At the beginning of June 2021, El Salvador made an economic announcement that gave the nation pioneering status in the world’s markets. The Central American nation announced that it would be adopting the cryptocurrency Bitcoin as legal tender, becoming the first country to do so.
This is not the first time El Salvador has made such dramatic moves regarding its own legal tender. Two decades ago, El Salvadorans found that their own currency, the Colon, had been replaced as the country’s legal tender by the US Dollar. However, El Salvador was not the first country to make this move towards “dollarization”, and the shift towards cryptocurrency looks to be a far more profound and unprecedented one.
But what does this mean exactly? As you might expect, Bitcoin was already legal to use in El Salvador prior to the switch, and customers were already allowed to offer the digital currency in exchange for goods and services. What has changed is that merchants are now required to accept Bitcoin in transactions and that citizens are now actively encouraged to utilize this currency.
The Possible Impact of El Salvador’s Decision on the Future of iGaming
So, what kind of ramifications does this have for the future of iGaming? What changes might we expect to see in the wake of El Salvador’s new economic policies?
- The decision shows an increasing acceptance of Bitcoin around the world, which may put pressure on gaming providers to deal in the digital currency.
- El Salvador has set a major precedent, and the eyes of the world’s economists will be on the Central American nation in an effort to gauge whether or not the move is a success.
- If the adoption is indeed successful, we can expect other nations to follow suit.
- If the world’s major betting and gambling markets begin to adopt the currency as legal tender, iGaming providers may have no choice but to accept Bitcoin when dealing with customers.
- But El Salvador has experienced significant resistance to the move. The World Bank has refused to provide El Salvador with technical support as they make the switch, describing how a “lack of transparency” and the environmental impact of Bitcoin make this a negative choice for El Salvador.
- The view of the World Bank echoes those of others around the world, including Tesla owner Elon Musk, who has described Bitcoin’s reliance upon computer mining hardware as harmful to the environment. However, Musk has recently said that Tesla will resume accepting Bitcoin for transactions, driving the value of the currency up.
The moves made by El Salvador and its government are still very much experimental and are perhaps risky. However, if the national acceptance of the cryptocurrency does pay off, it seems likely that many industries and markets around the world will take notice. For a market like iGaming, which is already operating exclusively in the digital sphere, this mean widespread adoption could come sooner than most.