In addition to the risks associated with fluctuations in the bitcoin price, there are practical benefits to be considered. “In practice, bitcoin is a solution for two things,” says founder Peter Slagter of the knowledge platform LekkerCryptisch. “Salvadorans abroad send a lot of money home. Western Union uses unfavorable exchange rates, so that costs them a lot of money.”
In addition to the 6.5 million people in El Salvador itself, an estimated 2.5 million Salvadorans also live abroad. In particular, from the United States, they sent home six billion dollars last year. Almost a quarter of the total economy that is $26 billion. If Salvadorans save the few percent in costs or commission, it makes a big difference.
Another advantage is that a large part of the Salvadorans do have a phone with a camera, but no bank account. That camera is needed to scan QR codes. “70 percent do not bank,” says Ralph Wessels, head of investment strategy at ABN Amro. “It can be an opening for that. In general, you see that if more people bank, prosperity increases and there is more tax revenue.”
But Wessels wonders whether a digital wallet with Bitcoin is the best solution for this. “A stable price level is one of the most important properties of money. Obviously you don’t want your money to decrease in value, but even if the price rises, that can be disadvantageous,” says Wessels. “People then start hoarding it. Money has to be spent, otherwise your economy won’t run.”
In El Salvador, not everyone is convinced yet:
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