El Salvador shocked the world last year by becoming the first-ever country in the world to make Bitcoin a legal tender last year in September. Since then, the Latin American nation has faced several internal and external obstacles and criticism about adding Bitcoin as the sole legal currency in the region. Nevertheless, the resolve of Salvadorian president Nayib Bukele has not waned in the slightest.
Recently, Bukele announced that the government has decided to acquire an additional 500 Bitcoin to the national reserves. He further marked this purchase as buying from the dip. The official announcement suggests that the government acquired its latest installment of Bitcoin reserves for an average price of $30,744 per unit.
While there are several critics of Bitcoin adoption in Salvador, the measure is not completely void of benefits. Some other Latin American nations have shown an interest in adding Bitcoin as a legal currency under their jurisdiction as well. Meanwhile, there are some other countries like CAR and Panama Island that have already adopted the example of Salvador with slight variations.
The statistics published by Bloomberg suggest that the Salvadorian government owns a total of 2,301 Bitcoins worth $103 million, considering all the total investment. It is interesting to note that the average cost of per unit Bitcoin for Salvador state reserve is estimated at $29K per unit. Meanwhile, the aggregate value of the state Bitcoin reserve is projected at $66.9 million at the current market price.
International Monetary Fund’s Concerns on Bitcoin Adoption
International Monetary Fund, IMF, has continued to issue snarky remarks about the adoption of Bitcoin in El Salvador. IMF officials have claimed it to be an interesting experiment in the past and recently claimed that Bitcoin as a legal tender is not a practical monetary policy considering the massive price volatility that can endanger the financial integrity of the country as well as negatively impact its contingent liability score.
It is worth noting that before Bitcoin, the legal tender in El Salvador was USD which replaced the native currency of Salvador’s colon was replaced by the US dollar due to a massive devaluation in 2001. Bukele has big plans for his country’s development with Bitcoin. He plans to issue Bitcoin-backed bonds and build a Bitcoin City backed by geothermal power to attract crypto organizations and investment from around the world.