The objective of the test is to familiarize the inhabitants of Alicante with the digital euro. The research will guide the implementation of the digital euro in the future.

The inhabitants of Alicante, Spain, could soon test payment with the digital euro through a pilot version. Finance council Lourdes Llopis nominated the municipality to participate in the pilot test, representing El Campello mayor Juanjo Berenguer.

Various universities and high-level public institutions are part of an international and multidisciplinary research group. They will study how society would accept this momentous shift from physical to digital euros.

The future of the European central bank digital currency (CBDC) could depend on this project. The European Central Bank (ECB) seeks to discover how municipalities could participate alongside the public and private sectors. Their objective is to design a digital currency based on the preferences of users, traders, and intermediaries.

Carmen Pastor Sempere, Professor of Commercial Law and Director of Baes BlockchainLab at the University of Alicante, said they have much work ahead. She stated that everyone could contribute to creating an inclusive design for the digital euro in municipal code. That would boost local retail payments, the structuring of the territory, and the relocation in real and local economies.

The organizers of the test believe that developing a local digital euro would bring a unique opportunity. In this way, the municipality would become the pilot and guide for implementing the digital euro at the international level. Congress explained that local administrations would have to educate their citizens and familiarize them with the cryptocurrency.

According to the members of Congress, the municipality of El Campello would be ideal for a pilot test. They explained that its population of around 30 thousand inhabitants is very open to innovative projects.

The European Central Bank Lists the Advantages of the Digital Euro

Congressional representatives cited as an example the experience of the British town of Bristol. Since 2012, its inhabitants have used a local digital currency complementary to the British pound (GBP) with a parity of 1 to 1. That is the first local currency to offer electronic accounts that a regulated financial institution in Europe endorses. Besides, people can pay local taxes and purchase products or services with it.

The ECB believes that the digital euro will guarantee the protection of user data and a high level of confidentiality. Additionally, they have highlighted some characteristics that would facilitate adopting it internationally and replacing currencies in countries with unstable currencies and weak fundamentals. The Bank of Spain (BdE) explained that all operations would be more efficient, transparent, and traceable, particularly those with multiple currencies.

For their part, the Bank of France (BdF) and the Monetary Authority of Singapore (MAS) conducted tests in early July to create the digital euro. They consisted of simulating international transactions using multiple CBCDs on the Quorum blockchain. These trials were novel as they would contribute to implementing decentralized finance tools such as Automated Market Makers (AMM).

By Alexander Salazar

The International Monetary Fund acknowledges that the underlying technology of crypto-assets is robust, but they allege there is no legal issuer. IMF spokesman Gerry Rice believes that the adoption of Bitcoin as a national currency poses macroeconomic risks.

In recent days, the International Monetary Fund (IMF) warned of the potential negative consequences of adopting Bitcoin as legal tender. Economists Tobias Adrian and Rhoda Weeks-Brown specifically argued that this could lead to macroeconomic instability.

Adrian and Weeks-Brown note that a cryptocurrency like Bitcoin can become popular in countries without inflation or stable exchange rates. They said the cost to the economy could be considerable even if it provides the unbanked with the means to make payments.

Additionally, they believe that companies would have to invest a lot of money to integrate a cryptocurrency instead of focusing on production.

The IMF comments on its blog that the consequences of countries adopting Bitcoin as a national currency could be disastrous. On that website, the organization’s staff and officials discuss current urgent economic and political issues.

Although their position on the issue is official, they do not mention any particular country.

Risks the Adoption of Bitcoin Poses, According to the IMF

The adoption of Bitcoin can lead prices to fluctuate due to the volatility of the cryptocurrency. For that reason, Tobias Adrian and Rhoda Weeks-Brown mentioned the widespread crime and fraud occurring in the cryptocurrency market.

The economists said that homes and businesses could lose wealth due to significant changes in value, fraud, or cyberattacks. Although the underlying technology of crypto-assets has proven robust, they explained that there might be technical flaws. In the case of Bitcoin, they argued that recourse is difficult as there is no legal issuer.

Adrian and Weeks-Brown spoke about adopting cryptocurrencies as national currencies or legal tender. The IMF officials believe there is a risk that domestic prices will become very volatile.

They also believe that some people could use those assets contrary to anti-money laundering and terrorism financing measures. Likewise, they argued that Bitcoin could cause problems related to macroeconomic stability and the environment.

The blog post does not explicitly mention El Salvador, but Adrian and Weeks-Brown do not recommend converting Bitcoin into a national currency. They believe that it is not the best solution for those seeking more inclusive financial services.

El Salvador is the First Country to Adopt BTC as Legal Tender

El Salvador became the first country to adopt BTC as its official currency alongside the US dollar. Although the IMF is negotiating a loan of USD 1 billion for that Central American country, it was quick to criticize the measure.

For his part, President Nayib Bukele has promoted its use as it can help Salvadorans living abroad to send remittances to their families.

According to IMF spokesman Gerry Rice, the adoption of Bitcoin as legal tender raises many macroeconomic questions. In addition to financial and legal aspects requiring careful analysis, he said they are closely following developments and consulting with the authorities.

Various organizations still link Bitcoin to illegal activities such as money laundering and terrorism financing due to its anonymous and decentralized nature. Several studies have shown that illicit activities with fiat money are more common than those with cryptocurrencies.

