Cryptocurrency has had a rough few months. Since the last quarter of 2021, many cryptocurrency tokens have gradually started losing their value. This is expected in cryptocurrencies due to their ability to fluctuate in value over time. This was not a big deal at the moment since most of the tokens ended the year at a higher level than at the beginning. The problem became more alarming this year. This year has been bad for almost, if not all, the cryptocurrency tokens in the world. Some of the tokens have lost most of their value, with Tera Lunar losing all its value.
This begs the question, what will this development mean to countries that have adopted cryptocurrency as a legal tender for transactions? For those who don’t know, El Salvador was the only country that had adopted cryptocurrency as a legal tender for transactions for a long time. Recently, the Central African Republic passed a bill allowing Bitcoin to be used in the country as a legal tender.
It might take the Central African Republic a few months to develop the infrastructure and other things required to make the adoption successful. Still, El Salvador already has everything in position, and Bitcoin is already in use. For Bitcoin to be adopted in El Salvador, the main player that helped in the adoption was president Nayib Bukele. Nayib Bukele is a well-known Bitcoin supporter and was the person who convinced other leaders and citizens to adopt Bitcoin in the country.
His main goal was to make the country one of the world’s greatest cryptocurrency mining hubs. His idea was that the people investing in crypto mining in the country would use the tokens rewarded for their proof of work for transactions. Now that Bitcoin and all other common cryptocurrency tokens are dropping in value every week, the country is in a strange position.
The bet Nayib Bukele and his government had made on Bitcoin proved a failure. Bitcoin and other cryptocurrency tokens were supposed to be the saviour. They were to be the solution to their dying economy and currency. But rather than solving the issues, cryptocurrency is causing more problems. The main problem is that people might lose hundreds or thousands of money every time the tokens lose value. This is a huge problem in a country where people have transferred their incomes and savings into cryptocurrency. With this problem, citizens are left to choose what to do in a crushing crypto market.
Their leader, Nayib Bukele, remains persistent that Bitcoin will be successful eventually. Although this is the case, many citizens have adapted to the situation. Some of the things they do include using the normal currency for transactions and holding US dollars for savings. This is a good idea and plan. They only use the local currency or transactions to buy and sell goods and services. The country already prefers using United States dollars for transactions, meaning people are better off using fiat currencies rather than cryptocurrency. This is causing a huge problem for cryptocurrency adoption as a legal tender of transaction. This failure might have unprecedented impacts in the future.