El Salvador, the small Central American country that made history just over a year ago when Bitcoin (BTC) submitted a legal tender, recently celebrated its first year of BTC adoption.
The Salvadoran government promoted BTC as a tool to attract foreign investment, create new jobs and reduce dependence on the United States dollar in the country’s economy at the time of its adoption. Many BTC supporters and the libertarian community rallied behind the small country despite mounting pressure from global organizations such as the World Bank and the International Monetary Fund (IMF) to remove BTC as legal tender.
A lot has changed over the past year since El Salvador became the first “Bitcoin country”. Enthusiasm and public interest surged immediately after BTC was recognized, with the price hitting new highs.
Salvadoran President Nayib Bukele joined the growing federation of bitcoin supporters to buy into the many dips in the market, and even reaped the benefits of buying bitcoin in the early days as the country built schools and hospitals with its profits.
As market conditions turned bearish, the frequency of bitcoin purchases slowed, and the president, often seen interacting with the crypto community on Twitter and sharing his future bitcoin endeavours, curtailed his interactions on social media dramatically.
El Salvador has bought 2,301 BTC since last September for about $103.9 million. Bitcoin is currently worth about $45 million. The last purchase was made in mid-2022 when the country bought 80 bitcoins at $19,000 a piece.
With the price of BTC dropping, critics who have long raised concerns about the cryptocurrency bubble felt validated, with many comments along the lines of “I told you so.” However, market experts believe that the experiment with BTC in El Salvador is far from a failure.
El Salvador’s Volcanic Bitcoin Bond, a project aimed at raising $1 billion from investors to build a Bitcoin City, has already been delayed on numerous occasions now and doubts are growing not only about the project but about the adoption of BTC in general.
Samson Mao, a bitcoin entrepreneur who played a key role in designing bitcoin’s volcanic association – also called a volcanic token – told Cointelegraph that contrary to popular outside perceptions, El Salvador is building through a bear market. He pointed out that the volcanic bond was delayed for several reasons and is currently awaiting the passage of the Digital Securities Law. It is to explain:
“We are still waiting for new Congressional digital securities laws, and once they are passed, El Salvador can start raising capital for its Bitcoin bonds. I hope that happens before the end of this year. Like a lot of Bitcoin companies, El Salvador is focused on building through the bear market. No I can see Chief Bukele not stacking up more with these prices.”
BTC price hit a new all-time high of $68,789 just one month after the adoption of El Salvador on November 10. But since then, the price has fallen by more than 70% and is currently trading at around $19,000. Many critics believe that the future of volcanic bonds and their native token is highly dependent on the cryptocurrency market, and therefore it can only gain momentum during bull markets.
Paolo Ardoino, chief technical officer at Bitfinex, told Cointelegraph that the volcanic token will interest investors regardless of market conditions, explaining:
The volcanic symbol will be the first of its kind. While investor appetite for new offerings is usually greater during a bull market, we are confident that the unique offering represented by this token will command great interest regardless of market conditions. The volcanic token has widespread support in the Bitcoin community, and there is clearly a huge demand for supply regardless of whether we are in a bear market or a bull market.”
Bitfinex is the main infrastructure partner for the El Salvador government responsible for processing transactions from the sale of volcanic tokens.
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While critics have called the Bitcoin experiment in El Salvador a failure from the start, proponents see it as a revolution of some kind and believe that the adoption of El Salvador could create a domino effect for other countries facing similar financial challenges such as a large number of unbanked citizens and large remittances. sizes.
Bukele previously stated that the primary focus of BTC recognition was to provide banking services to more than 80% of unbanked Salvodrans. Within six months of the law’s passage, the country’s national Bitcoin wallet was able to accommodate four million users, ensuring that 70% of the unbanked population had access to payment and transfer services without having to go to a bank.
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Arti Dapati, senior research analyst at Market Research Future, told Cointelegraph that the adoption of BTC in El Salvador has proven successful on several fronts, whether it is related to the banking services of UNPA.