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Context: The tiny Central American nation of El Salvador has embarked on an interesting experiment by recognizing bitcoin as legal tender. This is proving painful for many of its citizens, but it’s a useful “pilot” project for larger economies that are contemplating about this new asset class.
What has been the impact of El Salvador’s decision?
What are some issues with adopting Bitcoin?
Another issue is that the money supply increases at a fixed rate, and every transaction recorded on the blockchain involves a unique bitcoin. This makes it hard to carry out normal lending operations. Fractional reserve banking is difficult, except by converting every transaction to a fiat currency before lending, and converting back when servicing the loan. This means accepting massive risks on the exchange rate.
What are some positive implications?
By: Shubham Tiwari ProfileResourcesReport error
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