Home Global Blockchain El Salvador’s Bitcoin Law is a Farce: Foreign Policy

El Salvador’s Bitcoin Law is a Farce: Foreign Policy

El Salvador’s Bitcoin Law is a Farce: Foreign Policy

On June 5, El Salvador President Nayib Bukele declared that bitcoin, the first cryptocurrency, would become legal tender in El Salvador. A few days later, the Bitcoin Law was passed, to take effect Sept. 7. Businesses would be required to accept bitcoin for all payments.

Bitcoin was originally created to be a form of money outside government control. Using bitcoin as a government-endorsed currency had a number of obvious issues: Cryptocurrency has a stupendous money-laundering problem, the price of bitcoin is incredibly volatile, and cryptocurrencies remain difficult and unwieldy to use.

Building a payment system that users trust takes time. You need to run pilot programs and fix the sort of problems that only show up in production. Deploying a system from scratch at national scale in just three months with no testing is a recipe for disaster—especially when that system is an electronic payments system in an economy that still largely ran on physical cash (U.S. dollar notes) and held widespread distrust of banks and a strong memory of the rushed dollarization of 2001.

Read the full story.

David Gerard is the author of the book Attack of the 50 Foot Blockchain and the cryptocurrency and blockchain news blog of the same name. His new book is Libra Shrugged: How Facebook Tried to Take Over the Money.


Please enter your comment!
Please enter your name here