How Bitcoin could help El Salvador with poverty alleviation
In September 2021, the president of El Salvador declared Bitcoin a legal tender making it the first country to legalize Bitcoin operations. However, the government has had to deal with a few technical issues and the volatility of this virtual money. Many people believe that El Salvador is a dollarized economy because it does not have its own currency. Instead, it uses the dollar as its main currency, meaning that the country’s government cannot print money. As a result, adopting this virtual currency by El Salvador does not seem like a bad idea but rather a perfect one. Here are some ways this digital currency can help El Salvador with poverty alleviation. You can visit Bitcoin 360 Ai to start your trading journey
Perfect Hedge against Inflation
Inflation is a common situation, especially with fiat currency, because the country can print more money, resulting in the currency losing its value. However, Bitcoin has a limited supply, meaning that the demand for this digital currency increases, which translates to an increase in the value of this electronic currency. Therefore, this virtual money is not subject to inflation due to the limited supply.
In the end, the people of El Salvador will benefit from not suffering from inflation which helps alleviate poverty in the country. With 70% of El Salvador’s population being unbanked, they will benefit from financial inclusion by legalizing this digital currency in the country.
Bitcoin is entirely decentralized and only runs on its underlying blockchain. As a result, the Central Bank cannot control its operations. Moreover, Bitcoin transaction fees are minimal, such that the poor people from El Salvador can benefit and invest in properties they have complete control over.
Ultimately, this virtual currency does not discriminate against the poor or the rich from transacting and trading this digital money. There are platforms that allow everyone to trade Bitcoin. Despite being an asset class, it does not discriminate against anyone when it comes to taking part in its operations because the governments and banks cannot interfere with Bitcoin transactions.
Bitcoin is a virtual currency that is hard to steal and safe, limiting the chances of corruption. The government can release financial aid to its citizens through fiat currency through its representatives. However, most times, that financial support does not get to the hands of the citizens. Also, the government can take loans that benefit the poor but benefit a few people.
On the contrary, with blockchain technology, the government can ensure that the necessary financial aid gets to the hands of the citizens successfully. So, with the adoption of this digital currency in El Salvador, the government can fight corruption and, in the end, alleviate poverty in the country.
Accepting Bitcoin Donations
Some non-profit organizations allow people to donate and distribute this digital currency to people living in poverty. The people from El Salvador can benefit from such donations even if they do not have bank accounts. Also, the people from El Salvador can benefit from this digital currency because they will not be subject to inflation. Ultimately, they can safely use this digital money as a medium of exchange and a perfect store of value.
The Bottom Line
Bitcoin is still new because it has only been available for twelve years, unlike fiat currency which has existed for many years. However, this digital currency has proven to be a successful invention for the people of El Salvador. Apart from using Bitcoin as a currency, individuals and enterprises can invest in it as an asset with the potential for substantial returns.