El Salvador President Nayib Bukele led the effort for his country to be the first one in the world to adopt bitcoin as its legal currency.
Bukele argued that crypto would allow 70 percent of El Salvadorians, whom don't have a bank account, to be part of a country's formal economy. It would also enable cheaper remittances from abroad and reduce the country's debt with the International Monetary Fund.
Remittances are payments of money from one party to another. In the crypto space, remittances typically refer to people sending money overseas to relatives who live in a less wealthy country.
The International Monetary Fund estimated that the total total remittances to low- and middle-income countries was $597 billion in 2021.
Some countries rely upon remittances. In El Salvador, 23% of its gross domestic product came from remittances.
Sending money through a service such as Western Union has much higher fees than a crypto-enabled service. For example, sending $500 via a credit card could cost up to $26 with Western. Using Remitly, it's only $7.99. That is a 70% savings.
One reason why El Salvador adopted bitcoin as its currency was to lower remittance costs.
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