The migrant rights advocate gave a talk on Bitcoin and remittances at the 16th Migrant Week organized by the University of Technology.
Sending remittances from abroad has always come at a cost. The sender pays a commission to carry out the shipment. The use of Bitcoin as an exchange rate in El Salvador has been promoted as a way to avoid paying these commissions. However, Oscar Chacón, director of the Alliance of Americas, believes that sending remittances using digital currency is a challenge for Salvadorans in the United States.
On August 30, Chacón gave the talk “The use of Bitcoin in sending remittances”
in the framework of the 16th Migrant Week organized by the Technological University. Here he explained that although sending remittances through the traditional financial system represents costs for users, digital currencies have other disadvantages such as fluctuation and the commission that must be paid to transfer assets from one wallet to another.
Chacón considers that in the current financial system the consumer, in general, ends up paying “extremely high costs, not only for sending remittances, but in general, for having banking services.” However, these costs are not absent when using digital currency for sending digital currency.
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When sending remittances through a bank or remittance delivery service, users pay between 5 and 7% of what they sent “in terms of administrative costs,” according to Chacón. “In some cases, for reasons of emergency or lack of knowledge, people pay much more than that percentage,” he added.
He recalled that more recent data indicate that between 36% and 37% of Salvadorans have a bank account; a percentage “very far from the 57% which is the average banking rate in Latin America.” Bitcoin has also been promoted in El Salvador as a way to integrate more people into the banking system. However, Chacón believes that Salvadorans naturalized in the United States, permanent residents and those with a work permit are more than Guatemalans and Hondurans who have any of these types of protection. In his opinion, “this favors that Salvadorans are quite on track” in the use of banking services in the United States. “It will become challenging for Salvadorans how to relate, theoretically speaking, to a digital currency with bitcoin,” he warned. “Especially when it is known that a digital currency like bitcoin suffers from a huge degree of exchange rate volatility, meaning changes are abrupt,” Chacón recalled in reference to the devaluations the cryptocurrency has had in recent weeks.
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The migrant rights activist recalled that remittances not only help the economy of thousands of Salvadoran families, but also serve them to pay taxes, as every time they buy they pay VAT. When Alliance Americas investigated the issue in 2009, it found that the Salvadoran state received about $ 200 million a year linked to the use of remittances “and the sum of remittances for that time was significantly less than the current”.
In Chacón’s opinion, without remittances El Salvador would look different from how it looks now. “And I have to say it too: remittances have fueled bad habits, and I’m not talking about how people spend remittances, I’m talking mostly bad habits in political and economic decision-making circles.” He believes that every Salvadoran who goes to the United States has represented, for this and other governments, one less critic and one more source of remittances, so that politicians have not been interested in solving the causes of migration.
But in addition to being a source of bad habits, remittances have a positive effect: “One of the most important impacts remittances have is viable access to basic social services, which are crucial to the well-being of any society including access to education “.
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After finishing his presentation, Chacón received a question: “Do you think Salvadorans in the United States are going to use bitcoin to send remittances?”. “The common sense answer is no,” he said, adding, “I want my parents to get what I send them. If they tell me that if I send $ 150, what they’re going to give them will be according to the exchange rate in force bitcoin on the day of delivery and what if it went down 50%? By common sense I would not want a remittance shipment to suffer any volatility between the time I ship it and the time my parents receive it “.