Bitcoin As Legal Tender Around The World

One interesting thing about bitcoin adoption is places that allow it to be used either as a legal tender (El Salvador) or for payments (many businesses). I think what is most exciting is the game theory that plays out as more and more nations adopt bitcoin as a legal tender. Being a finite resource, only 21 million bitcoins, will ever be created, there is an incentive to adopt early as a reserve asset. “Getting in on the ‘ground’ floor”. 

Of course, some countries have less incentive to do that. For example, the United States enjoys huge benefits of the USD being the world reserve currency. To adopt bitcoin openly would show lowering faith in the USD, so likely, America will be one of the last countries to openly buy bitcoin. 

El Salvador was the first country to adopt bitcoin as legal tender. It has already given up it’s own currency and all transactions in the country were beign done in US dollars. Adopting bitcoin as a secondary payment method/legal tender really isn’t that big of a deal. 

Now there are a few more small autonomous regions that have started to also allow Bitcoin to be used as legal tenders:

 Lugano, Switzerland

Prospera, Roatan Island, Honduras

Madeira, Portugal

Rio De Janerio (for property tax payments)

The best number I could find was El Salvador owns 1800 bitcoins. I believe it is a few more as this was in Jan 2022. When comparing their population (6.5 million) to the world population (7.9 billion) and their bitcoin holdings (1800) to total bitcoin available (21 million) they hold about the right proportion relative to the world. But Since they are accumulating more, while the rest of the world doesn’t, they should pull ahead and have the economic benefits of that as the price rises. 

There are a few other more autonomous areas that have also legalized bitcoin. 

Lugano, Switzerland, has formed a partnership with stablecoin issuer Tether to establish bitcoin, Tether and Lugano’s own LVGA Points token as essentially legal tender in the city.r”

Rio De Janeiro Is Giving People a 10% Discount to Pay Taxes in Bitcoin

Honduras’ Roatán Island, Portugal’s Madeira to ‘Adopt Bitcoin’

https://cryptonews.com/news/honduras-roatan-island-portugals-madeira-to-adopt-bitcoin-mexican-senator-sends-bullish-sign-too.htm

More information about what exactly Madeira is. 

More information about what exactly Prospera (Rotan Island, Honduras) is.

Of course, Bitcoin is still quite risky. Then again, everything is risky.

Stocks are risky as any 1 company could go under. 

Holding cash is risky as it can be inflated away as a country prints more of it. This has happened in many countries in history. Just because it hasn’t happened in the USA yet is not a good reason to think it couldn’t! (I recommend this book , Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail -by Ray Dalio, as a very interesting history primer on money).  

There’s also a 1 hour youtube video summary, by the author, if you don’t want to listen to the whole book. 

As always, this is not investment advice or telling you to buy bitcoin. But I believe it is a very interesting technology and certainly worth learning about!

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