El Salvador’s first Bitcoin anniversary coincides with BTC losing more than 60% of its value in a year, but this does not imply that the country’s Bitcoin experiment has failed. On the contrary, by enforcing the Bitcoin Law, El Salvador became the first country in the world to use Bitcoin (BTC) as legal money on September 7, 2022. Last year, El Salvador President Nayib Bukele advocated adopting Bitcoin as legal cash, promising that acceptance of Bitcoin would assist 70% of the local people who lacked access to financial services by 2021.
The Salvadoran government also promoted Bitcoin as a vehicle for attracting international investment, creating new employment, and reducing the country’s dependency on the US currency. However, one can question the practical benefits of Bitcoin acceptance in El Salvador, given that the cryptocurrency has lost about 60% of its value since the government approved it as legal cash.
According to CoinGecko statistics, on this day one year ago, BTC was trading at roughly $46,000. On September 6, 2021, the Salvadoran government made its first Bitcoin purchase, purchasing 200 BTC for $10.36 million, or $51,800 on average. This starkly contrasts with current BTC values, which fell below $19,000 on Tuesday. Bitcoin is selling at $18,806, down more than 64% over the last year.
El Salvador is currently down on all ten Bitcoin purchases that the government has made since adopting Bitcoin as legal cash, according to data from Nayib Bukele’s portfolio tracker. So far, the Salvadoran government has purchased a total of 2,381 BTC worth $62 million less than the amount El Salvador paid for its present BTC holdings.
El Salvador’s finance minister, Alejandro Zelaya, previously stated that despite falling prices, the nation did not incur losses on its BTC acquisitions since the coins were not sold. In addition, the Salvadoran government has repeatedly postponed its Bitcoin bond initiative, citing weak market circumstances and geopolitical concerns. As cryptocurrency prices fell and the bear market continued, some industry analysts began referring to El Salvador’s Bitcoin adoption as a “failed Bitcoin experiment.” However, others stated this was not the case because the country had a good influence on El Salvador’s economy and financial industry, including the cost of transactions.
On Tuesday, Bram Cohen, the originator of BitTorrent and the founder of Chia Network, turned to Twitter to point out that the number of advantages frequently “isn’t particularly associated with the amount of money it earns.” He said that some banks had to lower their rates due to the rise of cheaper Bitcoin transactions in El Salvador.
According to the Central Reserve Bank of El Salvador, Salvadorans working abroad donated more than $50 million in remittances between January and May 2022. In addition, the use of Bitcoin and the Salvadoran government-backed Chivo wallet contributed to a 400% rise in Lightning Network transactions in 2022.
Featured Image: Megapixl © Aoutphoto
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