The government of El Salvador bought 400 Bitcoins, in a strategy that cost the country an investment of $ 20.9 million dollars. This purchase of cryptocurrencies was made a day before formally adopting Bitcoin as legal tender in the country.
In a series of tweets published on Monday, President Nayib Bukele revealed to his citizens that the country had bought a total of 400 Bitcoins, the first big step in a government effort to add cryptocurrencies to its balance sheet.
The tweets they were posted within a few hours of each other. The price of Bitcoin rose following the posts and traded at $ 52,681.85 at the time of the Twitter statements.
“Our brokers will buy much more Bitcoins as the deadline approaches”, Public Bukele.
The information from Bukele arrived hours before El Salvador’s Bitcoin Law (approved in June) went into effect today. It should be noted that El Salvador is the first country in the world to accept Bitcoin as legal tender. Also, Bukele stressed that Bitcoin will work alongside the US dollar within the nation.
Given this decision by El Salvador to buy 400 Bitcoins. Cryptocurrency advocates and critics around the world are watching to watch this unprecedented experiment unfold.
Bukele’s announcement will mark a major milestone for Bitcoin and cryptocurrencies in general.
A wise or impulsive decision?
As a result of the decisions made, the decision of President Nayib Bukele has generated criticism throughout El Salvador. Almost 70% of Salvadorans surveyed by the José Simeón Cañas Central American University did not agree with the government’s decision to adopt Bitcoin as legal tender. Even to date, many citizens were not sure how to use cryptocurrency.
On the other hand, the supporters of the measure, comment that they perceive a growing acceptance of Bitcoin worldwide, for which other countries in the world could be interested in the cryptocurrency. The Salvadoran government hopes with these decisions, to promote the financial inclusion of its citizens. In a country where around 70% of its citizens do not have access to traditional financial services, according to the Bitcoin Law.
“Bitcoin is not really designed to be a medium of exchange, so this is a very premature experiment for digital currency.” Philip Gradwell, an economist at Chainalysis, told CNBC.
It should be noted that remittances or money sent to the country by migrants is an element of vital importance in the Salvadoran economy, since they represent more than 24% of El Salvador’s gross domestic product, according to the World Bank.
Salvadoran legislation will allow prices at the national level to be expressed in Bitcoin. In turn, tax contributions will be paid with cryptocurrency and exchanges in Bitcoins will not be subject to capital gains tax.
To promote the initiative, El Salvador launched a government wallet called “Chivo” in which citizens can register with their identification and thus carry out transactions with Bitcoins. Users who register will receive an incentive of $ 30 in Bitcoins as an incentive to use cryptocurrencies.