The adoption of Ethereum as an official currency by a country would be an unprecedented event that would transform both its economy and its reputation on the global stage. This move could take inspiration from the case of El Salvador, which in 2021 became the first country to adopt Bitcoin as legal tender. $ETH
Ethereum as official currency: a possible scenario
Suppose a small, technologically advanced country decides to implement Ethereum as its official currency. This country, like El Salvador, could have several motivations:
Financial Inclusion: Many citizens do not have access to traditional banking services, but they do have access to smartphones. Ethereum could provide an accessible alternative thanks to its blockchain network and digital wallets.
Economic Diversification: Depending on tourism, natural resource mining, or a specific sector, the country could seek to attract investments in cryptocurrencies. Ethereum is attractive due to its ability to execute smart contracts, which have applications beyond finance.
Innovative Reputation: This movement could position the country as a technological pioneer, attracting talent and companies in the blockchain field.
Benefits of adopting Ethereum
Smart Contract-Based Economy: Decentralized applications (DApps) could be integrated into key sectors such as health, education, and property rights.
Long-Term Sustainability: Ethereum, after its transition to Proof of Stake (PoS), consumes less energy than Bitcoin, which could align with environmental policies.
Greater Stability: As a network with multiple applications, Ethereum could generate less volatility in the long term compared to Bitcoin.
Challenges of adopting Ethereum
Price Volatility: Although Ethereum is less volatile than many small cryptocurrencies, it remains unstable compared to fiat currencies.
Technical Infrastructure: Implementing Ethereum would require a massive upgrade of payment systems, financial education, and regulatory frameworks.
Internal and International Resistance: Central banks and financial organizations may oppose it due to the loss of control over monetary policy.
The case of El Salvador with Bitcoin
El Salvador adopted Bitcoin as legal tender in September 2021 under the leadership of President Nayib Bukele. Some key aspects that could inspire a case with Ethereum:
Motivation:
Promote financial inclusion in a population where the majority were unbanked.
Reduce remittance costs, which represent a significant portion of the GDP.
Strategies used:
Creation of the official Chivo Wallet to facilitate transactions with Bitcoin.
Basic education for citizens on how to use cryptocurrency.
Mixed Results:
Positive: It managed to attract tourism and investments related to blockchain.
Negative: High volatility of Bitcoin and low usage among the general population. Additionally, public debt and international criticism have generated uncertainty.
Comparison between Bitcoin and Ethereum as official currencies
Although both are decentralized cryptocurrencies, Ethereum offers significant technological advantages, such as smart contracts and a transition to a more sustainable network. However, adopting Ethereum would also involve complexities, such as its more technical use and a less consolidated global community compared to Bitcoin.
In conclusion, the adoption of Ethereum as an official currency would be a risky experiment but with great possibilities, depending on how its implementation is managed and the context of the country attempting it. Will this be the next step in the crypto-economic revolution? Only time will tell.
