New tech that reduces costs of international payments would “be a boon for poor countries that rely on remittances” — but will BTC as legal tender fix that?
For much of its life, Bitcoin (BTC) has been viewed mainly as a speculative financial instrument, but El Salvador’s dramatic move in making BTC a legal tender is a reminder that cryptocurrencies can play a role in uplifting the world’s less-well-off citizens.Two surprising facts emerged on the global stage at the start of June: First, 70% of El Salvador’s population do not have bank accounts, and second, remittances — i.e., money sent home from workers abroad — are fueling El Salvador’s economy, accounting for an astonishing 23% of the gross domestic product.In this regard, Chainalysis was prescient last year when it described the global remittance problem in a blog — perhaps even anticipating a move like El Salvador’s: “Given the importance of remittances in the region, Latin America is one place we would expect to see such activity.”El Salvador’s president, Nayib Bukele, declared that as a result of the new law, “Bitcoin will have 10 million potential new users” in El Salvador, adding that BTC is the “fastest-growing way to transfer $6 billion a year in remittances.”The new law was met with skepticism among some mainstream economists, however, who deemed it unworkable.
