Arizona State Senator Wendy Rogers introduced bills with the intention of legalizing Bitcoin as a form of currency in Arizona. This is the second time that the senator wants the state to accept cryptocurrency as a legal form of payment.
Bitcoin Treated Like Money
The legalization of Bitcoin as a currency people can use for payments is far from impossible. Should Arizona go through with it, its citizens will be able to use it to pay debts, taxes, rent, penalties, and other fees. State agencies will also accept it as payment.
Although cryptocurrency is still not stable as people would like, there are still those who believe that it can have future potential, and that's considering its huge decline of 60% in the past year, as mentioned in Interesting Engineering.
The bill described the currency as a decentralized, peer-to-peer digital currency, meaning that the government has no control over it. It simply operates on a network, which is recorded on a public ledger that is the Bitcoin blockchain.
The first time that Senator Rogers proposed the bill was back in January 2022, but it was not passed. There are still no indications whether or not the bill would be passed this time. If it does go through, then Arizona will be the first state to do so.
Should They Approve the Bill?
There are many factors to be considered before making a big move like accepting Bitcoin as a legal tender. It's important to acknowledge that the exchange, or cryptocurrency in general, is still not as stable as fiat currencies.
Thomas Dimpfl, a professor of economics at the University of Hohenheim in Germany, said that a good legal tinder is reliable. He added that the biggest risk is that the exchange is so volatile, and that may cause problems.
As mentioned in Spectrum, the value of cryptocurrencies fluctuates wildly. It can drop thousands in just one day. That becomes a problem when the holder of the digital currency will have to exchange it for fiat currency and use it outside the state.
For instance, El Salvador has already adopted Bitcoin as a legal tender, spending $104 million for it. Then there was the crash in the crypto market, causing Bitcoin's value to drop, leading to the value of the assets that El Salvador bought dropping to just $67.9 million.
The International Monetary Fund strongly feels that digital currency is "a step too far." An article from the IMF stated that it requires significant investments and difficult policy choices. As mentioned before, the investment did not turn out well for El Salvador.
Although cryptocurrency is easier to access, secure, and cheap in terms of transactions, the IMF believes that the risks and costs still outweigh the potential benefits. The article even mentioned Bitcoin as an example, and how it crashed to less than half in value in two months.
There's also the issue of using cryptocurrency for money laundering, wherein criminals can convert fiat currencies to digital assets. It can also be used for other crimes like evading taxes and even funding terrorism.
