What advantages did the residents of the country get from endowing the main digital asset with the status of a means of payment and why this can negatively affect the economy of the state
El Salvador became the first country in the world to legally equate bitcoin with a means of payment. On September 7, the corresponding law came into force in the country. Also on this day, the government of El Salvador announced the purchase of 550 bitcoins. After that, the country's authorities bought another 150 and 420 bitcoins. Now the state fund Bitcoin Trust has 1,120 BTC. Topplabs.org experts explained why El Salvador continues to actively accumulate cryptocurrency.
Just the beginning
Before the adoption of the law on the legalization of bitcoin, President of Salvador Nayib Bukele announced a whole program for the development of the country based on the adoption of cryptocurrencies, recalled Mikhail Karkhalev, a financial analyst at the Currency.com crypto exchange. The use of bitcoin will help the country to increase its GDP, increase the level of investment in local companies, attract international business, and also help the tourism industry, the analyst explained. He also noted the possibility of cheap money transfers in cryptocurrency.
“Millions of citizens living outside the country can already send money home cheaper than before. Making transfers in fiat currency, due to conversion and commissions, Salvadorans lose up to 20% of the transfer amount. Bitcoin helped to correct this situation, "added Karkhalev.
On November 2, the President of El Salvador announced that the country plans to build 20 new schools at the expense of the profits brought to the state by investments in bitcoin. In October, Bukele announced the construction of a new veterinary clinic in the capital of El Salvador, which will be financed by the profit from investments in the first cryptocurrency.
Not everything is so positive
Speaking about the legalization of bitcoin in El Salvador, it is worth considering a number of rallies against this initiative, which took place in the country in August, recalled Maria Stankevich, the development director of the EXMO crypto exchange. According to her, El Salvador did not support the International Monetary Fund and the World Bank in granting the first cryptocurrency the status of a means of payment, and JPMorgan said that this could negatively affect the country's already "sluggish" economy.
“In this law, I rather see the desire of the president of the country to pass off a dead horse for a sleeping one, which is not entirely possible for him. There are absolutely no advantages of investing in bitcoin for the country (apart from the desire to make money), ”the expert noted.
With the help of bitcoin, El Salvador will not be able to get away from the US dollar, which is the country's main currency, Karkhalev is sure. In his opinion, the first cryptocurrency cannot be used as a full-fledged means of payment due to high volatility.