The era of the Bitcoin Standard begins?
I honestly did not want to write about Bitcoin for a while, but the commotion in the world generated by the news coming from El Salvador, which becomes the first state to adopt the main cryptocurrency as legal tender in the country, cannot go unnoticed under the table. It is no small thing, this could represent a chain effect in other countries with the same characteristics of the small Central American territory, overwhelmed by poverty, the absence of export revenues and a debt that swallows 90% of the Gross Domestic Product, the option of adopting the "new digital gold" as a currency without restrictions on use or storage is the best decision that any government can take.
It is important to consider that the Salvadoran President, Nayib Bukele, assumes this position after feeling the economic pressure coming from the decision of the Biden Administration to deny him the financial resources offered by the United States Agency for International Development (USAID), besides threatening (for a change) the Central American country with the application of more severe measures if it does not control the migration of its citizens to the United States. We must remember that about 30% of El Salvador's income comes from remittances sent from the United States, if this resource is somehow blocked the collapse of that country would be of holocaust levels.
The fact is that this is a recently dollarized country, that is to say, its legal currency is the same one issued by the Federal Reserve of the United States: the dollar, therefore it depends exclusively on a foreign power in the macroeconomic factor. Likewise, 70% of the population (7 out of 10 Salvadorans) do not have access to a bank account, their dependence on cash linked to remittances sent from the country located between Canada and Mexico is absolute, with the factor that the cost of transferring the money to Salvadoran territory is immense, both for those who work in the north and for their families.
But beyond the Salvadoran case which still remains to be discovered in what form the BTC will be adopted and how the Biden administration will fight this measure (because it will), surely if this is successful other countries will join this bitcoin system. El Salvador is the first country that assumes an open position with respect to this digital currency, however there are others that are suspected to be developing Bitcoin mining in a hidden way, such as Venezuela, Iran and China itself, the latter with a rather ambiguous position with respect to the main cryptocurrency, prohibiting its exchange and commercialization but not its possession and mining.
China wants to make its cryptoyuan the main centralized digital currency in the world, a version of the dollar but without printing and in blockchain, however its main problem lies in the fact that apart from the extreme control of the State (and the information it can get from users through wallets) this type of money has not yet had an impact on society. On the other hand, there is a suspicion that China assumes some form of backing of its currency in physical gold, given the large amounts of this metal that it acquires as its dollar reserves increase.
The Central Bank of China keeps under hermetic secrecy the amount of gold it keeps in its vaults, it is thought that it is a number that far exceeds the reserves of the USA, but knowing the lack of clarity and how manipulable the gold metal market is, it seems unlikely to return to the gold standard with a currency that works just like a fiat but at a digital level, So what if we remove the tangible factor from the equation and replace it with an intangible and decentralized one, incapable of being manipulated by anyone, secure and universal like Bitcoin?
BTC has the necessary characteristics to become (if it already is) a store of value far superior to gold, since it is easily fractionable, accepted everywhere and does not require costly infrastructures, surveillance and questionable extraction methods for its circulation. On the other hand, as the fiat model wears out, the next route to follow will be that of centralized digital currencies, which, however technological they may be, is nothing more than a fiduciary method. So, if any government, let's say El Salvador, announces that the next step it will take will be to put into circulation a digital currency backed by BTC, wouldn't this create a domino effect in the world, probably yes.
In an increasingly technological world, highly dependent on everything digital, keeping the old analog schemes such as cash or fiat money afloat seems impractical. Likewise, in these times when one power refuses to give up its leadership and another is considering taking its place, the most feasible non-nuclear option to end the power of the dollar and fiat currencies is represented by BTC. There is no doubt that perhaps in the medium term this cryptocurrency will become the object of desire of the States, displacing the dollar, yuan, euro and all other fiat currencies to the extent that the governmental digital money models discover their uselessness to contain the satoshis, there will be no other option but to accept and crown the new king.
So, will we be seeing the beginning of the new era of the Bitcoin Standard?
