Bitcoin democratizes access to electronic payments, which could benefit 70% of El Salvador’s unbanked adult population
A report from Bank of America (BofA) has highlighted some of the potential benefits El Salvador will experience following this Central American nation’s historic acceptance of Bitcoin as legal tender. The financial institution’s report, released last week, highlights key areas where the use of Bitcoin could have a major impact:
According to BofA analysts, the recognition of BTC will streamline the country’s money transfer industry, which contributes nearly 25% to El Salvador’s GDP. Using Bitcoin reduces the amount of transaction fees that are incurred when using traditional channels.
In this case, Bitcoin becomes an “intermediary for cross-border transfers” where El Salvadorans save money even if they exchange the BTC they receive into dollars. It is believed that such an increase in remittances and reduction in fees will significantly increase the disposable income of the people there.
Another advantage is the financial freedom that should be granted to about 70% of the country’s population who do not have a bank account. The digitization of finance is considered one of the main benefits of cryptocurrency, which is an advantage for those who cannot open a bank account, according to the report.
The ability to use Bitcoin also gives people more choices as consumers, the bank adds. “We disagree with the idea that it is mandatory for businesses to accept Bitcoin as a form of payment,” the bank wrote, adding that businesses and consumers have the freedom to choose the cryptocurrency or use dollars from their ‘Chivo’ wallets.
Bank of America also believes El Salvador will benefit from becoming a bitcoin hub. This, analysts say, will be especially the case when it begins to attract foreign direct investment, given developments related to bitcoin mining.
The report comes as a surprise given BofA’s“icy” attack on BTC in its March report, in which it stated that Bitcoin had “dirty little secrets” and was only suitable for speculative trading. This came on top of recent criticism from the IMF and the UN Economic Commission for Latin America and the Caribbean.
Sarah has been working in the field of crypto news for several years. She writes as a freelance author for various trade magazines on blockchain, bitcoin and altcoins. She also has a professional background in finance with a focus on investment and new forms of financing.