El Salvador’s Chivo Wallet could put deal a major blow to Western Union and Moneygram, according to a fresh report.
Ever since the country adopted bitcoin as legal tender on September 7th, 2021, El Salvadore has been a topic of discussion in internet circles. The country started buying bitcoin for its citizens before the legalisation was implemented and the very next day, a bitcoin market rout took place, registering $3.4 billion worth of liquidations.
Shortly after this point, the Salvadorian president Nayib Bukele said that El Salvador ‘bought the dip‘.
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One report published by CNBC explains that if the Chivo wallet becomes widely adopted and removes remittance customers from financial institutions, then US banks stand to lose millions.
CNBC’s MacKenzie Sigalos reports that “should the population adopt bitcoin at scale,” there’s a chance that “Western Union and MoneyGram will lose $400 million a year in commissions for remittances.” In El Salvador, remittances make up 50% of a person’s total income, adding to nearly a quarter of the country’s GDP. Sigalos highlighted that about 70% of the population in El Salvador gets these remittances.
Reaching out the Western Union and asking about whether the company was worried about this transition, the reporter wrote:
Western Union did not reply to a CNBC request for comment about whether the company was worried about how this might affect business and if there was any plan to alter the fee structure to adjust for increased competition.
Inventor of the Web Tim Bearns-Lee Writes About El Salvador’s Bitcoin Adoption
Meanwhile, several individuals have given their two cents on the bold move for bitcoin adoption in El Salvador. On Wednesday, famous whistleblower Edward Snowden talked about how the news coming out of El Salvador puts pressure on countries to acquire bitcoin, as El Salvador did.
He said: “Beyond the headlines, there is now pressure on competing nations to acquire Bitcoin—even if only as a reserve asset—as its design massively incentivizes early adoption. Latecomers may regret hesitating“, Snowden warned.
Snowden’s take also resonates with comments from Tim Berners-Lee, the creator of the World Wide Web, who has also written about El Salvador adopting bitcoin.
Berners-Lee is known for being one of the earliest reporters to cover bitcoin (BTC) when he wrote articles for Ars Technica. In his latest article, he elaborated on why president Bukele announced the bitcoin law at the Miami bitcoin conference. Berners-Lee explained that the motives are possibly financial saying: “It’s not clear if forcing merchants to adopt bitcoin will actually help people who lack banking services. Bitcoin requires Internet access, which is spotty in many parts of El Salvador. And bitcoin may prove too complex and cumbersome for everyday use.”
However, “It’s telling that Bukele chose to announce the initiative in English, at a Bitcoin conference in the United States, rather than addressing a domestic audience. One of his goals seems to be to get Bitcoiners around the world—some of whom are quite wealthy—to visit El Salvador and start businesses there.”
He went on to say that by becoming the “world’s most bitcoin-friendly jurisdiction“, it might lead to “a savvy tourism and business development strategy.”
But the computer scientist continued to criticize the concept and noted that Bukele’s experiment could hurt Salvadorans. “At the same time,” Berners-Lee wrote. “You can see why this might rub some Salvadorans the wrong way. Bukele’s experiment will impose real costs on small shopkeepers who may not be in the tourism business and may never see significant bitcoin business”.
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