With its president making it the first country to recognize bitcoin as legal tender, and inviting miners to set up shop among its volcanoes, El Salvador is currently at the epicenter of the Bitcoin universe. And even though these developments are relatively new, an embrace of BTC has been demonstrably underway in the country’s everyday use of bitcoin as a financial rail.
“Monthly bitcoin transfers of under $1,000 — a proxy for money sent to the country from Salvadorans working abroad — totalled $1.7 million in May compared to $424,000 a year earlier,” according to data from blockchain analysis firm Chainalysis, shared exclusively with Reuters. “Such transfers hit a peak of $2.5 million in March, though a comparison with the previous year was unavailable.”
“El Salvador is heavily reliant on remittances,” per Reuters. “In 2019, transfers using traditional money totalled nearly $6 billion — around a fifth of GDP — one of the highest ratios in the world.”
If the technical infrastructure needed to facilitate bitcoin transactions is established, BTC can be an incredibly efficient method for sending and receiving remittances. It is free from the third parties and regulators that can hamper or collect fees on such payments and with additional layers like the Lightning Network, transactions can be near-instantaneous and incredibly cheap.
Lightning Network payments platform Strike launched for customers in El Salvador in March and quickly became one of the most downloaded apps in the country.