One year ago today, the government of Nayib Bukele, President of the Republic of El Salvador, adopted bitcoin (BTC) as its official currency, along with the US dollar. With this decision, the country became the first in history to legalize cryptocurrency. At the time, the news made headlines and was widely criticized. Today, the question is what was really the impact of this initiative.
Twelve months of bitcoin in El Salvador: a nuanced assessment…
To date, El Salvador has received a total of 2,381 BTC. But, with the bear market, this investment lost almost 50% of its dollar value. However, Salvadoran Finance Minister Alejandro Zelaya believes that the country has not suffered any losses so far, because it has not sold its assets. In fact, he argued that the country is part of the logic of long-term investment.
Furthermore, the adoption rate is still relatively low. According to data from El Salvador’s central bank, crypto wallets account for only about 2% of addresses. Moreover, bitcoin was supposed to help the 70% of the local population who do not have access to financial services. However, it seems that Salvadorans regularly use the purse mostly young, educated people and banks. Which is not very consistent with the profile of the target group.
… But there are still some positive points
It is clear that bitcoin has greatly contributed to the economic development of the country in just one year. First of all, tourism in El Salvador increased by about 82%, with an influx of 1.1 million tourists to the country in the first half of 2022. In addition, Douglas Rodríguez, President of the Central Bank of Salvador , indicated that the Salvadoran diaspora had arrived in the country. repatriated nearly $52 million in bitcoins between January and May 2022 thanks to Chivo, the purse country officer.
Also, El Salvador had the opportunity to welcome many foreign investors to present its plans for Bitcoin City, a futuristic city for bitcoin.
Today, it is still too early to judge the success of the Bitcoin experiment in El Salvador. There are too many details missing from the equation to do this exercise perfectly. That being said, this initiative has merit because the Lightning Network (LN) can gain tremendous legitimacy. To the extent that this network is at the heart of the exchanges that take place in the country.
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I came to blockchain out of curiosity and stayed with it out of passion. I was amazed by the possibilities it offers through its various use cases. With my pen, I hope to help democratize this technology and show how it can help make the world a better place.