El Salvador is the first country making Bitcoin its national currency, and therefore making it equivalent to the US dollar. This move has broad implications for the entire region of South America and beyond, but first we need to understand why El Salvador rushed to make Bitcoin legal.
20 percent of El Salvador’s GDP is based on remittances, but those remittances have heavy fees on them when sent via international bank transfer.
Here comes in Bitcoin with a tailored solution for exactly this problem. A person from El Salvador working in the US can download the strike app and send US Dollars from the US to El Salvador with fees of only a few cents thanks to Bitcoin’s Lightning Network. It is as easy and fast as using PayPal or Credit Cards, while the magic is happening in the background. The US Dollars are exchanged to Bitcoin, send over the Lightning Network to the recipient in El Salvador, and then automatically exchanged back into US Dollars. The people in El Salvador don’t have to hold Bitcoin, as the transaction happens within seconds and they don’t need to know anything about how Bitcoin or the Lightning Network operates.
The only thing they know is that it works and that they just increased their family’s income and the national GPD of El Salvador by several percent as well.
And this is the reason why every country highly reliant on remittances is now keeping a close eye on El Salvador while rushing to implement similar policies. It is directly improving people’s life’s with nearly no effort on the political side. Countries can just copy El Salvador’s policy and increase their GDP by several percent overnight. So, it is only a matter of time until we see many more countries embrace Bitcoin in the same way El Salvador did.
Personal remittances, received (% of GDP): https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?most_recent_value_desc=true
Strike App; sending USD over the Lightning Network: https://strike.me/
El Salvador’s Policy: https://twitter.com/DocumentingBTC/status/1402448396171067392/photo/1
Remittances Global Worldbank Report: https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q121_final.pdf