> In theory, developing nations like El Salvador are ideal candidates for cryptocurrency adoption. More than half its citizens rely exclusively on cash, rather than credit or debit cards. Some 70 percent of households have no bank account and nearly 90 percent do not use mobile banking. A digital payment platform could be a way to make the economy more inclusive and accessible.
I have a really hard time understanding what lasting effect El Salvador hopes to accomplish.
> More than half its citizens rely exclusively on cash rather than credit or debit cards
That's not in itself a problem.
> Some 70 percent of households have no bank account
That's may be a problem, but is it something that Bitcoin itself can solve? For example, people who have no savings and survive hand-to-mouth really don't need a bank account. Maybe that's what the 70% statistic is telling us.
> and nearly 90 percent do not use mobile banking.
The experience of using bitcoin for most people is not unlike the experience of using a mobile banking app. What is it about Bitcoin in particular that makes it a better fit?
> A digital payment platform could be a way to make the economy more inclusive and accessible.
Possibly, but only if the reasons for lack of inclusivity and accessibility are understood, and Bitcoin is compatible with resolving them. If the reasons are social/political, Bitcoin is not going to help at all. Monetary policy is effectively set elsewhere, either Washington or the Internet through the Bitcoin protocol. Being the hardest form of money ever created, bitcoin is especially bad at funding public works projects like the kind El Salvador is going to need to elevate its standard of living.
Then there's the elephant in the room: money printing. El Salvador has no currency of its own. It uses the US dollar, and now Bitcoin. This means that the government has voluntarily foregone the ability to print the money to cover the debts incurred for domestic spending. Adding Bitcoin just doubles down on the status quo: no domestic currency and no possibility of money printing.
The real feature they want is the ability to receive remittances without the high fees caused by retail labor. This requires some kind of app whether it's online banking or crypto.
35% of the remittances are paid by banks, but I do not have numbers on how many of them are paid via an app.
El Salvador's informal economy is cash-based, doing business mostly with the small businesses in their neighborhood. I guess they don't have an account because they don't need them or because they don't have enough money to save. Other's want to avoid monthly fees that some of the traditional paper based bank accounts have.
People who need a bank accounts do open them. Like for receiving a wage from a 'formal' business or having to do electronic payments (like paying a landlord who lives in another town).
> How hard is it to get an ID card?
This is something El Salvador does very well. Our ID/Passport issuing system is really state of the art. I'd say it takes about 45 minutes to get an ID card or a passport. I've seen this take weeks or months in other countries. The first ID card is free, renewals cost about $10 every eight years.
There were edge cases though, like older people who's birth certificates were lost in town hall fires which were common during the war in the 80s. Or people who had duplicate but different birth certificates. In those cases they had to go through a longer process to replace their birth records and then apply for an ID card.
I have a really hard time understanding what lasting effect El Salvador hopes to accomplish.
> More than half its citizens rely exclusively on cash rather than credit or debit cards
That's not in itself a problem.
> Some 70 percent of households have no bank account
That's may be a problem, but is it something that Bitcoin itself can solve? For example, people who have no savings and survive hand-to-mouth really don't need a bank account. Maybe that's what the 70% statistic is telling us.
> and nearly 90 percent do not use mobile banking.
The experience of using bitcoin for most people is not unlike the experience of using a mobile banking app. What is it about Bitcoin in particular that makes it a better fit?
> A digital payment platform could be a way to make the economy more inclusive and accessible.
Possibly, but only if the reasons for lack of inclusivity and accessibility are understood, and Bitcoin is compatible with resolving them. If the reasons are social/political, Bitcoin is not going to help at all. Monetary policy is effectively set elsewhere, either Washington or the Internet through the Bitcoin protocol. Being the hardest form of money ever created, bitcoin is especially bad at funding public works projects like the kind El Salvador is going to need to elevate its standard of living.
Then there's the elephant in the room: money printing. El Salvador has no currency of its own. It uses the US dollar, and now Bitcoin. This means that the government has voluntarily foregone the ability to print the money to cover the debts incurred for domestic spending. Adding Bitcoin just doubles down on the status quo: no domestic currency and no possibility of money printing.