El Salvador remains the only country to date which accepted Bitcoin as a legal tender, whereas many other nations and countries merely tried to patronize the thought/idea of doing so. El Salvador was given a fair amount of warnings from the IMF and the World Bank against this initiative, but it didn’t bother to have an objective set of eyes to what these financial giants were saying about. It was pointed towards the economic stability of El Salvador and the imminent threat it would be under if it chooses to make Bitcoin a legal tender. So, it did it anyway.
When someone invests in stocks or the forex market, they are actually investing a part of their income to buy a fiat currency or a piece of legal paper that is backed by it. They buy it, they either hold it for the foreseeable future, or they chip in this investment of theirs at the end of the day to get whatever profit that might come their way. This is how normal trading takes place in both forex and stock markets.
Now the thing to look out for here is that making an investment in both of these financial markets means that the asset is not going to skyrocket in a matter of hours or see a very positive reach or increase in value too. It happens consistently and gradually. It doesn’t matter how much the asset is going to increase in value or depreciate over time, but it happens in a consistent and constructive manner, whereas the crypto market, especially Bitcoin, is highly volatile.
Bitcoin can Damage Financial Stability, Says IMF
It means that if you invest in cryptocurrency today, then it might depreciate significantly, and you might lose a significant portion of your investment, or if it soars or increase in value, you might see amazing returns on your investment. It is pure gambling with Bitcoin and nothing else. Bitcoin being a legal tender for a country could seriously damage its financial stability because of its extreme volatility.
This country might have borrowed loans in the past; they might have to regulate their budget or have suitable funds for pensioners that should be regulated by fiat currency which is not too volatile to put a dent into the economic infrastructure of the country as Bitcoin might. This is what IMF has been struggling to get through to El Salvador before and even still, but it seems that El Salvador might not care at all.