The informational uproar that the president of El Salvador, Nayib Bukele, generated by announcing that his country will adopt bitcoin (BTC) as legal tender, is leaving more questions than answers. The president’s decision, if it materializes, would make the Central American nation the first in the world to embrace cryptocurrency as part of its monetary policy.
After spreading the news on the second day of At the 2021 Bitcoin Conference, Bukele shared via Twitter what were the reasons that motivated him to lean towards BTC. For the head of state there are three aspects of the national economy that could improve significantly with legislation that supports the use of the first cryptocurrency.
Bukele believes that legalizing Bitcoin as a digital system and cryptocurrency will help El Salvador to attract new investments, make the reception of remittances more efficient and serve those who are not in the banking system. The president referenced the market capitalization of BTC and suggested that if some of those funds go to the country, there would be economic benefits.
«Bitcoin has a market capitalization of 680 billion of dollars. If 1% of it is invested in El Salvador, that would increase our Gross Domestic Product (GDP) by 25% », explained Bukele about a hypothetical investment of 6.800 million dollars in his country.
The president did not clarify where the funds would come from, that is, if it would be investments of companies bitcoiners that would arrive in the country , initiatives of the cryptocurrency communities or the creation of mixed capital companies to build a new technological infrastructure.
More efficient remittances with bitcoin
Giving a boost to bitcoin in El Salvador would serve to make the reception of remittances more efficient, one of the the main sources of income of the country. Currently, about 25% of Salvadoran households receive money from abroad for payments and consumption expenses. However, a significant percentage of the funds remains in the hands of intermediaries.
For Bukele, Bitcoin would solve this situation with millions of dollars in direct income for its inhabitants, which would avoid the collection of commissions, the handling of cash and a possible decrease in the crime rate.
«Bitcoin will have 10 million new potential users and a method fast growing to transfer $ 6 billion a year in remittances. In addition, a large part of those 6 billion dollars is lost to intermediaries, “added the head of state.
Bukele’s criterion is that, when using Bitcoin as a digital system and cryptocurrency, the amount received for more than one million of low-income families will increase by the equivalent of billions of dollars each year. “This will improve the lives and futures of millions of people,” he pointed out.
Serve the unbanked with bitcoin
A legalization of bitcoin as a national currency would allow the government to serve millions of people who are not banked. According to Bukele, 70% of Salvadorans do not have a bank account and work in the informal economy.
“Financial inclusion is not only a moral imperative, but also a way to make the economy grow of the country, providing access to credit, savings, investment and secure transactions “, published the president on the social network.
The bill to recognize bitcoin will be presented next week before the legislature , as announced by Bukele yesterday, June 5. The president is confident that the first cryptocurrency “is just the beginning to offer a space in which some of the main innovators can reimagine the future of finance.”
To reinforce his discourse on bitcoin and Encouraging adoption, Bukele also joined the bitcoiner community trend of swapping his Twitter profile picture for an image with the ‘laser eyes’ or « laser eyes «.