The 14th significant event in the history of currency! After El Salvador, which Latin American countries are most likely to adopt Bitcoin?

On June 9th, El Salvador successfully passed a proposal to adopt Bitcoin as legal tender, making it the first sovereign nation to do so. This event has been recognized by Agence France-Presse as the 14th major event in the history of currencies. According to the law, once Bitcoin becomes legal tender, prices for goods can be expressed in Bitcoin, and every economic entity must accept Bitcoin as payment. Capital gains tax will not be levied on Bitcoin transactions, and Bitcoin can be used to pay taxes. El Salvador is a coastal country located in the northern part of Central America, with a land area of only about 20,000 square kilometers and 14 provinces. The total population of the country is approximately 6.7 million, but it faces issues with numerous gangs. In the first half of 2015, nearly 3,400 people were murdered, despite the then-president declaring a strong crackdown on street gangs. These issues stem from El Salvador's history of colonial rule and frequent civil wars, leading to ongoing social instability. Economically, El Salvador is primarily agrarian, with a focus on coffee and cotton production. Its industrial base is weak, making it one of the "lower-middle-income countries" in the world. El Salvador has not had a sovereign currency and has relied on the U.S. dollar for settlements. Since the global financial crisis of 2018 and the adoption of quantitative easing policies by the United States, El Salvador has been struggling with currency inflation, which is a key reason for its proactive embrace of Bitcoin. Apart from El Salvador, many countries in Latin America (the region of the Americas south of the United States, including Mexico, Central America, the West Indies, and South America) have faced similar challenges. Unlike developed countries that focus more on the beauty of code in the crypto world and strive to build more anonymous algorithms and sophisticated community governance structures, most third-world countries view cryptocurrencies as a stable measure of value, a store of value, and a right to maintain purchasing power without deprivation. In addition, Bitcoin and blockchain have brought them a range of fast and inexpensive financial services that were previously difficult to obtain. PANews will provide an overview of which Latin American countries are most likely to adopt Bitcoin following El Salvador's lead.

Central America

1. Panama

Panama is the southernmost country in Central America, with a total area of approximately 76,000 square kilometers and a population of over 4.3 million. Panama is home to the Panama Canal, connecting the Atlantic and Pacific Oceans, giving it a strategic location as the boundary between South and North America.

Due to its strategic location, Panama's economy is mainly focused on the service industry, with a strong emphasis on finance, trade, and tourism. The financial and re-export industries are well-developed and play a significant role in the economy. Panama has been using the U.S. dollar as its circulating currency since 1907, with its own currency, the Balboa, pegged to the dollar and used interchangeably within the country. Panama was the first country in the world, aside from the United States, to use the U.S. dollar as its legal tender.

Following El Salvador's proposal to adopt Bitcoin as legal tender, Panamanian lawmaker Gabriel Silva tweeted that Panama cannot fall behind. He stated that if Panama wants to become a true center for technology and entrepreneurship, it must support cryptocurrencies and is preparing a proposal to present to the parliament.

Prior to this, Panama's Vice President Rolando Rodríguez had previously presented a draft bill to regulate cryptocurrencies in Panama, aiming to regulate the use and forms of cryptocurrency transactions within Panama. The bill also seeks to include cryptocurrencies in the national social security fund to provide financial freedom to all Panamanians who cannot access traditional banking services. Rodríguez mentioned that Panama is far behind in regulating cryptocurrencies and hopes that the Committee on Trade and Economic Affairs will give due attention to the bill.

South America

2. Colombia

Colombia is a country located in the northern part of South America, with an area of approximately 1.1 million square kilometers and a population of around 50 million. In 1821, Colombia, along with present-day Panama, Venezuela, and Ecuador, formed the Republic of Greater Colombia, which later dissolved in 1830.

Economically, Colombia's main industries are mining and agriculture. It has abundant mineral resources, with oil, natural gas, coal, and emeralds as the main reserves. Coffee, bananas, and flowers are the major agricultural products, with coffee and bananas ranking third in the world in exports and flowers second.

Colombia is classified as a country with a medium level of development in Latin America, and its economy has maintained continuous growth over the past decade.

Recently, Jehudi Castro Sierra, the digital transformation advisor to Colombian President Iván Duque Márquez, has been in talks with Jack Mallers, the founder of the Bitcoin Lightning Network wallet ZAP. Jack Mallers is a key developer behind El Salvador's adoption of Bitcoin as legal tender, and his startup company Strike, under ZAP, previously launched a Bitcoin Lightning payment application in El Salvador.

Jehudi Castro Sierra's interest in cryptocurrencies and his direct contact with the Colombian president indicate a growing interest in this area in Colombia. During his tenure as Deputy Minister of Digital Economy at the Colombian Ministry of Information Technology and Communications from September 2018 to October 2019, Jehudi Castro Sierra was publicly known as a technology enthusiast, particularly in cryptocurrencies.

