El Salvador’s decision to recognize bitcoin as legal tender is confusing for the majority of people who still see the cryptocurrency as a speculative bubble or a Ponzi scheme.
The arguments against such adoption are, seemingly, quite logical.
Bitcoin’s price is volatile–on May 19, for example, it plummeted 23% in two hours–so it appears to fail the most basic test of any currency: acting as a “store of value”.
This, in turn, hinders its ability to serve as a “unit of account”–another key test. Retailers cannot price their goods in BTC, as those prices would need to be changed continuously throughout the day. And even then, the “real value” of the goods would still be pegged to a more stable unit of account, such as the US dollar. If the price of an apple went up in BTC terms, that would tell you nothing…