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What does the Legalization of Bitcoin mean for the Entire Crypto Market?

Bitcoin is the world’s first decentralized cryptocurrency or say digital coin. It was invented in 2008 but the main use started from 2010. Earlier bitcoin was viewed with suspicion but now it has become the most popular cryptocurrency in the world. Thousands of companies in the world have adopted bitcoin for transactions. Now bitcoin has recognized as legal currency in the Central American country of El-Salvador.

Bitcoin has come a long way in such a short time. The impact of its legitimacy is being felt globally.

What does it mean for bitcoin to have legal currency status?
The use of bitcoin has been legalized in some countries of the world, but getting legal currency status in a country in just 12 years of its existence is another example of its popularity. Last year, on 7 September 2021, El-Salvador abolished the distinction between the prevailing fiat and digital currency by granting legal currency status to bitcoin. Becoming legal tender means that it will be accepted by the government for taxes, public or private charges, and for business transactions.

El Salvador recognizes bitcoin as legal tender
The economy of El Salvador has changed a lot after the legalization of bitcoin. More than 14% of the country’s trade is done through bitcoin. There is an atmosphere of excitement in the tourism sector while institutions that accept bitcoin are happy. El-Salvador has issued bitcoin bonds worth $1 billion. The funds will be used to set up a bitcoin city to mine digital assets using geothermal energy. Educational institutions have started to bring awareness to bitcoin and crypto.

Other countries and regions are also on the way to legalize bitcoin.
Following in the footsteps of El Salvador, some other countries and territories are also on the way to legalize bitcoin. These include the autonomous regions of Portugal, Honduras and Madeira. Here residents of Prospera will not have to pay capital gains tax on bitcoin and will be able to use bitcoin to pay taxes and other fees. In addition, Tonga, a South Pacific country country, has made a four-stage proposal to make bitcoin a legal currency, in addition to moving national treasuries to bitcoin in the future. The Mexican parliament has also shown interest in making bitcoin a legal tender.

What will be the benefits to the crypto market with bitcoin becoming a legal currency

  1. There will be an increase in the use of bitcoin for real-time payments and business transactions.Since Bitcoin dominates the entire crypto market with 42% share, this will strengthen the crypto market. El Salvador is an example of this.
  2. People will start considering crypto projects other than bitcoin as well. Because not all financial solutions using bitcoin may be possible.
  3. Now more and more people will also consider trying out Central Bank Digital Currency (CBDC). With this, the co-existence of digital currency will also be maintained with the common currency in the market i.e. fiat currency.
  4. Emphasis will be placed on adopting more and more green mining means for crypto mining.
  5. Till now only paper currency was considered as currency but now the distinction between paper and digital currency is ending. In addition to being recognized for use, bitcoin is increasingly being accepted as legal tender in many countries around the world.

This is a golden sign for the future for the entire crypto market.

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