On June 9, El Salvador successfully approved the proposal to use Bitcoin as legal tender, and the country became the first sovereign country to adopt Bitcoin as legal tender. This incident was also listed by AFP as the 14th time in currency history. Major events. According to the requirements of the bill, after Bitcoin becomes legal tender, the price of goods can be expressed in Bitcoin, and any economic entity must accept Bitcoin as payment; Bitcoin transactions will not be subject to capital gains tax and can be used for tax payment .
El Salvador is a coastal country located in the northern part of Central America, with an area of only about 20,000 square kilometers and 14 provinces. The country has a total population of about 6.7 million, but there are many gangs in the country. In the first half of 2015, nearly 3,400 people were murdered. Although the president at the time announced a vigorous crackdown on street gangs, these basically stemmed from the colonial rule of El Salvador. , Post-civil wars were frequent and social security has been unstable.
Economically, El Salvador is dominated by agriculture. It mainly produces coffee beans and cotton. It has a weak industrial base. It is one of the “low- and middle-income countries” in the world. It has no sovereign currency and has always relied on the U.S. dollar for settlement. After the global financial crisis in 2018, since the United States adopted the quantitative easing policy, El Salvador has been in the quagmire of inflation, which is also the main reason why it actively embraces Bitcoin.
Except for El Salvador, many countries in Latin America have the same experience. Different from developed countries, they are more focused on the beauty of the code in the encrypted world, and are committed to building more anonymous algorithms and sophisticated community governance structures. The expectations of these third world countries for cryptocurrencies are their stable measurement value, storage value, and the right to maintain purchasing power without being deprived. In addition, Bitcoin and blockchain have also brought them a series of Fast and low-cost financial services that were otherwise difficult to obtain.
PANews will take stock of what other countries in Latin America are most likely to adopt Bitcoin after El Salvador.
Panama is the southernmost country in Central America, with a total area of about 76,000 square kilometers and a population of over 4.3 million. The Panama Canal, which connects the Atlantic and Pacific Oceans, has an important strategic position and is the dividing line between South America and North America.
Given its important geographic location, the focus of Panama’s economy is on the service industry, with finance, trade and tourism as the mainstay. Among them, the financial industry and entrepot trade are developed and occupy an important position in the economy. In addition, Panama has used the U.S. dollar as its currency in circulation since 1907, and its national currency is balboa, which is equivalent to the U.S. dollar and is used in the country at the same time. It is the first country in the world to use the U.S. dollar as its legal tender.
After El Salvador proposed a bill to adopt Bitcoin as a legal currency, Panamanian Congressman Gabriel Silva tweeted that Panama must not be left behind. If it wants to become a true center of technology and entrepreneurship, Panama must support cryptocurrency and prepare a proposal for parliament. .
Previously, Panamanian Vice President Rolando Rodríguez also proposed a draft bill to regulate Panama’s cryptocurrency in the legislative plenary session to regulate the use and transaction of cryptocurrency in Panama, and also strive to include cryptocurrency in the state-supported social security fund. All Panamanians who cannot use common banking services enjoy financial freedom. Rodríguez also stated that Panama lags far behind other countries in regulating cryptocurrencies, and hopes that the Trade and Economic Affairs Committee of the General Assembly will give due attention to the bill.
Colombia is a land and sea country located in the northern part of South America, with an area of about 1.1 million square kilometers and a population of about 5 million. In 1821, Colombia also formed the Greater Colombia Republic with present-day Panama, Venezuela, and Ecuador, and then disintegrated in 1830.
Economically, the pillar industries of Colombia are mining and agriculture. It is rich in mineral resources, with oil, natural gas, coal, and emeralds as the main mineral deposits, among which emeralds rank first in the world. The main agricultural products are coffee, bananas, and flowers. The export volume of coffee and bananas ranks third in the world, and the export volume of flowers ranks second in the world. Colombia is at a medium level of development in Latin America, and its economy has maintained continuous growth over the past 10 years.
Recently, Jehudi Castro Sierra, the digital transformation consultant of Colombian President Iván Duque Márquez, was in a conversation with Jack Mallers, the founder of the Bitcoin Lightning Network wallet ZAP. Jack is the main developer in El Salvador that uses Bitcoin as its legal currency, and Strike, a startup company under ZAP, once launched a Bitcoin lightning payment application in El Salvador.
Jehudi Castro Sierra’s interest in cryptocurrencies, as well as his direct contact with the President of Colombia, seems to indicate that this issue will arouse interest in Colombia. As early as September 2018 to October 2019, when Jehudi Castro Sierra was the Deputy Minister of Digital Economy in Colombia, he was also shown on social networks as a technology enthusiast, especially cryptocurrency.
Venezuela is a country located in the northern part of South America. It is called the “land of waterfalls”. It covers an area of more than 900,000 square kilometers and has a total population of more than 31 million people. Venezuela is a member of the Association of South American Nations and the Organization of Petroleum Exporting Countries. It is also an important oil producer and exporter in the world. The oil industry accounts for about 80% of Venezuela’s export revenue.
