First Country Accepts Bitcoin; Currency Inflation Fears Rise in the US
Bitcoin appears to be on the road to recovery this week amid news of a Biden tech advisor being a Bitcoin millionaire. The week was also marked by impressive layers of institutional adoption and the rally of some unexpected alt coins in the market.
After having corrected over the past few weeks, the cryptocurrency market rebounded slightly with Bitcoin being in the green by Wednesday and showing bullish signals. This rebound from oversold conditions was the result of a stream of positive news, namely unrelenting global adoption.
El Salvador Takes Historic Bitcoin Leap
A momentous decision in the Latin American country of El Salvador has officially recognized Bitcoin (BTC) as legal tender. President Nayib Bukele had submitted a proposal for the nation to adopt Bitcoin which the supermajority voted in favor for just days ago.
The proposal stipulates that all businesses in the country accept Bitcoin in exchange for goods and services. In order to mitigate the volatility of cryptocurrencies, the El Salvadorian government is to assume the merchant’s risk by setting up a trust that will instantly convert Bitcoin to USD. In a Twitter Space conversation, President Bukele explained this new legislation by using a simplified example and said, “If there’s an ice cream parlor, he doesn’t really want to take the risk, he has to accept Bitcoin because it’s a mandated currency but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account, when he sells the ice cream, he can ask the government to exchange his Bitcoin to dollars”.
Discussing the benefits of this leap into crypto, Bukele said, “It will bring financial inclusion, investment, tourism, innovation and economic development for our country”.
Nearly 70% of El Salvadorians do not have access to bank accounts and traditional financial services – as such, this ruling could be life-changing. Moreover, much of El Salvador’s dollarized economy is dependent on money sent back from laborers outside the country. This move is set to simplify transfers to non-bank account holders, making the experience more seamless and instantaneous.
The law is set to go into effect in the next 90 days.
Will the Rest of Latin America Follow?
El Salvador’s impressive move has many wondering which countries will follow suit. Considering the fact that nearly 50% of the Latin American population is unbanked, there is a growing appetite in the region for alternative financial services. The adoption of bitcoin and other cryptocurrencies could prove to be revolutionary for closing the gap of financial inclusion in the region — particularly for those with informal employment. After El Salvador took the leap, it was reported that several politicians from other Latin American countries added laser eyes to their Twitter profile picture, a symbol for the endorsement of cryptocurrency. This sparked rumors of further adoption in the region.
The first country that is expected to follow in El Salvador’s footsteps is Paraguay whose congressman Carlitos Rejala put up a photo of himself with laser eyes along with a tweet that reads, “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. This week we start with an important project to innovate Paraguay in front of the world! The real one to the moon #btc &#paypal”.
Politicians from Panama, Brazil, and Mexico put out similar statements on their personal Twitter accounts. It seems the question is not will other Latin American countries follow suit — but rather when.
Rising Inflation Fears Fuel Crypto Confidence in U.S
US consumer sentiments continue to deteriorate as they are hit with mounting inflation woes. US inflation hit a staggering 5% year-on-year rise this past May, the highest it has been since 2008. This number exceeded expert estimations, fueling concerns about inflationary pressures as the country eases out of the global pandemic.
Since inflation implies that higher interest rates are coming, investors are naturally scrambling for alternative safe havens. Many view bitcoin and other cryptocurrencies as a hedge against inflation because unlike the U.S Dollar or other fiat currency, it has limited supply by design and therefore cannot be devalued by a central bank or government “over-producing” or distributing too much of it.
In a bid to protect against expected currency debasement, digital assets have quickly become viable competitors to traditional investments.
Nu Rallies 44% After Binance Listing
The price of NuCypher’ cryptocurrency has seen a rally of nearly 50% over the past few days, marking a successful week for the project’s coin. This high coincided with an announcement from Binance revealing NU’s listing on its cryptocurrency exchange. The currency managed to reach $0.51 before retracting slightly. Just last week, news of the listing of the memecoin Dogecoin on Coinbase Pro sent the coin skyrocketing.
Founded back in 2015, NuCypher aims to offer a coin that is secure and decentralized, providing an additional data privacy layer and allowing developers to store, share, and manage private data on public blockchains.
Amazon Gets the DeFi Bug
A job listing by multinational tech and e-commerce company Amazon has once again proved that the world’s largest conglomerates are unfazed by the crypto market’s current fall in prices, and are still pressing on to growing their emerging DeFi and blockchain departments. The job listing for a position titled Blockchain Head of Product revealed that the $300 billion company was on the lookout for a candidate with a “track record delivering outstanding products at scale in emerging spaces, and is passionate about blockchain, distributed systems, and cloud scale software…[e]xperience in Decentralized Finance a plus,” the ad states.
Previously, Amazon had similar job listings seeking project managers and software developers ahead of the launch of a digital currency project. The posts had described the upcoming project as a “new payment product,” both of which signal the birth of a new digital asset.
Being led by one of the largest companies in the world, this level of crypto adoption would be groundbreaking for the sector and would cement global institutional adoption.
225 Year Old Institution Says Yes to Crypto
More news of mainstream adoption of cryptocurrencies comes from the London based auction house Phillips. The nearly 225 year old institution has turned heads by announcing its decision to accept cryptocurrencies (Bitcoin and Ether) during its next auction for a Banksy piece in Hong Kong.
In an announcement published on their website, Phillips said they were proud to reveal that they would be accepting cryptocurrency as payment for the sale of Banky’s ‘Laugh Now Panel A’ piece, presumably worth millions (approximately $3 million). The Chairman of Phillips Asia commented on the matter saying, “Over the past few years many have made fortunes in cryptocurrency and so it was only a matter of time before cryptocurrency starts to be used as a payment method for art and other collectibles,” adding that he had been “inundated with questions as to whether we will start offering this service”.
Record Sale of Penthouse: $22.5 Million in Crypto
The sale of a luxury Miami penthouse for $22.5 million worth of cryptocurrency has set a new record for the largest known crypto real estate purchase made to date. At over 5,000 square feet and boasting an unobstructed 360 degree view of Miami’s ocean, the penthouse was paid for using an undisclosed type of cryptocurrency.
Miami has been at the forefront of embracing Bitcoin and cryptocurrencies, with mayor Frances Suarez vying to position the city as the next tech hub and Silicon Valley. Purchasing with crypto appears to be more mainstream than ever.
At the time of publication, Ether was trading at $2,534, Bitcoin rallied 13% and was up at $37,000, and XRP up at $0.92.