Forcing someone to accept Bitcoin is a fiat action. Literally fiat. Fíat in Latin means “let it be done”, it implies a decree. When El Salvador passed its Bitcoin Law and made it mandatory for businesses to accept BTC, it promoted Bitcoin from a fiat approach, not a bitcoiner. Therefore, not only is it not bad that they decide to modify such an article of the Bitcoin Law, but it is a good thing, a necessary amendment.
How does a State adopt Bitcoin the first time?
That a State adopt bitcoin as a currency is in itself contradictory, and it seemed even more so in 2021, when El Salvador was a pioneer in give legal course to Cryptocurrency in the country. This because Bitcoin dilutes the ability of the State to impose monetary policy through the Central Bank. It means taking power away, giving up a tool.
However, El Salvador had already renounced that power when was dollarized in January 2021. Any dollarized country, or that uses the national currency of another country, loses the ability to influence the domestic economy through interest rate manipulation or of the currency issuewhile becoming dependent on the monetary policy decisions of the country whose currency it uses; United States, in this case.
Dollarizing is an act of faith that the US Federal Reserve will manage the economy “well,” although we are left wondering what “well” means in the scope of central banking.
At the moment when Nayib Bukele decides move forward with bitcoin adoptionthe Federal Reserve had not been managing anything well. The huge amount of emission monetary that had been carried out in 2020 to face the Covid19 crisis, Under the first administration of Donald Trump, it ensured high future levels of inflation that would obviously be exported to El Salvador.
In that context, adopting the scarcest asset in history for the national economy sounded like a sensible way out. But being pioneers, There was no previous precedent or manual regarding how a State adopts Bitcoin. Bukele being someone who use military force For the legislative branch to approve a loan, it does not seem incoherent that the first way designed to explore the unknown terrain of Bitcoin adoption has been fiat, through decree and obligation. It is a reason of state.
A paper obligation, but a point of honor
At first, the obligation to accept bitcoin as payment in El Salvador generated controversy national. People were concerned about the technological gap that was opening up, especially for businesses among the population with fewer resources. However, the law already contemplated this scenario:
Art. 12.- Those who, due to a well-known fact and evidently, do not have access to the technologies that allow transactions in Bitcoin to be executed are excluded from the obligation expressed in article 7 of this Law. The State will promote the training and mechanisms necessary for the population to access Bitcoin transactions.
Bitcoin Law of El Salvador
Years passed and the protests disappeared, probably because it was noted that the adoption of Bitcoin was not as aggressive as it was stated on paper. But the mandatory nature of Bitcoin was still a focus of conflict for the International Monetary Fund to approve the USD 1.3 billion loan that El Salvador has been asking for since 2021.
For a long time, Bitcoin felt like a point of honor in which the government was not willing to give in to close the agreement. However, as Bukele himself admitted it In August this year, the adoption of Bitcoin in the country was not as he expected.
In this sense, the indications that the Bukele administration will eliminate the obligation to accept payments in bitcoin seem, more than a true abdication to the pressures of the IMF, a strategy in which El Salvador is honest with the reality that the paper does not reflectwhile you earn a loan that will give you financial comfort.
The international lender and one of the main representatives of the fiat world may believe that this is a victory against the advance of Bitcoin. But the truth is that today, three years after El Salvador opened the doors for the bitcoinization of the State, reversing the imposition of Bitcoin seems more like a recognition and rectification of a pioneer error.
The bitcoiner path of adoption
Today we understand that the state adoption of Bitcoin goes more along the path of adoption of bitcoin as a reserve asset that by his decree as currency. And it seems that Bukele has also understood it. Having been firm with its Bitcoin bet despite the pressures until this historical moment, in which more and more local or national administrations They point towards a bitcoiner treasurywe can believe that Bukele no longer sees risk in correcting mistakes such as the imposition of Bitcoin among the Salvadoran population.
Bitcoin is a currency that is adopted by consensus. Nobody forces you to use Bitcoin; Participation is completely voluntary. That has always been the natural process of this open source money technology: you study Bitcoin; you understand their rules; you decide whether to accept them or not; If you accept them, you participate as another node in the network, ensuring that the rules are followed; If you don’t like them, you can stick with the rules imposed by fiat, look for another cryptocurrency whose rules you do like, or even create your own rules. Bitcoin doesn’t care.
The Bitcoin network is also completely neutral to whoever uses it. It doesn’t matter if you are an individual, company, State or whatever you are. For Bitcoin, you are one more address, one more node, one more miner; equal to everyone before the rules of protocol.
This is why the most bitcoiner way for adoption by the State is passively, reducing interventions that make it difficult for individuals to access Bitcoin; and actively, buying and Mining Bitcoin, participating in the network as another node.
Whatever the details of El Salvador’s agreement with the IMF, eliminating the obligation to accept payments in bitcoin, even if only on paper, is a rectification on the right path towards a bitcoinization of the State that stops reproducing the evils of fiat logic
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