Salvadorans could save USD 400 million annually by sending remittances with bitcoin

Key facts

:

  • Remittances make up 24.1% of El Salvador’s Gross Domestic Product.

  • 2 million Salvadorans living abroad will be able to save by sending remittances with bitcoin.

In El Salvador, bitcoin (BTC) adoption could displace international remittance services Western Union and MoneyGram, which would drop $400 million (USD) in revenue per year.

According to a report by CNBC

, El Salvador’s President Nayib Bukele estimates that this would be the amount that Salvadorans would stop paying when using bitcoin to make international money transfers, depriving each of the aforementioned services of that amount in revenue.

The source includes data from the World Bank where it states that by 2020, remittances took up the equivalent of 24.1% of El Salvador’s gross domestic product (GDP).

Salvadorans could save USD 400 million annually by sending remittances with bitcoin Salvadorans could save USD 400 million annually by sending remittances with bitcoin Percentage of El Salvador’s gross domestic product received in remittances. Source: World Bank.

The World

Bank indicates that, by 2020, El Salvador will receive a GDP of USD 24 billion. Based on CNBC’s estimate of the volume of remittances received in El Salvador, which would be equivalent to 24.1% of the USD 24 billion, El Salvador would receive USD 5.78 billion in remittances annually. Salvadorans could save USD 400 million annually by sending remittances with bitcoin Salvadorans could save USD 400 million annually by sending remittances with bitcoin El Salvador’s gross domestic product (GDP) was USD 24.6 billion in January 2020. Source: World Bank.

CNBC rounds this figure to USD 6 billion, also indicating that 2.5 million Salvadorans abroad send money to family and friends in El Salvador.

In total, each person would be sending US$195 a month, and this could represent 50% of household income, says CNBC reporter Mackenzie Sigalos. “About 60% of that cash arrives through remittance companies, and 38% through banks, according to official data,” writes the reporter.

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However, one of the testimonies collected, explains that remittance services charge high fees, as is the case with Western Union, which for every 10 dollars would charge 3.41 for the service.

With Bitcoin wallets, on the other hand, fees can be as low as a few cents, regardless of the amount transferred, but varying <a href=”https://www.criptonoticias

.com/criptopedia/debes-saber-sobre sobre-comisiones-bitcoin-otras-redes-pow/”>depending on network congestion. In the case of the Chivo wallet, the transaction to send remittances abroad or make international transfers would be free, they explain.

Another element in which bitcoin remittances take advantage of traditional services is protection against crime. CNBC sources tell how common it is for people to be robbed after withdrawing their remittances at physical locations of services like Western Union. By being able to receive the money digitally through bitcoin, Salvadoran families would also be spared the risk of having their remittances snatched.

El Salvador: an experiment that can boost bitcoin

As we reported in CryptoNews, the Bitcoin Law went into effect last September 7 in El Salvador. The official government wallet came with stumbling blocks, which have been ironed out along the way, but it could still have privacy issues.

El Salvador bought 550 BTC and Bukele thanked the International Monetary Fund (IMF), sarcastically, for the recent drop in the price of bitcoin (BTC). Although there were protests on the first day, the adoption of bitcoin in El Salvador may inspire confidence in the rest of the world.