El Salvador’s decision to make Bitcoin legal tender has sparked plenty of debate. But President Nayib Bukele remains confident that Bitcoin has brought benefits to the country, even if not everyone is on board yet.
Bitcoin a Boost to El Salvador
In a recent interview with Time Magazine, Bukele talked about the impact of Bitcoin on El Salvador. He highlighted that Bitcoin has helped put the country on the map. According to him, adopting Bitcoin boosted El Salvador’s image, increased tourism, and brought in new investments.
Three years ago, El Salvador became the first country to officially adopt Bitcoin. At the time, Bukele’s move was seen as bold, drawing global attention. Despite this, fewer than 12% of Salvadorans have made a Bitcoin transaction. Still, Bukele insists that the primary goal was to improve El Salvador’s international image.
Bukele’s administration has also introduced Bitcoin bonds, which have drawn in additional investment and helped boost the economy. These bonds, backed by Bitcoin, are being used to finance development projects, including the creation of “Bitcoin City,” a planned urban area powered entirely by renewable energy. The government recently revealed that Turkish conglomerate Yilport will invest $1.62 billion into upgrading two of the country’s major seaports.
The Start of Bitcoin as Legal Tender
El Salvador grabbed headlines in September 2021 when it adopted Bitcoin as legal tender. The government’s plan aimed to promote financial inclusion, especially since 70% of Salvadorans don’t have access to traditional banks. To support this, the government introduced the Chivo Wallet, a crypto app that gave citizens $30 in Bitcoin just for signing up. But while the initial sign-ups were high, many users didn’t continue using the app after spending their free Bitcoin.
Why Bitcoin?
El Salvador’s Bitcoin adoption aimed to solve multiple challenges. One big goal was to give financial services to the unbanked and cut the high costs of remittances, which are essential to the country’s economy. Bitcoin and the Lightning Network were seen as ways to provide faster and cheaper transactions, especially in areas lacking traditional banking.
However, the journey hasn’t been without bumps. The Chivo Wallet faced technical issues, and there’s been skepticism from many Salvadorans. Large institutions like the World Bank and IMF also voiced concerns, warning about Bitcoin’s volatility and potential impacts on financial stability. Despite this, Bukele has stayed firm, seeing Bitcoin as a tool for economic growth and financial freedom.
Tourism and Investment Gains
Bukele believes Bitcoin is a key part of his strategy to attract foreign investment and boost tourism. And in many ways, it’s worked. According to Damian Merlo, a lobbyist, the Bitcoin move was like a “Great Rebranding” for El Salvador. “We could have paid millions to a PR firm to rebrand El Salvador. Instead, we just adopted Bitcoin,” Merlo told Time.
Bitcoin Holdings and the Future
As per El Salvador’s Bitcoin office, the country now holds 5,857.76 BTC, worth around $344 million at current prices. Despite mixed reactions and some criticism, Bukele remains unapologetic. He sees Bitcoin as more than just an asset; it’s a tool to reshape the country’s future. For El Salvador, the Bitcoin journey is far from over, and Bukele seems ready to keep pushing forward.
Whether you agree with the strategy or not, El Salvador’s bold embrace of Bitcoin continues to make headlines. For now, the country is betting on Bitcoin, and only time will tell how it all plays out. Follow us at HowToBuyBitcoin.org to hear the whole story play out.