Adopting Bitcoin by El Salvador as legal tender was a significant turning point for the crypto world. Now that BTC has legal status in El Salvador and is recognized in other countries, what is its future?
BitMEX CEO expects 5 to 10 countries to adopt Bitcoin by next year
At a Bitcoin Adoption by Countries panel at the Bitcoin & Beyond Virtual Summit sponsored by Forkast, the panel included Alexander Hoeptner, CEO of crypto exchange BitMEX; Lord Fusitu’a, a member of parliament in the small Oceanian country of Tonga; and Binance-owned crypto exchange WazirX founder and CEO Nischal Shetty, all agree that Bitcoin adoption has had a significant impact on El Salvador’s financial inclusion.
Bitcoin is decentralized programmable money, or in other words, just lines of code. Shetty compared the impact of cryptocurrencies to the impact of the advent of the Internet. The Internet allows for free, easy, and near-instant exchange of information, resulting in a leapfrog effect of technology, progress, and inclusion.
Similarly, cryptocurrencies allow the exchange of money regardless of one’s geographical location – a feat that was previously impossible because fiat currencies were restricted to different jurisdictions. In other words, cryptocurrencies made value exchange easy, Shetty said.
About 70% of the country was underbanked until Bitcoin was officially accepted. However, as of last month, more people in the country have Chivo wallets – El Salvador’s Bitcoin wallets – than traditional bank accounts. This means that for the first time, a large part of the country’s population has been introduced and brought into the world of finance.
Shetty says that Bitcoin and other cryptocurrencies can effectively bridge the gap between the two types of economies – one that lacks cheap capital like India and one with excess capital that leads to interest rates as low as the US.
El Salvador’s adoption of Bitcoin is not without criticism. While some support it, others oppose it. The main criticism surrounding El Salvador’s adoption of Bitcoin is that it could lead to the rise of monopoly power.
“Over the next few years, Bitcoin adoption will be propelled by the emerging markets,” Fusitu’a said. This is because Bitcoin adoption, especially on the Lightning Network can help achieve two things — reduce gross domestic product dependence on remittance and increase disposable income.
And because Bitcoin will increase financial inclusion as people who have been historically underbanked get introduced to the financial system like in El Salvador, Bitcoin adoption will be largely driven by these emerging markets, Fusitu’a said. Besides, the large inflow of institutional and previously risk-averse capital into Bitcoin will make it more and more attractive for countries and central banks to adopt it.
The emerging markets and potential Bitcoin adopters include Panama, Uruguay, Brazil, Tanzania, and Nigeria, Fusitu’a said.
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