Bitcoin, months after it became a legal tender in El Salvador?
Bitcoin after being pariah to nations for many years was adopted on 5 June 2021 by El Salvador President Nayib Bukele, who declared it as a legal tender.
Since El Salvadoran President Nayib Bukele made the announcement, Bitcoin prices have fluctuated quite a bit.
The Bitcoin price was $37,689 when the announcement was made, and it was $46,810 by the time the law was passed in El Salvador on 7 September 2021.
Ahead of the launch, El Salvador bought 400 bitcoins worth around $20 million. Like all innovations, El Salvador's Bitcoin process has a learning curve," Bukele said in a tweet. "Not everything will be achieved in a day, or in a month."
Lawmakers in the Central American country’s Congress voted by a supermajority in favor of the Bitcoin Law, receiving 62 out of 84 of the legislature’s vote.
Despite this, it wasn't easy for the president to declare the adoption of a cryptocurrency. Many experts believe that it was adopted because El Salvador doesn't have their own currency, and looking at the popularity, the president has decided to take this step.
Another important issue that Bitcoin adoption will solve is that over 70% of El Salvador who do not have access to traditional financial services will now be included in it. To make it successful, the president also provided all users with $30 of Bitcoin.
El Salvador, which gets a lot of remittances from other countries, believes that it can save over $400 million in remittance charges after implementing Bitcoin Law.
After the El Salvador decision, many small nations are now working towards adopting Bitcoin or other cryptocurrencies as legal tender. But, international organizations, like the International Monetary Fund (IMF), World Bank have been cautioning them to choose this route.
Things have now somehow slowed down, as the price of Bitcoin has too increased to over $68,000 on 11 November 2021, before stabilizing to $56,300.
To issue $1 BN Bitcoin Bond
In order to take things forward, very recently at Bitcoin Week, the president made an announcement of issuing a $1 bn Bitcoin Bond and using that fund to build a Bitcoin city near a volcanic island in the eastern region of La Union.
The $1 billion USD will be split between a $500M allocation in Bitcoin (BTC) and a $500M spend for building out energy and Bitcoin mining infrastructure in the region.
The first 10-year issue El Salvadoran Bitcoin Bond would be worth $1 billion, backed by Bitcoin and carrying a coupon of 6.5%, roughly half the weighted coupon of El Salvador’s long-duration sovereign debt.
El Salvador also aims to create a government securities law and grant a license to Bitfinex Securities to process and list the bond issuance. This could pave the way for other Liquid security tokens like the Blockstream Mining Note (BMN) or Exordium (EXO) token to be listed on a regulated El Salvadorian securities exchange.
The architect of the Bitcoin Bond is Blockstream CSO Samson Mow and designed with Blockstream VP of Financial Products Jesse Knutson, in collaboration with the government of El Salvador said, "This is the new dawn of digital capital markets.”
The demand for liquid assets with low volatility and low friction is strong and growing. Tokenized sovereign debt should be seen as an attractive third option for investors looking to allocate money or to take profit into.
Days after El Salvador declared Bitcoin legal, China on the other hand completely banned cryptocurrencies on 24 September 2021. Even though trading has officially been banned in China since 2019, it has continued online through foreign exchanges.
Apart from this, there were some media reports that the Indian government will be banning crypto, but the Indian finance ministry has said that only private cryptocurrencies will be banned and the bill in this regard will be presented in the winter session of the Indian parliament that is going to be held from 29 November 2021to 23 December 2021.
However, the government has yet not defined private crypto; many crypto experts, crypto exchanges have given their representation to the finance ministry in this regard and asked the government to come up with a regulatory authority, rather than banning it completely.
As a result, it seems that the fire started in El Salvador has spread worldwide, and every country wants to deal with cryptocurrency based on blockchain technology.
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