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Bank of America in its most recent Global Research report highlighted the main benefits that could bring the implementation of the use of bitcoin as currency of legal course in El Salvador, and highlighted that this position is quite positive especially because the 70% or more of the Salvadoran population is unbanked.
For this reason, US bank analysts speak of the “progressive touch” that this “democratization of electronic payments through the use of Bitcoin” has. For Bank of America, El Salvador has many advantages with this decision to approve the legal course of bitcoin.
Among the advantages highlighted by BofA is: sending remittances, promoting financial digitization, opening the Salvadoran market to both US companies and cryptocurrency miners.
Regarding the use of Bitcoin to send remittances , there is talk of a significant reduction in transaction costs when compared to regular shipping channels. In fact, in the month of May the statistics highlighted that the sending of bitcoins to El Salvador quadrupled, and it is estimated that this will continue to increase, although it depends on the price of the cryptocurrency, its volatility and the confidence generated by this new system.
But this was always one of the main objectives of President Nayib Bukele when implementing the use of bitcoin in his country, “the banking so that Salvadoran migrants do not lose in the process of sending remittances with intermediaries” .
Within the promotion of financial digitization , the government of El Salvador has already announced and even promoted the central government’s bitcoin (BTC) wallet. It will be available next September when the legality of this cryptocurrency enters into force, and it will be through a mobile application available for IOS and Android. To promote it, President Bukele promised that with the single registration Salvadorans will receive $ 30 dollars in bitcoins.
“Chivo” is the name of the app that Salvadorans will need to access the bitcoin portfolio created by the government. As it is a mobile application, the president of the country assured that it will work from any device and from anywhere in the country, only a connection to WI-FI will be needed.
On the other hand, another attraction highlighted by Bofa in its research report is the possibility that El Salvador now offers to investors, and it is also the intention of the local government. Bukele has always said that by becoming the first country in the world to pass a law to adopt bitcoin as legal tender, has the firm intention of attracting investors to the country, foreign exchange and tourism; in short, “boost the economy.”
However, the legality of use of Bitcoin in the Central American country has not been applauded by all. Indeed, it has been criticized by the International Monetary Fund and even the World Bank declined to provide the technical assistance requested by the government of El Salvador for the bitcoin implementation .
The truth is that since in June the The government of El Salvador decided to implement bitcoin as legal tender, other Latin American governments have been inspired and have come up with the idea of wanting to imitate Bukele’s strategy on the implementation of crypto assets in its economy.
The Law comes into effect on September 7, and everything seems to indicate that everything is going well for its implementation. We will see in the following months the contributions or not that this new system can bring to the Central American country.