Is the deployment and purchase of Bitcoin in El Salvador the legacy of the president and the start of the “new world”?
CEO of a game-changing global financial services group says El Salvador becomes the first sovereign country in the world to officially buy Bitcoin and make legal cryptocurrency the “start of a new one world”.
Comments from Nigel Green, CEO and Founder of deVere Group, one of the world’s leading asset management and fintech organizations, come as the President of El Salvador confirmed that his government had bought 400 Bitcoin – worth around $ 21 million – just ahead of the Central U.S. country officially adopts the world’s most popular cryptocurrency as legal tender.
President Nayib Bukele said the government is also planning to âbuy a lot moreâ.
The price of Bitcoin has risen following the announcements on Twitter to trade at around $ 52,680.
Mr Green says: âIt is almost universally recognized that the future of money is inevitably digital in one form or another.
âEl Salvador has made history today by not only becoming the first country in the world to declare Bitcoin as legal tender, but also by becoming the first sovereign country to officially purchase it.
“I think this is a pivotal moment in the evolution of digital currency and that it ushers the start of a new world, as we can expect more countries, especially those whose economies are developing, follow the historical example of El Salvador. “
On Monday, the CEO of deVere acknowledged that the move entailed major risks, including that El Salvador could run out of dollars and that institutions, such as the IMF, viewed a country that has failed. adopted Bitcoin.
These risks prompted some Salvadorans last week to take to the streets to protest the adoption of Bitcoin as the official currency.
However, he laid out five reasons why he âcautiously welcomedâ the Bitcoin decision.
âFirst, El Salvador has chosen to rely on a major ‘first world’ currency, the US dollar, to conduct transactions. But this dependence on another country’s currency also comes with its own, often very costly, problems.
âThe Salvadoran government cannot print its own currency and the economy cannot benefit from the US Federal Reserve’s money printing program. Therefore, El Salvador must either borrow or earn the dollars it needs.
âA stronger US dollar can have a crippling impact on emerging market economies like El Salvador.
âBy adopting cryptocurrency as legal tender, these countries then immediately have a currency that is not influenced by market conditions within their own economy, nor directly by the economy of another country.
âBitcoin operates globally and as such is largely impacted by broader global economic changes.
âSecond, central banks around the world have devalued their currencies, while the supply of Bitcoin is not only limited, but new coins are also mined at a declining rate. Salvadorians might therefore find that their new adopted currency gives them more purchasing power when buying abroad.
He went on to say, âThird, El Salvador’s adoption of Bitcoin could lower the cost of remittances, a major source of income for millions of people. Remittances would also be faster and easier, compared to money transfer services or bank transfers, so remittances are likely to increase further.
âFourth, by diversifying the country’s dollar reserves into the cryptocurrency, there might be additional opportunities to earn yield, which means that the size of the reserves would increase.
“And fifth, El Salvador could benefit from significant foreign investment and inflows of capital, as digital asset organizations are likely to move to the Bitcoin-friendly country.”
On the deployment of legal tender and the massive purchase of Bitcoin in El Salvador, Green concludes: âThe world is watching. This is probably President Bukele’s legacy in the making.