El Salvador’s Bitcoin move is ‘foolish’ and could ‘collapse economy’, economist says
Steve Hanke – the professor of applied economics at Johns Hopkins University who served as a senior economist under President Ronald Reagan from 1981 to 1982 – said that Bitcoin (CRYPTO: BTC) The adoption could “completely collapse the economy” of El Salvador.
He went so far as to say that “the dark forces are clearly behind this”.
What happened: In an interview with the financial media Kitco News published On Tuesday, Hanke said that El Salvador becoming the first country in the world to adopt Bitcoin as legal tender a week ago could be very bad news for its economy.
He warned that Bitcoin holders from China and Russia could now use the country’s infrastructure as a way to cash their coins:
“It has the potential to completely collapse the economy because all the dollars in El Salvador could be sucked up and there would be no money in the country. They have no national currency.
In March, Hanke described Bitcoin as a speculative asset “with a fundamental value of zero”, and it hit the coin again in April Tweeter stating that “cryptocurrencies are the future of money. Bitcoin is not.
During yesterday’s interview, he said Salvadoran elected officials were “in a nutshell, stupid” and wondered how Bitcoin could serve as legal tender in day-to-day transactions where most citizens depend on money. cash.
“You are not going to pay for your taxi fare with a Bitcoin. It’s ridiculous […] You have 70% of the people of El Salvador who don’t even have a bank account, ”he added.
Statements published yesterday by the Central American Bank for Economic Integration suggest the same Hanke.
The institution believes that the adoption of Bitcoin by El Salvador “creates many spaces and opportunities” through innovation.
The organization announced that it will also form a technical advisory group to assist the country in its adoption of Bitcoin.
Read also: El Salvador plans to mine Bitcoin using energy from volcanoes
One of the main reasons for adopting El Salvador-supplied Bitcoin was to use it to fuel cross-border remittances, an idea Hanke called “absurd.”
He pointed out that Bitcoin will need to be converted instantly to dollars in order to be spent – completely ignoring that in many cases buying Bitcoin to send it to another country to be immediately sold in the local currency is often much cheaper. than just wire the money. by traditional means.