Bitcoin Anniversary in El Salvador: Highlights!

  • September 9, 2022
  • Jennifer Moore
Bitcoin Anniversary in El Salvador: Highlights!

El Salvador completes one year of adopting bitcoin as a legal tender in the country. Here’s a detail on how bitcoin has been doing so far. 

The Central American nation, El Salvador made history by being the first country to legalize bitcoin, precisely one year ago. Following the lead, the Bukele-led country has faced several developments, adding both negative and positive aspects. Bitcoins have existed for decades, yet it has only been a few years since the currency has received worldwide recognition. Today, after the early 2022 crypto crash, bitcoin stands at $362.1 billion market capitalization. Bitcoin is the first cryptocurrency around the world that allows security and seamless peer-to-peer transactions.  

Also Read: Did You Know That Bitcoin Supply is Limited? What Will Happen When Limit is Reached?

How Bitcoin Became a Legal Tender in El Salvador?

It was only a few weeks after bitcoin reached its highest peak in 2021 when the entire world was discussing the popularity of “Bitcoins”. Various companies from the conventional finance industry like MicroStrategy and Tesla are rushing their deal with bitcoins.

The confusion that lay as if the entire world will be confident enough to do so. The answer finally came out during the Bitcoin Conference in Miami in 2021 where El Salvador made plans to legalize bitcoin currency by the end of the year.

Despite the unavoidable backlash that the cryptocurrency received from various organizations and officials, Nayib Bukele the president of El Salvador composed the new law on the 7th of September the same year. The cryptocurrency came up with a designated wallet known as “Chivo”, along with a promise of $30 worth of bitcoin for every new user. 

Also Read: Crypto Questions: The Top Google Queries on Cryptocurrencies

How Good is Bitcoin Doing as a Legal Tender in El Salvador?

The reply from the cryptocurrency industry was unchangeable, with multiple enterprises, supporters, and everyone who is praising the bravery of the country. 

With the steady growing interest, bitcoins increasing price, and foreign investments, El Salvador initiated various projects related to bitcoins. The nation chose to delve into the bitcoin mining business however, it chose a more unconventional approach. The country started mining new bitcoins using its additional volcanic power to mine new bitcoins and the first mined crypto Coin came in the early month of October 2021.

The country also opened a huge pet hospital building which was constructed by the profits from its bitcoin endeavors. The hospital opened in the early months of 2022 and each procedure costs around $0.25 worth of cryptocurrency. 

The officials of the country invited forty representatives of the central banks to talk about the adoption of bitcoin, the financial inclusion of the currency into the states, and more. El Salvador revealed plans to assemble an entire city focused and committed to bitcoins. Moreover, it will fund a bitcoin city by gaining $1 billion in the aspect of bitcoin-backed bonds and around five hundred million dollars for more bitcoin purchases.

Problems El Salvador is Facing by Adopting Bitcoin as a Legal Tender

El Salvador has not faced all the good and positives of bitcoin. The country spent a little over a hundred million dollars to assemble its reserve. However, the market has been down in the last few months annihilating billions of the entire crypto industry.

The 2381 bitcoins of the country are now at a value of $44.6 million. Despite some consolations from the finance minister that the risk was minute. Fitch reduced the rating of El Salvador citing similar risks from bitcoin adoption.

The IMF (International Monetary Fund) is yet another global institution that used some brutal phrases to claim “El Salvador” as the leader. This was again a huge risk with crypto adoption and requests the authorities to reverse the judgment. However, Bukele’s decision was not the same. Several anti-bitcoin senators in the US including Bob Menendez and James Risch recommend a new bill to investigate bitcoin adoption in El Salvador.

A recent survey says that it will take time to turn the locals to adopt bitcoins. The one billion dollars bitcoin-backed bond is yet to be a reality. The officials of the country postponed its takeoff citing the negative market situation.

Wrapping Up

All the above situations are expected and reasonable. Worldwide institutions are present to warn countries against new experiments given their interests and history. The locals may find their interest in Bitcoin with time as the price retraces. However, the reality that asset prices are down by 70% since it’s last week. El Salvador is at a huge loss but has not yet given up on the idea.

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