BitMEX chief executive officer Alexander Höptner is predicting that five developing nations will follow in El Salvador’s footsteps and adopt Bitcoin (BTC) as legal tender by next year.
In a blog post, the head of the crypto exchange says BTC will help citizens of developing countries financially by reducing the transaction fees associated with sending money across the globe.
“Remittances made up an astounding 23% of El Salvador’s GDP (gross domestic product) in 2020. Across the world, it’s nearly 10% of GDP in the Philippines, which has over 10 million overseas Filipino workers. According to World Bank data, low and middle-income countries receive about 75% of total global remittances.
This money has got to find a way home somehow. But the current system of remittances is…charging [people] an average of 10% just to send money home the next business day… People deserve better. So is it any surprise that Bitcoin – with its near-negligible fees and quick 24/7/365 transactions – would pique the interest of countries reliant on remittances?”
Höptner says another reason developing nations may adopt BTC is growing concerns of runaway inflation, something Bitcoin is not burdened by as it has a maximum supply cap of 21 million.
“The IMF (International Monetary Fund) forecasts 2021 inflation for developed countries at 2.4%. Its estimate for developing countries is more than double, at 5.4%. While consumers in advanced economies might be better placed to weather shocks, people in developing countries are more vulnerable, especially when the price of consumer goods and services is impacted…
Bitcoin fixes this, with its capped supply of 21 million. And developed countries – and/or their people – are noticing. “
Lastly, Höptner says the decision to adopt BTC as legal tender ultimately rests with political leaders and that El Salvador’s “leap of faith” has made it easier for them to take the plunge.
“On a macro level, those who will make the decision to make Bitcoin legal tender will be politicians or rulers. Bitcoin is many things – a technology, a store of value, and a means of payment.
It’s also a cultural touchstone and, at its core, an expression of the user’s lack of faith in the global financial system as presently constructed…
What El Salvador did is take the first leap of faith, making similar moves by other countries much easier to consider.”