Bitcoin became an official currency in El Salvador on September 7, 2021. Since that day, the eyes of dozens of developing countries have been focused on the country presided over by Nayib Bukele. All these countries are waiting for the first feedback from this full-scale experiment of a Bitcoin standard to adopt the same strategy for their future.
In fact, the big question on everyone’s mind now is which countries will adopt Bitcoin as their official currency next.
In the media, we are seeing more and more headlines explaining that this or that country has legalized Bitcoin. You have to understand that there is a difference between legalizing Bitcoin and making it an official currency.
For the moment, only El Salvador has taken the step of going that far with Bitcoin.
As of this writing, just over 110 countries around the world have given Bitcoin status by making it legal to use. Wikipedia offers the following map:
El Salvador appears in small orange as the only country that has made Bitcoin an official currency. In green are countries that officially allow Bitcoin to be used by their citizens.
In yellow are countries that allow the use of Bitcoin with certain restrictions. In purple, you have Russia and China, which de facto ban Bitcoin without having actually passed a law about it.
Finally, in red, you have countries hostile to Bitcoin that have banned its use and ownership. The important thing to understand here is that just because a country has banned the use of Bitcoin does not mean that its citizens are not using it. Bitcoin is banned in Morocco, for example, and the volume of P2P exchanges in BTC continues to grow.
That’s the magic of a totally decentralized system that has no leader. It is unstoppable.
Among the countries most likely to make Bitcoin an official currency in the coming months and years, I think we should look to Central and South America. These countries have the example of El Salvador right in front of them, and they are likely to want to compete with each other to attract entrepreneurs from the Bitcoin world.
In this regard, Paraguay seems to be a very serious candidate.
Congressman Carlos Rejala has already announced his intention to present law to the parliament to attract Bitcoin and crypto-currency companies to Paraguay. This law could ultimately lead to the recognition of Bitcoin as an official currency in the country.
The example of El Salvador has obviously prompted Carlos Rejala to accelerate things in this direction:
“As I was saying a long time ago, our country needs to advance hand-in-hand with the new generation. The moment has come, our moment.”
The situation in Paraguay will need to be closely monitored in the coming months.
Closer to El Salvador geographically speaking, Panama is a small country by size used to play well above its class in terms of economy. The geography of the country has something to do with this as Panama represents the link between North and South America.
Panama enjoys strong support among the different political parties in the country. Several politicians were quick to respond to El Salvador’s announcement in June 2021. Congressman Gabriel Silva was quick to demand that his country follow El Salvador’s example:
“This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies.”
A cryptocurrency law has been introduced in Panama in early September 2021:
Suffering from the U.S. embargo for several decades, Cuba is also a credible candidate for recognition of Bitcoin as an official currency.
With the tightened restrictions under the Trump administration, citizens of Cuba are finding it increasingly difficult to use US dollars for their purchases. In August 2021, Cuba had to pass a law recognizing and regulating Bitcoin and cryptocurrencies for “reasons of socio-economic interest”.
This means that Cubans can officially use Bitcoin to bypass the restrictions that the country suffers from. Official recognition of Bitcoin as a currency could be next in the coming months.
In South America, Argentina is also an interesting candidate. People have been suffering from monetary hyperinflation for many years and Bitcoin is something that is already very popular. Discussions within the government have already mentioned this possibility several times.
Argentina has not yet taken action. The old guard is still wary, and possible threats from the IMF or the World Bank could scare off the more timid politicians.
The problem is more political here because the people are clearly waiting for this. We can nevertheless expect to see a bill emerge in the coming months. But it is not certain that it will pass.
In South America, people are talking a lot about Venezuela as a possible country that could recognize Bitcoin as an official currency in the future. Certainly, the population suffers more than anywhere else from monetary hyperinflation and censorship. However, I can’t see President Nicolas Maduro making such a move that would cause him to lose some of his power over his country.
As far as Mexico is concerned, there are also frequent discussions in political circles, but the trend is not towards recognition of Bitcoin as an official currency in my opinion.
This is evidenced by this latest statement from the head of Mexico’s central bank in September 2021:
“Whoever receives bitcoin in exchange for a good or service, we believe that (transaction) is more akin to bartering because that person is exchanging a good for a good, but not really money for a good.”
This recent statement by Alejandro Diaz de Leon suggests Mexico will not be following El Salvador any time soon in adopting the digital currency as parallel legal tender.
Beyond Central and South America, many African countries would do well to follow El Salvador’s lead. Unfortunately, while the will of the people is often present for full recognition of Bitcoin, the corrupt politicians in power see it as a bad idea.
For them, it would mean losing some of their power and they are clearly not prepared for that.
In Europe, one country stands out. It is Malta which is one of the most advanced European countries in terms of Blockchain and cryptocurrencies. The government is open to these new technologies which makes it a credible candidate for such an opportunity.
The main problem lies in the pressure that the big powers of the European Union such as Germany or France could put on Malta so that such recognition does not take place.
Malta would be caught between its desire to seize the Bitcoin opportunity and its European partners. In the end, the second option is likely to be preferred.