Luxolo Financial

A closer look at crypto-friendly nations

Melissa Karns,
for Luxolo Financial
Crypto is entering the real world in some interesting and exciting ways.

As more countries adopt Bitcoin as legal tender, this cryptocurrency is getting closer to being used regularly in our everyday lives. And while Bitcoin is mostly spent in virtual spaces, the adoption of this digital currency means it can be used for any transaction in certain nations — from buying that daily cup of coffee, to paying rent each month and taxes annually.

Given Bitcoin’s ease of use in daily commerce through free, smartphone-based digital wallets, this move proves the currency is both tangible and practical as it has now been accepted by governments in El Salvador, Central African Republic and Panama. There, people can use it just like cash to make purchases, pay bills and more.

Advocates say the adoption of Bitcoin and other cryptocurrencies as legal tender is a way to strengthen economies by creating a fully inclusive financial system. The opposition contends widespread acceptance could prove tricky due to the volatility of the cryptocurrency market.

What’s important to know is that the world of crypto is moving fast — in less than a year’s time, these three countries approved Bitcoin as legal tender.

Here’s a quick primer on why some nations have welcomed Bitcoin to come alongside other government-approved currencies as a way to pay for life’s necessities.

Little countries that could

By its very nature, crypto is global and decentralized, meaning it is not controlled or backed by a government (such as the U.S. dollar). As we so often see with burgeoning tech advancements, it takes a leader/advocate figure to push the world forward. With Bitcoin, it’s no different.

In September, El Salvador, spurred by crypto-bullish President Nayib Bukele, became the first country on the planet to approve Bitcoin as legal tender. And while this country may be the smallest in Central America, its adoption of digital currency has made a big impact — setting the stage for additional governments to consider accepting cryptocurrencies.

From Ahuachapan to San Salvador, citizens can make their Bitcoin an everyday spend.

El Salvador’s experience with Bitcoin began in 2019 when the small, seaside village of El Zonte was gifted $100,000 worth of bitcoins from an anonymous donor. The little village became known as “Bitcoin Beach” and made big waves toward the country’s eventual adoption.

Since then, the Central African Republic has gotten on board and approved Bitcoin as a legal tender after a unanimous parliamentary vote. And recently, Panamanian lawmakers have approved a bill that would allow citizens to use Bitcoin and eight other cryptocurrencies as money for everyday purchases and payments. While there’s no predicting the future, it’s clear that these three nations’ financial futures will garner a great deal of attention.

Mainstream financial asset

In areas without access to traditional banking services, the adoption of cryptocurrencies, like Bitcoin, is often seen as a way to eliminate barriers to traditional banking systems where things like credit history, insufficient balances, and even social credit scores can prevent many from taking part.

Now, small businesses like this Panama street vendor can accept and spend their crypto nationwide.

According to the World Bank’s Global Financial Inclusion database, 1.7 billion adults are unbanked across the globe. This makes cashing checks and paying bills very difficult; plus, it prevents entire swaths of citizens from partaking in the wider world economy.

Still, the International Monetary Fund (IMF) has expressed concern about consumer protection and the stability of cryptocurrencies.

Crypto’s volatility is one characteristic that often makes it appealing to investors. A strongly diversified portfolio can help weather cryptocurrency’s sometimes-wild swings. But for some

impoverished nations, the volatility could leave folks with variable amounts in their wallet when they need it most. Such fluctuations also could challenge a government’s ability to meet conversion needs, according to the IMF.

Whether new to cryptocurrencies or an experienced investor, a Maine-based digital asset wealth management firm dedicates itself to helping clients understand all the changes happening right now in the world of crypto. Luxolo Financial employs a team of crypto and banking experts who live at the intersection of the two, ready to answer any and all questions about how this highly promising system can make a difference in any portfolio. Already, countless investors have developed a diverse investment strategy with hands-on help from Luxolo’s in-person cryptocurrency exchange desk.

Could the United States be next to approve Bitcoin and other cryptocurrencies as legal tender? Experts are skeptical, but nearly 30% of U.S. residents support making Bitcoin legal tender, showing some burgeoning interest in the possibility.

In any case, it’s clear that crypto has evolved well past a niche interest on the way to being accepted as real-life hard currency. With mainstream government confidence, the future of crypto has seemingly never looked brighter.

Book an appointment today with one of Luxolo Financial’s experienced and knowledgeable agents and learn more about building your own cryptocurrency wealth.