The President, Nayib Bukele, proposed to recognize the world’s famous cryptocurrency as a legal tender and a huge majority of the congress validated.
When talking about reserves, what comes to mind to most is heavily-guarded vaults that hold a country’s valuable assets for use in case of a crisis.
The above assets are used to permit the country to carry out international transactions even in a crisis.
This means that the digital asset can act as a world currency and can be held as a reserve asset.
However, no other country has given virtual currencies the status of being legal tenders, where only trading is allowed.
Bitcoin isn’t tied to particular currencies and reflects global demand rather than a country’s rising prices, thus beating inflation.
Much remains to be done, and cryptocurrency remains under investigation and is still in the early years of adoption.
At the very least, it is likely experts are engaging with various governments to evaluate the risks and benefits of adoption.