- “My expectation is that by the end of next year, we will have at least five countries accepting Bitcoin as legal tender. All of them will be developing countries,” wrote BitMEX CEO.
- High inflation, exorbitant transfer fees and political incentives may push developing countries to follow in El Salvador’s footsteps and adopt BTC as legal tender next year.
- In Alexander Hauptner’s opinion, the criticism of the Central American country’s bitcoin law by the mainstream media is unfair.
The recent move by El Salvador to make bitcoin legal tender alongside the dollar has sparked some criticism around the world, but mainly among the mainstream media, such as financial times And The Wall Street Journaland reputable financial institutions, including the International Monetary Fund and the World Bank.
Alexander Hauptner, CEO of bitcoin exchange BitMEX, explained in an October 6 blog post that the immediate reaction to the Central American country’s bitcoin law reflects the opinion of those who are profiting from the status quo.
“What critics fail to realize is that developing countries like El Salvador are leading the world in adopting decentralized digital currencies and payments,” Höptner wrote. “They have had decades to analyze how the global financial system works – and does not work – for their people. They recognize their inability to influence monetary policy decisions that can have dire consequences for their citizens.”
Höptner went on to explain that making bitcoin legal tender as El Salvador did in September does not mean a complete withdrawal from the established financial system. Rather, it means that countries are looking for alternatives to better benefit their population and economy.
“They are not entirely choosing to break out of the status quo of the monetary system (El Salvador still maintains its other legal currency, the US dollar), but they are choosing to try something new. This is to be commended, not ridiculed,” he said.
Developing countries usually face an economic reality that is very different from the developed economic reality. As a result, the status quo may not be enough – The alternatives have the potential to provide a better quality of life to citizens, thus improving the country as a whole. For this reason, the BitMEX chief anticipates that more countries will follow in El Salvador’s footsteps and bet on the alternative.
“My prediction is that by the end of next year we will have at least five countries that accept Bitcoin as legal tender,” Höptner said. They will all be from developing countries.”
High fees in remittance flows that reduce the actual amount of money transferred, frequent high inflation rates, and political incentives may make the ideal environment for bitcoin adoption to incentivize more.
Low- and middle-income countries received about $540 billion in remittances in 2020, nearly 75% of all global remittances, according to the World Bank. The International Monetary Fund has forecast that developing countries will see more than double the rates of inflation that advanced economies will take this year.
“Faced with an inherently unequal financial system, those who have the most to lose by continuing the status quo are acting in their own self-interest to explore alternative options such as Bitcoin. It would be wrong—and hypocritical—to show them with their noses while continuing to benefit from the same unequal system. Equivalent.”