The next El Salvador?
After El Salvador, will the next country adopt Bitcoin as its legal currency?
Recently, Suriname presidential candidate and Datalist Labs CEO Maya Parbhoe proposed a political idea during the election campaign. If he is successfully elected, he will adopt Bitcoin ($BTC) as the country’s legal currency, hoping to use Bitcoin to Address the country's long-term economic problems, particularly inflation and corruption.
Image source: BBC Suriname presidential candidate and Datalist Labs CEO Maya Parbhoe
Since independence in 1975, Suriname has been mired in inflation and corruption, and Maya Parbhoe placed Bitcoin at the core of his campaign platform. He believes that Bitcoin’s decentralization and transparency are the key to solving Suriname’s problems. The key to economic distress is not only to solve the problem of excessive currency issuance, but also to bring transparency through blockchain technology and help combat corruption in government spending.
Maya Parbhoe pointed out that currently half of Suriname’s working population is employed by the government, but the government operates inefficiently. By placing government transactions on the Bitcoin blockchain, the public can monitor every expenditure in real time and reduce the occurrence of corruption. At the same time, it will improve the operational efficiency of the government.
What are the advantages of using Bitcoin as legal tender?
El Salvador, on the other hand, has experienced significant changes since President Nayib Bukele promoted Bitcoin as legal tender in September 2021.
Image source: BBC El Salvador President Nayib Bukele
The first is increased financial inclusion. Until now, about 70% of the country’s population was unbanked. Through Bitcoin and the official digital wallet Chivo, Salvadorans are able to participate in the digital financial system.
In addition, the decision to adopt Bitcoin has attracted many cryptocurrency enthusiasts and entrepreneurs to El Salvador to invest or conduct related business activities, and the growth of foreign investment and tourism industries has enhanced El Salvador’s global visibility.
Economically, El Salvador's economy is highly dependent on foreign remittances. The remittances sent back by Salvadorans from abroad account for more than 20% of the gross domestic product (GDP) every year. Through Bitcoin and Chivo wallets, residents can increase the efficiency of remittances while avoiding the high fees of traditional remittance systems.
In addition, El Salvador has also made use of local volcanic energy to build Bitcoin mining facilities, which not only makes mining more environmentally friendly, but also brings new sources of income to the country and further promotes the country's economic development.
However, El Salvador’s Bitcoin policy is not all smooth sailing. With Bitcoin prices fluctuating violently, some residents and businesses have reservations about adopting Bitcoin.
In addition, the International Monetary Fund (IMF) and other institutions have warned that the country may face financial risks if it uses Bitcoin as a legal currency. So while El Salvador has seen some success with Bitcoin, it remains to be seen how its long-term effects will be tested.
Global adoption increases
In addition to Suriname, other countries around the world have also begun to pay attention to the potential of Bitcoin. Joana Cotar, a member of the German Parliament, strongly supports Bitcoin as a national reserve asset.
Image source: BBC Member of Parliament Joana Cotar
Joana Cotar believes that Bitcoin is an effective tool to fight inflation. He pointed out that inflation is "stealing people's money every month." She believes that Bitcoin can provide economic sovereignty, especially in countries with high inflationary pressure.
Joana Cotar further pointed out that Bitcoin can help developing countries improve financial inclusion and provide financial freedom and opportunities, which will have a real impact on future economic development.
She acknowledged the need to address illegal activities involving Bitcoin, however she also emphasized that any regulatory measures should not hinder innovation or the financial freedom that Bitcoin provides, and she asked that the German government should not rush to liquidate its Bitcoin holdings, but should explore Bitcoin’s utility as a national reserve allows Germany to diversify its national debt assets and effectively hedge against inflation.
