Can Bitcoin Become Legal Tender in Arizona?

Is it Possible for Arizona to Make Bitcoin Legal Tender?

Let’s start by tackling the obvious question. Is it even possible for Arizona to make Bitcoin legal tender within the state? The short answer is no, not at this time.

The bill would first have to be passed by the state senate, then the house, before officially being signed into law by the governor of Arizona. Although the federal government says states cannot create their own legal tender, states may still be able to declare that they’re adopting a nebulous internet currency as legal tender. So it is technically possible for Bitcoin to become legal tender, it is just not all that likely. This is beside the point though, Arizona may benefit regardless of whether or not the bill gets passed.

What Does Arizona Stand to Gain By Embracing BTC?

Assuming Bitcoin becomes legal tender, it would become accepted for the payment of debts, state taxes, and payments made to store owners or merchants. So aside from what it would technically mean, there are a few more broad reaching implications that are worth discussing.

The race is officially on with respect to which state will become the most crypto friendly. There is a huge economic incentive to become a place that welcomes Bitcoin and crypto entrepreneurs, rather than shuns them. Florida and Wyoming are the closest thing to becoming crypto friendly.

Wyoming created a number of blockchain and crypto friendly legislation back in 2019, which worked to incentivize new companies to set up shop within their borders. Then there is the mayor of Miami and New York city who are taking their pay cheques in bitcoin. Ultimately this is about signalling support.

Bitcoin is a Public Relations Play

After El Salvador made Bitcoin legal tender, people started paying attention to the little central american country. Many bitcoiners made a pilgrimage to El Salvador in order to experience what it was like paying for goods and services with bitcoin. What is clear is that bitcoiners are ready to give attention and acceptance to states or entities that support Bitcoin. So regardless of whether or not the mayors of New York City and Miami are actually bitcoiners is irrelevant. They’re attracting attention to their respective cities, and doing so in an effective way.

The same can be said for the state of Arizona. Regardless of whether or not the bill succeeds, they’re attracting attention to their state. They’re also starting the conversation of making bitcoin legal tender in states, prompting other states to start taking it seriously. There is the potential that it becomes a race between states to be the first to make bitcoin legal tender. The first state to actually succeed will be the winner of a lot of (positive and negative) media attention.

Turkey May Be Next to Adopt Bitcoin

The conversation of taking Bitcoin seriously is not just happening within the United States.

The president of El Salvador (Bukele) met with the president of Turkey (Erdoğan) in late January. One of the topics of conversation was the current condition of Turkey’s economy. The Lira, (Turkish currency) suffered a 38% inflationary drop in purchasing power in 2021 which posed a major economic challenge for the leadership.

As inflation is expected to continue to get worse in years to come, radical action may be necessary to curb radical inflation. Adopting a currency like Bitcoin as legal tender within Turkey could help in two ways.

1. Citizens would have the official approval and support of the government, removing any question or barrier to entry from the leadership.
2. Bring international attention and Bitcoin tourism to Turkey

Turkey already has one of the higher rates of adoption for cryptocurrency in general (approx. 25%). This is largely because the citizens have taken it upon themselves to protect themselves against currency degradation.

An official endorsement from the government of Turkey may be the push the country needs to put Bitcoin in the hands of 85 million people. As Turkey is a G20 nation, it could become a model for developing nations (and/or states) that wish to adopt Bitcoin as legal tender.

A Fad Becomes a Trend, A Trend Becomes a Force

What started as an obscure cryptocurrency just 13 years ago is now being considered as legal tender. Bitcoin was just a fad in 2011 through to 2017, at some point graduating to a trend.

Now, with several cities, multiple states, one country, and another potentially on the way, Bitcoin is becoming a force. However, while Arizona is deliberating making Bitcoin legal tender within the borders, we are considering this more as a sign of things to come, rather than a change that will actually be made in the short term.

So we’ve answered the question of “Can Arizona make Bitcoin legal tender?”. The answer is yes. Whether or not they will is another story.