El Salvador’s President Idea to Make Bitcoin a Legal Tender Leads to Bitcoin Currency Standard

Crypto news keeps exploding while easily overshadowing all the other market and near-market events. One of the most cited this Monday story is, beyond doubts, sensational Anonymous hackers’ YouTube message to Elon Musk. Wearing the group's trademark Guy Fawkes mask and using a voice changer, the person on the video accused Musk of being arrogant and negligent to basic interests of his former ordinary fans and followers - i.e. being someone with a carefully cultivated image as a visionary that's a disguise for "nothing more than another narcissistic rich dude who is desperate for attention." After walking through Musk's controversial environmental and labor record, the video mocked Musk's recent dabbling with cryptocurrencies and saying that Musk only turned his back on bitcoin (BTC) because he was afraid of Tesla losing government green energy subsidies. “We are legion! Expect us!” - the final message of the video said.

Although, certainly, Musk has an explicit option to ignore those “nowhere men from nowhere land” , that wouldn't be in his best interest.

Meanwhile, outlining the utter importance of bitcoin’s value and destiny, El Salvador’s young, but well educated and popular President Nayib Bukele said on Saturday at the Bitcoin 2021 conference in Miami that his country is ready to make Bitcoin legal tender while replacing the U.S. dollar partnering with the digital wallet firm Strikeas as he spoke at a video broadcast. Interestingly, Bukele's party has a strong position in the new country’s parliament and it should be easy for him to get approval for the new legislation regarding Bitcoin legalization.

His ultimate goal is no lesser than to make the cryptocurrency legal tender in the entire Central American nation. In his Twitter account, Bukele clarified saying, "Bitcoin has a market cap of $680 billion. If 1% of it is invested in El Salvador, that will increase our GDP by 25%".

Bukele said that although 70% of El Salvadorians do not have a single bank account, Bitcoin could improve their lifestyle and boost consumption. According to CNBC, El Salvador has assembled a team of Bitcoin leaders to help build a new financial ecosystem with Bitcoin as the base layer.

The main reason behind such a, at a glance, reckless and controversial statement is obvious: since weak El Salvador’s economy keeps suffering from too strong U.S. dollar, on which it is fully dependent since the country doesn’t print its own money, this looks like a more substantial move than a purely populistic action.

Apparently, in case Bitcoin becomes a legal tender in a sovereign country (let alone a group of countries) it would definitely boost its appeal and lead to its nomination as a fully backed currency, rather than an alternative “gold-like commodity”. However, since Bukele mentioned poor access to banking services in El Salvador, so is, presumably, ownership of mobile phones and access to high-speed internet among its citizens. That fact casts doubt on the whole idea of substitution of printed banknotes for electronic payment media, which apparently is needed once Bitcoin becomes legal tender. However, what comes to mind is using Bitcoin the same way as gold possession vs. an amount of a gold-backed currency in circulation was used. If El Salvador will tap into the complexity of auditioning the main crypto proofs - proof of stake or proof or work - its hypothetical “Bitcoin-backed currency” would pave a solid road to the new universal concept of Bitcoin standard (as opposed to former gold standard).