Can the “fiat currency” label break new ground for Bitcoin?

The recognition of bitcoin as a legal tender in El Salvador against the backdrop of the unprecedented dollar overdraft has brought the dollar and bitcoin head-to-head in a subtle way.

The bombshell exploded over the heads of El Salvador’s fans as the first country to actually legalize bitcoin, causing excitement.

According to news on June 9, El Salvador became the first country in the world to recognize bitcoin as a legal tender when its Congress voted to approve a proposal submitted by the president to make bitcoin legal tender.

“Bitcoin is a ‘super asset’ that many capitals or institutions are fighting each other for, and now there is a ‘small country’ to be added to the future, and a ‘big country ‘” Jiang Zhuoer, founder of Lepit Mining Pool, expressed his excitement about the news on his Weibo account.

In fact, in recent times, under the influence of the high pressure of regulation, the crazy fire of “cottage coins” has been extinguished and the systemic risks of the crypto market have been released. Right now, investor confidence is low and bitcoin is once again the focus of the cryptocurrency world.

On June 9, Bitcoin’s strong rally also rekindled the hopes of the bulls with the addition of positive news for Bitcoin.

“We all speak the same language, and that’s Bitcoin.” So said Jack Dorsey, CEO of Twitter, one of the world’s most influential tech entrepreneurs, on his personal Twitter feed on June 11.

According to one industry insider who did not want to be named, the two major threats to the crypto market ecosystem are market manipulators of all stripes and regulatory policies. At the same time, the legalization of bitcoin in El Salvador is a special dollar vs. bitcoin “match” against the backdrop of an unprecedented dollar overdraft.

First Country to Recognize Bitcoin as “Legal”

Since mid-May, a storm of regulation has been sweeping through the crypto industry. Right now, the wind is at everyone’s back. But then, El Salvador opened a window for bitcoin.

Information shows that El Salvador is a coastal country located in northern Central America with an area of 20,720 square kilometers and the country’s total population of 6.705 million in 2019.

On June 9, El Salvador’s Congress finally voted to approve the proposal submitted by the president for bitcoin as legal tender, ultimately receiving 62 out of 84 votes. This means that El Salvador became the first country in the world to recognize bitcoin as a legal tender.

AFP posted a tweet with a picture saying that this is a major event in the history of cryptocurrency after El Salvador passed a law accepting bitcoin as legal tender. El Salvador’s President Nayib Bukele retweeted the tweet and commented that El Salvador became one of the top 14 most important events in 12,000 years of “monetary history.

Meanwhile, Salvadoran President Nayib Bukele also tweeted that I just instructed the president of LaGeoSV (the state-owned geothermal power company) to develop a plan to provide very cheap, 100% clean, 100% renewable, zero-emissions energy from volcanoes for bitcoin mining.

Can the "fiat currency" label break new ground for Bitcoin?

El Salvador’s president instructed the state-owned geothermal power company to provide volcanic renewable energy for bitcoin mining. Photo credit: Nayib Bukele Twitter

Commenting on El Salvador’s use of clean volcanic energy for bitcoin mining, F2Pool co-founder Godfish commented that, as he learned when he visited hydropower in 2014-2015, geothermal power is low cost for thieves, highly stable, and the main cost is the cost of digging geothermal wells, for which volcanic areas are particularly suitable.

“Today is a historic day.” Jiang Zhuoer said do not think that El Salvador is just a small country, small countries are also complete sovereign states. In the same comparison, the Cayman Islands is only 60,000 people, but the number of companies registered in the Cayman Islands is more than 100,000, including more than 700 banks, more than 800 insurance companies and nearly 10,000 hedge fund institutions. Among them are subsidiaries of large multinational companies such as Coca-Cola, Procter & Gamble, Intel and Oracle, as well as major Chinese companies of all types such as Tencent, Baidu, Alibaba,, New Oriental, Evergrande Real Estate, Beyoncé and Mengniu.

“If El Salvador is run properly, it is expected to become the Cayman Islands of cryptocurrencies.” He believes that in the long run, this is the biggest positive for bitcoin this year, surpassing the short-term funding benefits such as the passage of the U.S. bitcoin ETF and Apple’s purchase of bitcoin, and that in the future, you can directly dislike “bitcoin has no value without government endorsement.

What comes after El Salvador?

The application of this experiment as a legal tender by a sovereign state has certainly played a positive role for Bitcoin at the moment.

On June 11, the Securities Times published an article titled “Bitcoin’s Perfectly Controlled Experiment”. The article stated that the full legalization of bitcoin in El Salvador is a perfectly controlled experiment. El Salvador has no currency of its own, and both the U.S. dollar and bitcoin are foreign objects, so there is no ideological barrier to having them “on the same stage”.

Cryptocurrency analyst Lark Davis tweeted that 70 percent of El Salvador’s population is unbanked, but has a 146 percent cell phone penetration rate, and they rely on the dollar rather than their own currency. That means it’s a perfect country for rapid bitcoin adoption.

