Topic: The beginning of the end of traditional payment processors? - page 4. (Read 607 times)

Isn't Chivo giving away $30 to anyone who registers? Of course a lot of people in a poor nation would want to claim free money. The article claims that millions of users were added to Lightning Network, while in reality millions of people just installed an app. Not a fact that they will use it in their daily lives. A lot of people will uninstall it once they claim the free $30 or will use it a few times per year. It's completely unrealistic to think that millions of people who a few weeks ago didn't care about Bitcoin are not "Bitcoin users" who conduct their purchases through LN.

El Salvador has been using the US dollar as its national currency for 20 years, so there is no room for some theories in this regard, especially considering that most of their emigrants live in a country whose currency is also identical. Sending money from the US in dollars to El Salvador using the same currency does not incur any additional costs due to the conversion.


From what can be seen so far, the Chivo wallet brings the best of both worlds, LN and automatic free conversion between BTC and USD. I am sure that this will not extend to countries such as the US, Japan, or the EU - but the countries of Central and South America will follow the development of the situation in El Salvador very closely.

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I agree that this will affect people’s decision to transfer BTC or USD, but in the case of El Salvador, we know that they have set up 50 Chivo ATMs in the largest US cities, which means you insert USD into ATM and automatically get BTC free of charge into your Chivo wallet, and then you send that same BTC for a minimal fee to any other Chivo wallet. Let someone correct me if I’m wrong, but I realized that the whole thing works that way.

For sure, it is definitely going to be a loss for most of the centralized platforms out there. Some of these centralized means of transactions are  fond of charging high fees when it comes to making transactions that are international, and that is unlike Bitcoin where you have to pay just a fraction of what you are going to be sending and sometimes the fees you are even paying to send Bitcoin is close to nothing at all. So, people are definitely going to be choosing Bitcoin over centralized means.

Western Union and MoneyGram are very expensive means when it comes to international transactions, and a lot of people have been avoiding them for years now. Bitcoin is not a legal tender in my country, but I have been using it for over five years now to be sending transactions to my family and friends that are living abroad and they can make use of exchanges to convert them immediately and have the money in their bank that same minute. So, tell me why Bitcoin wouldn’t take over?

This only tells the story of one country, and I'm pretty sure other countries with a pretty stable banking system and money remittance services would like to keep things how it is for quite some time. But what's happening in El Salvador might be a catalyst of what's to come in the future. Perhaps banks and money remittance services would adopt a similar structure to crypto, but them as an entity would still surely remain solid as they are right now. They'd need to adapt to the changes, and if copying how bitcoin and crypto does it is the only way to do it, they'd do so in a heartbeat.

I had a serious question from an economics student in my country, and he was intrigued by the news that El Salvador had adopted Bitcoin.

He said: Would it be enough with the current available supply, if all countries adopted Bitcoin as a legal payment like El Salvador did? if enough what is the reason?

As someone who has limited knowledge, of course, I can't answer it scientifically with strong references. So dealing with this exact topic would be invaluable for me to gain enlightenment from those of you who understand more than what I know.

thanks ...

Interested to know how other countries will react after learning about the development of bitcoin usage in El Salvador in the next 2-5 years. Being the first country to adopt bitcoin as a currency will make many other countries use El Salvador as a test example of how bitcoin can develop and be accepted in the wider community. Maybe El Salvador's move will have an impact on other countries in the next 2-5 years, I'm not sure it will spread so fast. Inflation and poor economic condition will accelerate its spread to other countries, but it seems unlikely for now. One fact that seems good is the increasing number of LN users since El Salvador adopted bitcoin.

I'm not sure whether this is due to people not liking El Salvador's native currency or if it's actually that they don't like their banks and money transmitting services.  It makes sense that their reviews are so negative for Banco Agricola and Tigo Money, since sending money through the traditional banking system takes way more time than sending bitcoin, in addition to the fact that you have to deal with middlemen.

However, that's El Salvador.  I'm not sure if the rest of the world is ready to give up using the banking system and money-sending services like Western Union or PayPal.  In the US, the dollar isn't inflating at a rate that people are desperate to switch to cryptocurrency, nor is sending money so cumbersome that they're looking for alternatives.  That could change in a heartbeat if inflation ramped up or some other economic disaster happened, but for now I'm not sure the bitcoin fever that's hit El Salvador is ready to spread.

El Salvador is indeed taking some unprecedented steps in Bitcoin adoption, and it's really great that they're making use of the Lightning network, the adoption of which wasn't going too well before this. It's also impressive that Bitcoin is valued more than Western Union there, but IMO the comparison should be between the number of international transfers (per month, per day) via Western Union and Bitcoin to really see if payment processors are going away there. That being said, El Salvador isn't saying goodbye to the USD, right? So it might be the end of payment processors, but not of fiat and probably also not of traditional banks in this country.

I personally wouldn't say this is the beginning of the end of traditional payment processors. It's happening in El-Salvador because the government is promoting the use of bitcoin over anything else. One of the arguments he made while making bitcoin legal is that El-Salvador will save a huge sum of money from remittances. But that's a concentrated use case. The rest of the world may not follow the same pattern here.

The payment processors need to be smarter and cheaper to beat cryptos in this space, buy that might not be possible unless government supports them. I would say, changes will happen and the remittance market will become more competitive, but that's not the end of it. At least not anytime soon.

If you spread the graph to one year it tells a different story for both cases
In the case of WU it has been declining since April, and if we look at MG is up 20% since that date.

And for WU, the fall in the last month is from 21.09 to 20.89, at this rate, it's going to be a long way to really come down, it could be at most the beginning of the start of the beginning,  at this point, it's more the virus and restrictions killing the remittance sector than cheaper transfers.
The main point of resistance in this is that for poeple to completely avoid WU and MG it needs that the other part in the US or in other countries to be just as friendly with bitcoin purchases, the sender must get those as cheap as possible without paying extra for the exchange. That will be the turning point, till then, no, only one part of the bridge has been built.

El Salvador became the first country where bitcoin was accepted as a means of payment. How has this affected centralized payment systems and what will be the trend in the future as more countries follow the path of El Salvador?

I recently came across an article https://www.kevinrooke.blog/el-salvador-and-bitcoin-two-weeks-in/. It talked about how bitcoin adoption proceeds in El Salvador, and there I discovered interesting facts.

Thanks to El Salvador, the Lightning Network received a powerful impetus in development. This happened thanks to the popularization of the Chivo wallet and the incentives that the government of El Salvador guaranteed when it was installed. In total, the Lightning Network gained about 2 million new users:


Many users began to actively use bitcoin payments and money transfer using the Chivo wallet and support for the Lightning Network. Consequently, the Salvadorans increasingly began to use bitcoin services instead of the usual banking or payment processors:


The use of the Lightning Network has exploded, creating a powerful network effect with the infusion of several million new users into the ecosystem. People see the benefits and potential of fast, low-cost transfers and are choosing to use the Lightning Network over the usual centralized transfer methods. This is evidenced by the official data of the stock market.


As we can see, since July (when El Salvador's plans to accept bitcoin were announced), Western Union and MoneyGram began to fall, and continue their downward trend. While bitcoin is growing and gaining strength.

The era of traditional money transfers is coming to an end and this business, if it does not disappear completely, will significantly reduce its influence in the world. Other countries will follow in the wake of El Salvador, and millions of new users will join the ecosystem. What do you think about this?