ViaBTC on the Implications of Paraguayan Lawmaker’s Proposal for Legalizing Bitcoin after El Salvador’s Announcement of Making Bitcoin Legal Tender
Two countries in the Americas have recently been in the spotlight of the cryptocurrency community. One is El Salvador, a small country located in northern Central America. It announced it would make Bitcoin its legal tender. Although El Salvador does not have extensive influence in the world, its announcement of legalizing Bitcoin is still of historical significance as far as the development path and influence of Bitcoin are concerned: Bitcoin is made a legal tender by a country for the first time.
Another Latin American country may be set to follow in the footsteps of El Salvador: Paraguay. A congressman in Paraguay announced that he was working on a bill about Bitcoin legislation and support for mining with green energy, with the aim to make his country a hub for cryptocurrency investors worldwide. Despite uncertainty around the bill presentation, these moves at least speak for the fact that Bitcoin is unleashing wide-reaching influence to be reckoned with.
There is a multiplicity of views on the adoption of Bitcoin as a legal tender in the cryptocurrency industry, which are roughly divided into three groups: those for it, those against it, and those neutral.
In the opinion of proponents, small as El Salvador and Paraguay are, they have a combined population of nearly 14 million (6.7 million in El Salvador and 7.25 million in Paraguay); their acceptance of Bitcoin will enlarge the cryptocurrency’s direct exposure, increase Bitcoin addresses sharply, and encourage a wider community to reach consensus. This can contribute to Bitcoin’s extension of its global reach and further decentralization. What is more significant is that the legalization will indirectly make Bitcoin much more popular over a long period of time.
In addition, by both supply and market capitalization, Bitcoin has surpassed the majority of the world’s legal tenders, and so far grown to be the fifth-largest currency worldwide, only after the U.S. dollar, the euro, the yuan, and the yen. According to a statistical website of the value of global assets, the current market capitalization of Bitcoin stands at $653.3 billion, ranking the ninth after Apple, Microsoft, Saudi Aramco, Amazon, Alphabet A (Google’s parent company), Facebook, Tencent, and Tesla.
This shows that Bitcoin has such considerable influence that some countries are attempting to legalize it. As a larger number of people become the holders and followers of Bitcoin, more countries and territories may be willing to accept this cryptocurrency, putting technical, economic, and legal issues aside.
Opponents, on the other hand, argue that the adoption of Bitcoin as a legal tender could seriously undermine a country’s economy. Bitcoin’s current network and its technical weaknesses make it almost impossible to become a payment method for day-to-day economic activities, and its extremely low on-chain carrying capacity eliminates the likelihood of it functioning as a legal tender. Athena Bitcoin, an American operator of Bitcoin automated teller machines (ATMs), is poised to establish 1,500 new cash-to-crypto machines in El Salvador with a funding of $1 million, to help El Salvador become the world’s first Bitcoin-based economy in the real sense after the country announced the legalization of Bitcoin. But it’s worth noting that there will be numerous difficulties for the shift from the traditional legal tender-based economy and the deep-rooted, user-friendly payment methods to the uncertain, volatile payment with Bitcoin which has not created a good experience yet.
More people are not as aggressive as the proponents and opponents above, and they take a neutral stance. Instead of considering Bitcoin as a payment method or technology, they deem the emergence and growth of Bitcoin a large social experiment in human civilization that advocates decentralization and equal rights. Bitcoin provides our increasingly large and complex society which fails to distribute resources evenly with a more reasonable option of resource allocation and adds more possibilities to the reasonable allocation of production factors so that the productive forces are tapped unprecedentedly.
Undoubtedly, Bitcoin has weaknesses. But throughout the process of human civilization, all new things that can face-lift society, e.g. Tesla’s alternating current, Marconi radio, and the Internet affecting every aspect of our lives today, grow stronger in the midst of doubts and challenges. We should give Bitcoin more attention and time.
ViaBTC hereby quotes a post that is going viral abroad.
Ten years ago, very few heard of Bitcoin;
Five years ago, some knew about Bitcoin;
Three years ago, people tried to understand Bitcoin;
One year ago, many people embraced Bitcoin;
Now, a small country has declared Bitcoin a legal tender;
What will happen two, five, or 10 years from now …
We do not know what the future holds. As of today, there are close to 40 million addresses holding non-zero Bitcoin. And, the latest count of the world population is 7.262 billion. Assuming that these 40 million addresses are not repetitive and one person holds one Bitcoin, only 0.55% of the population has Bitcoin.
Even so, Bitcoin has demonstrated mighty momentum, including but not limited to the spheres of wealth, technology, industry, and era. We have every reason to believe that Bitcoin will finally thrive and be widely accepted by the public. Then, its price will go beyond our imagination.