twitter and Square Inc. Chief Executive Officer, Jack Dorsey, said his digital-payments company, Square Inc., is considering building a Bitcoin hardware wallet, which is an offline cryptocurrency wallet that holds the digital currency but isn’t connected to the internet.
Hardware wallets are considered the safest way to safeguard cryptocurrencies and are used by investors in cryptocurrency who want an extra layer of protection from holding their coins on soft wallets such as web-enabled devices
But Bitcoin or no Bitcoin, America understands that nations rise on its economic competitiveness and wants to plan a playbook against the rise of China: “The Senate passed rare bipartisan legislation on Tuesday aimed at countering China’s growing influence by investing more than $200 billion in American technology, science and research.” Possibly, that bill will help to seed the next generation of coins! That has always been the concerns because if someone comes up with something really better, possibly the current coin will be like those files you could not retrieve from the old floppy diskettes.
But the biggest risk is how these government coins will operate.
Technological change is upending finance. Bitcoin has gone from being an obsession of anarchists to a $1trn asset class that many fund managers insist belongs in any balanced portfolio. Swarms of digital day-traders have become a force on Wall Street. PayPal has 392m users, a sign that America is catching up with China’s digital-payments giants. Yet, as our special report explains, the least noticed disruption on the frontier between technology and finance may end up as the most revolutionary: the creation of government digital currencies, which typically aim to let people deposit funds directly with a central bank, bypassing conventional lenders.
These “govcoins” are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated. They are to be treated with optimism, and humility.
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