Consequences of Adopting Cryptocurrency as a Legal Tender with Reference to El Salvador

Abstract

The objective of this research paper is to study about the various implications a nation has to face if they adopt any cryptocurrency as a legal tender and a form of currency in the economy and the case study of El Salvador when they adopted bitcoin as a legal tender. The president has said that the problem of high transaction fees when people send money to El Salvador from abroad which accounts for 20% of the nation’s GDP will be solved by this move. The government also wanted to get rid of the UD dollar and excessive United States government control over the country’s economy. Usage of bitcoin also has some other benefits such as no banking fees on bitcoin transactions, low transaction fees on international bitcoin payments, transactions are mobile and secure as they are equipped with blockchain technology and transaction are not required approval from authority or an external source unless the transaction is international. Cryptocurrency is also facilitating transactions for various crimes. Bitcoin mining also poses a huge environmental hazard as a lot of electricity is used in the process.