Bitcoin in El Salvador: Bank of America takes everyone by surprise

By: Bharggavi Ssayee

Bitcoin in El Salvador: Bank of America takes everyone by surprise

August 5, 2021 5:24 AM

For the Bank of America (BoA), in January 2021 (just 6 months ago), Bitcoin was nothing less than "the mother of financial bubbles" according to its chief strategy officer. This strategy has obviously been revised 180 °, since the king of cryptos is now seen as a great “opportunity” for El Salvador, which has adopted Bitcoin as a legal tender.


El Salvador promised a great economic boom by the Bank of America

The Bank of America, founded in 1929, is one of the largest banks in the United States, with more than 200,000 employees. Long - and until very recently - negative on Bitcoin and cryptocurrencies, the big bank radically changed its tune, even unveiling a team entirely dedicated to the crypto-asset sector last month.


This change in vision on Bitcoin now goes even further, as revealed in a tweet from Salvadoran President Nayib Bukele. The head of state thus takes up a very recent report from the BoA which considers that the economy of the Central American country seems very promising ("bullish"):


“The Bank of America explains that El Salvador will exceed all forecasts for its economy. The overall consensus is that our country will experience 4.3% growth this year. Our government is optimistic and we think it will be 6%, but the Bank of America is forecasting 12%. "

Publication by Nayib Bukele - Source: Twitter


How effective is Bitcoin in contributing to El Salvador's success?

In another tweet, President Bukele features page 14 (below) of the BoA report which details the opportunities that Bitcoin offers to the small country. We can already read there first that:


“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels (…) The idea is that Bitcoin could be used as an intermediary for cross-border transfer, so for dollars to be converted to bitcoin by the sender and then back to dollars nationally by the recipient. "


Extract from the Bank of America report - Source: Twitter (Nayib Bukele)


Bitcoin mining is also seen as a real opportunity by the BoA, which explains that this sector could be very attractive for El Salvador, comparing it to the success that Iceland is already experiencing in this area. Because like the small island nation, the nation of Latin America is rich in geothermal sources, perfect for mining BTC.


The same goes for the bitcoin vending machine (ATM) industry, which is already considering establishing itself in El Salvador, with ChainBytes.


According to the big bank, Bitcoin could also greatly democratize access to digital payments, in a country where 70% of adults do not have bank accounts.


Some sorrowful spirits in the country, clearly more out of ignorance of cryptocurrencies than anything else, oppose the establishment of Bitcoin as an alternative to local US dollar hegemony. However, even Bank of America is now breaking this opposition, recalling that Bitcoin simply brings "greater choice to consumers" and that the use of this alternative to the interference of the US dollar will in no case be "Forced" (including the ability to immediately convert BTC payments into dollars).