Just recently, the El Salvador government stated their decision to formally adopt Bitcoins in addition to the US Dollar as an official currency for the country. As written in some news articles, the central american country’s legislative department has shown their support for this currency by voting in favor of the bitcoin law. This law is designed to regulate bitcoin as unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out. Along with the release of this news, several feedback coming from financial experts advocating their knowledge on “What is Forex Trading? “ have sprouted. Some say that this is good news but the majority state that this is not an effective move to uplift the El Salvador economy as there are many reasons why Bitcoins should not be considered as a legal tender. Among these reasons include the following:
1. Technological Issues
Keeping the ledger or the blockchain secured in mobile phones is almost impossible as the ledger itself consumes 125 GB of data. If at any rate, everyone would be able to obtain the required memory to store the ledger, an ordinary person will find it hard to learn the knowhow of storing and maintaining such a large file.
2. Transactional Issues
Despite the fact that Bitcoins meet some criteria that a legal currency should have, it fails as a medium of exchange, store of value and unit of account. Bitcoins are characterized as a highly volatile financial instrument so it has a great possibility to reach extreme ups and downs in the market. Because of the extreme demand it will be difficult for people to obtain as much bitcoins as they wish due to its extremely high value.
3. Security Issues
Bitcoins are believed to be an ideal vehicle for anonymous transactions because it is not a specific system that is designed to trace account ownership and transactions. In case of trust issues, the authorities will find it difficult to settle the problem as they never have any documents or records that will prove someone’s ownership or involvement in a financial transaction. In the worst situation, Bitcoin accounts could also be potential tools for scams and money laundering.
4. Universal Acceptance
Though bitcoins are convenient instruments for individuals who know alot about “What is Forex Trading? “ Unfortunately, only a few countries around the world recognize this as a mode of payment. The truth is, there are more countries that do not appreciate its usage as a legal tender rather than the ones who recognize it.
Conclusion:
Summarizing the arguments coming from those who do not believe in the effectiveness of Bitcoin as a legal tender will all boil down to a single sentence stating that Bitcoins are not money at all. It is merely an instrument that is used by some trading platforms. El Salvador on the other hand mentioned that their government will find ways to mitigate possible problems that may occur due to their adoption of Bitcoin as a legal tender.