- El Salvador’s move to adopt Bitcoin as legal tender has prompted discussions on whether Bitcoin can replace the dollar.
- Bitstamp CEO Julian Sawyer says crypto shortcomings are an obstacle.
- After El Salvador, a handful of Latin American countries are now considering Bitcoin.
El Salvador’s historic move to adopt Bitcoin as legal tender has once again elevated discussions among Wall Street on whether a cryptocurrency could really substitute the pleasantly old-fashioned dollar.
In 2001, El Salvador switched to the dollar, allowing for free circulation of the currency within its borders. Now, after twenty years of a weak, vulnerable economy mainly attributed to dollarization, the country passes the law to accept Bitcoin as legal currency.
Some observers take this act as the manifestation of a bigger move poised to come, that more and more countries adopt Bitcoin and use it to replace the dominant dollar — or in other terms, for crypto to take over the world.
While this can seem probable to many, Bitstamp CEO Julian Sawyer doesn’t think so. In an interview with Bloomberg, Sawyer asserted that there will always be a need for traditional banks and central banks. He stated:
There’s been a lot of people who have sat in the crypto world who’ve said, ‘Oh, crypto is going to take over the world and traditional banks and central banks will go away.’ That’s not going to happen.
Bitcoin’s technology might find its way to central banks and financial institutions, easing financial services such as sending money across borders. But Bitcoin itself is still far away from replacing the dollar, mainly due to its volatility, Sawyer said. “Will there still be the dollar? Yes. Will there still be Visa and Mastercard? Absolutely. It will just be we’ll have alternatives for using plastic, or paper, or coins or checks,” he added.
Bitcoin Can Coexist with the Dollar
The fact that Bitcoin is still not sturdy enough to substitute the governing dollar doesn’t imply that it can’t coexist alongside it. Walking in the footsteps of El Salvador, more and more Latin American countries are now considering Bitcoin.
On June 8, Mexican Senator Eduardo Murat Hinojsa tweeted that he aims to promote and propose “a legal framework for crypto coins in Mexico’s lower house”.
Voy a promover y proponer ante la Cámara de Diputados un marco legal para las criptomonedas en México #btc
— Eduardo Murat Hinojosa (@eduardomurat) June 8, 2021
Alongside Mexico, countries like Paraguay, Panama, Brazil, and Argentina are also seemingly interested in Bitcoin as politicians from these countries have called for Bitcoin adoption.
Como ya lo decía hace un buen tiempo, nuestro país necesita avanzar de la mano de la nueva generación.
Llegó el momento, nuestro momento.
Esta semana empezamos con un proyecto importante para innovar a Paraguay frente al mundo!
— Carlitos Rejala 🙏🇵🇾🙌 (@carlitosrejala) June 7, 2021
While Bitcoin offers almost all the premises of a leading payment network, another relatively powerful motive in pushing countries toward it can be the fear of missing out. If El Salvador’s wrecked economy benefits from Bitcoin, other countries will race toward adopting the leading cryptocurrency.