And the success or failure of this experiment will be measured by whether it can replace the U.S. dollar. The Securities Times article argues that because of transaction costs, the vast majority of a country’s payment currency function will eventually be carried by one currency, and it is unlikely that the two currencies will coexist in the long run. El Salvador has given bitcoin and the dollar almost the same authority and a completely free floating “exchange rate” between the two, while neither is subject to Salvadoran intervention, so the playing field is fairly level. If Bitcoin’s stability (anti-inflationary properties) and anonymity security are as good as its adherents say they are, there is no reason why Bitcoin should not replace the dollar.

As it stands, the world has been suffering from the dollar for a long time, and there may be few followers to follow suit.

“Look for Panama to be the next country to support bitcoin.” Jiang Zhuoer said, because the United States this epic release is too hard, the Federal Reserve directly doubled the dollar, Latin American countries as the United States’ backyard, collectively by the dollar a hard minting tax. There are also media reports that Panamanian congressman Gabriel Silva has also said he is working on a proposal to include bitcoin and other cryptocurrencies within the country’s legal tender.

In addition, LordFusitua, a member of Tonga’s upper house, said he and the Jackmallers want to use the country’s $750 million in reserves to buy bitcoin, representing 37 percent of its GPD.

June 12 (Bloomberg) — After El Salvador adopted bitcoin as legal tender, many small and developing countries will now legalize or at least make rules about cryptocurrencies, according to cryptocurrency expert Himanshu Kumar. Using Bitcoin as a legal method of payment will empower the people of Nigeria and will help them access money from all over the world without having to pay large sums of money to banks. It is important to use Bitcoin and give power back to the people, especially for a country like Nigeria.

The regulatory curtain is being pulled back

Bitcoin is currently favored by some smaller countries, but several of the world’s major powers still see it as an “outlier” and are hounding it. Among them, China’s regulatory measures have landed in quick succession, receiving widespread attention from the global crypto industry.

On May 18, the three associations jointly issued the “Announcement on Preventing the Risk of Speculation in Virtual Currency Trading”, prohibiting financial institutions affiliated with the three associations from conducting business related to virtual currency; on May 21, the 51st meeting of the Financial Stability Development Committee of the State Council called for “cracking down on bitcoin mining and trading practices”. Since then, the tone for regulation of the crypto industry has been set at the national level.

Over the past few days, localities have followed up on the implementation of the regulation, and the rectification of the cryptocurrency and mining circles has been gradually pulled off.

On May 25, the Inner Mongolia Development and Reform Commission drafted the “Eight Measures of the Development and Reform Commission of Inner Mongolia Autonomous Region on Resolutely Combating and Punishing Virtual Currency “Mining” (Draft for Comments)”. After entering June, many places on bitcoin mining also began to take action to rectify.

On June 9, Xinjiang Changji Hui Autonomous Prefecture Development and Reform Commission issued a notice on the immediate shutdown and rectification of virtual currency mining enterprises, requiring the Xinjiang Jundong Development Zone Management Committee to immediately order enterprises engaged in virtual currency mining to stop production and rectify by 14:00 on June 9, and report the relevant shutdown and rectification to the Development and Reform Commission. On the same day, the Department of Industry and Information Technology of Qinghai Province issued a notice on the complete shutdown of virtual currency “mining” projects, requiring all regions to carry out cleanup and rectification of virtual currency “mining” behavior.

In addition, the Yunnan Provincial Energy Bureau office sources confirmed to “Blockchain Daily” reporter, according to the notice requires the timely organization of electricity departments to carry out joint inspections, at the end of June this year to complete the cleanup and rectification of bitcoin mining enterprises with electricity.

At the same time, the exchange has also become a key regulatory object. In this context, some small exchanges announced their shutdown, most of them suspended or restricted some trading services for mainland Chinese users and made some contraction of trading business and products.

On June 5, the Weibo accounts of several cryptocurrency circle vloggers were blocked, with the relevant pages showing that the accounts are now unavailable for viewing due to complaints of violations of laws and regulations and the relevant provisions of the Weibo Community Covenant.

On June 9, according to media sources, the search results for “Coinan”, “OKEx” and “Firecoin” on Weibo and Baidu were no longer displayed. The Weibo page also showed that “according to relevant laws, regulations and policies, the search results are not displayed”. It was later verified that Weibo and Baidu had blocked the above keywords.

On June 8, Securities Daily published an article stating that under strong regulation, crypto digital coin trading and mining behaviors were further regulated and rectified. Many experts in the industry believe that the heavy regulatory means that came one after another in May not only made investors fully aware of the nature and risks of crypto-digital coins such as Bitcoin, but also made them no longer blindly participate in any form of trading and speculation activities, thus better maintaining the stability of the financial order.

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