As the most popular token of the crypto industry, Bitcoin took a new flight to fame when the Central American country of El Salvador adopted it as a legal tender along with the fiat currency in the country. To increase Bitcoin adoption, El Salvador has launched a new virtual wallet called the Chivo wallet that facilitates easy transactions. In a recent interaction, President Nayib Bukele revealed that with the entry of Chivo, payment service providers like Western Union and MoneyGram are estimated to lose $400 million per year of their commission earnings for remittances.
As per reports, El Salvadorians receive a hefty amount of money every year in remittance from their family members and friends living in different parts of the globe. In 2020, the country fetched nearly $6 billion from remittances, which forms about 23% of the GDP. Nearly 70% of the entire population gets remittances, making it an important commission earning source for payment service providers.
The main reasons for the success of Bitcoin as a remittance tool can be the underlying issues related to payment protocols followed by firms like Western Union. People have to go to a Western Union branch, give cash, and pay extra charges to execute the remittance. The channel takes three days to finally transfer the money to the recipient in El Salvador. This causes a lot of inconvenience to people living far from such branch offices or having busy schedules. High cost of transfers is a major problem associated with remittances.
These limitations encouraged President Nayib Bukele to adopt Bitcoin as a legal tender. The currency runs on blockchain technology, providing users a secured, economical, and transparent payment settlement system. The launch of country’s native virtual wallet, Chivo, is likely to boost popularity of Bitcoin amongst people.
The wallet facilitates no-fee trading and seamless cross-border payments. The government is looking forward to witness active participation from people. To attract customers, the authorities are offering free Bitcoins worth $30 to every person who signs up for the wallet. The government has launched 200 new Chivo ATMst to help locals in collecting their remittances. The country has a huge section of unbanked population. Chivo is likely to open doors for a regulated banking cluster. Launched in March, the crypto payments app Strike soon became the most downloaded portal in El Salvador. The surge in Bitcoin popularity is likely to revamp the economic condition.
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