Bank of America Shows 4 Potential Benefits of El Salvador’s Bitcoin Strategy

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Bank of America, one of the country’s largest financial institutions in terms of total assets, believes El Salvador could have a lot to gain from its latest foray into Bitcoin (BTC).

In a report released last week, analysts at the bank said El Salvador’s decision to recognize BTC as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice and open up the country to American companies and digital currency miners.

The bank noted that remittances represent 24% of El Salvador’s gross domestic product, but a significant portion of that goes to transaction fees.

Using Bitcoin for remittances could potentially lower transaction costs compared to traditional transfer channels, according to the report, according to an image provided by state-backed Diario El Salvador. The idea is that Bitcoin could be used as an intermediary for cross-border transfer, so that dollars are converted to Bitcoin by the sender, and then back to dollars nationally by the recipient.

#ElSalvador President @nayibbukele shares this morning some of the opportunities @BankofAmerica sees in El Salvador, after adopting #Bitcoin pic.twitter.com/08D1RuGFYI

– El Salvador Newspaper (@elsalvador) August 1, 2021

In June of this year, El Salvador became the first nation state to accept Bitcoin as legal tender, marking a milestone in the evolution of digital currencies from obscurity to mainstream acceptance. The decision to integrate BTC into the country’s financial system has been criticized by the International Monetary Fund and the United Nations Economic Commission for Latin America and the Caribbean. Meanwhile, JPMorgan Chase believes El Salvador’s Bitcoin bet could put additional pressure on the already limited capacity of networks to serve as a medium of exchange.

Related: Inside El Salvador’s Bitcoin Experiment: Cointelegraph Video Report

Survey data shows that half of Salvadorans are skeptical about using BTC as legal tender. Those who choose to adopt BTC for transactions can use the state-backed Chivo Bitcoin wallet, among many other options available to them.

Since El Salvador recognized Bitcoin as legal tender, several other Latin American countries have suggested pursuing their own cryptocurrency strategy. However, so far no other country has followed in El Salvador’s footsteps.

Related: El Salvador To Dump $ 30 In Bitcoin To Every Adult Citizen

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