With 80 percent unbanked and 70 percent dependent on remittances, the Salvadoran people have a lot to gain if their country’s bitcoin experiment is a success
Using bitcoin to purchase food, a haircut and even the daily newspaper is now an option for 6.5 million people in El Salvador, after the small Central American nation became the first in the world to officially adopt the cryptocurrency on September 7.
However, some locals still don’t know how the cryptocurrency works nor how they’ll be able to use it. As far as the technology is concerned, it supports the Lightning network, a payment protocol layered over cryptocurrencies like bitcoin that enable rapid transactions.marred the wallet’s launch as server capacity was overwhelmed.
On the morning of the Bitcoin Law’s implementation – which stipulates that bitcoin must be accepted as a form of payment everywhere alongside the US dollar – skepticism filled the air. There was uncertain about the adoption process, as the administration, led by young populist president Nayib Bukele, kept citizens in the dark about the rollout’s details.
Now, the Bitcoin Beach experiment has gone nationwide. With nearly 80 percent of the Salvadoran population unbanked, bitcoin can offer the prospect of financial inclusion to millions. However, Peterson notes that metric is based on access to high-speed internet at home rather than smartphones, which is how most people access the internet in developing countries.
During the course of his pitch, Bukele identified a primary antagonist: the predatory wire transfer services and traditional banks that extract commissions from remittance dollars sent by Salvadoran emigres.of the nation’s GDP dependent on remittances and over two-thirds of its population receiving these flows, the implications bitcoin could have for Salvadorans is massive – and potentially transformative for the region writ large.
The president said there would be no enforcement – if anyone didn’t want to use bitcoin, they were free to “queue up at Western Union and pay a commission” if they wished. Dominguez believes much of the public’s trust deficit stems from “the nature of how fast the law was rammed through without any cross-political consensus.”
Reminiscent of that period, the belief that bitcoin could be the latest strategy which ends up producing an inequitable outcome isn’t all that surprising.
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