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El Salvador Blazes The Future Of Decentralized Finance On “Bitcoin Day”

Raymond’s views on El Salvador becoming the first nation in history to recognise Bitcoin as legal tender and how to handle the recent flash crash.

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Raymond Hsu

CEO of Cabital

Raymond’s 10 years of experience holding leadership positions in fintech companies and banks inspired him to democratise digital currency financial solutions with Cabital.

Yesterday, the Central American country El Salvador took a giant leap for the cryptocurrency and blockchain industry by becoming the first country in history to recognise Bitcoin as legal tender. I applaud El Salvador as they have crossed a milestone in Bitcoin’s history and will be remembered as the country that first started on this daring and inspirational journey.

But plans never go exactly as planned. 

The rollout was rocky to say the least and faced many technical issues. The government designed Bitcoin wallet Chivo was planned to be released on Huawei, Google, and Apple app stores at midnight, but it wasn’t available to download until the early morning. 

When applications were downloaded, some people claimed to still have issues. This led Chivo to temporarily go offline since a lack of server capacity prevented people from entering their data, an important step in setting up a wallet and for them to receive their free $30 of Bitcoin. There were other problems too, including users unable to send funds.

Within hours of rolling out the platform, Bitcoin’s price fell almost $10,000 with traders trying to figure out if its rapid drop was linked to Salvador’s bumpy rollout of its Bitcoin wallet and where the market will go from there. 

The sudden drop in Bitcoin’s price may scare some investors, but I have faith in the transformational power of Bitcoin and its underlying blockchain technology. As a long-term cryptocurrency investor, I view this drop as simply another flash crash that we in the industry will successfully navigate through, as we have done through other volatile cycles in the cryptocurrency market. 

The fundamentals of Bitcoin remain strong and it's clearly being more accepted across the world. Today, we also saw The Republic of Panama introduce a bill on regulating cryptocurrencies, aiming to make the country “compatible with the blockchain, crypto assets and the Internet.” We have also seen support for making Bitcoin legal tender growing across Latin America in general, showing the world that it's possible to have a truly decentralized payment and financial system.

A sudden crash or drop in the cryptocurrency space may create emotional triggers to sell your digital assets. But that strategy in general isn’t a good idea in the long run. If you buy low, and sell lower, you will never accumulate wealth. 

Cabital recommends two different tested investment strategies to ensure that you grow your wealth over the long term: portfolio management and dollar cost averaging. As you can see, since Bitcoin and Ethereum were released, in the long term, their prices have steadily increased despite sometimes severe drops. Don’t let this flash crash in the digital assets market startle you. Just remain focused and keep investing every month as you do with other asset classes. 

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