Bitcoin remittances to El Salvador jumped more than fourfold in May from the previous year, according to data from blockchain analytics firm Chainalysis.
Last week, El Salvador passed a bill making bitcoin legal tender in the country alongside the U.S. dollar.
The monthly bitcoin transfers of under $1,000 to El Salvador totaled $1.7 million in May, representing more than a 300 percent increase from $424,000 the previous year, Reuters reported, citing data from blockchain analytics firm Chainalysis.
The monthly bitcoin transfers to the country peaked in March at $2.5 million. While remittances using bitcoin have soared, they are still a small portion of total remittances to the country.
According to the World Bank, remittances using traditional money totaled nearly $6 billion in 2019, and about 95 percent of total remittances in the first quarter of this year came from Salvadorans working in the U.S.
El Salvador became the first country in the world to make bitcoin legal tender when its congress passed President Nayib Bukele’s bitcoin bill last week.
The country is now focusing on bitcoin mining using energy from volcanoes, which aims to be “very cheap, 100% clean, 100% renewable” and with “0 emissions.”
Several organizations have voiced concerns over El Salvador’s move to make bitcoin legal tender, including the International Monetary Fund (IMF) which warned the country of legal and economic issues last week.
Rating agency Moody’s said last week that El Salvador’s bitcoin law “carries risks for the financial system, the stability of the country’s monetary regime and signals a lack of a coherent economic framework.”
Meanwhile, an official with the Bank of International Settlement (BIS) called the bitcoin law in El Salvador an “interesting experiment” but said it did not change the bank’s approach to cryptocurrency.
The president of the European Central Bank (ECB), Christine Lagarde, similarly said the ECB’s policy is unaffected by El Salvador’s bitcoin law.
Bitcoin is a Better Inflation Hedge Than Gold: deVere CEO
The Bitcoin rally stalled on heightening global worries about inflation, but, says the CEO of one of the world’s leading financial advisory, asset management and fintech firms, it remains “a better shield than gold.”
The largest cryptocurrency by market capitalization ended three consecutive days of healthy gains, before stabilizing, after U.S. Federal Reserve Chair Jerome Powell said on Tuesday it may be time to stop using the term “transitory” as a way of describing the current wave of inflation.
Meanwhile, inflation in Europe has ballooned to the highest on record.
Mr Green says: “Bitcoin is perceived by many investors as a hedge against inflation due largely to its strict supply controls.
“As such, it would be assumed that its price would automatically rise when the U.S. central bank suggests that it would consider speeding up the reduction of its asset purchase policies that have boosted the stock markets.
“But for other investors, including some major institutional investors who have piled into Bitcoin in recent months, the cryptocurrency is still perceived as a risky asset.
“So when they sell-off riskier assets, despite the longer-term outlook and based on short-term hawkish policies from the world’s de facto central bank, Bitcoin, like equities, also becomes vulnerable.”
A long-term, high-profile crypto advocate, Mr Green remains confident that “Bitcoin is today a greater inflation shield than gold”, which has long been the standard go-to inflation hedge.
He says: “Gold has always been regarded as the ultimate inflation hedge – but the world is a much different place now. Our lives and the global economy is increasingly run on tech and digital solutions and this megatrend is only set to become more dominant.
“Gold is likely to be dethroned within a generation as millennials and younger investors, who are so-called ‘digital natives’, are going to be more comfortable with Bitcoin as a hedge than a physical metal.”
The deVere CEO goes on to say: “Bitcoin is often referred to as ‘digital gold’ because like the precious metal it is a medium of exchange, a unit of account, non-sovereign, decentralized, scarce, and a store of value.
“Yet, the cryptocurrency, Bitcoin is superior to gold as a medium of exchange or form of payment.
“Unlike gold, it is a fixed unit of account and easily divisible and transportable. Gold is not easily immediately divisible, and there are potential issues with purity and verification. Whereas Bitcoin is easily traced on blockchain technology and this is going to be a considerable advantage, especially in cross-border transactions.”
