en
Back to the list

El Salvador’s Bitcoin approach has four possible benefits, according to Bank of America

source-logo  thecoinrepublic.com 02 August 2021 14:18, UTC
  • According to Bank of America’s latest Global Research study, more than 70% of El Salvador’s adult population does not have a bank account
  • The notion is that Bitcoin might be used as a cross-border middleman, with dollars being changed to Bitcoin by the sender and subsequently returned to dollars by the receiver domestically
  • The International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean have also criticized the move to incorporate BTC into the country’s banking system

According to Bank of America’s latest Global Research study, more than 70% of El Salvador’s adult population does not have a bank account. As a result, democratizing electronic payment access through Bitcoin has a progressive tinge to it. El Salvador may benefit a lot from its recent entry into Bitcoin, according to Bank of America, one of the country’s top financial institutions by total assets (BTC). El Salvador’s decision to accept Bitcoin as legal cash, according to analysts at the bank, may expedite remittances, boost financial digitalization, provide customers more options, and open the nation up to American businesses and digital currency miners, according to a study issued last week.

The bank pointed out that remittances account for a whopping 24% of El Salvador’s GDP, but that a significant portion of it goes to processing costs. According to an image given by state-backed Diario El Salvador, using Bitcoin for remittances may possibly lower transaction costs compared to regular transfer channels. The notion is that Bitcoin might be used as a cross-border middleman, with dollars being changed to Bitcoin by the sender and subsequently returned to dollars by the receiver domestically.  El Salvador became the first country to accept Bitcoin as legal cash in June of this year, marking a significant step forward in the digital currency’s journey from obscurity to popular acceptability. 

The International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean have also criticized the move to incorporate BTC into the country’s banking system. Meanwhile, JPMorgan Chase believes El Salvador’s Bitcoin gamble will put even more strain on the network’s already strained capacity to function as a means of exchange. According to survey results, half of the Salvadorans are wary about adopting Bitcoin as legal money. Those who prefer to utilize BTC for transactions can use the Chivo Bitcoin wallet, which is supported by the government, among many other alternatives. Since El Salvador made Bitcoin legal tender, many other Latin American countries have expressed interest in following their own cryptocurrency approach. However, no other country has followed El Salvador’s lead until today.

thecoinrepublic.com