One Year Later, How Did El Salvador’s Bitcoin Experiment Pay Off? – Tech Tribune France

By CNBCTV18.com IST (Released)

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In October 2021, Bukele added 420 BTC to El Salvador’s Treasury. The following month, BTC hit an all-time high (ATH) of around $69,000, and things looked perfect for the developing country. It seemed like being the first to move was starting to pay off.

It has been exactly one year since Salvadoran President Nayib Bukele announced that Bitcoin was legal tender in the country. Back then, Bukele also made numerous promises and initiatives to boost Bitcoin adoption and portray the country as a haven for digital assets.

He promised to create a Bitcoin City, a hub for crypto investors that would have its own airport, as well as residential and commercial complexes. Bukele also distributed $30 worth of Bitcoin to every citizen of El Salvador through a government-issued digital wallet called Chivo.

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In October 2021, Bukele added 420 BTC to El Salvador’s Treasury. The following month, BTC hit an all-time high (ATH) of around $69,000, and things looked perfect for the developing country. It seemed like being the first to move was starting to pay off.

However, 12 months later, BTC prices are in the dumps, currently trading at around $19,000 and down more than 70% from its November 2021 ATH. The legacy coin’s price movement sums up also El Salvador’s Bitcoin Experiment – ​​while it created a lot of the excitement at first, it has since died down. This is evident from the progress of Bukele’s Bitcoin experiments.

For example, although there has been a lot of hype surrounding Bitcoin City, Reuters reports that the site is still a densely forested area with no signs of construction workers, commodities, or machinery. Additionally, a National Bureau of Economic Research (NBER) report found that only 20% of citizens continued to use the Chivo app after spending the initial $30 provided by the government.

Crypto remittances have also not taken off, with the country’s Central Bank reporting that only 2% of the $6.4 billion received in payments between September 2021 and June 2022 came from crypto wallets. But perhaps the biggest worry would be the country’s BTC stock. According to a Binance report, El Salvador purchased 2,301 BTC between September 2021 and July 2022 for nearly $104 million. That stock is now worth just $44 million, leaving El Salvador with a massive loss in value.

In many ways, the country’s bitcoin experiment has lost steam, but it hasn’t completely stopped, at least not yet. It’s a sentiment shared by Carlos Acevedo, the former head of the Central Bank of El Salvador.

“No one really talks about bitcoin here anymore. It’s kind of forgotten,” Acevedo said in an interview with Fortune. “I don’t know if you would call it a failure, but it certainly wasn’t a success,” he added.

On the other hand, officials tried to paint a better picture of the Bitcoin experience and encouraged people to be patient. “We won’t get results overnight. We cannot go to bed poor and wake up millionaires. New technologies have shown how people in previous years were scared of things like websites and digital business, but over time it has been shown that reality imposes itself,” said El Salvador’s Finance Minister Alejandro Zelaya in an interview with Bloomberg.

“With the use of bitcoin, tourism has increased by 30%,” El Salvador’s Tourism Minister Morena Valdez said in an interview with a local news channel. Additionally, the country’s Central Bank said that nearly 60 crypto and blockchain companies have come to El Salvador after adopting Bitcoin as legal tender. The influx of tourism and crypto businesses is expected to boost revenue generation for the country and create jobs in the IT and travel sectors.

However, daily Bitcoin usage is what will drive mainstream adoption and determine the success of El Salvador’s BTC experiment. Unfortunately, things aren’t going so well in that department.

A survey published by the Chamber of Commerce in May showed that local businesses seemed unconvinced by cryptocurrencies; only 3.6% of business owners surveyed felt Bitcoin helped their sales.

“It’s mostly big companies using it,” said Jose Bonilla, a shoe store owner and one of the first citizens to sign up for a government-backed digital wallet. “Between bitcoin and cash, I prefer this

“If you go to any market in El Salvador, you are more likely to receive an insult than you can buy something in Bitcoin,” said Laura Andrade, director of Universidad Centroamericana Jose Simieon Canas of El Salvador. The university recently conducted a survey in which over 70% of respondents felt that the newly introduced bitcoin did nothing to help their family’s financial well-being.

It is for these reasons that most citizens of El Salvador regard Bukele’s Bitcoin experiment as his second biggest failure behind his inability to fight inflation. However, crypto markets are cyclical in nature and a quick rebound could help get Bukele back on track for most of his plans.

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One Year Later, How Did El Salvador’s Bitcoin Experiment Pay Off? – Tech Tribune France


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