The President of El Salvador, Nayib Bukele, is rumored to be making his country start implementing credit loans based on Bitcoin.
This step strengthens the position of the State of El Salvador as one of the countries that supports Bitcoin as a medium of exchange.
El Salvador Gives Bitcoin Loans
Through a discussion on Facebook entitled “Bitcoin loans with lower interest rates”, Monica Taher, an adviser to the government of El Salvador, stated one essential plan regarding Bitcoin.
Monica Taher stated El Salvador will make Bitcoin available as loans to local small and medium enterprises.
It is also reported that this loan will have a low-interest fee to facilitate demand. Monica Taher stated,
“Bitcoin-based small loans will provide access to parties or businesses that are not accepted by banks in order to build their credit score in El Salvador. El Salvador’s economy will be stronger through the growth of local small businesses.”
It is predicted that this loan mechanism will most likely be tied to the El Chivo government blockchain wallet of El Salvador.
El Chivo Wallet is a unique wallet to accommodate all Bitcoin and US Dollar transactions in El Salvador.
Its growing user base states that the people of El Salvador, willingly or unwillingly, will use Bitcoin as a means of transaction.
Less than four months since its adoption, the El Chivo Wallet has been adopted by more than 60% of El Salvador’s population.
It should also be noted that currently, the business world of El Salvador is still dominated by small and medium enterprises.
There are currently around 1.2 Million businesses in El Salvador, and about 66% are small and medium enterprises.
More than 90% are still working with their own capital or using moneylenders for loans.
This is because these businesses are deemed unfit for loans by banks.
Loan lenders in the country are also relatively sadistic, with interest rates reaching 15% with a short repayment period. Because of these conditions, El Salvador’s move to lend Bitcoins makes more sense, according to many analyzes.
Is there a demand for this loan?
Some crypto market players claim that El Salvador’s move to provide Bitcoin lending services is the right move, providing some evidence.
The first is Andrea Mara GĂłmez, a manager at Acumen, a Decentralized Finance or DeFi project focusing on crypto lending.
He stated that some crypto activists in El Salvador have been seen using crypto on DeFi to solve their funding problems and avoid high-interest rates in banks.
Alessandro Cecere, community manager from Ledn, the company that created the world’s first Bitcoin-based home loan, also expressed his positive support.
In addition, he also predicts that El Salvador will do the same as Ledn.
Lastly is Paul Steiner, Head of CONAMYPE, El Salvador’s national institution on small and medium enterprises, who has provided all of the previously mentioned data.
Steiner stated that he is very open to ongoing discussions regarding crypto adoption, especially Bitcoin, in the El Salvador business world.
Its main goal is to help the growth of the business ecosystem in El Salvador, especially for small and medium enterprises.
Nayib Bukele, President of El Salvador, also stated that this step is the right step to increase Bitcoin adoption in his country.
He also predicts that at least two more countries will adopt Bitcoin as an official means of payment. He will most likely realize this prediction personally due to his plans to meet with several state leaders.
The proof, he just met with the President of Turkey, Recep Tayyip Erdogan, regarding the plan to adopt Bitcoin as a solution to inflation in his country.
This discussion is predicted to discuss crypto regulation in Turkey, considering that currently, President Erdogan is starting to open up to crypto adoption.
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