This is actually not a terrible overview of what El Salvador is doing with bitcoin and cryptocurrency as a whole:
Central banks around the world have been scrambling to co-opt digital currencies for their own purposes. El Salvador beat them all to the punch by passing a law that makes bitcoin legal tender for all debts public and private.
Through this law, El Salvador’s legislators essentially voted to begin the process of outsourcing the country’s monetary policy to a decentralized network of computers governed by a fixed set of rules. This is an important step toward a world where money is sound, not subject to the vagaries of politics.via WSJ
Dang, this is cool (although enforcement is another thing):
The law provides that any economic actor technologically able to accept bitcoin is required to do so for payments of goods and services. It also permits bitcoin to be used to pay taxes and exempts bitcoin transactions themselves from capital-gains taxation.
To deal with bitcoin’s wild price fluctuations, the legislation establishes a free-floating exchange rate determined by the market. If someone immediately transfers his bitcoins to dollars when he receives them, then it shouldn’t matter how volatile the exchange rate is because he’ll always have the equivalent in dollars. Salvadorans are free to hold their savings in either currency; the legislation simply puts bitcoin on par with the U.S.
Don’t miss this because you would if you read it too fast:
Throughout history, central banks have devalued their currencies or tried to maintain untenable exchange rates to the detriment of investors.
So why do we put up with that shit? That’s a really good question! The math (and the system) is fundamentally-broken and bitcoin provides a real, positive, alternative:
Central banks want the benefits of digital currency, but they also want to control the system and not cede their monetary tools. This makes the concept of a central-bank digital currency inherently contradictory. Bitcoin was created to provide an alternative to a currency managed by the state.
Sound monetary policy isn’t a magic solution to a country’s every economic woe. El Salvador needs to embrace the rule of law, private property and limited government. But having faith in a sound currency is going to become more and more important as the inflationary costs of monetary stimulus become known.
It’s not a solution for everything but it can be a great starting point for a better and more financially healthy future. It starts with one person and then everyone does it, seemingly overnight.
For those that are have been in this for a while; let’s continue to stay patient because our
time preferences keep us sane, motivated, hungry, and profitable.