The Bitcoin revolution is slowly but surely sweeping across the world, and El Salvador recently made a huge decision that may spell the end for traditional money transfer companies like Western Union.
On June 8th, 2021, El Salvador's President Bukele announced a law that would identify Bitcoin as legal tender in the Central American country. The law would also require all businesses in El Salvador to accept Bitcoin payments, including those made online.
The landmark decision has been hailed by cryptocurrency supporters as a potential turning point for Bitcoin, which has often struggled to gain mass acceptance in the past. But the news has been met with concern by service providers like Western Union, which stand to suffer from the legislation.
Western Union's Overhead
Western Union operates through brick and mortar locations scattered across the globe. It charges fees for its services, which can range from 5-10% of the total transaction amount.
Often, part of this fee goes to the respective governments and regulatory bodies, adding another layer of overhead for Western Union's customers. With the service already expensive in comparison to other remittance services, this legislation would sound the death knell for the company in El Salvador.
Bitcoin's Potential
In comparison, Bitcoin stands to benefit heavily from El Salvador's decision. Compared to legacy institutions like Western Union, Bitcoin offers drastically lower transaction costs and far greater transparency.
By using a blockchain-based system, customers can be sure that their Bitcoin transactions have been recorded and verified securely by a network of nodes. The blockchain and individual nodes around the world also ensure that their funds are secure, with no single entity or entity able to manipulate the system.
The Road Ahead
The full impact of El Salvador's decision remains to be seen, however. While the promise of a Bitcoin-based economy gives hope to many cryptocurrency enthusiasts, there are still a number of questions that remain unanswered.
For one, will other countries follow suit, or will decision makers remain reticent to make such a move? How will Bitcoin's underlying technology evolve to handle the huge influx of users that this legislation could create?
Time will tell, and for now, the world can only look on with amazement as El Salvador takes the first steps in what is set to be an exciting Bitcoin revolution.
Conclusion
El Salvador's decision to recognize Bitcoin as legal tender is groundbreaking, and could open the door to wider adoption of the cryptocurrency. Western Union, and other traditional money transfer services, may be forced to pivot or face obsolescence.
In the coming months and years, it will be interesting to follow the impact of this decision and what it might mean for the future of money transfers around the world.