At present, El Salvador and the Central African Republic (CAR) are the only two countries in the world where Bitcoin functions as a legal currency. However, speculations abound that many others are likely to follow suit.
Bitcoin or Cryptocurrencies are one of the most talked about subjects of the last decade. Ever since the emergence of blockchain technology, the traditional global financial market has witnessed a revolution. Armed with the power to decentralise, cryptocurrencies have emerged as the future of finance.
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Since 2017, when the first Bitcoin boom occurred, countries and institutions worldwide have been taking notes. Back in May 2021, President Nayib Bukele of El Salvador, a small Latin American country, declared that they are adopting BTC as the legal tender. Eventually, El Salvador became the first country in the world to adopt BTC as a legal tender.
On April 27, the Central African Republic (CAR) adopted BTC as a legal tender too. Despite being rich in natural resources, CAR has remained one of the poorest countries in the world. President Faustin-Archange Touadera expressed his belief that adopting BTC as a legal tender will bring prosperity to the country in the future to come. Some experts also believe that this decision can help the country to reduce its dependency on the US Dollar and create sustainability for the struggling nation.
Moreover, last year, a special economic zone on a specific tourist-centric island in Honduras, have adopted BTC as a legal tender as well.
As of now, El Salvador and the Central African Republic (CAR) are the only two countries in the world where Bitcoin functions as a legal currency. However, speculations abound that many others are more likely to follow suit.
Adopting BTC as a legal tender
The Central Banks and Regulatory authorities of a country or a nation decide on what can be used as legal tender under their jurisdiction. For instance, a $5 or a $10 bill can be used to purchase items in the USA since those bills are considered legal tenders in the US.
Similarly, adopting Bitcoin as a legal tender means that the citizens of the country can pay for any item through Bitcoins, the same way they use fiat currencies. Without approval from the Central Banks, anyone accepting BTC for selling goods in a country can put oneself at risk. BTC can become a form of value exchange only when it receives explicit support and approval from the Central Banks.
Digital currencies such as Bitcoin and other cryptocurrencies make it easy to trace every unit of currency spent, reduce money laundering, and calculate their taxes in a more organised manner.
Therefore, countries such as the UK, US, China and India are busy creating pilot projects regarding Central Bank Digital Currencies (CBDCs). These countries obviously have found some credible uses for cryptocurrencies instead of fiat currencies.
5 countries likely to adopt Bitcoin as legal tender
Saint Kitts and Nevis
On November 12, 2022, while speaking at the Bitcoin Cash 2022 Conference, Terrance Drew, the Prime Minister of the Caribbean nation of Saint Kitts and Nevis said that the country may adopt Bitcoin Cash (BCH) in the following year.
As a member of the Eastern Caribbean Central Bank and a part of their CBDC program DCash, Drew said that their nation was a forward-thinking nation that encouraged exploring modern technologies for the future of their people.
Soon after El Salvador declared BTC as their legal tender, Carlitos Rejala, a member of Paraguay’s Chamber of Deputies, proposed a bill for accepting BTC as legal tender in the county.
Next year, he is willing to run for President, and part of his campaign will be dedicated to this cause. As a result, it is possible to see Paraguay as a BTC-friendly country.
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Just a couple of years back, Ukraine created its own Ministry of Digital Transformation, and they have announced that the country aims to become one of the foremost authorities on crypto.
As the war between Russia and Ukraine rages on, we have seen how people across the world have donated millions through crypto payments as wartime assistance for food and basic supplies. Vitalik Buterin, co-founder of Ethereum, himself donated $5 million to the country during the war. Although it is highly unlikely right now, in the middle of the war, there is a strong possibility that Ukraine will be adopting crypto as a legal tender soon.
The chances of Venezuela adopting crypto as a legal tender is relatively high since the Venezuelans have been using crypto for quite some time, not as a hedge, but to pay for their daily requirements. Some experts also believe that crypto could usher in an era of economic freedom that would eventually lead to the end of socialism in Venezuela.
US & Russia
The two countries mentioned in the list of top probable countries to adopt BTC, according to CoinMarketCap, are the United States and Russia.
The position for US and Russia to take a step toward BTC adoption right now is unlikely. The state of regulation in the US is cumbersome, while Russia is at war with Ukraine. As the crypto winter continues, we may have to wait to hear about developments from these two giants on crypto adoption.