Mr Green concludes: “Gold and Bitcoin can, and perhaps should, complement each other in a portfolio.
“But as the world continues to pick up momentum in its shift towards tech, and as millennials become a more dominant part of the world economy, we should expect Bitcoin to also take an increasingly influential role in financial markets, including in regards to being an inflation hedge.”
MicroStrategy Adds 7,002 Bitcoin to Portfolio
Yet again MicroStrategy, an Amereican business intelligence company has purchased an additional 7,002 Bitcoin worth $414.4 million to its digital asset portfolio, summing its total bitcoin asset to $3.57 billion.
The CEO of MicroStrategy, Michael Saylor made the purchase announcement on Monday via a Twitter post.
He tweeted, “MicroStrategy has purchased an additional 7,002 bitcoins for ~$414.4 million in cash at an average price of ~$59,187 per #bitcoin. As of 11/29/21 we #hodl ~121,044 bitcoins acquired for ~$3.57 billion at an average price of ~$29,534 per bitcoin”.
MicroStrategy currently owns 121,044 BTC valued at $3.57 billion that were acquired at an average price of $29,534 per bitcoin.
At the time of writing, data from Kucoin shows that Bitcoin is trading at $56,490 per coin. This implies that Microstrategy’s total bitcoin asset is worth over $6.8 billion.
On Friday, Saylor tweeted, “Bitcoin offers better inflation protection than gold and is growing faster than big tech.”
Saylor believed that Bitcoin (BTC) “is the only property you can truly own, as well as the first technology capable of granting property rights to everyone on earth and In time, we will come to understand that it is concentrated energy in digital form and critical to the progression of our civilization.”
Despite some countries showing little to no adoption to digital assets, Saylor believed that Bitcoin has a potential to become a $100 trillion asset class. He said “digital gold is going to replace gold this decade.”
The MicroStrategy CEO further said the company is not troubled with the ongoing discussion on crypto regulation, noting that it will affect security tokens, decentralized finance (defi) exchanges, crypto exchanges, and other use cases of cryptocurrency that are not bitcoin. In his opinion, “bitcoin is unstoppable as digital property.”
IMF Discourages the Use of Bitcoin as Legal Tender
Global financial body, the International Monetary Fund has informed the public that bitcoin constitutes a high risk to consumers.
In giving this warning, the Monetary Fund made a reference to El Salvador’s recently announced plan to make the coin a legal tender, as the country sets plans to erupt a Bitcoin City which is funded by cryptocurrencies.
On Monday, the IMF released a statement where it referred to the decision made by El Salvador to make bitcoin a legal tender as risky. This was said in spite of the Fund’s admission that cryptocurrencies and other digital forms of money possess the potential to make payment systems much more efficient.
According to the financial body, bitcoin’s high rate volatility means its use as a legal tender opens up serious risks to financial integrity, consumer protection and financial stability. The body then encouraged the strengthening of the supervision and regulation of the new payment system.
In September 2020, El Salvador passed a law that granted bitcoin the status of an official legal tender side by side with the US dollar. This made El Salvador the first country in the world to recognize cryptocurrency officially.
Since then, El Salvador’s government has supported an e-wallet system known as Chivo, which allows El Salvador residents to engage in payments with bitcoin and convert the cryptocurrency to US dollars.
The financial body recognized the benefits of the system, which could augment financial inclusion, while supporting financial growth. The body however called for more legal defences for consumers, to protect them while countering money laundering and the financing of terrorism.
This warning arrived merely days after El Salvador revealed its plans to build the world’s very first ‘Bitcoin City’ which will receive its initial funding from bonds backed by cryptocurrencies. The city will contain commercial and residential areas, airports, restaurants, entertainment venues, and other amenities which are common to a metropolis.
It is still in the conceptual stage but the first bond offering is set for 2022, with construction to begin about two months after financing has been secured for the construction.
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