Recently El Salvador adopted Bitcoin as legal tender. Some sources report that other Latin-American countries are planning to follow suit [1]. I personally feel that Bitcoin is not suitable currency for most types of countries that (potentially) want to adopt it. The success or failure of some countries to adopt any form of cryptocurrency will no doubt have big implications for others to follow.
The main reason I made this post is not to bash Bitcoin but so that others here could potentially shine light to the flaws in my reasoning.
First off I don´t think that El Salvador or others have the necessary infrastructure present to support transactions in crypto. Research shows that the precent of population using internet in El Salvador is roughly 30-40% [2]. This obviously means that 60-70% don´t have access to necessary prerequisite for crypto. Likewise for crypto to function as a useful legal tender, a country needs to have high level of internet availability. This is not likely the case for most countries looking to adopt it.
Secondly I don´t think that most countries have the necessary financial education to support Bitcoin as legal tender. There are some statistics that show that a shockingly small number of people even in developed countries have the necessary skill-set to even keep a balanced budget [3]. As an investment option crypto is risky. I believe I´ve seen it said on this very forum that most of crypto traders lose money. As a currency it is definitely harder to plan around than regular money specially due to Bitcoins volaitility.
Thirdly and related to second point is the fact that trading in Bitcoin can be more prone to scammers due to the fully digital nature of the currency and also due to the fact that this currency does not have a safety net provided (albeit at times poorly) by regular banks. I think that safety measures taken by some people in this forum shows nicely how well aware in cyber security one must be to feel safe around crypto. I myself have probably had at least three mini-strokes fearing that I might have sent a substantial amount of money to a wrong address. It´s a problem that is not as substantial with FIAT currencies.
So why is all this important? One can easily say that there is no harm if people have the option to either use crypto as currency but also the freedom to not use it if they so choose. I believe that at least for a time being we will be hearing bad news from El Salvadors crypto experiment. By that I mean of people losing their savings, being scammed out of money and generally having the infrastructure fail. We have one such example already [4]. This will likely create caution for other trying to follow in El Salvadors footsteps. This might have devastating implications for crypto however. Looking back in time people still bring out Chernobyl to this day to justify not using nuclear energy.
[1] https://theconversation.com/bitcoin-is-now-legal-tender-in-el-salvador-heres-what-that-means-167099
[2] https://www.statista.com/statistics/1055468/internet-penetration-el-salvador/
[3] https://www.prnewswire.com/news-releases/3-financial-literacy-statistics-that-need-to-change-in-2021-301246352.html
[4] https://www.reuters.com/technology/el-salvadors-bitcoin-digital-wallet-beset-by-technical-glitches-2021-09-10/
The main reason I made this post is not to bash Bitcoin but so that others here could potentially shine light to the flaws in my reasoning.
First off I don´t think that El Salvador or others have the necessary infrastructure present to support transactions in crypto. Research shows that the precent of population using internet in El Salvador is roughly 30-40% [2]. This obviously means that 60-70% don´t have access to necessary prerequisite for crypto. Likewise for crypto to function as a useful legal tender, a country needs to have high level of internet availability. This is not likely the case for most countries looking to adopt it.
Secondly I don´t think that most countries have the necessary financial education to support Bitcoin as legal tender. There are some statistics that show that a shockingly small number of people even in developed countries have the necessary skill-set to even keep a balanced budget [3]. As an investment option crypto is risky. I believe I´ve seen it said on this very forum that most of crypto traders lose money. As a currency it is definitely harder to plan around than regular money specially due to Bitcoins volaitility.
Thirdly and related to second point is the fact that trading in Bitcoin can be more prone to scammers due to the fully digital nature of the currency and also due to the fact that this currency does not have a safety net provided (albeit at times poorly) by regular banks. I think that safety measures taken by some people in this forum shows nicely how well aware in cyber security one must be to feel safe around crypto. I myself have probably had at least three mini-strokes fearing that I might have sent a substantial amount of money to a wrong address. It´s a problem that is not as substantial with FIAT currencies.
So why is all this important? One can easily say that there is no harm if people have the option to either use crypto as currency but also the freedom to not use it if they so choose. I believe that at least for a time being we will be hearing bad news from El Salvadors crypto experiment. By that I mean of people losing their savings, being scammed out of money and generally having the infrastructure fail. We have one such example already [4]. This will likely create caution for other trying to follow in El Salvadors footsteps. This might have devastating implications for crypto however. Looking back in time people still bring out Chernobyl to this day to justify not using nuclear energy.
[1] https://theconversation.com/bitcoin-is-now-legal-tender-in-el-salvador-heres-what-that-means-167099
[2] https://www.statista.com/statistics/1055468/internet-penetration-el-salvador/
[3] https://www.prnewswire.com/news-releases/3-financial-literacy-statistics-that-need-to-change-in-2021-301246352.html
[4] https://www.reuters.com/technology/el-salvadors-bitcoin-digital-wallet-beset-by-technical-glitches-2021-09-10/
While some of your points are valid, I will like to confirm to you that this same 30-40% percent of the population that has access to using the internet in El Salvador that makes you think that they are not equipped for it, is also the same percentage of the population that only had access to bank accounts in El Salvador
Source]
and they still find their way around using their fiat currency for decades. I would like to see this process as starting a Business venture which the first years are always the toughest and as all in the crypto space have agreed, El Salvador took the bold step in adopting Bitcoin as a legal tender and using their self as the guinea pig for this great experiment and will definitely correct every challenge they will meet along the way.
