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๐ก Crypto & Poverty: why Bitcoin did not save El Salvadorโ
๐ฑ World is witnessing a second attempt to make the crypto asset a panacea for the national economy: Central African Republic declared Bitcoin as the official currency. Market BTC ignored this news. We offer to recall the bad experience in El Salvador.
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To combat inflation, El Salvador abandoned its own currency and replaced it with the US dollar. The country's economy stabilized, but heavy labour immigration proved to be a problem. In 2019, the volume of remittances from Salvadorans working abroad reached 20% of GDP (or $6 billion), and about 5-10% of this amount was received by international payment systems, for example, Western Union. El Salvador wanted to reduce the costs of cross-border transfers and reduce influence of dollar.โ
Population was offered $30 each for a special free bitcoin-wallet Chivo, which is approximately 0.7% of the average annual income per person.
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And what is the result?โข According to results of
NBER study, approximately 61% of citizens withdrew the bonus in cash and did not use crypt- wallet anymore. More than 21% of respondents knew about this possibility but never downloaded the Chivo app. Reason is the lack of a mobile phone with Internet access.
โข Population prefers cash: more than 70% of respondents do not use banking services and almost 90% do not know what ยซmobile bankingยป is.
โข For cross-border payments, Chivo is also not in demand โ in February 2022, only 1.6% of remittances were received in BTC, and in March - 1.9%. So it was the low literacy of population and the lack of access to information technology that ยซprovidedยป failure of crypto project in El Salvador.
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Central African Republic, with its annual GDP of $2.4 billion, is not ready to invest in a technological breakthrough for the effective implementation of cryptocurrency. But this project can be used to gain new practical experience.
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Or does Central African Republic have secret investors and hidden resources? We're going to see!
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Profits to y'all!