El Salvador had the world’s first: in mid-2021, the Central American country became the first country in the world to introduce Bitcoin (BTC) as legal tender, as can be read on the news website and information or crypto-currencies Bitcoin Altcoins. Following this example seems to be the case here as well. A former MP from Tonga claims that his country will also accept Bitcoin as legal tender in November 2022. Over 100,000 Tongans could then start using the Bitcoin network for payments.
Lord Fusitu’a, the former MP in question, brought up the subject in a series of tweets on his Twitter account. He outlines a five-step plan that should lead to the adoption of Bitcoin as legal tender in the Polynesian island nation. Fusitu’a speaks of a bill modeled on the same bill in El Salvador and which would even be almost identical to it. The speculation that surfaced last year that Tonga would be one of the next countries to adopt Bitcoin appears to be based on the truth. Incidentally, these speculations were based on a podcast with the same Lord Fusitu’a.
Money transfers from abroad
But what does Tonga really gain by accepting Bitcoin as legal tender? The remote island nation depends on remittances from countries like the United States, Australia and New Zealand. An estimate by the International Finance Corporation indicates that it derives more income from it than any other country in the world, up to 30% of the average household income. How is it possible? More Tongans live outside of Tonga than in the island nation itself. It is very important to them and their families in Tonga that money can be transferred easily and cheaply.
According to Fusitu’a, Bitcoin acceptance also has national benefits. Tonga could create a circular economy with Bitcoin. This is partly because the country is sparsely populated. However, there are also challenges that hinder the successful adoption of Bitcoin and the creation of this circular economy. In 2017, only 50% of people in Tonga were connected to the internet, which is required to use the Bitcoin blockchain. However, according to Fusitu’a, today more than 90% of the country’s inhabitants have a smartphone with Internet access. This should have solved most of the problem.
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