Countries where Bitcoin (BTC) is legal
Usually there are macroeconomic factors that a country wants to deal with by adopting a currency as legal tender. To make Bitcoin legal tender, these factors should coincide with visionary leadership.
Despite that, central banks are moving into digital currencies. There are countries with more fundamental problems that just a digital version of a fiat currency may not solve. For example, countries like Argentina and Venezuela have suffered from hyperinflation for years and can get by with a form of currency that derives value from much outside their own economy. There are also countries such as El Salvador, Panama, Guatemala and Honduras, where a large percentage of GDP is contributed by remittances. This facilitates a form of value exchange that is not limited by national borders. For example, 24.07% of El Salvador’s GDP in 2020 came from remittances.
Another consideration for countries is the extent of financial inclusion in their economies. While the customer journey around cryptocurrencies is by no means user-friendly, it must be said that hyperlocal experiments in creating a bitcoin ecosystem in countries like El Salvador have seen some success. With remittances contributing to the economy to a large extent, digital currencies can not only aid financial inclusion but also achieve cost savings on transfer fees.
It should also be noted that regimes rolling out Bitcoin as legal tender have claimed to bring financial inclusion to the population. Nevertheless, financial inclusion must often be preceded by mobile and internet penetration. Without the digital infrastructure, a digital currency will not be able to solve the problem of financial inclusion all by itself.
So, which countries have adopted Bitcoin as legal tender and how have they done it? El Salvador is the first country to adopt Bitcoin as legal tender. Aside from the macroeconomic factors described above, the country had a leader willing to experiment with bitcoin. He has since been a loyal ambassador for the cryptocurrency.
The second country to adopt Bitcoin as legal tender is the Central African Republic (CAR). CAR is rich in natural resources such as gold and diamonds and has an economy of $2.3 billion. Yet financial inclusion is quite low and they rely on remittances. Aside from embracing Bitcoin, the country also revealed that 20% of its treasury will hold Sango Coin (SANGO), a digital currency that will reflect the health of the country’s natural resources.
