Cryptocurrency adoption is on the rise for several reasons. In emerging markets, research shows that cryptocurrency transfers are a factor, although some argue that the idea of using cryptocurrency for these transactions is nothing more than a pure dream.
Alexander Hauptner, CEO of cryptocurrency trading platform BitMEX, predicted earlier this month that by the end of next year, at least five countries will accept Bitcoin (BTC) as legal tender, where cryptocurrencies can be faster and cheaper to transfer. …
He believes that the five countries will be developing countries and will accept cryptocurrencies due to the growing need for cheaper and faster cross-border transactions, rising inflation and escalating political issues.
Several other commenters have suggested that Bitcoin and other cryptocurrencies are a solution to the high costs associated with remittances, as cryptocurrency transactions can be much cheaper than remittance payments during settlement in a shorter time.
El Salvador was the first country in the world to use bitcoin as a legal currency, with the country’s bitcoin law officially taking effect on September 7. The country also bought 700 BTC over time.
Worldwide remittances reached over $ 689 billion in 2018, and fees were so high that the industry grew to $ 49 billion. For cryptocurrencies, El Salvador is a great example of how cryptocurrency can positively change the world, but for others, the volatility and general distrust of the market makes the introduction of cryptocurrency impractical and undesirable.
Cryptocurrencies are not traded with banks?
With the Chivo wallet, Bitcoin can effectively help provide financial services to unemployed or underbanked residents of El Salvador. In September 2021, the head of state, Najib Bukele, announced that 2.1 million Salvadorans are actively using their wallets, despite the repeal of a new law, as a result of which protests even burned a bitcoin ATM.
Chivo is not a bank, he said, but in three weeks it has amassed more users than any other bank in the country. However, this adoption could be related to the $ 30 BTC giveaway in El Salvador sent to all seniors using the public wallet app.
Eric Berman, senior legal editor for US Treasury at Thomson Reuters Operational Law, told Cointelegraph that remittances using cryptocurrencies are “an old dream.” While Heptner noted that remittances accounted for 23% of El Salvador’s GDP in 2020, Berman responded that only a fraction of the country’s businesses were receiving payments in bitcoin and that the government’s cryptocurrency app had technical problems.
Berman also added that “most of El Salvador’s $ 6 billion in annual transfers continue to be made through transfers,” as many are concerned about the volatility of the cryptocurrency. Due to the virtual lack of volatility, he said, Bitcoin was not used as a payment method among merchants, adding:
“This practice is greatly enhanced for the underprivileged and those without a bank. Nobody will send $ 100 to my mother, only for her to get $ 80 when you receive it. ”
Berman added that “instead of the populist uprising that BTC proponents have been promoting for years,” Bitcoin adoption has grown thanks to “some welcome happy voices from the United States and global regulators.”
In fact, the chairman of the US Securities and Exchange Commission (SEC) Gary Gensler has confirmed that the regulator will not ban cryptocurrencies. In fact, the Securities and Exchange Commission (SEC) approved this week the first US futures fund (ETF) – the Bitcoin strategy ProShares.
Berman suggested that the rise in the use and price of bitcoin is the result of “institutional enthusiasm that stands in stark contrast to the massive movement of disadvantaged and bankless people that gave birth to BTC over a decade ago.”
Alexander Lutskevich, founder and CEO of cryptocurrency exchange CEX.IO, seems to disagree with Berman’s assessment, saying that El Salvador’s adoption highlights bitcoin as “a replacement for the traditional central rails used for transfers.”
According to Lutskevich, Bitcoin’s infrastructure has also been adapted to improve the movement of stablecoins at the top of the network so that cryptocurrency volatility does not affect transfers. He said the move by El Salvador improves financial inclusion by helping to reduce the cost of remittances.