Far-reaching potential for LedgerScore in El Salvador & Latin America
“More than 70% of the adult population of El Salvador does not have a bank account”
For that reason, Bank of America, one of the nation’s largest financial institutions based on total assets, believes El Salvador could have a lot to gain with its latest foray into Bitcoin.
In a report published recently, analysts at the bank said El Salvador’s decision to recognize BTC as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice, and open the country to American firms and digital currency miners that would improve the overall landscape of the country. LedgerScore is one company that would not only benefit but also greatly contribute to the progress of each citizen borrowing and lending opportunities in El Salvador. LedgerScore will be able to provide a thorough credit report that provides a transactional history of all cryptocurrency wallets.
The bank noted that remittances account for an overwhelming 24% of El Salvador’s gross domestic product, but a sizable chunk of that goes toward transaction fees. LedgerScore can increase the safety of remittances by removing the anonymous transaction of cryptocurrencies. LedgerScore can verify who and when transactions have taken place. In turn, this helps borrowers and lenders around the world by reducing the risk of these transactions and/or showing delinquency of transactions.
“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels”
The idea is that Bitcoin could be used as an intermediary for the cross-border transfer so that dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver.
In June of this year, El Salvador became the first nation-state to accept Bitcoin as legal tender, marking an important milestone in the digital currency’s evolution from obscurity to mainstream acceptance. The decision to integrate BTC into the country’s financial system has been met with criticism by the International Monetary Fund and the United Nations’ Economic Commission for Latin America and the Caribbean. Meanwhile, JPMorgan Chase believes El Salvador’s Bitcoin gambit could place additional pressure on the network’s already limited ability to serve as a medium of exchange. This pressure could change with the help of credit scores. LedgerScore will be at the forefront to provide these scores to lenders, borrowers, and retailers worldwide.
Credit scores look different in every country. With El Salvador now adapting to the use of Bitcoin as a means of exchange, they now can create a better currency system using LedgerScore. LedgerScore can determine a borrower’s credit score in both the fiat and crypto worlds. No other cryptocurrency nor bank can do this at this time.
Survey data shows half of the Salvadorans are skeptical about using BTC as legal tender. Those who choose to adopt BTC for transactions can use the state-backed Chivo Bitcoin wallet, among many other options available to them. Salvadorans will also have the option to incorporate LedgerScore into their ecosystem to obtain better credit which will provide lower interest rates when borrowing. LedgerScore makes sure that there is an entry point for anyone to start building credit using cryptocurrency.
Since El Salvador recognized Bitcoin as legal tender, several other Latin American nations have hinted at pursuing a cryptocurrency strategy of their own. However, until now, no other country has followed in El Salvador’s footsteps.
Latin America’s real potential
Blockchain-based fintech platforms, like LedgerScore, can help increase financial inclusion and encourage a consumer market of an estimated 400 million unbanked and underbanked. SMEs in the region could themselves use such platforms to tap this emerging consumer market and thus achieve previously unattainable growth. All of this could mean better financial literacy and even social mobility for the people, as well as economic development for the region.
Cryptocurrency and Blockchain adoption in Latin America will soon reshape industries and completely redefine services.
There is an obvious need for establishing creditworthiness when using any currency. The potential for LedgerScore is far-reaching, not only in Latin America but around the world.
More About LedgerScore
LedgerScore is a platform that provides users with complete data on cryptocurrency transactions and comprehensive and credible credit scores with patent-pending technology. By creating a new golden standard, LedgerScore is aiming to bridge the gap between centralized (CeFi) and decentralized (DeFi) worlds, while complementing traditional credit scores.
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