Good news for all Bitcoin fans: A country is preparing to recognize this cryptocurrency as legal tender. This is El Salvador.
This was recently announced during a speech by the President of this small Central American country, Nayib Bukele, at the Bitcoin Conference in Miami in 2021. More specifically, during this intervention, Bukele announced that he would propose a bill in Congress in this country of 6 million people to make Bitcoin legal tender (like the US dollar).
“Next week I will send a bill to Congress that will make Bitcoin legal tender in El Salvador,” said the head of state. “In the short term, this will create jobs and help bring financial inclusion to thousands of people outside of the formal economy, and in the medium to long term, we hope that this small decision can help us take humanity to the next level in the right direction. “
And, as an Associated Press article published by NPR explains, Bukele’s political party has a qualified majority in this Congress, which means the bill has a good chance of being passed.
But why does El Salvador want to legalize Bitcoin?
While other countries remain reluctant to use cryptocurrencies, El Salvador is preparing to make Bitcoin legal tender. But why ? Of course, so that money from abroad no longer goes through intermediaries who charge a commission.
In a statement, the company Strike, which supports the country in this project, explains that remittances from abroad make up 20% of El Salvador’s GDP and financial service providers can charge 10% or even more for these transfers. “This equates to the hundreds of millions of dollars a year people could save or spend at local businesses in their communities, demonstrating the powerful use cases and addressable market opportunities of scaling Bitcoin and the Lightning Network for everyday use,” said Strike.
These transaction fee issues were also raised by President Bukele on Twitter. ” […] a large part of this $ 6 billion (sent from abroad to the residents of El Salvador, note) is lost to the intermediaries, ”he wrote.
In addition, El Salvador is also using Bitcoin to improve financial inclusion in the country. In fact, 70% of the population do not have a bank account and work in the informal economy.
“We hope this move is just the beginning of a space where some of the world’s leading innovators can rethink the future of finance and potentially help billions of people around the world,” the president said.