El Salvador’s intentions to make Bitcoin legal tender have been questioned by JP Morgan analysts. This is due in large part to the fact that El Salvador already has a currency in the form of the US dollar.
JP Morgan researchers outlined some of the possible difficulties with El Salvador’s ambitions to declare Bitcoin its second legal currency in a research paper issued last week.
According to researchers at a multinational investment bank, one of the country’s biggest challenges is its first legal currency, the dollar.
The bank quotes a recent Johns Hopkins University research that shows that the costs of sending remittances in Bitcoin are “almost twice as much” as the costs of doing equivalent US currency operations.
This isn’t a tiny problem. Such transfers by World Bank accounted for around 24 percent of El Salvador’s GDP in 2020. The country depends significantly on payments, generally in US$.
Hence, people questioned and mocked JP Morgan on Twitter messing the issue more.
A Twitter user blames him as JP Morgan silently buys Bitcoin from other sources and still insulting the world’s no.1 crypto.
What research says
In 2001, the transition from the colon to the dollar in El Salvador is complicating the issue. In a bi-monetary system, dollarization makes the country more vulnerable to price shifts. And Bitcoin’s a volatile market already.
JP Morgan pointed out a number of additional snags in El Salvador’s intention to make Bitcoin an offer, including the failure of the blockchain to manage the flood of new “on-chain” payments, and the exorbitant charges paid for each Bitcoin network transaction. The cost of using blockchain increases as Bitcoin’s prices and total trading volumes grow.
As the heat expanding, there are reports that half of the population of El Salvador doesn’t even know What bitcoin is. Hence, making it a challenge to enforce bitcoin as a primary mode of transaction.
The government is trying its level best alongside developers and citizens. The launch of the Strike-lightning payment app for El Salvador made it a bit easy to make payment transfers over Bitcoin.
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