Nearly everyone is aware of the historic decision by President Bukele of El Salvador about making Bitcoin (BTC) legal tender. El Salvador is the first country ever to consider doing this, and while many have praised the country’s leader for spearheading this new initiative, there are plenty of organizations that remain unsupportive, such as the IMF and the World Bank.
Bank of America has now offered its opinion on the subject, and to the surprise of many, the company has chosen to support El Salvador’s decision via a note that had been issued to the clients in the past week. The reason why this support by Bank of America is a bit shocking is that other financial institutions and organizations in the United States have previously expressed disdain for El Salvador’s plans regarding Bitcoin, as alluded to earlier. The Central American nation continues to face opposition even now from numerous global bodies, but President Bukele has stated that he shall continue with his plans regardless of any criticisms made towards him.
Reduction of costs
One of the biggest reasons why Bank of America is supportive of El Salvador’s plans is because the utilization of BTC for the purposes of remittances may drastically reduce the transaction costs as opposed to using more traditional channels for remittances.
According to a research note that had been issued by the bank, it utilizing Bitcoin really does decrease the transaction costs by a considerable amount, then the overall disposable income for the average citizen of El Salvador will be increased while the number of remittances that tend to be lost via various financial intermediaries will be simultaneously reduced.
So, what are the benefits?
According to Bank of America, there are several benefits to be had thanks to El Salvador’s decision to potentially legalize Bitcoin. Firstly, nearly three-quarters of the country’s population lacks any kind of access to financial services, which normally also includes a bank account. This means that by using Bitcoin, a number of issues related to this glaring problem can be solved. Moreover, the usage of geothermal energy is a fantastic way of mining BTC. Bitcoin mining has become a controversial topic as of late, and so El Salvador has the opportunity to show that it is possible to conduct mining activities using a renewable energy source.
Additionally, through the adoption of Bitcoin, FDIs (foreign direct investments) could be made into El Salvador as numerous foreign investors have expressed a desire to contribute to the small nation’s ecosystem ever since its initial announcement about making Bitcoin legal tender. Finally, using Bitcoin on an everyday basis can help usher in a new era of progressive innovation and ‘financial digitalization’ in the country.