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Last week, El Salvador made history as the first country to name bitcoin legal tender. This week, Reuters revealed how much digital currency is pouring into the country via cross-border remittances.
Compared to traditional methods, blockchain-based remittances are generally faster and cheaper.
Zoom In: For El Salvador, cross-border bitcoin transfers amounted to $ 1.7 million in May 2021, up 300% from $ 424,000 last May. Transfers peaked at $ 2.5 million in March.
That’s huge growth, but still a small share of total remittances for El Salvador, one of the most remittance dependent countries in the world. It saw $ 6 billion in total remittances cross its borders in 2019. For comparison, Mexico-based crypto exchange Bitso handles 2.5% of remittances between the United States and Mexico, or more than ‘a billion dollars a year.
A potential downside to using bitcoin for such transfers? Volatility. Exactly two months ago (April 16), the price of bitcoin was $ 61,966. Today it is around $ 40,000. Despite this, bitcoin is actually more stable than the fiat currencies of some Latin American countries, as the rest of the world points out.
Looking Forward: Grace Broadbent, Insider Intelligence research analyst, told us that she expects remittances to become the most mature payment application on blockchain over the next five years.
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