Nations accepting crypto as legal tender
When the first-ever cryptocurrency, bitcoin, was invented in 2008 and introduced to the public, most people, specifically prominent figures of industries and governments, said that it’s either fraud or a Ponzi scheme illegitimate. You might be shocked to find out among them was Warren buffet. But since then, nobody can deny bitcoin’s penetration as a currency and banking system for most people worldwide. And maybe that’s the reason why countries like El Salvador are starting to recognize bitcoin as legal tender. Quite clearly, there is a huge gap between other cryptocurrencies, but it’s still a step forward. Let’s explore what this means.
What’s legal tender
Legal tender is a note or instrument of transferring and defining value within a country. A banknote is a legal tender because it’s the official currency of a country, issued by its central bank. A coin is also a legal tender. But a cheque is not legal tender. So people are not obligated to accept it as payment. A good definition of legal tender would be that anybody, either individuals or entities or governmental institutions in the country, is obligated to accept it as a form of payment. It might surprise you to know that in most countries, even gold isn’t a legal tender, so if you bring a bar of gold to a cashier, while they can and would accept it as a payment, they are not obligated to do it, but they HAVE to accept banknotes because they are legal tender. That is huge if you really think about it; if a government like El Salvador, which up until now used to use The United States Dollar as its national currency, has recognized bitcoin as a legal tender, it means any merchant as well as the government, would have to accept it as payment.
What countries are likely to be next
El Salvador is leading the way by making it official. A country like China has officially banned it while having many industries based on it, including meaning. So there is little to no chance of them recognizing it, at least in the foreseeable future. But there is some buzz about South Africa thinking of it. Rumors have been circulating about Hong Kong and Singapore as well. There are two kinds of countries that would be interested in doing this. The first group is like El Salvador, lacking the necessary banking infrastructure and could definitely use some help from the crypto community. The second group would be countries leading in the FinTech industry, including Singapore and Hong Kong. But the last group is the most interesting one. These are developing countries that are categorized as emerging economies. Philippines, Indonesia, Thailand, and Brazil are all emerging economies, as well as South Africa. These countries should gain a real advantage by jumping on the bus early on. Therefore increasing the chance of a higher GDP due to ease of regulations. There is already a huge community of crypto users in the Philippines and Thailand.
What’s the effect on crypto
The El Salvador news kicked the prices a bit. So it’s completely natural to think that the value would increase when more countries recognize it. The keyword here is value, not price. Because when more countries either recognize them or at least legalize them in some form. The community of investors increases therefore increasing the value. Another advantage would be to create new industries like crypto banking in those regions which would increase functionality and ease of use in countries.
How to take advantage
Getting into crypto right now is like getting into the internet in the 1990s. Being an investor in crypto while these developments are taking place would potentially increase your investment multiple folds. But simultaneously, it’s important to go forward being cautious and follow regulations and professional advice.
Crypto being recognized as a legal tender or commodity is a clear step toward formal recognition worldwide. While some countries are legalizing it, it is important to note that some banks and countries are also cracking down. So it’s not a total win here, and we will have to see which side wins. There is a saying in businesses that really inspires most people. It says,” you cannot stop innovation, either innovate or die” this sentence is focused on companies and businesses. A lot of companies laughed at the idea of NetFlix, but in fact, they succeeded, and blockbuster video filed for bankruptcy. We’ll leave the decision to you. Who do you think will win the crypto wars?
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