More Latin American countries are exploring the possibility of adopting Bitcoin as legal tender following El Salvador’s recent move despite rising transaction costs.
According to strategist Samson Mow, who helped drive the adoption of crypto in El Salvador, other countries in the region, such as Ecuador, Peru, and Mexico, are exploring the adoption of Bitcoin. Mow stated this in a video, suggesting that Bitcoin could bring about revolutionary changes throughout the region. He noted that high inflation rates would motivate individuals to protect their assets and income by adopting cryptocurrency.
However, the current surge in transaction fees has made it impractical to use Bitcoin for everyday purchases, with the average transaction fee at around $10, having briefly surged to $20 earlier. The Lightning Network offers a potential solution to address this issue as it significantly reduces transaction costs.
According to Bitcoin Visuals, Lightning Network usage has increased by 77% in the last 12 months. Its capacity has also reached a record-breaking 5,463 BTC. Countries that have adopted Bitcoin could benefit from implementing the Lightning Network payment system.
Despite the current challenges, advocacy group JAN3 supports the move and notes that countries with high inflation tend to see greater adoption of cryptocurrencies.
Meanwhile, President Nayib Bukele of El Salvador recently passed legislation to remove tariffs on new technology, including artificial intelligence, software and app development, communications equipment, and computers, as part of his broader strategy to promote technological development in the country.
I’ve just signed into law, the INNOVATION AND TECHNOLOGY MANUFACTURING INCENTIVES ACT, that eliminates all taxes (income, property, capital gains and import tariffs) on technology innovations, software and app programming, AI, computer and communications hardware manufacturing. pic.twitter.com/rZtGzPgVzW
— Nayib Bukele (@nayibbukele) May 4, 2023
Latin America was ranked eighth in the index of world cryptocurrency markets as of 2022. Between July 2021 and June 2022, residents of Latin American nations received $562 billion in cryptocurrency, a significant increase of 40% from the previous year. Five of the top thirty crypto-ranking nations for the year are located in the region: Mexico (ranked 28), Brazil (ranked 7), Argentina (ranked 13), Colombia (ranked 15), and Ecuador (ranked 30). Peru and Venezuela, for example, seem like promising nations.
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