Last September, the Central American country of El Salvador decided to use Bitcoin as its legal tender, becoming the first country in the world to officially use Bitcoin. Although the starting point is not to be constrained by the United States, the country has handed over the construction of the monetary system to the Hands of the Americans, and finally let the Bitcoin crash drag down its own economy, the following translator takes you to review the magical operation of the country.
(Figure from the network)
As we all know, Tesla President Musk is a big fan of cryptocurrencies, single-handedly bringing the cryptocurrency "Dogecoin" to the face of cryptocurrency walking.
According to the British "New Scientist" reported on February 12, in fact, in the promotion of cryptocurrencies, El Salvadoran President Nayib Bukele is more bold than Musk, which can be called the national force to open the way for the legalization of Bitcoin.
Things go back to last June. The El Salvadoran Parliament approved President Bucker's proposal on Bitcoin, which will become the country's legal tender from September 7 and all businesses must accept payments that can be made using Bitcoin.
However, Bitcoin itself is extremely risky, on the one hand, the value of Bitcoin is extremely volatile, and on the other hand, because Bitcoin itself is opaque and difficult to regulate.
Despite this, Sawardo insisted on passing the bill because the country itself adopted the US dollar as its legal tender, and if the US dollar inflation, it would also affect the country's economy. Using Bitcoin may serve as a "hedge" away from the impact of the dollar on the country's financial system.
At the same time, there are a large number of cross-border transactions in the country, accounting for one-fifth of the country's GDP. Cross-border transactions require large transaction fees, and most traders do not have a bank account. Bitcoin can provide fast and cheap cross-border transactions, and it does not require people to open a bank account to complete it.
A day before the regulations went into effect, Bukkel himself excitedly announced on Twitter that he had just bought 200 bitcoins, with a total of 400 bitcoin assets on his account.
As a result, on the day the regulations went into effect, Bitcoin collapsed by $7,000. Bukkel did not make a fuss and continued to buy 150 bitcoins at the bottom.
(The picture shows the payment using Bitcoin, the picture comes from the network)
Savaldo also distributed to each citizen a dedicated Chivo wallet containing $30 worth of bitcoins that could be used for everyday purchases or for government taxes.
After the bill came into effect, the brother's approval rating in El Salvador rose instead of falling, once reaching 85.1%. The whole country is filled with a festive atmosphere.
The ideal is very full, the reality is very bone. According to New Scientist magazine, just half a year later, the project was in need of major repairs.
Many citizens complain that many merchants don't actually support bitcoin payments; sometimes, bitcoin even disappears from their accounts out of thin air; and some take advantage of loopholes in the Chivo wallet to steal the government's wool. What's even more outrageous is that if you pay with Bitcoin, the system takes 1 hour to process the transaction.
Now, El Salvador has decided to have a U.S. company help "patch" these issues, making the infrastructure for Bitcoin payments more robust, and Chivo Wallet will also adopt Ligntning technology to shorten transaction times.
In view of the big dive in the value of bitcoin, the US credit rating agency Fitch adjusted El Salvador's credit rating to "junk". Just last month, the International Monetary Organization,IMF (IMF) warned El Salvador that it abandon Bitcoin as legal tender. But El Salvador responded domineeringly that no international body could interfere with El Salvador's decision.