Bitcoin Is About To Snap

What's up Grandma! It's guys here, so we gotta bring attention to a topic that, in my opinion, is not getting enough recognition. Which I think is surprising because this has the potential to completely change the trajectory in terms of how we transact money and build wealth.

That is the fact that an entire country could soon be the very first to officially adopt Bitcoin as their legal tender right alongside the US dollar. That's right! Just like you'd go to the grocery store and pay for your items with cash or credit, pretty soon Bitcoin could be the preferred method of choice, with absolutely no capital gains tax paid in the process for any profits you make.

For many people, this could represent a complete shift in the way they spend, save, and build economic prosperity. So let's break down exactly what just happened, what this means, how this could affect the value of Bitcoin, and then finally how you could use this information to make more money.

But before we start, it would mean a lot to me if you diamond-handed that like button for the YouTube algorithm. And listen, I can't promise you that hitting the like button is going to make you an instant millionaire or cause Elon Musk to stop changing his mind on Bitcoin faster than he promotes random altcoins. But I can promise you that it certainly can't hurt!

And if we could get this video to 69,420 likes, I will intro my next video with whatever the top comment to this video says. So now that my fate is in your hands, let's begin.

Alright, so if you've clicked on this video, chances are you're already familiar with Bitcoin. Since the introduction in 2011, it's gone up in price from a dollar all the way up to now thirty-five thousand dollars as it slowly gains mainstream adoption and finds its way into people's portfolios as a way to further diversify.

However, some of its biggest challenges have been the recognition of Bitcoin as a legal source of currency or store of value from a central point of authority. For example, the United States has pushed for more oversight and taxation, China has banned and discourages their citizens from participating in it, and overall, Bitcoin is still struggling to be recognized and endorsed on a large scale as a method of payment.

But that might soon change thanks to a brand new recent announcement that El Salvador aims to be the first country in history to adopt Bitcoin as legal tender. What you gotta say is pretty big news for all of us, regardless of where we live, for reasons I'm about to discuss shortly.

In terms of this headline, as of right now, El Salvador is largely a cash economy. Seventy percent of their citizens don't have a bank account or a credit card, and more than 20 percent of their GDP comes from remittances or money sent home from other locations, of which is subject to excessively high fees for international transfers that could take days to arrive or require physical pickup.

Bitcoin, on the other hand, could solve those issues entirely while allowing their citizens to transfer money anywhere in the world for a fraction of the cost and in a fraction of the time. Then, in addition to that, the president of El Salvador also tweeted that alongside using Bitcoin as legal tender, there would be no capital gains tax on profit as a currency.

He would offer immediate permanent residence to cryptocurrency entrepreneurs, and as a reminder, El Salvador also has no property tax. Now, on paper, it's fantastic! And if it's successful, it could be implemented around the world and boost the value of Bitcoin.

But there are a few major hurdles that have to be overcome for Bitcoin. First, the number one being transaction speeds. See, as it is right now, Bitcoin is not exactly fast. I mean, sure, it's faster than initiating an ACH transfer with your dinosaur bank and then waiting three to seven days for it to clear. But it has not been fast enough to pay for your groceries, to not have to wait 30 minutes at the checkout counter for your transaction to complete.

That's because when you initiate a transfer on a basic level, that transaction needs to be recorded and confirmed by miners on the blockchain. Those transactions are generally prioritized by the fees that you pay. Sometimes this could be as quick as 10 minutes, and other times as long as an hour. But that presents a few other problems.

First, waiting around for an hour while your Bitcoin transaction is confirmed isn't exactly ideal, and it's really inefficient to expect that people in businesses would want to wait that long. The second, because of how volatile the price of Bitcoin is, with a hundred percent certainty, by the time your transaction has confirmed, you will have either overpaid or underpaid for your item depending on what Bitcoin is trading at.

And third, speaking of transaction times being prioritized by these, that then brings us to this: these transactions are not free because every transaction must be confirmed by a miner for a fee. And there's only so much space available at any given point in time. The more people transact at the same time, the higher the network congestion rate, and either the more expensive your transaction will be or the longer you're going to have to wait.

Like, as you could see over the last two years, transaction volume has increased significantly for Bitcoin, slowly turning Bitcoin's transfer speeds into more like a traffic jam, unless of course you pay a slightly higher fee to expedite that process. In terms of how much though, it really depends on how much you're transferring, and the amount of money you pay depends on the amount of data you're sending.

On average though, low-priority transactions are paying about 35 cents, and high-priority transactions are paying just over a dollar. But these are averages and that could go up substantially depending on how much you're sending. Of course, the good news of this though is that the cost of transactions is still significantly less expensive than a same-day ACH transfer with Bank of America or sending an international wire transfer with Chase.

So, in certain aspects, Bitcoin is a much more efficient way to move money around anytime, anywhere. But in terms of being able to pay your groceries with it, it's still not as optimal as paying with cash or a credit card. And third, like I mentioned, there's a lot of price volatility, meaning one moment it's up and the other it's down.

