Why Ecuador should lift cryptocurrency ban
Roberto is an emigrant working in Madrid. He emigrated to Spain from Ecuador in 2015 in order to provide for his family. He is currently making roughly 750 EUR a month(855 USD aprox.), less than the minimum wage in Spain. Each time he sends money back, he pays a fee, which, in his case, costs him about $10 for every $250 he sends as he keeps the rest to pay rent and live. He uses Western Union.
This doesn’t seem much, but for a person making this little, it sums up. Talking with him, I made him realize he spends around $120/year in transaction fees.
“Wow that’s a lot of money!” my humble friend states. “But I guess it cannot be helped”.
Oh, but it can.
One of the core ideas behind Bitcoin is that there is no central authority auditing or controlling transactions. By removing the middleman, this could potentially result in cheap transactions, even though that is not the end goal of Bitcoin.
Another example of a clear use case is emigrant remittances, which represent our second biggest source of income, after oil exports.
Ecuadorians living abroad remit about $2.5 billion USD to their families back at home. Of that amount it is calculated that around $100 million is paid in transfer fees. YOUR WELCOME Western Union.
That is $100 million dollars each year not making it into the Ecuadorian economy, and yes, around $120 less to more than one family. And this is without taking into account the fee for currency conversion.
If this wasn’t enough, as a dollarized economy, Ecuador also have the problem of lack of cash in the streets. So what we do? We import bills and coins. Yehp you heard(or read) it right.
According to ex-president Correa and the Central Bank of Ecuador, our country spends a considerable amount on import fees of bills and coins from the Federal Reserve Bank.
This is when the ban begins to sound astonishingly absurd.
The Ban
Ecuador banned bitcoin and other digital currencies in July 2014, while establishing guidelines for the creation of a new, state-run currency, in what many analysts saw as a first move to remove the so-criticized(by the political left) dollarization.
The government expected massive adoption of their state run, centralized ‘digital money’!
Instead they ended up with yet another money black-hole and an obtrusive law that has hindered, what could potentially have being, the first wide adoption of a decentralized running economy.
In a desperate attempt to salvage their sinking(or already sank) boat, they make another move: to pass control of their digital centralized currency to the private banking system.
But what prevents the Government to seize control back anytime they want to? Sneaky.
A new hope
This year Ecuador had a change of government. Although the same political party remains in power, recent changes and discrepancies with the previous president makes us hope for a possible change in mindset and a potential ban lift.
There is an on-going petition to the National Assembly for the law to be revised and the ban to be lifted here
Even though many local business have decided to ignore that law and accept Bitcoin anyway, it still limits the possibility of a wider massive adoption and further realization of bigger projects around this technology.
Conclusion
The new rise of general interest in blockchain technologies gives us hope that the day where we finally have an open, decentralized, inclusive economy will come.
Slowly but steadily the old generation is being replaced. Old ideas(like fiat money) will have to die at some point, and then a new era will begin, but until then we must continue fostering it forward as the Bitcoin space is still in its infancy.
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