Could Bitcoin Be Legal Tender in 40+ Countries Soon?

The prevalence of Bitcoin (BTC 2.13%) as legal tender has slowly been adopted by a few nations. In this clip from the "The Crypto Show" on Motley Fool Live, recorded on May 18, Fool.com contributor Jon Quast highlights how El Salvador, which added it in 2021, recently held a conference to try to enlist more countries to make Bitcoin legal currency.

Jon Quast: El Salvador made Bitcoin legal tender in 2021 alongside the U.S. dollar. The country actually owns 2,300 Bitcoins, but the idea is businesses are supposed to, I think things are still priced in dollars, but they're supposed to have infrastructure to accept Bitcoin as payment.

I know that many of the big companies, like McDonald's (MCD -0.78%), Starbucks (SBUX 2.42%). I've seen videos where people in El Salvador, those companies have to actually accept Bitcoin if people choose to do that. I've seen videos of people buying stuff at McDonald's and Starbucks with Bitcoin, so it is possible.

Now a report has come out, we talked about it a few weeks ago. That very few people in El Salvador are actually doing it, but it is legal tender nonetheless. This week, El Salvador is trying to recruit more countries to this form of money. They are hosting a conference with representatives from 44 countries.

The banks in 44 countries like central banks or whatever the monetary system is in that country, it's not always a central bank. But Nigeria is there, Pakistan, Paraguay, where I used to live, Kenya, more. Many of these countries are smaller countries, are perhaps struggling economies, but not all of them. Nigeria, very much an up-and-coming economy in Africa. Pakistan has a huge population, and Kenya, a very interesting country as well, more in South Central Africa.

But, yeah, explaining to the president of El Salvador saying the conference, we're trying to talk about how we believe this is helping bank, the unbanked, how it benefits our country all these things and so that the idea is other countries would adopt to this.

I think that some people believe this is perhaps the catalyst for Bitcoin going forward, that more countries would choose to adopt it, like El Salvador, we did see the Central African Republic accept this maybe two weeks ago, make it legal tender as well.

In terms of catalysts for Bitcoin though, this is where it ties into the question earlier. What about the next halving? What happens with Bitcoin is, it is mined. We talked about it, proof-of-work. There are so many Bitcoins that are rewarded per block, I believe at the moment doggone it, what is it? Twelve and a half, I believe is the current Bitcoin reward.

Travis Hoium: I'm not sure.

Quast: I think that's it, but I might be wrong on that. It might be half of that. But every four years or so, the Bitcoin protocol goes through what's called a halving event. As you reach a certain number of blocks on the blockchain, the mining reward is cut in half.

What this does historically, is it creates an imbalance of supply and demand. You have this demand that is beating supply, it's pretty regular. Something like 900 new Bitcoins are created every single day right now. Then there is demand in there that keeps the price somewhat stable. We've seen Bitcoin pullback, but if people are buying 900 new Bitcoins a day and there's 900 new ones entering circulation.

That's what I mean by supply and demand. Then when you have these halving events, if there's still demand for 900 a day and now there's only 450 coming out next halving cycle, then theoretically the price can go up.

Historically the halving event has been a time where all of a sudden the supply demand gets out of whack and we see huge price appreciations all at once before it comes back down higher than it was before, but still well off the high. It's what we saw happen around the last halving event in 2020 and you could see it again, we'll see.