El Salvador could adopt bitcoin as its legal currency. It would be the first country in the world to attempt this path

Little El Salvador could be the first country in the world to adopt bitcoin as a fiat currency. Alongside, and not in place of, the US dollar that the Central American country currently adopts as its currency. The president made the announcement Here’s to watching, announcing that next week he will submit his proposal to the congress. It is no coincidence that this experiment can take place in El Salvador. The country has little more than 6 million inhabitants but others 2 million Salvadorans they live and work abroad. Every year they move home 4 billion dollars, that is about 20% of gross domestic product. In Bukele’s project, the adoption of bitcoin should reduce the commissions paid, there would no longer be a need for intermediaries such as banks, thus increasing the value of remittances and encouraging further transfers.

Technically, the project is a bit more complex, although for now only sketchy. It would be exploited an application for digital payments through named smartphones Strike, developed in El Salvador. Basically the application exploits the digital currency like “Means of transport” on which to travel the dollars. At the time of sending, the dollars are transformed into bitcoins which the application then converts into dollars once they arrive at their destination. A system that mitigates the problem of violent fluctuations that characterize cryptocurrency. Bitcoin has been losing in the last month 37% of its value and is trading at around 36 thousand dollars after hitting a record of over 63 thousand dollars last March. The fact that El Salvador uses the U.S. dollar and not a currency of its own and therefore there is no fear on the part of local monetary authorities due to the presence of a competing alternative currency.

Today the Bri, the ‘central bank of central banks (a sort of central bank of central banks, ed) warned that, although the world’s “banks’ exposure” to cryptocurrencies is still limited, “their continued growth and innovation, coupled with increased interest from credit institutions, could increase fears for global financial stability in the absence of a specific prudential regulatory treatment “.

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