El Salvador adopting Bitcoin could make it lose market dominance
El Salvador recently added as legal tender. In barely over a decade, an open-source, cypherpunk, radically new money system, with no publicly known creator and open to participation in both using and building from anyone in the world, has gone from zero value and branded as a tool for criminals to now being accepted by a government as a legitimate legal tender. To say this has been a wild ride is an intense understatement. Now, for the first time in history, a fully decentralized digital money is recognized by a state as being just as legitimate as said state’s own currency.
That being said, there’s some devil in the details of this otherwise wonderful announcement: The law specifically mentions Bitcoin (BTC) rather than cryptocurrencies as a whole and includes a government partnership with Strike, a payments company based around the Lightning Network, the primary off-chain scaling solution for Bitcoin. Because of the current scaling limitations of the first layer and the state of development of the second, this historic adoption could come with some headaches.
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