El Salvador and Bitcoin
The state of the future; El Salvador – so could be called this small Central American country that went down in history as the first country in the world to adopt Bitcoin as a legal tender. This bold decision by President Nayib Bukele aims to improve the economy, facilitate banking and boost foreign investment in the country. But will this monetary experiment succeed or fail? What are the advantages and disadvantages of using Bitcoin as the official currency? And how did one village become known as “Bitcoin Beach”, after receiving a $100,000 donation worth of bitcoin from an anonymous donor established a bitcoin-based economy? Learn more in this blog about El Salvador and its bitcoin adventure, which could change the way other states think about money and technology.
Source: cointelegraph
Bitcoin; Legal tender in El Salvador
The idea of setting up Bitcoin as legal tender in El Salvador was proposed on May 5th. June 2021 years of the President’s Nayiba Bukelea, via video call at the Bitcoin conference in Miami. Two days later, 7. June 2021 Congress approved the proposal with a large majority of votes. El Salvador became the first country in the world to adopt Bitcoin as legal tender, in addition to the U.S. dollar, which had been the case since before. Ahead of the official adoption of the currency, which took place on July 7th, the currency is expected to be adopted. September 2021 years, the president Bukele he announced that his government had bought 200 bitcoins and later additionally bought another 150 bitcoins. He also launched a project to mine bitcoin using energy from volcanoes, arguing that it is an environmentally friendly way to exploit the country’s geothermal resources. To encourage the use of Bitcoin among citizens, the president Bukele promised that anyone who downloads a state-created crypto wallet, Chivo, will receive $30 worth of bitcoin as a gift. The Chivo wallet allows you to send and receive bitcoins, as well as convert bitcoins into U.S. dollars without commission or fee.
Source: cointelegraph
How many bitcoins does El Salvador own?
According to the last According to data, El Salvador owned a total of 2,381 bitcoins on day 19. June 2023 years. This means that the value of Salvadoran bitcoin reserves is about $72 million at the current exchange rate. El Salvador has bought bitcoins on several occasions, and the average price he paid for his bitcoins is $43,357, which tells us that they are currently in the red in their position. According to the World Bank, the total value of el Salvador’s assets is estimated at $51.8 billion in 2023. year. If we assume that the value of his bitcoin reserves remained unchanged from June 2023. Bitcoin accounts for about 0.2% of the state’s total assets. This is a relatively small proportion, but still shows that El Salvador has significant exposure to Bitcoin as part of its monetary policy.
Source: cointelegraph
Bitcoin Beach; The small village that launched the Bitcoin economy
One of the places where you can best see the impact of Bitcoin on El Salvador is El Zonte, a small fishing and surfing a village on the Pacific coast. Here’s 2019. An anonymous donor gave it to a group of lovers. Cryptocurrency the first of many large bitcoin donations, aimed at creating a sustainable bitcoin economy where most people could use bitcoin to pay for goods and services. A project called Bitcoin Beach has launched a series of initiatives that include the payment of scholarships in bitcoin for young people participating in social and sports activities, training local entrepreneurs on how to accept bitcoin as a means of payment, and building infrastructure for internet and electricity access. Bitcoin Beach has also inspired other places along the coast to adopt bitcoin as an alternative currency, such as Punta Manga, another surfer places. During the pandemic, while other tourist places had a hard time surviving, residents of El Zontea they remained resilient thanks to the bitcoin economy that allowed them to get help directly on their bitcoin wallets without physical contact. Bitcoin Beach has also attracted the president’s attention Bukelea, who visited the village in June 2021. He announced his plan to make Bitcoin a legal tender nationwide. Bitcoin Beach has become a symbol of the crypto revolution in El Salvador and an example of how Bitcoin can improve the lives of those who are often excluded from the banking system.
Source: cointelegraph
Volcano Energy; El Salvador and volcanic energy
One of the most ambitious and innovative projects President Bukele has launched regarding Bitcoin is harnessing volcanic energy to mine bitcoin. President Bukele in June 2021. In 2001, he ordered state-owned geothermal electric company LaGeo to make a plan to use volcanic energy to power bitcoin mining facilities. El Salvador is known as the “land of volcanoes,” and already uses geothermal energy to generate about a quarter of its domestic electricity consumption, according to official data. President Bukele argued that using volcanic energy to mine bitcoin is an environmentally friendly way to exploit the country’s geothermal resources, and that this will reduce Bitcoin’s carbon footprint. The “Volcano energy” project started in October 2021. In 1999, President Bukele announced that El Salvador had successfully mined your first bitcoin using volcanic energy. President Bukele also shared a video showing a container full of bitcoin mining equipment that was placed near the geothermal power plant of the Conchagua volcano . The Volcano energy project is still in the testing phase and installing new mining equipment, and President Bukele said he plans to increase mining capacity in the future. The “Volcano energy” project has attracted a lot of attention and interest from the international public, as well as criticism for the possible risks and challenges associated with the use of volcanic energy for bitcoin mining.
Source: cointelegraph
El Salvador cuts taxes
El Salvador recently introduced a series of tax reforms aimed at boosting economic growth and attracting foreign investors. Among these reforms are the abolition of corporate income tax for new companies investing in the country, the reduction of income tax for lower and middle incomes, and the abolition of the capital gains tax for transactions with bitcoin. President Bukele said the measures were part of his vision to make El Salvador a “state of the future”, which would be a leader in innovation and technology. He also compared El Salvador to Dubai, which has achieved rapid economic development thanks to low or non-existent taxes and openness to foreign investors. According to some research, tax cuts can have a positive impact on economic growth, as it stimulates consumption, savings, investment and entrepreneurship.
Source: cointelegraph
Conclusion
El Salvador has become the first country in the world to adopt Bitcoin as legal tender, as part of its vision to become the state of the future. This bold decision aims to improve the economy, facilitate banking and boost foreign investment in the country. El Salvador has also launched a series of innovative projects that use Bitcoin and volcanic energy to mine bitcoin, and created the bitcoin economy in the village of El Zonte, known as “Bitcoin Beach.” El Salvador has also cut a number of taxes to attract investors and boost economic growth, compared to Dubai. However, adopting Bitcoin was not without challenges and risks. El Salvador is facing criticism and protests over bitcoin’s volatility, its environmental impact, and a lack of transparency regarding the government’s fiscal policy. El Salvador also risks complicating its relations with the International Monetary Fund, where it is seeking a program worth more than $1 billion. El Salvador has taken a historic step in using Bitcoin as its official currency, but it’s still too early to say whether this experiment will succeed or fail. What is certain is that El Salvador will be interesting to observe and learn for the rest of the world. We hope you enjoyed reading today’s blog, we would love to hear your opinion on the future of El Salvador, and you can share it with us on our social networks (Twitter, Instagram).
