This accomplishment was made possible by President Nayib Bukele of El Salvador, who was responsible for implementing the well-known Bitcoin rules.
The Highs and Lows of El Salvador's First Year of Independence
In 2018, President Nayib Bukele advocated for the use of Bitcoin as an alternative to traditional fiat currencies. In addition to this, he asserted that the adoption of Bitcoin would facilitate access to financial services for seventy percent of the world's population.
Additionally, the administration advocated the use of Bitcoin as a means of luring foreign investment, producing new employment opportunities, and lessening the nation's reliance on the US Dollar.
However, in light of the carnage that occurred on the cryptocurrency market, El Salvador was unable to persuade detractors that the country had benefited from its move. And after the government acknowledged bitcoin as a form of legal cash, its value dropped by more than sixty percent. The topic that many people are currently pondering is, "What are the actual benefits of adopting Bitcoin to the economy of the country?" According to data provided by CoinGecko, the price of one bitcoin was around $46,000 one year ago. On September 6, 2021, the federal government made its initial investment in Bitcoin by purchasing 10.36 million dollars' worth of the cryptocurrency.
However, the prior purchase was a drop in the bucket in compared to the value of the token at the present time. On September 6, 2022, the price of bitcoin fell below $19,000, and it is presently trading at $18,806. This demonstrates a decrease of over 64% over the course of the previous year.
According to information obtained from El Salvador's Bitcoin Reserve, the value of all of the ten Bitcoin purchases has considerably decreased.
To now, the country in Central America has acquired 2,281 bitcoins with a value of $62 million. This is less than what the nation has spent to acquire all of its digital assets to this point. However, despite the fall in price, Alejandro Zelaya, the minister of finance, has stated in the past that the country has not yet suffered any losses on its holdings.
In the meantime, the government has repeatedly delayed the sale of its Bitcoin bonds, citing unpredictable market conditions as the reason each time.[rb_related title="More Read" style="light" total="4"]
El Salvador's Achievement
Some industry professionals have formed the opinion that El Salvador's Bitcoin initiative was doomed to fail due to the persistent price volatility and the ongoing bad market for cryptocurrencies. However, a number of participants in the sector observed that the project had been met with a degree of success in terms of El Salvador's economic forecast.
The fact that many underserved categories of people are unable to access banking services was mentioned as a good influence on the economy by proponents of adopting Bitcoin as a national currency. In addition, since the formal introduction of Bitcoin, the prices of conducting transactions have dramatically decreased. Bram Cohen, who works for BitTorrent, claims that the amount of money generated by Bitcoin cannot be associated with the number of positive effects that widespread use of Bitcoin has on an economy. In spite of this, the initiative has resulted in El Salvador's banks lowering their interest rates because there are now cheaper alternatives available.
The Central Reserve Bank of El Salvador, when asked to comment on the impact of cryptocurrency transactions, emphasized that it has swiftly assisted in the facilitation of remittances into the country. Since January of this year until May of this year, the Central Bank of El Salvador reports that Salvadorans have sent more than $50 million in remittances.
It is important to note that El Salvador's Bitcoin restrictions have drawn a significant amount of investment from outside the country. Meanwhile, the number of tourists who visited the country in the first three months of 2022 increased by 82%, reaching over one million.