Steve Hanke is convinced that cryptocurrencies cannot be turned into a real means of payment that can be used cheaply and quickly.
The adoption of bitcoin as a means of payment could completely destroy the economy of El Salvador, Steve Hanke, professor of applied economics at Johns Hopkins University, told Kitco News .
Hanke worked as a senior economist during the administration of US President Ronald Reagan from 1981 to 1982. He recalled that El Salvador does not have its own currency, and the people of the country use US dollars.
The economy of El Salvador may “collapse” due to the fact that all US dollars will be withdrawn from the country, by converting them into bitcoin, the economist claims.
“The big problem with cryptocurrencies in general is that you can’t turn them into a real legal tender that can be used cheaply and quickly,” Hanke explained.
The professor also recalled the high transaction fees that are charged to users when converting bitcoin to US dollar and vice versa. According to Hanke, this and other reasons will prevent cryptocurrencies from being fully used in everyday transactions.
El Salvador became the first country in the world to legalize bitcoin as an official means of payment. The corresponding decision was made by the country’s parliament on June 9.