This means you can be standing in line to pay for your groceries, and by the time you reach the checkout counter, Elon Musk has tweeted some FUD, and all of a sudden the groceries now cost you 15 percent more than you were expecting. So that's why they've partnered with a company called Strike, which uses something called the Lightning Network to expedite transactions nearly instantaneously.

They say that fees are so low that you could customize how and when you send your money down to the minute, and they followed up with this: "This will allow billions of people around the world to access the financial system in a simple low-cost way, fulfilling the original vision and promise of Bitcoin."

Well, evidently it's working for El Salvador because back in March this app became the number one most downloaded app in the country. However, this now brings us to the second roadblock of Bitcoin actually becoming legal tender, and that would be actually passing.

Now, like I said, this is a proposal being sent to Congress, but as their politics are organized over there, this actually has a pretty high chance of passing. El Salvador is a country which, unfortunately, has seen its fair share of violence and corruption, and recently their new president runs and controls the majority of Congress, meaning pretty much whatever he proposes and says is pretty much guaranteed to pass because they have the majority of votes.

Politically, critics do worry that the recent removal of several judges along with the attorney general allows them to pretty much do whatever they want without anyone opposing them. And obviously that brings into question the future of their political system, including potential sanctions with the U.S. But politics aside, as far as this current topic of Bitcoin, under their current political system, it has a very high chance of actually going through.

Then, within 24 hours of that announcement, Paraguay also announced that they too would look into embracing Bitcoin. And once you start looking into this even further, it's easy to see the trend throughout the last decade. Latin Americans face difficulties with inflation, rate hikes, and defaults, meaning their currencies lose value at an extraordinary rate.

That's led to what's called the dollarization, which is where another country uses the US dollar in exchange for its own. But now, that's beginning to shift towards Bitcoin in a move that could soon follow in many more places, further legitimizing Bitcoin as a store of value.

Now, before we get into my own thoughts on this, I have to say it's kind of mixed. On the one hand, it's important to understand that El Salvador has not exactly been the most stable country, and it's yet to be seen if this move is really coming from the right intentions. Sure, it's good news for Bitcoin, and any further adoption is really one step closer to one day being worth five hundred thousand dollars.

But it also might just be a PR move to garner more positive media in light of U.S. sanctions, and it's too early to tell for sure. Now, also tax-wise, even though it sounds really exciting to go and move there and pay absolutely no capital gains tax, if you live in the United States, you're required to pay capital gains tax anywhere in the world, regardless of where you live.

So logistically, it just sounds like it's way more hassle than it's worth, and it's probably way easier just to pay your taxes than it is to start over in a new country that's still trying to find their footing. So overall, the way I see it, yes, this is good news for Bitcoin. Yes, this is good news for El Salvador, and yes, I do think that if it's successful, other countries are going to follow.

However, turning Bitcoin into a universally recognized global currency is easier said than done. Although this is a step in the right direction, as long as it's done with good intentions, which I really hope it is. But I'll admit I'm not as educated on the political system over there as I should to really make too many comments about this.

So for anyone out there who knows more than I do on this topic, feel free to comment down below, and like I said, I pretty much read them all. So if you write something, I will probably see it.

And lastly, speaking of all things Bitcoin, you may have seen that about two months ago, I made a video calling the new Bitcoin credit card a disaster. This is a product introduced that would give its users unlimited one and a half percent cash back in Bitcoin, along with the 250 sign-up bonus after you spend three thousand dollars in the first three months.

But after all of the numbers, I concluded that it was an absolutely horrible deal because they had an annual fee of, wait for it, two hundred dollars a year. So of course, this is what I had to say at the end of the video.

However, if they do remove the annual fee, then I gotta say I would probably end up getting the card, and one and a half percent cash back is pretty decent. It's okay! And guess what? My utter amazement, I am shocked, but they reached out to me personally.

They said they would be removing the annual fee, and then they sent me this. Inside is the Bitcoin credit card that I trash-talked in my previous video, which means the fact they actually listened to me and removed the annual fee means that this card itself is actually not so bad anymore. Although, I'll be honest, it's still not as good as the Citi Double Cash Rewards Credit Card, which offers you two percent unlimited cash back on everything.

But the fact that this one has no foreign transaction fees and gives you one and a half percent unlimited cash back in Bitcoin makes this a lot better than a lot of the other free credit cards on the market. But overall, like I said, I think all of these updates are really positive for Bitcoin and the entire financial system in general.

El Salvador wanting to make Bitcoin illegal tender would be a huge milestone for any country, but still, I hope this is being done for the right reasons, for the well-being of the citizens, and not so much for good PR. If all of this does go through, however, and it's successful, I would not be surprised at all if other countries begin implementing this as well.

I think El Salvador is a great starting point. I see a lot of advantages, and I think this would be a good push for Bitcoin long term. But like I said, expect to see a lot more volatility, and for myself personally, I am still sticking with my goal of allocating five percent to my entire portfolio between a mix of Bitcoin and Ethereum.

And that's it. Until then, anything could happen, but I see this as very exciting news, and I am really excited to see where this goes long term. So with that said, you guys, thank you so much for watching! I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell.

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Thank you so much for watching, and until next time!