Previously, Venezuelan President Nicolas Maduro promised to revive the Petro Coin at the Constituent Assembly, stating that the state-owned Petroleum Company, Venezuela Petroleum Corporation, would use the Petroleum to conduct a “trial sale” of 50,000 barrels of oil per day, and then consider adding The scope of application of petrocoins is extended to oil transactions across the country, and tax and utility bills will also be paid by petrocoins.
Nicolas Maduro said that Venezuela is opening a path to a new economy. The crisis caused by the old rules and the stubborn bureaucracy has stimulated Venezuela’s innovation momentum. Venezuela will take the untraveled road and seek rebirth from adversity in the unknown.
However, although the petro currency was issued with a high profile in 2017 by the Venezuelan government, the central bank daily publishes the exchange rate of petro currency against the renminbi and other currencies, and the market also uses petro currency to mark prices in order to bypass the US economic sanctions and allow Venezuela to reintegrate into the international market. capital market. But since the petro coin was issued, the market response has been flat, and most people don’t even know where to buy petro.
In addition, Dashcoin is very popular in Venezuela, and since its adoption, the number of wallets downloaded every month has shown a significant increase.
Ecuador is a country located in the northwestern part of South America, with an area of approximately 260,000 square kilometers and a total population of more than 15 million. After the founding of the country, Ecuador’s political situation has been in turmoil. Coups have been repeated. The literati and military governments have alternated in power for as many as 19 times. Ecuador is known as the “banana country”, and its economy has implemented a dollarization policy.
Julio Eduardo Clavijo Acosta, Ecuador’s Deputy Minister of Economic Inclusion, is a crypto enthusiast who replaced his Twitter profile picture with a laser eye, and has repeatedly published and reposted Bitcoin and cryptocurrency-related tweets. He also recently stated that Bitcoin’s ability to support charity and alleviate poverty is enough to prove the power of its change.
In addition, in Ecuador’s 2021 general election, Presidential candidate Geovanni Andrade also expressed his intention to create a national cryptocurrency to facilitate transactions within Ecuador, and the new cryptocurrency will be a stable currency related to gold.
Brazil is the largest country in South America, with a total land area of approximately 8.5 million square kilometers, ranking fifth in the world, with a total population of 210 million, and the seventh largest economy in the world. Brazil has abundant natural resources and a complete industrial base. It has developed agriculture and animal husbandry and is a major producer and exporter of a variety of agricultural products. Brazil has a strong industrial base and a complete range of industries. The petrochemical, mining, steel, and automobile industries are relatively developed.
In March of this year, QR Capital’s Bitcoin ETF was approved by the Brazilian Securities and Exchange Commission and will be traded on the B3 stock exchange in Sao Paulo under the QBTC11 stock code. Brazil has become the second country in the world to approve a Bitcoin ETF.
And, according to reports from Brazil’s largest media, Globo, the number of Brazilian Bitcoin investors has exceeded the total number of individuals registered on the Sao Paulo Stock Exchange (B3), which is about twice as much, and the actual number of traders may be even more than this. Many, some traders may use foreign exchange or only trade offline.
On the other hand, data released by the Brazilian Institute of Statistics and Geography (IBGE) shows that in May this year, Brazil’s inflation rate climbed to 8.06%, the highest level since September 2016, exceeding market expectations of 7.93%. The rising inflation rate has become an important reason for the cryptocurrency boom in the Brazilian market.
Argentina is located in the southeastern part of South America, with an area of about 2.8 million square kilometers, second only to Brazil, and the second largest country in Latin America. The country has a population of more than 45 million, and the population ranks 31st in the world. Argentina is one of the world’s leading producers and exporters of food and meat. Thanks to abundant natural resources, opening-up policies and a diversified economy, Argentina once had a large middle class relative to other Latin American countries. At the beginning of the 20th century, Argentina’s total economic output was also among the top ten in the world.
However, due to the debt crisis in the 1980s, Argentina’s economy fell sharply. Since 2008, affected by the international economic and financial situation, Argentina’s economic growth has slowed down significantly, inflation is high, the local currency has depreciated, and foreign exchange reserves have declined. In recent years, the downward pressure on the Afghan economy has increased and the economy will decline by 11.8% in 2020.
In May of this year, Bitcoin.com reported that more than 1 million Argentines have been buying cryptocurrency in the past period of time. Local media Ámbito revealed that most of them are buying Bitcoin and stablecoins such as USDT, USDC and DAI. The media also emphasized that users believe that such tokens are a more effective way to convert Argentine pesos into U.S. dollars.
In 2019, due to inflation, the value of the Argentine fiat peso decreased by about 40%. At present, the Argentine National Congress is advancing digital currency-related bills to provide a legal framework for digital currency and encourage its adoption. If adopted, banks and companies can also choose to use digital currencies.
Paraguay is a landlocked country in central South America with an area of about 400,000 square kilometers and a population of nearly 7 million. Its national economy is dominated by agriculture and animal husbandry, and its industrial foundation is weak. It is one of the most backward countries in Latin America.
