El Salvadore builds nations Bitcoin infrastructure on Algorand

Source With Bitcoin now being legal tender in El Salvador the nation has turned to Algorand to build its bitcoin infrastructure, despite heavy protests from the people of El Salvador the president is pushing forward with his pledge of making Bitcoin legal tender. The reported main purpose of algorands use will be for the tracking of COVID19 and financial services of undertaking transactions and Decentralised Finance which has seen significant growth on the Algorand block chain Source

Financial Remittance main driver of adoption

One of El Salvador's main income streams and industries is financial remittance predominantly coming from the United States, which in part is why the nation adopted the US Dollar as legal currency in which Bitcoin will sit opposite the US Dollar as legal tender.

However, financial remittance can be a costly exercise as a number of intermediaries act as middle men to the process which can result in high transfer costs and even loss of money. This has become the main driver of Bitcoin adoption in the South American nation as it hopes to cut the cost of remittance source The other benefit which has drawn the close attention of neighbouring South American nations is the ability to circumnavigate sanctions such as the financial remittance sanctions placed on CUBA last year by the Trump administration source something no doubt world banks across the globe will also be monitoring as it can pose a risk to global financial security and a risk to current regulations surrounding anti money laundering and funding or terrorist organisations.

Algorand Price Rallies 600%

source Algorand has has seen significant price rallies growing 600% since the announcement that it had partnered with El Salvador to develop their financial system Chivo source but the Proof-Of-Stake network has been growing in popularity and as reported been the focus of many smaller nation governments for its speed and settlement process.

The launch of Bitcoin as a legal tender has been marred with protests as citizens advocate that they had not been consulted or provided adequate training on what Bitcoin is. Many have not participated in digital currencies and the first they had learned of them is when their President legalised the tender with many store owners unsure on what Bitcoin is. This was further impacted by Chivo the financial service known as a digital wallet that would be managing the transfers crashed source

Bitcoin ATM's and FREE Bitcoin

To launch Bitcoin the El Salvadorian government has established a government fund to back the currency. The fund is $US150 million and is to ensure people are able to withdrawl cash from Bitcoin ATMs which are being rolled out across the nation. Furthermore, the El Salvadorian Government is also providing early adopters of the wallet $US30 worth of Bitcoin to get them trading source

El Salvador also hopes that being the first nation to legalise Bitcoin and legal tender will help drive its tourism on so called Bitcoin Holidays providing a location for early adopters of Bitcoin whom have become overnight millionaires a place to travel and legally spend their Bitcoin source.

The move could potentially add millions and even billions of dollars to El Salvador's struggling economic nation.

Opinion

Them move has definitely drawn the attention of the cryptosphere and also that of other nations looking to develop financial policies and regulations to enable the trading of digital assets but still meet monetary legislation and regulations. Concerns do come to mind with the ability to circumnavigate global sanctions and a new problem arises for governments and policy makers to plan and develop new ways of tackling perceived and real risks.

Will it work? it is anyone's guess however, no doubt we will see many travelling to El Salvador once COVID restrictions ease and to try out the new system. As for the people of El Salvador, I am of the opinion if the government was to take this seriously they should have developed a trial with opt in traders and rolled the initiative out slowly and not rushed the process.

What we have come to witness is a large portion of El Salvadorians do not have access to the internet or much of the outside world so have been kept out of the loop of what digital currencies are. There would have been a significant benefit to upskilling and training the broader community prior to a universal roll out across all sectors.

What are your thoughts? let me know in the comments section below.

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