SAE./No.185/June 2021

Studies in Applied Economics

BUKELE’S BITCOIN BLUNDER

Steve H. Hanke, Nicholas Hanlon, and Mihir Chakravarthi

 

Johns Hopkins Institute for Applied Economics,
Global Health, and the Study of Business Enterprise

 

 

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El Salvador’s President Nayib Bukele blessed El Salvador’s Bitcoin Law, asserting that making
bitcoin legal tender would reduce remittance costs. But at present, Bukele’s assertion is incorrect.
As things currently stand, the cost of using bitcoin to send remittances to El Salvador is not, in
fact, cheaper than traditional money transfer services. Indeed, at present, traditional transfer
methods are the cheapest way to make remittance payments.

The remittance fees for each of the money-wire transfer services are contained in Table 3.
According to the World Bank, the average realized fee is, in fact, 2.85%. El Salvadorans want
greenbacks, not bitcoin. So, if sent remittances in bitcoin, El Salvadorans (at present) have to
convert their bitcoin to dollars at a bitcoin ATM. Therefore, the minimum cost of receiving
remittances via bitcoin is 5% plus network fees plus the costs of travel, safety, and security. This
is clearly at least double the average fee realized when using traditional methods.

From .

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