Historic Day for Bitcoin: 1.2 Million El Salvadorian’s to Benefit From Crypto Adoption
El Salvador, where 70% do not have a bank account and 50.5% don’t have internet access; Bitcoin is ready to advance financial inclusion, save on remittance cost, and attract new businesses as it “breaks the paradigms of the past,” and advances “towards the first world.”
September 7 was a historic day for Bitcoin as El Salvador became the first country in the world to adopt the digital currency as legal tender alongside the US dollar.
“We must break the paradigms of the past,” tweeted president Nayib Bukele. “El Salvador has the right to advance towards the first world.”
Roughly 70% of all Salvadorans do not have a bank account, amounting to 1.2 million people that are to benefit from Bitcoin adoption.
Besides increasing financial inclusion, the country took this move due to the high dependence on remittances in the country and the current inefficiencies involved with remittances. According to the World Bank, remittances made up 24% of El Salvador's entire gross domestic product (GDP).
With this adoption, El Salvador also seeks to attract new businesses to the country, aiming to position itself as a crypto-friendly hub.
Making Bitcoin a legal tender hasn’t been really popular among its citizens or outside the country. But as we reported, people are not in favor of Bitcoin adoption because they have little knowledge about cryptocurrency and do not really understand how this works but once familiar; adoption should increase.
Besides the citizens, the IMF has also raised concerns while on Tuesday, the World Bank reiterated that it could not help El Salvador in adopting the cryptocurrency “given environmental and transparency shortcomings.”
IMF pretends to make countries independent.
BTC actually makes countries independent. https://t.co/0rLVnjkgD9
— Balaji Srinivasan (@balajis) September 7, 2021
Nevertheless, president Bukele announced the purchase of 400 BTC and bought the dip that occurred on Tuesday.
El Salvador’s dollar bonds meanwhile experienced a sell-off and were the worst performers in emerging markets. The US criticized the country’s decision and said it damages bilateral relations between the two nations.
Additionally, through the Chivo app, El Salvador is giving away $30 to every El Salvadorian user who registers on the app with a national ID number to incentivize usage.
“Assuming the entire adult population of more than 4 million El Salvadorians register on Chivo and receives BTC worth $30, this will translate to 2366 BTC paid out to Salvadorans,” noted Arcane Research.
According to DataReportal, only 50.5% of Salvadorans have internet access, equalling approximately 2.2 million adults. Assuming all these adults get BTC airdrop, 1301 BTC will be paid out to the country's inhabitants.
However, to circumvent limited Internet access, 200 Bitcoin ATMs have already been installed throughout the country.
Bitso said on Tuesday that it would be the core service provider for the digital wallet. For this, it will work with Silvergate Bank, a federally regulated and California state-chartered bank.
“We are looking forward to working with El Salvador in an initiative that will transform payment structures and increase financial inclusion in the country,” said Santiago Alvarado, vice-president of Bitso for Business.
The app itself ran into the issue of not being available on various internet platforms, including Google, Apple, and Huawei, and experienced technological glitches. The government-backed bitcoin app also couldn’t keep up with user registrations and had to be unplugged to increase capacity.
But it is gaining adoption with videos appearing on social media platforms of people using BTC at retailers in El Salvador. From McDonald's Corp, Starbucks Corp to Pizza Hut, food and drink franchises are accepting BTC for purchases at their restaurants, drive-through facilities, or to go.