3. Venezuela

Venezuela is a country located in the northern part of South America, known as the "Land of Waterfalls," with an area of over 900,000 square kilometers and a population of over 31 million. Venezuela is a member of the South American Union and the Organization of the Petroleum Exporting Countries (OPEC), and is an important oil-producing and exporting country in the world, with oil accounting for about 80% of its export revenue.

Previously, Venezuelan President Nicolás Maduro pledged to revive the Petro Coin at a constitutional convention, stating that the state-owned company Petróleos de Venezuela (PDVSA) would conduct a "pilot sale" of 50,000 barrels of oil per day using the Petro Coin. Subsequently, the scope of Petro Coin's application may be expanded to all national oil transactions, and future taxes and water and electricity bills may be paid using the Petro Coin.

Nicolás Maduro stated that Venezuela is paving a path to a new economy and that the crisis triggered by entrenched rules and bureaucratic mechanisms has sparked Venezuela's innovation potential. Venezuela is venturing down an unknown path in search of rebirth amidst adversity.

However, since its high-profile issuance by the Venezuelan government in 2017, the market response to the Petro Coin has been lukewarm. Most people are unaware of where to purchase Petro Coins.

Additionally, Dashcoin has gained popularity in Venezuela since its adoption, with a significant increase in monthly wallet downloads.

4. Ecuador

Ecuador is a country located in the northwest of South America, with an area of approximately 260,000 square kilometers and a population of over 15 million. Since its founding, Ecuador's political situation has been tumultuous, with numerous coups and alternating governments between intellectuals and military rule, totaling 19 changes in government. Ecuador is known as the "Banana Republic" and has implemented dollarization in its economy.

Julio Eduardo Clavijo Acosta, the Deputy Minister of Economic Inclusion in Ecuador, is a cryptocurrency enthusiast who has changed his Twitter profile picture to a laser eye and has posted and shared tweets related to Bitcoin and cryptocurrencies. He recently stated that the ability of Bitcoin to support charity and alleviate poverty is proof of its transformative power.

In Ecuador's 2021 elections, presidential candidate Geovanni Andrade expressed interest in creating a national cryptocurrency to facilitate transactions within Ecuador. The new cryptocurrency would be a stablecoin linked to gold.

5. Brazil

Brazil is the largest country in South America, with a total area of approximately 8.5 million square kilometers, ranking fifth in the world, and a population of 210 million, making it the seventh-largest economy globally. Brazil has abundant natural resources and a well-developed industrial base, with a strong agricultural sector as a major producer and exporter of various agricultural products. The industrial sector, including petrochemicals, mining, steel, and automotive industries, is also well developed.

In March of this year, QR Capital's Bitcoin ETF was approved by the Brazilian Securities and Exchange Commission, allowing it to trade on the B3 stock exchange in São Paulo under the ticker symbol QBTC11, making Brazil the second country globally to approve a Bitcoin ETF.

According to Globo, Brazil's largest media outlet, the number of Bitcoin investors in Brazil has surpassed the total number of individual registrations on the São Paulo Stock Exchange (B3) by about twice as much. The actual number of traders may be even higher, as some traders may use foreign exchanges or engage in offline transactions.

On the other hand, data from the Brazilian Institute of Geography and Statistics (IBGE) showed that in May of this year, Brazil's inflation rate surged to 8.06%, the highest level since September 2016, exceeding the market's expectation of 7.93%. The rising inflation rate has been a significant factor driving the cryptocurrency boom in Brazil.

6. Argentina

Argentina is located in the southeast of South America, with an area of approximately 2.8 million square kilometers, making it the second-largest country in Latin America after Brazil. With a population of over 45 million, Argentina ranks 31st in the world in terms of population. Argentina is one of the world's major producers and exporters of food and meat. Due to its abundant natural resources, open policies, and diverse economy, Argentina once had a relatively large middle class compared to other Latin American countries. However, due to the debt crisis in the 1980s, Argentina's economy suffered a significant decline.

Since 2008, Argentina's economic growth has slowed down significantly due to international economic and financial conditions. The economy faced downward pressure, with a severe recession of 11.8% in 2020.

In May of this year, Bitcoin.com reported that over a million Argentinians have been buying cryptocurrencies for some time. Local media outlet Ámbito revealed that most people were purchasing Bitcoin and stablecoins like USDT, USDC, and DAI. The media emphasized that users believe these tokens are a more effective way to convert Argentine pesos into dollars.

In 2019, due to inflation, the value of the Argentine peso decreased by about 40%. Currently, the Argentine Congress is advancing legislation related to digital currencies to provide a legal framework for digital currencies and encourage their adoption. If adopted, banks and companies could choose to use digital currencies.

7. Paraguay

Paraguay is a landlocked country in central South America, with a land area of approximately 400,000 square kilometers and a population of nearly 7 million. The country's economy is primarily based on agriculture and livestock, with a weak industrial base, making it one of the least developed countries in Latin America.

