Bitcoin was designed as an independent currency to act as money and to facilitate making payments outside the control of any single person or financial institution. It also helped remove government financial authorities’ involvement in monetary affairs through games for bitcoin. Bitcoin uses blockchain as a base to verify its transactions and also holds and records all the required transactions of Bitcoin. Bitcoin was publicly introduced in 2009 Publicly by satoshi Nakamoto’s anonymous identity. After the introduction of Bitcoin, it has become the mould-hyped cryptocurrency in the world hype of Bitcoin has inspired many other developers to develop many other cryptocurrencies, and the second most hyped cryptocurrency is ethereum.
El Salvador made Bitcoin a legal tender about one year ago and has been using It to make domestic payments, but it is not permitted to use it in its import-export trades. El Salvador has purchased about 410 bitcoins starting at $45,000 per BTC. End Salvador has benefited from Bitcoin because the domestic transactions of El Salvador have become completely digitalized, and it is helping the country’s government with better tax collection and control over the flow of money.
Benefits of Bitcoin to El Salvador Eliminating remittance on payment
El Salvador has the most significant benefit of receiving payments from abroad, where Salvadorians who live abroad or their relatives live outside El Salvador. A study showed that last year the country received approximately $6 billion in remittances from the people of Salvador living abroad. The sum is so high that it represents about 22% of the country’s GDP. Whereas remittance of the transfer fees can reach around 50%, using Bitcoin has reduced the fees dramatically. Can receive Bitcoin charges about 0.2% fee per transaction and receive money overseas in minutes. The traditional payment system can take around 5 to 6 working days to complete payment.
No capital gain tax on Bitcoin
As El Salvador has made Bitcoin a legal tender in payment transfers. The country has removed capital gains taxes from Bitcoin. With the increase in the value of Bitcoin, the citizens of El Salvador are more liable to shift to the use of Bitcoin, and the holders of bitcoins are already getting benefited from the increase in the value of Bitcoin.
Due to removing capital gains taxes from Bitcoin, more users are shifting from traditional payment systems to Bitcoin users Due to Bitcoin price volatility. Furthermore, as becoming a legal tender, Bitcoin is also benefiting its user to gain as its price changes continuously.
No longer subjected to dollar dominance.
As the use of Bitcoin is continuously increasing in El Salvador, and it has become a legal tender, Bitcoin can influence the dollar’s dominance and diversify the trades with the use of Bitcoin.
Many other countries are using the U.S. dollar as their global currency, due to which the U.S. dollar can influence their economic growth because these countries do not have proper control over their monetary system. It can also lead to poor decisions, thus giving complete control.
During the pandemic, the U.S. has printed significant amounts of new cash and injected it into the U.S. economy. As a result, the countries using the U.S. dollar as their primary currency benefited during the pandemic. However, after the pandemic, the new cache resulted in high inflation in the U.S. markets. Also, it led to the devaluation of the currency by the increase in the circulating supply.
The country and the citizens of the country need to maintain a level between supply and demand of the currency, which does not get manipulated or inflated by any of the other central authorities. Bitcoin is a kind of supply that can alter during high inflation and can use to boost inflation during a high recession.
Access to financial services and markets
The use of Bitcoin and the regularly increasing prices of Bitcoin have made the citizens of El Salvador who are not connected to a bank or the population who do not have any relation with the banks as it came under the same roof.
Other reasons people are not coming to banks are due to the Distress in the banking system and the strict requirements of identification to open an account with a central financial authority.
But now, anyone accessing the Internet can open an account with Bitcoin or a Bitcoin wallet. Using Bitcoin, anyone can access financial institutions strictly controlled by traditional authorities.
These are some of the benefits offered by Bitcoin to El Salvador. Bitcoin could make the country’s monetary system completely digitalized and acceptable at an early stage. Bitcoin can also push economies toward accepting complete digitalization. It could also help countries’ governments better control the flow of money in the economy and balance inflation and recession in the country. On the other hand, there is some disadvantage to using Bitcoin. Everyone has to force merchants to accept Bitcoin who are not willing to accept it, and there are regular fluctuations in Bitcoin prices which can create distrust among the citizens of El Salvador.