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14 August 2021: With the success of El Salvador being the first nation on Earth to officially make Bitcoin legal tender, other countries are not so far behind. As more countries begin to contemplate their own adoption, a race to adopt Bitcoin before others could initiate a period of exponential Bitcoin adoption. This article will be focused on where Bitcoin is heading and what lies ahead for the world in terms of rapid monetary transformation.
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The Future 'Space Race' of International Bitcoin Adoption
With only 21 million Bitcoins ever set to be available, and over 18 million of those already minted, the race to secure the final remaining Bitcoins is already underway in current market trading. El Salvador's decision to invest immediately into Bitcoin and make it legal tender are truly profound. This is due to multiple reasons. To begin, they are first. No other country on Earth has officially done what the small nation of El Salvador has chosen to do already. Being first means El Salvador is securing their share of the Bitcoin pie before any other major first world nations, including all of Europe and the United States.
When viewing this from a long term, big picture perspective, El Salvador has placed themselves in the best position possible for a truly immense global wealth transfer as the race to adopt Bitcoin heats up as other nations follow suit. Other countries, many of whom reside in Central and South America, are also already considering adopting cryptocurrencies. Western Nations such as the United States and the European Union have taken a negative approach thus far towards cryptocurrencies. This is leaving the door open for nations without a substantial, durable native currency to look at the best alternative out there: Bitcoin.
How would a transfer of wealth take place? Consider the following graphic:
The chart above is meant to serve as a visual representation of what the process of international Bitcoin adoption could look like in terms of the adoption rate and BTC price. With El Salvador being the first country, the curve sits currently at the bottom left of the graph above. As more countries adopt Bitcoin as legal tender, the price of BTC is forced upwards with a tightening supply. This tightening of the supply and further upward pressure on price will be the incentive for other nations to get in before the price rises too steeply. Getting in at the bottom of the curve above means paying a significantly lower entry price before other major nations get into the frenzy.
Thus, the wealth transfer may occur from current major world powers to small nations who decided to adopt Bitcoin first. International power overall could effectively change hands. As Bitcoin adoption increases, the United States Dollar's total market share of the outstanding world reserve currencies would diminish over time. This means that as the dollar declines, so too will the power and influence of the United States on the world stage. El Salvador would benefit in the opposite way from this. Having both currencies as legal tender, as the dollar declines, the population of El Salvador may choose to operate more and more in Bitcoin.
Current Outlook of Bitcoin Adoption Interest
The following map currently highlights all the nations in which Bitcoin is legal tender or is being considered in recent legislation. These nations include Mexico, El Salvador, Panama, Colombia, Venezuela, Brazil, Paraguay, Uruguay, and Argentina. It should be noted that outside of traditional Bitcoin adoption through governmental means, many nations have taken interest in Bitcoin to escape their respective native monetary systems. Included in these nations are Cuba, Nigeria, and others.
Slowly but surely, the world is turning Bitcoin orange and Latin America is leading the way. If all of these nations highlighted in the above map do in fact pass legislation making Bitcoin legal tender in their respective governments, Bitcoin adoption will begin to move up the exponential adoption chart as other nations scramble to not be left behind.
Short Term Obstacles to Further Bitcoin Adoption
There are essentially two major obstacles that block the potential rapid adoption of Bitcoin. These are central banks which would be rendered obsolete with Bitcoin adoption and current first world nations, such as the United States, which stand to lose substantial global influence over world economics. Any intervention from current world powers, whether it be through sanctions or military action, would undoubtedly lead to immense hesitation from other countries inquiring into Bitcoin adoption, especially within Latin America.
Additionally, the role of central banks can not be overlooked. In Argentina, the central bank of the country has already come out against Bitcoin adoption even though the current governmental leadership of the country sees it in a positive light. The future roll outs of central bank digital currencies (CBDCs) is a direct competitor to cryptocurrencies in general as it essentially digitizes fiat currencies.
Summary
International Bitcoin adoption will not come easily at first. For the nations that do choose to go the route of Bitcoin adoption, there may be substantial obstacles and pressures from current world powers to think twice about considering Bitcoin. However, once the dominoes begin to fall, there will be no effective way to stop the momentum. As soon as western nations begin to realize that their efforts to stop the spread of cryptocurrencies, especially into their own mainstream markets, are futile, there will be no way to stop the exponential expansion of Bitcoin use in the future.
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