SOMETHING interesting happened last week. On June 8, El Salvador, a small Latin American country, adopted Bitcoin as its currency, and now, there are dozens, if not hundreds, of articles pontificating what this might mean for the world and the global economy as a whole, and this article is no different.
For a small nation like El Salvador to adopt Bitcoin means several things to several people. For crypto enthusiasts, it means a major step in their widespread adoption of cryptocurrency, and possibly an increase in their portfolio.
From a geopolitical perspective, it means a weakening of the traditional banking system, and a nail on the coffin of the US dollar as the global reserve currency.
For governments, El Salvador is a test case should they want to follow suit.
In any case, El Salvador’s adoption of Bitcoin is a big deal. If they’re successful, other countries may follow their lead. For one thing, the widespread use of Bitcoin makes people more dependent on technology.
Secondly, the use of Bitcoin has the potential to undermine global powers and even global institutions. Let me put it this way: Bitcoin has no International Monetary Fund, and is designed not to have one. If Bitcoin adoption becomes popular, and if the old postwar institution cannot adapt to the changes, then the world as we know it will change. Whether that will lead to more centralization or its opposite is anyone’s guess, however.
Finally, El Salvador’s move to adopt Bitcoin is brave. Bitcoin’s price is very volatile, and it does not have the historical or institutional support that US dollar has. Those who wish to emulate El Salvador’s decision will have to take a lot of risks.
But with cryptocurrency becoming more popular, and other Latin Americans saying they’re interested in following El Salvador’s path, other countries may noy be far behind./PN
