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El Salvador Is Stronger Because Of Bitcoin: The Unbelievable Facts

El Salvador Is Stronger Because Of Bitcoin: The Unbelievable Facts

Bitcoin is helping El Salvador regain its monetary sovereignty, opening up new financial possibilities for the population and addressing longstanding issues.

Crox Road
October 27, 2022

Table of Content

Content
Conclusion
FAQ
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External Links

Introduction

Since El Salvador accepted Bitcoin as legal cash in September 2021, several rapid judgments have been issued proclaiming this move a failure. Some commentators have even gone so far as to argue that Bitcoin is somehow responsible for the economic issues that existed in El Salvador long before Bitcoin was ever established. This decision has been met with a number of quick judgments praising this move as a failure. But the conventional financial gurus, talking heads, and even officials from the International Monetary Fund (IMF) who advocate this viewpoint are completely missing the mark here.

After President Nayib Bukele of El Salvador made public in July his intention to make an offer to acquire publicly owned bonds with maturities between 2023 and 2025, the total amount of El Salvador's national debt increased to more than $20 billion. Although it was a significant sum in comparison to the size of the Salvadoran economy, the decision to recognize Bitcoin as valid currency had nothing to do with it.

Instead, El Salvador's debt is the result of a wide variety of variables. El Salvador took out a loan from the International Monetary Fund (IMF) in the amount of $85 million in 1982, which added to the country's already extensive fiscal debt and offered negligible benefits to the country's citizens during a time of civil war. This was 39 years before Bitcoin was made legal. After that, the country's capacity to handle its own finances was further hindered when, in 2001, it chose to adopt the United States dollar as its official currency. El Salvador was unable to adopt its own monetary policy because its base currency, the US dollar, prevented it from doing so. This prevented it from paying for internal needs such as social programs or infrastructure. Instead, more money had to be borrowed from the public sector to pay for these important services.

The problems that El Salvador's debt problems are not a direct outcome of the country's investments in innovative financial technology such as Bitcoin. Instead, El Salvador's adoption of Bitcoin is a step toward recovering its monetary sovereignty, giving its inhabitants access to financial services and possibilities, and tackling systemic issues that traditionally disadvantaged Salvadorans. Bitcoin is a digital currency that doesn't have a central bank and uses cryptography to make sure its transactions are safe.

El Salvador has spent little more than a hundred million dollars on Bitcoin in the time since it was declared legal tender last year. The new legislation mandates that all establishments in the nation accept Bitcoin as a form of payment. The government also established a trust with $150 million dollars in public money at the same time to allow dollar conversions. Also, the government made a digital wallet called "Chivo Wallet" and gave residents who downloaded it $30 in Bitcoin as a reward.

The government has made important efforts toward its goal of providing residents with more financial freedom and opportunity than they have ever had before. These actions include recognizing Bitcoin as a form of legal cash, providing wallets for its citizens, and motivating their use of these new tools with Bitcoin bonuses. For instance, around the time this law was enacted, estimates showed that as many as 70 percent of the country's people did not have bank accounts. The experiment with Bitcoin is helping these folks improve their lives by giving them a method to participate in the formal economy and an opportunity to build money for themselves.

Even while the timing of El Salvador's commitment to Bitcoin as legal cash has unhappily coincided significantly with a bear market that has affected the whole sector, the rush to declare that this is a failure is, to say the least, premature. To figure out if the experiment was a success, it is important to think about the study's goals and give the experiment enough time to be done.

El Salvador embarked on the Bitcoin project for two primary reasons: the first was to usher in a new era of monetary sovereignty in the nation; the second was to provide citizens with financial opportunities that they did not have in the past and likely would not have in the future. Both of these goals are central to the Bitcoin project. As a direct result of this project, millions of Salvadorans who didn't have bank accounts before now do. This is made possible by the use of blockchain technology.

El Salvador has taken the initiative to become a leader in this movement, which is likely to expand to a great number of other countries all over the world while other countries sit idly by and watch to see what unfolds. Countries like Venezuela and Guatemala, as well as a large number of others, may soon follow in El Salvador's footsteps and look for forward-thinking financial solutions based on blockchain technology. This would give citizens more power and help the economy grow and become more independent.

The adoption of Bitcoin, as opposed to being the cause of El Salvador's economic problems, as some critics have asserted, is a response to the intractable challenges that El Salvador and other countries like it are currently facing. This is the case despite some critics having drawn a correlation between the two. The decision that the government of El Salvador has taken, which is both courageous and commendable, is to provide its people and the government itself a shot at economic independence. When regular people begin to achieve their goals using the financial resources that have been made available to them, other nations will be inspired to pursue their own goals of progress in the subsequent generation of finance.

Conclusion

El Salvador's primary motivation for its Bitcoin initiative was to usher in a new age of monetary sovereignty for the country and to provide its population access to economic possibilities they had not previously had and were unlikely to have again in the near future. Many other nations, like Venezuela and Guatemala, may soon follow El Salvador's lead in looking for innovative financial solutions based on blockchain technology to better equip their inhabitants and usher in a new age of economic prosperity and self-sufficiency. Critics who say Bitcoin is to blame for El Salvador's economic problems are missing the point; Bitcoin is a solution to the insurmountable obstacles that El Salvador and similar nations face right now.

FAQ

What caused Bitcoin to dip?

Experts say that the falling prices on the stock and cryptocurrency markets are caused by a number of things, such as the possibility of an economic recession, rising interest rates, the ongoing conflict in Ukraine, and persistently high inflation.

Why does El Salvador have bitcoins?

The project was advocated by President Nayib Bukele, who has a strong interest in cryptocurrencies, as one that would provide many economic advantages. He said that adopting Bitcoin as a legitimate form of currency would encourage foreign investment, create new employment, and "push mankind at least a small bit towards the right path."

How long do crypto dips usually last?

Because it is impossible for anybody to precisely time every bottom or peak, you should secure some profits whenever you have them. In the cryptocurrency market, extended downtrends in bear markets may persist for weeks or months, while bull markets can also last for a significant amount of time. Hence, be conscious of the pattern as a whole!

That's all for today, see ya tomorrow! If you want more, be sure to follow our Twitter (@croxroadnews)

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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