Bitcoin could boost El Salvador's economy by making overseas payments cheaper and boosting US business, Bank of America says

Jose Cabezas/ReutersBank of America stated that Bitcoin could help El Salvador's economy by lowering the cost of overseas payments.The bank said that it could also help digitize the economy and encourage investment from the US.BofA is still pessimistic about the overall move, in large part due to bitcoin's volatility.Subscribe to our daily newsletter 10 Things Before The Opening Bell.Bank of America, like many financial institutions, believes that El Salvador should not adopt bitcoin as its legal currency.However, analysts at the bank stated in a note last Wednesday that there may be some benefits to digitizing banking and making it easier for migrants send money to El Salvador.Claudio Irigoyen, a Latin American strategist, stated that the market is too pessimistic and has ignored any argument for it.Remittances from workers could be less expensiveRemittances flows, which account for 24% of El Salvador's GDP, are a significant part of the economy. They come from workers who leave El Salvador and send money back home.BofA stated that bitcoin could benefit the economy by lowering transaction fees on remittances from Central American countries.Although the average transaction cost for cross-border remittances via bank accounts is more than 10%, it could be significantly lower if bitcoin was used. Bitcoin is volatile, so transaction fees may vary.Read more: A head of research for a crypto company explains why bitcoin will hit $250,000 by 2025. He also shares two altcoins that could rise 20x.The economy can be digitalized with BitcoinBofA stated that 70% of El Salvador's adult population doesn't have a bank card. Bitcoin is a digital currency that can be used easily, such as through mobile apps.Analysts at BofA stated that democratizing electronic payments through bitcoin has a progressive edge.American firms could benefit from adoptionThe US is a crypto-hub, and El Salvador's adoption bitcoin could lead to American companies moving into El Salvador to benefit from the change and bring investment.BofA stated that there could be foreign direct investment from Strike, the developer of the payments platform, bitcoin miners, ATM manufacturer, and other types of firms.For example, Bitcoin miners might be attracted by geothermal energy from El Salvador's volcanoes. However, large-scale mining is unlikely due to high electricity costs.BofA claims that bitcoin adoption is generally negativeBank of America is still not keen on El Salvador adopting bitcoin as legal currency. This is due to bitcoin's extreme volatility. The world's largest cryptocurrency can swing 10% in a single day and plummet 50% within a matter weeks.The bank stated that allowing people to pay taxes in volatile bitcoins is especially worrying and could cause sharp drops in revenue if they fall.