El Salvador's interest in Bitcoin is largely driven by their economy's reliance on remittances -- residents who go abroad for better work opportunities send money back home, usually through services like Western Union, to support family members still there. The World Bank estimates that over 24% of El Salvador's GDP in 2020 is from these remittances.
Cryptocurrency can be used as a way to bypass wire transfer fees, which can get pretty hefty. This is one of the main advantages touted by cryptocurrency enthusiasts, although if you have to pay currency conversion fees on both ends of the bitcoin transfer it can actually end up being more expensive. So, El Salvador is trying to make this more attractive by anointing Bitcoin as an actual legal tender so theoretically you don't have to pay the conversion fee once it's in their country.
This, of course, doesn't solve the volatility problem you mentioned; good currency is, well, boring, and as long as Bitcoin behaves like a meme stock, it's a better -- if obviously extremely high-risk -- investment than a currency for commonplace transactions.
El Salvador's interest in Bitcoin is largely driven by their economy's reliance on remittances -- residents who go abroad for better work opportunities send money back home, usually through services like Western Union, to support family members still there. The World Bank estimates that over 24% of El Salvador's GDP in 2020 is from these remittances.
Cryptocurrency can be used as a way to bypass wire transfer fees, which can get pretty hefty. This is one of the main advantages touted by cryptocurrency enthusiasts, although if you have to pay currency conversion fees on both ends of the bitcoin transfer it can actually end up being more expensive. So, El Salvador is trying to make this more attractive by anointing Bitcoin as an actual legal tender so theoretically you don't have to pay the conversion fee once it's in their country.
This, of course, doesn't solve the volatility problem you mentioned; good currency is, well, boring, and as long as Bitcoin behaves like a meme stock, it's a better -- if obviously extremely high-risk -- investment than a currency for commonplace transactions.
— Chipotle