However, Paraguay is a hub for renewable energy, with almost all of its electricity coming from hydroelectric power. The Itaipu Dam in Paraguay is the world's second-largest hydroelectric plant after China's Three Gorges Dam, producing 103 megawatts annually. Paraguay consumes only 20% of the national electricity, with the rest exported.

According to The Guardian, local miner Gregorio Bareiro stated that Paraguay's abundant energy could make it a global Bitcoin mining hub. He suggested that instead of selling energy to Brazil, Paraguay should invest in cryptocurrencies. Additionally, the South Korean Blockchain Technology Foundation had negotiations with the Paraguayan government to establish the world's largest Bitcoin mining farm and cryptocurrency exchange.

On June 7th, Paraguayan Congressman Carlitos Rejala announced his intention to introduce a bill to allow Bitcoin as legal tender following El Salvador's announcement. Rejala changed his Twitter profile picture to a laser eye and stated, "As I said a long time ago, our country needs to move forward with the new generation. Our time has come. This week, we started an important project, and Paraguay is truly taking off in the face of the innovative world!"

North America

8. Mexico

Mexico has an area of approximately 2 million square kilometers, making it the third-largest country in Latin America and the 14th largest in the world. With a population of 123 million, it ranks as the 11th most populous country globally. Mexico is a free-market economy with modern industrial and agricultural sectors, and a growing private sector. Since the establishment of the North American Free Trade Agreement in 1994, trade and investment between Mexico and the United States have increased rapidly, promoting economic development and raising national income.

In February of this year, a report by The Economist cited Mauricio Hurtado, the Managing Partner of PwC Mexico, stating that Mexican companies are now eager to join the Bitcoin trend. While previously Mexican companies were concerned that the lack of regulatory bodies made cryptocurrencies too risky as an investment asset, the situation has changed recently. Many companies feel they cannot stay out of the trend, and they are adjusting according to market realities to gain a competitive advantage.

In June, Ricardo Salinas Pliego, Mexico's third-richest person, changed his Twitter profile picture to a laser eye. Pliego has previously stated that Bitcoin is his "best investment ever" and changed his Twitter bio to Bitcoin in February of this year.

Additionally, Mexican Senator Eduardo Murat Hinojosa announced that he would submit a "legal framework for cryptocurrencies" to legislators. In a recent tweet, Hinojosa changed his profile picture to the iconic laser eye speaking into a microphone, showing his support for cryptocurrencies.

In Latin America, Bitcoin is more popular than traditional finance

In Latin American countries with high inflation, the economy often exhibits instability, and holding the local currency often leads to significant devaluation of purchasing power. Other investment options such as foreign exchange, gold, and other hedging methods have high entry barriers and are challenging to access through traditional financial channels. As a result, locals are turning to cryptocurrencies like Bitcoin for their applications.

Many issues caused by hyperinflation and subsequent capital controls can be addressed through Bitcoin. While workers and merchants initially used Bitcoin as a tool to hedge against the devaluation of the local currency, Bitcoin has begun to find practical applications as a payment method in Latin America. As a universal currency, Bitcoin allows consumers to shop and transfer globally, enabling Latin American online shoppers to use Bitcoin for purchases from companies like Apple and Walmart. International companies may not accept local payment methods in Latin America, but Latin American online shoppers can use Bitcoin for shopping. Bitcoin can also help the Latin American tourism industry navigate the current economic crisis.

As Bitcoin can be used by anyone with an internet connection, it can reduce the cost of currency exchange for tourists and businesses. Due to the low credit card penetration in Latin America, some popular tourist destinations can attract more consumers by accepting Bitcoin as a payment method. Bitcoin offers faster payment speeds, a simpler process, and avoids the costs and delays of traditional banking transactions.

Regarding Bitcoin becoming legal tender in El Salvador, Leo Weese, CEO of the Lebit Mining Pool, stated that it was a historic moment for Bitcoin. He believes that a new offshore financial center will rise, coupled with blockchain offshore company registration, tax benefits, and other policies, allowing small countries to rise. Weese is optimistic about Panama's prospects and added, "Panama is closely following El Salvador and may become the next country to support cryptocurrency as legal tender. Panama's control of the Panama Canal, a vital waterway connecting the Atlantic and Pacific Oceans, gives it more influence than El Salvador."

While El Salvador may be a small country, some countries are eager to follow its bold move. So far, politicians from seven Latin American countries have expressed their interest in Bitcoin.

However, the International Monetary Fund (IMF) expressed concerns on June 10th regarding El Salvador's decision to adopt Bitcoin as legal tender, citing various economic and legal issues that may arise. Adopting Bitcoin as legal tender could trigger a series of macroeconomic, financial, and legal issues that require careful analysis.

Nevertheless, Bitcoin has taken another significant step forward. Every major change always starts from a seemingly insignificant crack, and the disruption brought by Bitcoin and other cryptocurrencies may be just around the corner.