El Salvador becomes first crypto nation; gives Bitcoin a legal tender | StartUpCentral
But i think, overall, you know its about adoption, and this is one of the best adoption that bitcoin has ever gotten. On what basis are you saying that other countries will do it? We have not. You know, i think, barring peru weve not seen that kind of commentary. You may want that kind of commentary, but it hasnt come what see uh. You know its its a lot like um how startups operate. If you, if you think about the income banks, the large companies out there, they always uh stay cautious, and that is what most of the nations around the world are doing: theyre staying, cautious to anything new and disruptive and uh the startups, the smaller countries that i See theyll always be the ones that are going to take these risks. So el salvador happens to be one of those, many smaller nations, which probably have an edge out here to try and see how bitcoin would operate if they were to adopt it as a legal tender. Now, only time will tell the other important thing to understand about bitcoin, as a legal tender in any nation is its going to be a deflationary asset that is considered as a currency. Now that is going to be very interesting because, most times pr is all inflationary. So i think that we are having sort of a double experiment. One is what happens when you uh, you know sort of adopt a legal tender that is not under the control of any nation, because we have to understand that el salvador currently has us dollar, which is basically an inflationary.
If you are being printed by the us out here, they have the opportunity to adopt something that is not under the control of any country and im sure that every country would want to see how this experiment goes. And if it goes in the right direction, then i wont be surprised if other nations also adopted okay and is that the real uh test? What are you pointing out from deflationary and inflationary perspective? A of course has to be the citizens who um you know. The president has uh added 400 bitcoins to the treasury is talking about the wallet the el salvadors wallet being made public and all of that, but the citizens also have to accept it. They have to be willing to transact in bitcoins and uh just the way the bitcoin is. We today saying its volatile, but you know 50, even at 50 000, it is very expensive. Yeah. Look, i think, uh its definitely volatile and thats. Probably one of the major concerns that uh everyone will keep closely watching uh. Will it sort of stabilize the uh the the talk about the citizens, uh so fun fact i just i just uh read that their their wallet. Apparently, the servers crashed because of the number of people who wanted to there was a rush for people to download the wallet and apparently has been taken offline for a while till they increase the capacity. So it definitely shows there is initial uh huge interest in the nation on uh trying this out and i think uh, the other.
The other important thing is um. You know sort of this whole 50 000 range that bitcoin is at and and thats been crucial. If it can hold on to that and increase from here, i think uh people in the nation will be glad that they participated in bitcoin as one of the legal tenders over there, but yeah. I think only the time will save. This is going to go in the right direction, but i think adoption there is definitely a lot of challenges for adoption, the biggest being. How do you ensure because bitcoin? This is a lot like having cash with you? How do you ensure the safety and security and all of that its definitely going to be a big challenge in terms of implementation in the country? So now you have the server crashing on day, one which you know: okay, it does happen, but its also happening on a day where youre seeing a lot of volatility. For example, the bitcoin which looked like was going to you, know re test. 53. 000. Go beyond that is not retesting 50 000 levels. The alt coins today are also suddenly uh spooked and losing out a lot. This kind of a volatility spike this chilean. I know you, you try to address it, but this is whats going to make um citizens. Investors even more vary yeah absolutely see we cannot deny. The volatility is a way more compared to lets, say other asset class like gold, so there is definitely going to be jitters, and this is probably one of the biggest tests.
Um will volatility be in the range which is comfortable to the citizens of that country. I think that is what well have to see over time im sure. In the short term, there will be some shocks and some you know, worries from people uh, but im guessing in a longer term period. It will subside uh because, as the adoption grows, the volatility seems to reduce. This has been happening to bitcoin in the last 10 years. So you know only time will tell, though volatility is part of the game, its certainly not for the faint hearted now whats. Also very crucial to note is that, because its a legal tender, you can buy goods and services with it, whether its a cup of coffee, a car or you know, even want to pay your taxes. What uh the el salvador government has also said is that, for an initial boost, the bitcoin wallet called shivo will come pre loaded with 30 worth of currency for users. That register with a salvadorian national id number. Mr fifty thousand dollars of one bitcoin is going to be fractionalized to thirty dollars. How is this going to work because itll have to be taken along with fiat currency right? Yeah, absolutely, look i think uh. You know this is theres. This term called air drop, and this is what is happening there. Uh a country is air, dropping bitcoin to its uh citizens, just so that they can experiment and try it out, and i think for quite some time.
It might remain that an experiment in that nation, where people are probably going to test it out, try it out and the government is just bootstrapping this whole thing, so i dont, i dont, see um. You know adoption happening uh immediately. I think what is going to happen is the adoption of just the wallet, and for that to happen, this airdrop of 30 is going to be crucial, because that will motivate people to try it out and its a good way, because that way, people dont lose their Money they can just test it out and they can experience it, and i think eventually, if that is the right way for you, then you can top it up and load more bitcoin and fractionalize. Bitcoin is what how you know thats the whole thing it doesnt matter. How expensive bitcoin gets you can just buy a small piece of it and keep it with you. Okay lets see how all of this goes. You know we had uh weve read about the atms that will work with bitcoin that are going to be put across the country, theyre air, dropping 30 worth of bitcoins to those that actually register. Weve also heard about 150 million dollars fund at the state run bank. Will be backing all of these transactions, and mr shetty is always a pleasure talking to you thanks.