July 21, 2021

Paraguay Could Follow El Salvador Implementing Bitcoin as Legal Tender

Paraguay could be the second country in the Americas presenting a new Bitcoin (BTC) bill that could make the largest cryptocurrency legal tender in the country.

Paraguay could be the second country in the Americas presenting a new Bitcoin (BTC) bill that could make the largest cryptocurrency legal tender in the country. According to Carlitos Rejala, Paraguayan deputy, they are working on a project to bring Bitcoin and other innovative technologies to the country. 

It is worth mentioning that Paraguay has cheap electricity produced by hydroelectric power plants located in its rivers. The country could be the home to new companies expanding in the region that could help not only Paraguay but also the entire crypto and Bitcoin ecosystems. 

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Paraguay Could Adopt Bitcoin as Legal Tender

Paraguay could be the second country in the Americas accepting Bitcoin as legal tender. This is something that has been announced by Congress deputy Carlitos Rejala a few days ago. He explained on Twitter that their country needs to move forward with the new generation of individuals. 

At the same time, he stated that they are now working on a new project that would allow the country to innovate and adopt new technologies. After sharing a picture of himself with laser eyes (adopted by Bitcoin supporters) has also mentioned that the real “to the moon” includes Bitcoin. 

Another thing to take into consideration is related to the fact that Paraguay has access to cheap and abundant electricity provided by the Itaipu dam. This dam produces energy to power Paraguay’s needs and also Brazilian energy consumption. 

In the future, the energy produced but not consumed from the Itaipu Dam could be used to mine Bitcoin or to attract new miners from all over the world. However, this is just speculation as there has been no information related to the project that Carlitos Rejala could present to Paraguayan authorities (congress). 

This could be the second country after El Salvador to implement and adopt Bitcoin, at least in an indirect way by supporting its expansion in the country. 

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El Salvador Experience

El Salvador has been the first country in the world to adopt Bitcoin as legal tender. That means that individuals and companies in the country could use Bitcoin to pay for goods and services. Firms and merchants are obligated to accept Bitcoin and the U.S. dollar (USD) if a client wants to use any of these currencies. 

At the same time, the decision has also been political and a message to financial institutions around the world. El Salvador is now working in order to start accepting Bitcoin and make it possible for individuals and users to start accepting this virtual currency. 

This requires the education and preparation of the population. It is not an easy task to do considering that all the country should be ready to learn and understand how BTC works. There are several working groups already in the country expanding the knowledge about Bitcoin and how this virtual currency works. 

Finally, there has also been an interest in the Lightning Network (LN). This makes reference to the second-layer scaling solution that makes BTC transactions faster and cheaper for users. Rather than paying large amounts of money in fees for processing a transaction, the LN makes it faster and cheaper to operate. 

Impact on Bitcoin and Financial Systems

It is worth taking into consideration that the International Monetary Fund (IMF) has already talked about the current situation in El Salvador. It is clear that financial institutions would now have to deal with the official (legal tender) currency of a country. 

This is something that we have to closely follow and understand in order to know which is going to be the impact of this type of project. Depending on the reaction of the IMF, it would then be possible for other countries to understand whether it could be a possibility for them (or not) to also adopt Bitcoin as legal tender. 

The whole process would take several months in order to be analysed. However, this is just one the beginning. Paraguay could be the second country to adopt Bitcoin and promoting it in the country. The effects could be noticeable and they could help the entire crypto market move forward in the region and around the world.

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