El Salvador has now entered its third day with bitcoin as legal tender in the country. There have so far been many testimonies about how the law has worked so far. With residents publishing evidence of how easy it is to spend bitcoin in the country since implementation. Stores have also implemented bitcoin payments in the country. With the likes of McDonald’s and Starbucks accepting bitcoin payments in El Salvador.
One aspect that has yet to be addressed is how implementation will affect existing remittance services in the country. Remittances have been an important point in the argument for Bitcoin adoption in the country. It was explained that it was cheaper to send money from abroad to El Salvador using Bitcoin. Now that it has become a legal tender in the country, it is important to consider how this will affect existing companies such as Western Union and MoneyGram.
Bitcoin is the best way to transfer money
Smaller countries such as El Salvador owe a large proportion of their economy to remittances. It is estimated that in 2020 alone, remittances from citizens abroad accounted for 23% of the country’s GDP. This makes it a major economic contributor to the country. Remittances alone in 2020 reached $6 billion, of which remittance services that are used to send this money take a percentage as a fee.
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With bitcoin, the broker, in this case, Western Union and the like, is completely removed from the process. The money sent goes directly to the recipient without the need to pay a third party processing fee. It is estimated that these remittance companies will lose around $400 million annually when remittances are routed via bitcoin instead.
The importance of nation-state remittances in El Salvador cannot be underestimated, which is why the remittance industry is booming in the country. With nearly 70% of its population receiving remittance payments from abroad, bitcoin payments will save citizens millions of dollars in commissions paid to remittance services.
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The use of encryption in El Salvador
President Najib Bukele called the first day of the official implementation of bitcoin as legal tender in the country “Bitcoin Day.” In honor of the historic event, the country of El Salvador bought an additional 150 coins, bringing its total bitcoin holdings to 550 coins.
A Twitter user known as Bart Mol took to the platform to show how “Bitcoin Day” is going. Mol posted updates with both photos and videos To show how the implementation was carried out by citizens. The majority of citizens seem to be fine with it. But there have been small protests across the country against the implementation.
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Another issue is that the government-issued cryptocurrency wallet Chivo is not working properly. They ran out of bitcoin ATMs, making it impossible for people to spend their bitcoins. But payments made on the Lightning Network have had the best success. mall Spread That he was able to pay for a pizza at Pizza Hut for a small fee.
Despite the problems it faced on the first day, the world still looked eagerly towards El Salvador. The use of cryptocurrencies as an official legal tender is a very significant event. As Moll said, “This is the future.”
Bitcoin appears poised to take over remittances in El Salvador. How long do you think it will take for it to become a global reserve currency? Let us know your thoughts here.
– Bitcoinist.com (bitcoinist) September 7, 2021
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