By Alexander Salazar

Commercial establishments in the south of the country take gold as a reference to set their prices. Venezuelans use foreign fiat currencies and Bitcoin (BTC) to face the devaluation of the bolivar.

Since 2018, hyperinflation in Venezuela has reduced the purchasing power of the bolivar to practically nothing. That also affects the prices of products and services set in US dollars (USD), which increase indiscriminately in the face of economic distortion.

The traders of Bolivar State, the south of Venezuela, have set the prices of their articles, taking gold as a reference. The reason is that they seek to minimize the general lack of interest in the bolivar and the prices increase in US dollars. Although the move is drastic, many buyers agree with it as there are multiple mines in the region.

Some people who no longer use the bolivar usually buy food with grams of gold. Currently, a video that appears on social networks shows the dynamics of paying under this modality. On many occasions, buyers use the so-called “cochano” gold, that is, the one in its natural state and unalloyed.

In many commercial establishments, sellers offer the items by the dozen, with direct payment in grams of gold. People who want to buy 1 kilo of rice, sugar, or cornflour can pay with cash US dollars. In businesses near the border with Brazil, they also accept payments in reais (BRL), the Brazilian national currency.

Depending on the area, the price of gold can be in Colombian pesos (COP) or US dollars. People can buy essential goods with one-tenth of a gram of gold, equivalent to USD 5. Gold currently trades between USD 44 (18K) and USD 59 (24K) on regulated markets.

Curiously, gold traders use the low denomination banknotes of the bolivar to pack the grams they sell. When buyers receive the precious metal, they throw away the paper money as it does not represent any purchasing power.

Venezuelans Use Bitcoin as an Alternative to the Bolivar

Venezuelan citizens have used various monetary mechanisms to face the loss of value of the bolivar. While those living near the Colombian border use the peso, those near the Brazilian border turn to the real. The US dollar prevails as a store of value over other foreign currencies worldwide. However, cryptocurrencies like Bitcoin and Ethereum are increasingly gaining ground in the country.

According to a 2020 Chainalysis report, the South American country is the third to adopt Bitcoin and other cryptocurrencies in the world. The study considered four metrics: the value of all transactions received the value of operations in retail stores, the trading volume on P2P platforms, and the total of deposits in cryptocurrencies.

At the moment, Venezuela is the country with the highest inflation in the world. Statista records indicate that it reached 65,000% in 2018 and fell to 19,900% in 2019. In 2020, the level of inflation was around 6,500% and could close this year at about 5,500%.

By Alexander Salazar

Lee ruled out that the price of Bitcoin depends on influential characters or companies since its market value is very complex. The investment analyst believes that the Fed and central banks will not impose cuts or restrictive policies for long.

Market analyst Michael Lee believes that the future of Bitcoin is unshakable and does not depend on regulators. In recent days, the expert predicted that the price of the pioneering cryptocurrency would inevitably hit a new all-time high.

Lee is the founder of investment firm Michael Lee Strategy, which deals with investment advisory services. The analyst stated that cryptocurrencies are still in a very early stage of development. For that reason, he does not believe that the regulatory policies of the Federal Reserve or other central banks will hinder them.

Additionally, Lee ruled out that the price of Bitcoin depends on the opinion of influential people or companies. He was emphatic in the case of Amazon and its alleged steps concerning cryptocurrencies. He said that the value of the first cryptocurrency on the market is very complex, and he considers it wrong to attribute it to a single phenomenon.

Michael Lee Says that Bitcoin Does Not Depend on Third Parties

Curiously, renowned analyst and strategist Michael Lee considers that Bitcoin is autonomous in its development. He sees the impact of external factors on the stability of the cryptocurrency as something circumstantial that will not affect its long-term future.

The analyst noted that the price of Bitcoin shows no signs of falling anytime soon. On the contrary, he foresaw that it would gradually reach new all-time highs. He explained that this increase would be well above the rest of the cryptocurrencies.

In this regard, Lee estimates that there will soon be no asset to match Bitcoin in terms of profits. He thinks that investors should feel satisfied to put their capital in the current stage. He highlighted that no other cryptocurrency has as many secure return capabilities as Bitcoin.

Likewise, he stated that the best days for cryptocurrencies, particularly Bitcoin, have not yet arrived. According to Lee, the pioneering cryptocurrency is a future earnings asset, so investors’ fruits will ripen over time.

Lee Believes Neither Regulations nor Central Banks Will Stop Bitcoin

The market analyst stated that potential threats against Bitcoin from regulators are not very relevant. He believes that neither the Federal Reserve (Fed) nor other central banks will stop the momentum of the cryptocurrency. At the same time, he stated that it is something beyond the capabilities and scope of those institutions.

Lee believes that the Fed will not impose any curtailment or restrictive policy against Bitcoin for long. Additionally, he said that the same would happen with other central banks in the world.

However, Lee believes that nothing can weaken Bitcoin in the future. Since it is an unstoppable asset, its long-term price behavior looks highly positive.

To conclude, Michael Lee argued that the price of Bitcoin is due to various factors, not only to cases of speculation. According to the analyst, the element with the most effect on the valuation of the pioneering cryptocurrency is the unlimited printing of fiat money.

By Alexander Salazar