Fortunately, there are specific firms that allow clients to receive interest on the bitcoins they have. This should be common, as there is little point to saving accounts if they don’t offer interest. Second, much like traditional savings accounts, saving money via bitcoin yields interest. Thus, people are more inclined to save, bit by bit, over time.
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However, a bitcoin wallet protects your savings via password or personal identification number (PIN). This is for two reasons.įirst, saving purely in cash poses a great risk. The Benefits to El Salvador’s PopulationĪs already mentioned, people without a bank account in El Salvador find it increasingly difficult to save money. Some of these countries include Paraguay, Panama, Brazil, Argentina, and even Mexico.
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However, El Salvador’s adoption of bitcoin has inspired other Latin American countries and politicians to call for the same. He continued to say that the IMG would closely follow developments in El Salvador, in consultation with the authorities. “Adoption of bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis,” said Gerry Rice, an IMF spokesperson.
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The International Monetary Fund (IMF) has also said it has economic and legal concerns over the decision to make bitcoin a currency that is on par with legal tender. Places like the United States and the United Kingdom, in an effort to combat cryptocurrency, are exploring digital currencies via their central banks. For, both China and India have restricted cryptocurrency trading. Of course, this move to cryptocurrency is in direct opposition to many global superpowers. This partnership will see the firm aiding the Central American country to build a financial infrastructure using Bitcoin technology. Days after the decision to adopt bitcoin, El Salvador announced a partnership with Strike, a digital wallet firm. An anonymous donor has been giving money to help make this happen.Įl Salvador has also been working to ensure the proper structures are in place so the transition can go as smoothly as possible. Shoppers can make payments for everyday needs like groceries and utilities with digital cash, allowing them to buy their groceries with the touch of an app on their phone screens. Just recently, not one but two booming tourist destinations in El Salvador have begun accepting bitcoin as an alternative payment method: Punta Mango and Zonte (both known for their beautiful beaches). This decision didn’t just come out of the blue, and El Salvador has indeed been experimenting with bitcoin for quite some time. What Is El Salvador’s History with Bitcoin? And now that a digital currency is legal, the unbanked can easily spend this money wherever they go, boosting the economy of El Salvador. Thus, the ability to send and receive money instantly, without the use of a bank account, is very attractive to the unbanked. Without a bank account, people in need of money will need to wait for physical cash to arrive at their doorsteps, a process that could potentially take weeks (no bank accounts mean no e-transfers). For example, a man working in the United States sending a portion of his paycheck to his family in El Salvador, or a woman working in Canada doing the same. This means that 70% of citizens will always be one step behind, no matter how hard they try, and will have even more challenges accumulating wealth and saving what they already have.Įl Salvador also relies heavily on money sent back to the country from migrants. Some 70% of El Salvadorians are unbanked, meaning they don’t have even a basic bank account.
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Why Did El Salvador Move to Cryptocurrency?Īccording to a tweet from president Bukele, moving to cryptocurrency would promote “financial inclusion, investment, tourism, innovation, and economic development for our country.”Īnd he does have some facts and figures to support his claim. In what is likely an unprecedented move for any nation worldwide, both USD and BTC can be used interchangeably within all government transactions - and this will likely make the nation a world leader in an increasingly digital era. Starting in September, El Salvador will soon have two official currencies: the U.S. El Salvador’s congress voted to accept the cryptocurrency and won a supermajority of 62 out of 84 votes.