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Why countries should embrace bitcoin

Only time will tell whether countries will embrace Bitcoin like El Salvador or not. 

physical bitcoin on table
Image: Unsplash

There’s no doubt that Bitcoin use is increasing globally. Countries like El Salvador have taken the first step in making this virtual currency a legal tender.

In Nigeria, 33% of the citizens own or use cryptocurrencies. This digital currency debuted back in 2009, introducing an era of cryptocurrencies.

Nevertheless, tax authorities, regulators, and enforcement agencies globally are unsure about the best practices for embracing or regulating Bitcoin.

Central banks do not issue, regulate, or endorse Bitcoin. Instead, miners use a computer-generated process called mining to create Bitcoin.

Apart from lacking a relationship with any government, this digital currency is a peer-to-peer payment system that physically doesn’t exist. Therefore, it presents an excellent, convenient means to complete cross-border transactions without incurring exchange fees.

Platforms like Immediate Bitcoin enable people to access, buy, and sell Bitcoin. Consequently, even citizens of the countries that have banned Bitcoin can access and trade it online.

Peer-to-peer phone payment prevalence and remittance reliance have also increased the use of cryptocurrencies in developing countries.

Also, consumers are using Bitcoin to pay for services and goods at online retails and some brick-and-mortar stores. Initial coin offerings, digital currency-related ventures, and crypto exchanges draw interest from the entire investment spectrum.

At a glance, Bitcoin looks like a well-established digital currency system. However, the world lacks uniform international laws to regulate it.

How Bitcoin Can Benefit a Country

A country that accepts Bitcoin can reap the following benefits:

  • Increased economic activities: Cryptocurrencies have already established an entire industry. This sector comprises investors, crypto exchanges, and traders. Embracing Bitcoin can bring such activities into a country, increasing money circulation.
  • Capital Access: Some countries have poor banking systems, meaning their citizens can’t access funding for their startups. Embracing Bitcoin will enable such people to access loans and even start business ventures.
  • Increased remittances: Some people don’t send money to their loved ones due to the high costs of transferring funds using traditional methods. Bitcoin transactions attract low fees, motivating such people to send more funds to their loved ones.

Bitcoin can benefit countries in many ways. However, not every country has the necessary infrastructure to make Bitcoin a legal tender. For instance, not every country has stable internet connectivity to access, trade, and store Bitcoin.

Will Countries Embrace Bitcoin?

For a country to benefit from Bitcoin, it must accept it as a currency, meaning it must reduce the overbearing regulations while allowing residents or citizens to use it conventionally. Thus, a country must see Bitcoin as any other currency within its jurisdictions. But this will bring tax issues.

Nevertheless, many crypto enthusiasts believe that Bitcoin can support the developing countries’ growth process. In countries like El Salvador, citizens send funds from foreign countries, accounting for about a fifth of the nation’s GDP.

However, these citizens incur high costs to send remittances to their loved ones. Also, up to 70% of such countries’ citizens lack bank accounts. That means they have difficulties accessing funding to start businesses. Bitcoin facilitates affordable and fast payments even for people without bank accounts.

In El Salvador, every citizen has Bitcoins worth $30. Initially, the U.S dollar was the official currency of the country. However, Salvadorans can now pay taxes and shop with Bitcoin.

The law requires all companies to accept Bitcoin because it’s a legal tender. Nevertheless, the law permits companies to swap Bitcoins for dollars immediately after receiving them.

But it’s unlikely that significant economies will accept Bitcoin because no central bank controls it. However, central banks worldwide are likely to launch their digital currencies. That way, they can enjoy the benefits of traditional money and cryptocurrencies.

Only time will tell whether countries will embrace Bitcoin like El Salvador or not. 

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