Bitcoin use in El Salvador can make banks lose R$2 billion a year

According to CNBC, 70% of the population of El Salvador receives money from abroad, last year the amount received was more than 30 billion reais, and fees for intermediary services could reach R$ 2 billion. Bitcoin solves this.

The arrival of Bitcoin in El Salvador as legal tender could change the lives of many families who depend on money sent by family members living in other countries. Previously this money was sent through traditional services such as Western Union.

El Salvador President Nayib Bukele estimates that banks and financial services like Western Union and MoneyGram will lose $400 million a year in remittance fees thanks to the country’s adoption of bitcoin.

Western Union

According to a report, the fee charged for a physical service of the company is 25 dollars, about 130 reais in the current conversion, for a simple shipment. In addition, there is also the risk of being robbed, as other people know that you are going to send money, or a withdrawal if you are the recipient.

A solution to this problem would be to use digital apps from these companies, however a 12.5% ​​fee charged by them still seems like a bad option.

Through the Bitcoin Law, which transformed Bitcoin into El Salvador’s legal currency, and the popularization of the use of the lightning network (LN), people can now receive money internationally without spending almost anything.

LN fees cost around 1 satoshi per transaction, around R$0.0024, making the amount saved in these shipments usable by people.

Another great advantage that Bitcoin presents is the instant transactions that can be done at any time of the day and any day of the year, there are no holidays. In urgent cases, the money will be available in a few seconds through the lightning network or in a few minutes in normal Bitcoin transactions. In both cases, transactions are available at any time and day.

government being government

While the transformation of Bitcoin into a legal currency in the country may be synonymous with freedom, the government remains the government.

The Chivo wallet developed by the government of El Salvador does not allow users to have custody of their assets, and this is one of the pillars of Bitcoin.

If that weren’t enough, many Salvadorans also complain that they can’t do identity verification in the wallet app.

Salvadorans complaining about Bitcoin Chivo’s wallet. Source: play.google.com

The government’s strategy for people to use their wallet was a distribution of 30 dollars, around 150 reais, in BTC. However, any citizen can make use of wallets that work with LN with which they have true ownership of their BTC, enjoying not only cheap, instant and 24/7 transactions, as well as the security of not relying on third parties.