El Salvador experiments with Bitcoin to boost its economy

Bitcoin will be a great benefit for our people, it will stimulate foreign investment says, President Nayib Bukele.

This week’s pioneering adoption of Bitcoin will spur its economy as El Salvador is betting especially on one of its most crucial sources of revenue according to the reports by AP.

More than 2 million Salvadorans who live overseas were asked by President Nayib Bukele to send their remittances in Bitcoin, arguing it will be cheaper than transferring dollars. The President also says it will stimulate foreign investment.

“It will be a great benefit for our people,” President Nayib Bukele wrote on Twitter.

But both those living at home and abroad are uncertain if the plan which takes effect on Tuesday will work as considered or not. According to some people, the system is too complicated and blurred. The rise and fall of Bitcoin value over a night worries other people, potentially giving recipients a windfall or a loss.

William Justo a 44-year-old Salvadoran who has lived in Chicago since 1986 is looking on the bright side of Bitcoin. Justo, who sends money every week to two children, his wife, and grandmother said to AP, “Digital currency offers the opportunity of having access to something similar to a bank and making money when the currency goes up. Even farmers will have access to all of that.”

Justo, says he may send bitcoins now instead of dollars, which will be something very good for the economy. Whereas a spokesperson who asked not to be identified according to the institution’s policies said to AP, “While the government did approach us for assistance on Bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

Bitcoin is being criticized due to the huge amount of energy Bitcoin consumes as electricity is being used by miners to process the blockchain transactions in order to earn bitcoins themselves. According to the Central Reserve Bank of El Salvador, in 2020, El Salvador received nearly $5.9 billion in remittances from abroad — the vast majority of it from the U.S.

Subscribe to our newsletter
Subscribe to our newsletter
Sign up here to get the latest news delivered directly to your inbox.
You can unsubscribe at any time