El Salvador, the small Central American country that made history just over a year ago when it submitted legal tender for Bitcoin (BTC), recently celebrated its first year of accepting BTC.
The Salvadoran government promoted BTC as a tool to attract foreign investment, create new jobs and reduce dependence on the US dollar in the country’s economy at the time of its adoption. Many BTC supporters and the libertarian community rallied around the small country despite mounting pressure from global organizations such as the World Bank and the International Monetary Fund (IMF) to scrap BTC as legal tender.
A lot has changed over the past year since El Salvador became the first Bitcoin country. Enthusiasm and public interest immediately escalated after learning about BTC as the price surged to new highs.
Salvadoran President Najib Bukele has joined the growing league of bitcoin supporters to offset many of the market downturns, even reaping the rewards of his bitcoin purchase in the early days as the country built schools and hospitals on their profits.
However, as market conditions turned bearish, the frequency of BTC purchases decreased, and the president, who was often seen interacting with the crypto community on Twitter and sharing Bitcoin’s future efforts, dramatically reduced his social media engagement.
El Salvador has bought 2,301 BTC since last September for about $103.9 million. This bitcoin is currently worth about $45 million. The last purchase was made in mid-2022 when the country bought 80 bitcoins at $19,000 each.
With the price of BTC dropping, critics who have long raised concerns about the cryptocurrency bubble felt justified, with comments such as “I told you so.” However, market experts believe that El Salvador’s experiment with Bitcoin is far from a failure.
The Bitcoin Volcanic Bond project in El Salvador, a project designed to raise a billion dollars from investors to build a Bitcoin city, has already been delayed again and again, and skepticism is growing not only about the project, but towards the adoption of BTC itself.
Contrary to popular outside belief, Samson Moe, a Bitcoin entrepreneur who played a key role in the development of the Bitcoin Volcanic Bond, also called a volcanic token, told Cointelegraph that El Salvador is building a bear market. He noted that the Volcanic bond issue has been delayed for several reasons and is currently awaiting passage of the Digital Securities Act. It is to explain:
“We are still waiting for the new digital securities laws to be submitted to Congress, and once they are passed, El Salvador will be able to start raising capital for its Bitcoin bonds. I hope this happens before the end of this year. Like the Bitcoin companies, El Salvador is focused on building in a bear market. No I see Chief Bukele not hoarding more at these prices.”
BTC price hit a new all-time high of $68,789 just one month after passing El Salvador on November 10. However, the price has since 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 Arduino, chief technology officer at Bitfinex, told Cointelegraph that the volcanic token will spark interest from investors regardless of market conditions, explaining:
The volcanic symbol will be the first of its kind. While investor appetite for new offerings is usually higher during a bull market, we are confident that the unique offering represented by this token will generate significant interest regardless of market conditions. The volcanic token has widespread support in the Bitcoin community and there is clearly a lot of interest in showing it whether we are in a bear market or a bull market.”
Bitfinex is a major infrastructure partner for the Salvadoran government responsible for processing transactions for the sale of the Volcanic Token.
Bitcoin adoption boosts remittances and tourism
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 with similar financial problems, such as the large numbers of unbanked citizens. Services and large transfers. sizes.
Bukele previously stated that the main purpose of recognizing BTC is to provide banking services to more than 80% of non-bank Salvodrans. Within six months of the law’s passage, the country’s national bitcoin wallet was able to connect four million users, providing 70% of the unbanked population with access to payment and money services.