Nayib Bukele, President of El Salvador, adopted a monetary reform a year ago which BTC to state digital currency Powerful. All stores in the country are required to accept crypto reserve currency. Can the example set a precedent?
In mid-November, the crypto market saw its first digital banking run in the form of the FTX crash. This has exacerbated the already tense situation Location of the DeFi sector and sent the Major currency BTC at two-year low.
questions about the Take the future of digital currencies to, not only in circles already skeptical about Bitcoin and Co. In this situation, it is not easy to draw a tentative conclusion for the Bitcoin project in El Salvador, but it should still be done, especially within the crypto community.
Review: El Salvador makes Bitcoin the national currency
When Bukele’s government passed the Currency Reform Act in September last year, the Bitcoin price on its way to its all-time high. A year and three months later, it is trading at around $17,500 and since down about 75 percent.
In November this year, the president of the Central American state responded to constant criticism of his plans, which Make El Salvador independent from the Fiat crises Homework. Bukele, who made his country the first to adopt bitcoin as legal tender, promised the public and state media that buy one bitcoin per day. He wants by particularly benefit from future price increases and the State thus facilitating the repayment of the debt.
In late November, his administration asked Congress to pass a new law empowering leaders to one billion dollars in so-called “volcano bonds” in US dollars, the second national currency, spend and for 6.5% interest payable. With the proceeds from the bond program, Bukele wants to buy more cryptocurrencies and build a “Bitcoin City” on the Pacific coast. The construction project aims to attract international crypto investors to the developing country.
To date, it is not clear how much is the sum that the president actually invested in bitcoin. The only internationally rumored estimate comes from $107 million release. Further $200 million should for the Extension of infrastructure, among others for the state application, and the administration issued has been.
These sums may seem manageable to many when considered in the context of the US budget or the German federal budget. But the country has a gross domestic product of just $28 billion and owes $21 billion to foreign lenders.
The bitcoin holdings originally used for should make it possible to ease the repayment of the debt, are no more than $40 million today value. And the investments to date for the country’s bitcoin project represent about 4% of the total state budget.
Bukele’s policy has his government’s negotiations with the International Monetary Fund (IMF) through a loan amount of 1.3 billion dollars was enormously damaged. In order to fill the gaps in the Salvadoran state budget, the president recently launched antennas with regard to China.
According to Felix Ulloa, to Vice President of El Salvador, China is ready to help the country manage its sovereign debt if it lacks new lenders. Further information on the status of negotiations between El Salvador and the Chinese government is not yet known. Only interest in expanding trade relations was expressed on both sides.
BTC is not well received by all Salvadorans
A survey of Jose Simeon Canas University (UCA) in October’s La Libertad revealed that less than 25% of respondents use Bitcoin as a means of payment used. Only 17% saw the Bitcoin launch as a success and 66% saw the currency reform as a failure. A majority of 77% of participants spoke out against further purchases of Bitcoin from public funds.
Interestingly, the Salvadoran Prime Minister’s personal approval ratings have not suffered from criticism of his Bitcoin project. If you follow relevant polls in the country, Bukele has achieved since taking office Continuous approval rates of 85% and above.
Foreign political analysts see the president’s polarizing statements and plans for Bitcoin City as a public relations measure. Major international media also see the president’s activities as a diversionary tactic aimed at diverting attention from other policy areas that have drawn heavy criticism from the international community in the past.
Whether Bukele is a visionary who wants to make El Salvador a young, innovative, and egalitarian country where Bitcoin is the chosen vehicle for freedom and independence, or whether he wants to distract much more attention from the country’s problems, can cannot be conclusively assessed.
But he can certainly be sure of a few sympathizers from the Western crypto scene as well. Simply because he apparently dares, the so-called challenge traditional finance. In any case, he does not seem willing to correct the path taken by his country with Bitcoin as its official currency.
Bitcoin Analysis – How can investors make informed trading decisions?
Like most crypto enthusiasts, Nayib Bukele believes that the BTC price will recover soon. His tweets about Bitcoin and Co. have since been retweeted and commented on thousands of times. Crypto Influencers Celebrate the President of El Salvador as a Pioneer and see the country as a haven of financial freedom.
One may wonder, however, if this romanticization helps informed business decisions related to bitcoin, altcoins or new problems meet in the crypto market.
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