Published in El Pais, 19 June 2021.
The past week El Salvador President Nayib Bukele made the surprising announcement to make Bitcoin legal tender, if the legislation passes it will be the first country to do so. Bitcoin of course is legal to own in most countries but if it is declared a legal tender it will mean all wages, debts and taxes in the Latin American country could be paid in Bitcoin.
President Bukele argued that 70 percent of his country does not have access to banking, and this will help give them access to proper finances and millions of dollars are wasted in remittance payments a year (many El Salvadorians live in the US and send as much as $6 billion back to the country) and Bitcoin will be able to be sent at a fraction of the cost and time. These are both valid points to be making but adopting Bitcoin as legal tender may not be the answer to what is clearly a very complicated problem.
Many decentralized finance (DeFi) companies are working on blockchain projects to provide banking to those that do not have, but these are complicated business plans that involve blending traditional banking with DeFi technology so those that do not understand the technology can still use it. Bukele is simply dropping bitcoin onto an unsuspecting population, forcing many who are not familiar with the technology to learn how use wallets and to send and accept Bitcoin.
Blockchain technology can help solve many of the problems listed above but the President needs to take more time to properly fix these issues rather than simply say “Bitcoin” and walk away. The President has a super majority, meaning the law is almost guaranteed to pass, so we might as well see how this plays out. It will certainly be interesting to see what happens.
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