Before the acceptance of bitcoin as a legal tender in El Salvador, there were a lot of complications in it. China was implementing a strict ban on cryptocurrency mining, and therefore, the prices of bitcoin were decreasing. Also, China is looking forward to protecting its environment by imposing a complete ban on cryptocurrency mining operations. It says that due to cryptocurrency mining, a lot of electricity is consumed and therefore, it leads to carbon emissions. Therefore, it is not at all healthy for the ecosystem of China. If you are planning to trade Bitcoin, use a trusted trading platform like bitcoin-billionaire.
On the contrary, let in America is welcoming cryptocurrencies with open hands. For example, on September 5, El Salvador’s president announced at the bitcoin 2021 conference that it would accept bitcoin as a legal tender. Right after the approval of this decision by the Central American Parliament, bitcoin prices started to increase. It increased by 5%, and therefore, cryptocurrency traders got to make a profit.
On the contrary, there is some negative news about cryptocurrencies as well. The FBI has seized 75 bitcoins worth $4.4 million. It is the data posted by a company based in Latin America. It was affected by some cyber-attack, and the bitcoins were stolen. However, the FBI can track some 64 bitcoins with the latest technology and advanced equipment. It is about 85% and is worth $2.3 million.
The tracking of bitcoin with the help of the FBI shows that the bitcoin transactions are not completely capable of being secure and anonymous. Bitcoin is significantly easier to track nowadays, and therefore, it has created some trouble in the minds of cryptocurrency traders. They believe that if the cryptocurrencies are not as safe as the firms believe them to be, it will create a massive problem.
El Salvador is the first country to accept bitcoin as legal tender. It is something that has boosted the cryptocurrency environment to a large extent. Also, the interest of neighbouring countries of Latin America with El Salvador has been very problematic for the prominent players. They support the use of bitcoin in legal tender, and they are also looking forward to implementing some cryptocurrency bills in the future. However, the giant players of the global economy are not in favour of the same. Some major countries in the global ecosystem like China, India and the United States of America are looking forward to imposing restrictions and regulations on cryptocurrency transactions. Also, if the bitcoins would not have been decentralised, the possibility would altogether have disappeared to implement it in the legal tender in the country.
The vital matter of concern here is nothing else but the worry of bitcoin being accepted as legal tender in different countries despite the harmful warning of the IMF. Some large international organisations are accepting bitcoin as a legal tender. However, El Salvador has still taken a step towards accepting it in the legal tender. It is essential to understand that the adoption of bitcoin as a legal tender will not be a matter of concern for the countries affected by hyperinflation and fluctuations in monetary policies. The same was the case with El Salvador. It was not a very well developed country, and also, the monetary policy was fluctuating more openly. Therefore, acceptance of bitcoin as a legal tender will provide some support to the country, and it may have chances of development.
Is bitcoin risky?
The volatility in the cryptocurrency market is dependent on the acceptance of a particular coin. If one digital coin is accepted widely by larger masses of the population, it will increase the prices. The same is a concept for bitcoin. As El Salvador accepted bitcoin, it experienced increased prices. In the case of China, it neglected cryptocurrency mining, and therefore, the prices started to decline. Therefore, it is very well understood that bitcoin is a hazardous investment option and a risky currency to adopt.
The process of deciding the price of bitcoin is price discovery. We can only mine 21 million bitcoins units, and therefore, there is a limit imposed on the market capitalization. Therefore, there are huge, unpredictable decisions regarding countries associated with bitcoins, and the value of bitcoin also oscillates naturally. As the process of price adoption for bitcoin is unstoppable, it is a long-term process for the proposition of bitcoin value. This currency has no rules and regulations by any controlled government. It is driven by its own rules and software, and monetary policy. Therefore, it is evident that bitcoin is unequivocal, and many Latin American countries are now interested in it.
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