El Salvador Celebrates a Year With Bitcoin as Legal Cash
One year after, the Bitcoin experiment promoted by the country remains controversial, even as many remain wary of Bitcoin.
El Salvador celebrates today the first anniversary of the approval of the Bitcoin Law that made the country the first nation in the world to accept Bitcoin (BTC) as legal tender. President Nayib Bukele of El Salvador pledged that the introduction of Bitcoin will help the 70% of the country’s population that did not have access to financial services as of 2021 when he argued for Bitcoin as a legal tender last year.
One year after having the legislation, adoption has moved slowly, and steep declines in Bitcoin’s price have dampened the early euphoria that swept across the nation. According to a report written by Cointelegraph, El Salvador is now down on all 10 Bitcoin purchases that the government has made since adopting BTC as legal tender. Citing data from Nayib Bukele's portfolio tracker, the Salvadoran government has bought a total of 2,381 BTC so far, which is at current prices worth $62 million less than the price El Salvador paid for its current BTC holdings, reports the magazine.
Despite the drop in the value of bitcoin caused by the ongoing bear market, the Salvadoran administration seeks to pour oil on troubled waters. El Salvador’s minister of finance, Alejandro Zelaya, previously emphasized that the country didn’t experience any losses on its BTC purchases because they did not sell the coins. Still, the goverment emphasize that the digital economy ecosystem has gained strength and has given way to new investments and job creation, while also succeeded in terms of attracting foreign investment and tourism.
According to a local magazine, Monica Taher (director of technological and international economic affairs of the Secretariat of Trade and Investment) stressed that after the Bitcoin Law, about 50 companies with crypto operations have been installed in the country, and there are many others showing interest. “With the Law we have had an avalanche of companies that have settled in the country and others looking to start bets. Foreign investors want to start tokenization projects and other blockchain applications,” she said. As previously reported by Cointelegraph, tourism in El Salvador has soared in the first half of 2022, surging about 82% as 1.1 million tourists have flocked to the country this year.
Reuters also point out that the government has also encouraged Salvadorans working abroad to send money home through the Chivo government wallet, or other private ones, without charging commissions. According to statistics from the central bank, between September 2021 and June 2022, the country received nearly $6.4 billion dollars in remittances and less than 2% was transferred by digital cryptocurrency wallets.
Overall, it remains to be seen whether the Bitcoin experiment promoted by the Bukele administration will carry over into this controversial endeavor, even as many remain wary of Bitcoin.