However, Paraguay is a renewable energy hub country, and all domestic electricity comes from hydropower. Paraguay’s ITAIPU hydropower station is the second largest hydropower station in the world after China’s Three Gorges-with an annual output of 103 megawatts, while Paraguay consumes only 20% of the country’s electricity, and the rest is used for export.
According to the British Guardian, local miner Gregorio Bareiro said that Paraguay is rich in energy and can become a global Bitcoin mining center. The best opportunity it has is not to sell energy to Brazil, but to invest in cryptocurrency. In addition, the Korean Blockchain Technology Foundation has also negotiated with the Paraguayan government to establish the world’s largest bitcoin mining farm and cryptocurrency exchange.
On June 7, after Paraguayan Congressman Carlitos Rejala announced in El Salvador that it would introduce a bill to allow Bitcoin to be regarded as legal tender, Rejala posted a photo of her own laser eye on Twitter and said, “As long as I am As I said before, our country needs to move forward hand in hand with the new generation. Our time has come. This week, we have embarked on an important project. Paraguay is truly taking off in the face of the world of innovation!”
With an area of approximately 2 million square kilometers, Mexico is the third largest country in Latin America and the fourteenth largest in the world, with a population of 123 million, making it the eleventh most populous country in the world. Mexico is a free market economy, with modern industry and agriculture, and the proportion of the private economy has increased significantly. After the official establishment of the North American Free Trade Area in 1994, the trade and investment exchanges between Mexico and the United States increased rapidly, which promoted its economic development and increased national income.
In February of this year, the Economist published a report quoting PricewaterhouseCoopers (PwC) Mexico’s managing partner Mauricio Hurtado as saying that Mexican companies are now keen to join the Bitcoin boom. Mauricio Hurtado said that although Mexican companies used to worry about the lack of regulatory agencies making cryptocurrency too risky as an investment asset, the situation has changed recently. Many companies feel that they can’t stay out of the situation at all. The company is adjusting to market realities in order to defeat competitors and gain advantages.
In June, Mexico’s third richest person, Ricardo Salinas Pliego, also changed his Twitter profile to a laser eye profile. Pliego has also stated that Bitcoin is its “best investment ever” and changed its Twitter profile to Bitcoin in February this year.
In addition, Senator Eduardo Murat Hinojosa of the Mexican Federal Government also stated that he will submit a “legal framework for cryptocurrency” to legislators. In a recent tweet, Hinojosa changed his profile picture and spoke into the microphone with his iconic laser eyes, expressing support for cryptocurrency.
In Latin America, Bitcoin is more popular than traditional finance
In high-inflation Latin American countries, the economy tends to be unstable, and holding the domestic fiat currency often means that the purchasing power will be greatly devalued. However, other investment methods, such as foreign exchange, gold and other hedging methods, have too high entry barriers and are difficult to obtain through traditional financial channels. Therefore, local people have turned to other cryptocurrency applications such as Bitcoin.
Many problems caused by inflation and subsequent capital controls can be solved by Bitcoin. Although workers and businessmen first used Bitcoin as a tool to hedge against the depreciation of the local currency, Bitcoin began to find multiple practical applications as a payment method in Latin America. As a universal currency, Bitcoin allows consumers to shop and transfer money globally. From Apple to Wal-Mart, international companies may not accept local payment methods in Latin America, but online shoppers in Latin America can use Bitcoin for shopping. The currency can also help the tourism industry in Latin America to tide over the current economic crisis safely.
Since Bitcoin can be used by anyone with an Internet connection, it can also reduce foreign exchange costs for tourists and merchants. Because the popularity of credit cards in Latin America is not high, some well-known tourist destinations can use Bitcoin as a payment method to attract more consumers, and the payment speed is faster, the process is simpler, and there is no need to bear the cost and delay of wire transfer.
In addition, with regard to Bitcoin becoming the legal tender of El Salvador, Lebit Mining Pool CEO Jiang Zhuoer said that this is a historic moment for Bitcoin, and a new offshore financial center will rise, coupled with blockchain offshore company registration. With preferential policies such as, taxation, the rise of small countries will not be a dream. At the same time, Jiang Zhuoer is also more optimistic about Panama’s prospects and added, “Panama follows El Salvador and may become the next country to support the legal status of cryptocurrencies. Panama also serves as the control country of the Panama Canal (the main link between the Atlantic and the Pacific). , The impact is much greater than that of El Salvador.”
Perhaps El Salvador is just a small country, but for his bold attempt, some countries are already eager to try, trying to imitate and follow. So far, Latin American politicians from seven countries have made it clear that they are also interested in Bitcoin.
However, “good fortune and misfortune”, the International Monetary Fund also stated on June 10 that there are many economic and legal worries regarding El Salvador’s move to use Bitcoin as legal tender, and the adoption of Bitcoin as legal tender may trigger A series of macroeconomic, financial and legal issues that require careful analysis.
But no matter what, Bitcoin has taken another important step. Any great change is always torn from an inconspicuous crack, and the shock brought by cryptocurrencies such as Bitcoin may not be far away.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.