El Salvadoran legalization of Bitcoin (BTC) has been condemned by Steve Hanke, an American applied economist. He believes that the decision will collapse the economy of El Salvador completely. He recognized the step to be stupid. The reason behind this statement is given by him as El Salvador has a dollar-based country; therefore, the Bitcoin tender would be destructive for the economy.
While discussing the monetary policies in the world, Professor Hanke touched the matter on Kitco News. He stated that the driving force behind the decision includes some criminal interests.
Bitcoin: not a currency but a speculative asset
Although El Salvador received a bulk of criticism regarding the utilization of Bitcoin as a legal tender in real-life transactions after it had taken the decision, much support has also been given to it for making BTC a legal tender.
Referring to this, Steve Hanke revealed that it would be much challenging for the country to incorporate Bitcoin (BTC) on a daily basis. He alluded to the immense rate for the conversion of Bitcoin for sending the fees etc., as burdening the legal tender, which should not be the case as the legal tender should be inexpensive and convenient to use.
Hanke is of the view that this legalization would make them vulnerable, and the foreign Bitcoin holders would exploit this weakness for making benefit out of it in cashing their digital currency holdings to U.S. dollars. This is because the country does not have any domestic currency, according to Hanke.
Is Bitcoin deception or Not?
Unlike at the beginning of the digital currencies, Steve Hanke has acknowledged that he does not consider Bitcoin to be a scam. He states that Bitcoin (BTC) is a speculative asset, and people should treat it accordingly. As it has the fundamental value of zero, therefore it is not recognized as a currency by Hanke. He further mentioned that a lot more competition is to be faced by Bitcoin, and during this, its value would be lowered down to a large extent as compared to its position right now.
The reasons that the El Salvadoran President had given for the legalization of Bitcoin include that it would bring convenience in the remittances. Professor Steve Hanke responded to this statement in a nonsensical way by saying that it costs 0 to 4 percent to send flat to the country, and along with the conversion into Bitcoin (BTC), it would cost 8 percent, which is quite expensive.