“What the critics fail to recognize is that developing countries like El Salvador are leading the world in embracing decentralized digital currencies and payments.”
“[El Salvador] they are choosing to try something new. This deserves praise, not derision.”
Days after El Salvador became the first country to adopt Bitcoin as legal tender, credit rating agencies and global regulators, including the IMF, had raised several concerns.
Bitcoin as legal tender… again?
As far as adoption is concerned, however, Chainalysis’s 2021 research confirmed that developing countries are leading the adoption index. The study stated reasons like inflation, ease of exchanging remittances, and carrying business transactions in emerging markets as being responsible for greater adoption.
Along similar lines, BitMEX’s CEO also made predictions for emerging markets. He asserted,
“My prediction is that by the end of next year, we’ll have at least five countries that accept Bitcoin as legal tender.”
According to the exec, all of the five countries will be developing countries. Additionally, he listed out reasons why developing countries will be the ones to jump into crypto next.
“The importance of this [remittances] cannot be overstated for many developing countries whose main export is human capital.”
Quoting World Bank figures, Höptner argued that$540 billion in remittances reached low and middle-income countries last year. Therefore, it is no surprise that Bitcoin’s “near-negligible fees and quick 24/7/365 transactions” are spiking interest.
“For remittance dependent countries and countries that suffer from hyperinflation, it’s not just the most sensible choice – it’s almost our only choice for survival…”
In the context of inflation, Höptner believes that “Covid-19-related stimulus” has raised those concerns. On the back of the pandemic, the IMF had also claimed that due to several factors, emerging markets and low-income countries are more vulnerable to inflation.
Politics of Bitcoin
Having said that, the road to Bitcoin adoption is still not simple. According to the exec,
“Politics will play a big role in the adoption of Bitcoin as legal tender…”
This means failure by politicians in implementation will “hurt wider adoption of cryptocurrencies in general.” Just like the dream of “economic liberation” with Bitcoin adoption still remains debatable in El Salvador.
Meanwhile, large transaction volumes on peer-to-peer (P2P) platforms also continue to drive the adoption index in many emerging markets, as per Chainalysis.