(Kitco News) – El Salvador has recently made Bitcoin legal tender. While the crypto community has rejoiced at the news, practical problems still remain.
Steve Hanke, professor of Applied Economics at Johns Hopkins University, said that in practice, Bitcoin will still not be used in everyday transactions given the state of El Salvador’s economy.
Additionally, Bitcoin‘s transaction fees are high when converting to U.S. dollars, which is the currency that El Salvador uses.
“The big problem with cryptos, in general, is that you can’t convert them into actual real legal tender that’s usable cheaply, and quickly,” Hanke told David Lin, anchor for Kitco News. “You can’t Bitcoin, for example, cheaply and easily convert into U.S. dollars.”
The problem can become so severe that the country could be drained of U.S. dollars through Bitcoin transactions, and the entire economy could “collapse”, Hanke said.
For more information on issues with remittances using Bitcoin, watch the video above. Follow David Lin on Twitter at https://twitter.com/davidlin_TV.
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