In an effort to embrace Bitcoin as a legal currency, El Salvador is introducing a $150 million trust fund.
The fund is designed with multiple objectives, including the installation of Bitcoin ATMs countrywide, educating citizens about the 'Chivo' Bitcoin app, and distributing $30 million in Bitcoin.
Significantly, the fund also serves as a conversion platform for anyone preferring US dollars over Bitcoin.
Recently, there have been protests in El Salvador regarding the government's decision to make Bitcoin a legal currency, rooted more in perception than in reality.
Bitcoin Allows Seamless Conversion to USD-linked Currencies
It's worth mentioning that there are various USD-linked stablecoins available, compatible with most digital wallets.
Nayib Bukele, the President of El Salvador, addressed concerns saying,
“No one is obligated to use Bitcoin if they don’t wish to. Payments received in Bitcoin can be easily converted to dollars.”
El Salvador could benefit from a broader understanding of how decentralized financial assets operate. Bitcoin is known for its unparalleled flexibility, offering trade possibilities with countless assets, including USD-pegged stablecoins.
The Dissenting Voices in the System Seem Excessive
Skepticism towards the Bitcoin adoption plan is not limited to El Salvadorian retirees.
International media outlets have put a spotlight on the move with predominantly negative reports, while various official bodies voice concerns about the policy.
To clarify, people in El Salvador aren’t compelled to solely use Bitcoin. Retailers must accept it, but citizens can choose to hold onto Bitcoin, US dollars, or various other assets.
Businesses have the option to convert the Bitcoin they acquire from customers. Given Bitcoin's swift transaction capabilities, it can be exchanged for USD-backed assets without delay.
For many businesses, converting Bitcoin to USD daily should suffice, considering the usually stable pace of Bitcoin's market.
The international uproar over Bitcoin's adoption might hint at underlying issues.
Statements like this from the IMF may be cause for concern
“The immediate economic impact of widely adopting a cryptoasset like Bitcoin pertains to macroeconomic stability. If commodities and services are valued in conventional currency and cryptoassets, individuals and businesses would need substantial resources to decide which form of money to adopt, distracting from productive activities.”
Could differing monetary choices genuinely challenge – macroeconomic stability?
The Price of Power
The IMF seems to be describing a scenario that isn't entirely clear, but one certainty is apparent: cryptos are not favored by the global power players.
Those in high places appreciate central banks and fiat currencies, as these offer them the means to wield influence over the populace through financial avenues.
The past decade and a half have illustrated how central banking systems utilize fiat currencies to amplify the wealth divide, enriching a select few while others remain trapped in financial strife.
Contrary to assumptions, the true underlying risk isn't Bitcoin itself but the issue of societal disparity.
Bitcoin isn't a flawless solution. While its market capitalization marks it as a valuable asset, its underlying technology is considered somewhat outdated.
Like the pioneering Model T by Ford, Bitcoin's introduction has showcased what's achievable.
Now, El Salvador’s decision to incorporate it into state policy highlights a potential crisis in the conventional system.
What some, like the IMF, misunderstand is viewing cryptos as the core threat – they merely represent a broader social evolution that won't easily be curtailed.
