A year ago, President Bukele introduced the Bitcoin Law in El Salvador, making it the first country to adopt Bitcoin as legal tender.
On June 9, 2021, El Salvador's President Nayib Bukele first introduced a bill to make Bitcoin legal tender.
Just a few hours later, the project was approved, thanks to the overwhelming majority that Bukele has in the country's Congress. In this way, El Salvador became the first country in the world to adopt Bitcoin as legal tender.
In this way, El Salvador equates Bitcoin with the US dollar, the currency that had replaced the Colón in 2001, and forced businesses and companies in the country to accept payments in it.
Protests against the bill
Even before the law was made official, large groups of Salvadorans demonstrated against the Bitcoin Law President Bukele. Protests spread across the country, calling on the ruling party to remove the requirement to accept cryptocurrency in businesses.
The protesters also argued against receiving their salaries in Bitcoin, as they thought the cryptocurrency's volatility would be detrimental to their economy.
A year later, the Chamber of Commerce and Industry of El Salvador points out that the 91,7% of the country's entrepreneurs have not noticed any differences after the law was passed, while 4,7% say that Bitcoin has caused complications in their businesses.
On the other hand, a study by Francisco Gavidia University reveals worrying data for Bukele, since six out of ten Salvadorans are against the Bitcoin Law.
Chivo Wallet
Following the approval of the draft law and its activation in September, on the 17th of that month, Nayib Bukele announced that the Chivo wallet, designed by the government to facilitate the adoption of Bitcoin, already had more than one million users.
Chivo Wallet included a $30 Bitcoin Bonus for all Salvadorans, as an incentive to adopt. However, many users began to report problems with the wallet, which generated some distrust in the project.
Chivo Wallet's launch shortcomings took almost four months to be resolved. In February, Alpha Point joined the project, fixing some of these bugs.
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Clash with the International Monetary Fund (IMF)
From the first moment, The IMF opposed the legalization of BitcoinIn January, it demanded that Bukele remove the law legalizing cryptocurrency and return to the dollar. At the same time, the international organization pointed out the need to tighten surveillance and regulation over Chivo Wallet.
Although the IMF highlighted Bukele's great work during the pandemic and even applauded the initiative of Chivo Wallet like a excellent form of financial inclusion, pointed out that the legalization of Bitcoin posed a serious risk to economic and financial stability.
In this way, the organization urged Bukele to limit the scope of the Bitcoin Law eliminating its designation as “legal tender”.
Despite pressure from the IMF, which even threatened to buy debt, the Salvadoran government did not give in and found a two-part solution:
- Alternative sources of financing in regional institutions.
- Bitcoin Bonds.
Bitcoin Bonds
El Salvador prepares to launch the call for "Bitcoin Bonus” of 1.000 million dollars, with which it seeks finance the construction of Bitcoin City and increase their holdings in this cryptocurrency.
The bond funds were to be used 50% for Bitcoin City's energy infrastructure and cryptocurrency mining projects, while the remaining 50% would be used to purchase more Bitcoin.
However, the launch of these bonds, also called “Volcano Bonds” has been delayed; first by the war in Ukraine, then by the need to attend to more important matters in Congress and later by the state of the market.
Bitcoin City
During the LABITCONF, President Nayib Bukele surprised everyone by presenting his Bitcoin Bonds and what is destined to be his great project: “bitcoin city".
It is a city whose functionalities will be based on Bitcoin and will be located on the Conchagua volcano, from where it will extract energy with which it plans to be self-sufficient.
Chivo Pets, the Bitcoin veterinary hospital
In a post on his Twitter account, Bukele presented to the world Chivo Pets, the first veterinary hospital funded entirely with Bitcoin and where you can pay with cryptocurrency.
The veterinary hospital is equipped with consulting rooms, emergency units, operating rooms, rehabilitation areas, isolation areas, hospitalization areas, recovery areas and grooming areas. In addition, Chivo Pets has office spaces, classrooms, a pharmacy, coworking space and even an auditorium.
Paying taxes with Bitcoin
In February 2022, José Chicas, mayor of the town of Ilopango, announced on his Twitter account that citizens could Use your Chivo Wallet to pay municipal taxes.
Citizenship for investors and other legal reforms
Also in February 2022, Bukele presented 52 legal reforms which are intended to fight bureaucracy and speed up procedures for Offer Salvadoran nationality to foreign investors.
In this regard, El Salvador has already received more than 40 applications from foreign investors seeking to take advantage of the growth of the tourism sector in the country.
The increase in tourism in El Salvador
In March, Nayib Bukele announced the expansion of the international airport and the great impact that Bitcoin had had on increasing tourism to the country. In fact, in November 2021, the government's expectations were for one million tourists.
However, thanks to the new law and other social factors, The number of tourists from El Salvador this year exceeded 1,4 millionThis is largely due to the fact that cryptocurrency has greatly enhanced the country's brand, thanks to concepts such as Bitcoin Beach or the future Bitcoin City.
Debt qualification
In May, the rating agency Moody's downgraded El Salvador's debt from “Caa3” to “Caa1”, and warned investors of high risks of total loss of funds. The agency also notes that El Salvador does not appear to have a financing plan, which puts the country at risk of acquiring additional credit risks.
Buying Bitcoin
Since the approval of the Bitcoin Law, El Salvador has been making large purchases of Bitcoin. The latest, taking advantage of the May dip, when they were purchased 500 BTC at an average price of $30.447, for a total value of about $15 millionIn total, it is estimated that El Salvador would have more than 2.301 accumulated Bitcoins.
El Salvador's Bitcoin purchases have been another reason for criticism of the president and the project, as there is no way to know how much public money the government has spent on Bitcoin purchases or how much it has earned from its sale.
The only reference is President Bukele's posts on his Twitter account.
Bitcoin Adoption
The example of El Salvador has spread throughout the world and many countries, such as Honduras, have threatened to legalize cryptocurrency. In most cases, the initiatives have not gone any further or have even been withdrawn.
However, last month the Central African Republic followed in the footsteps of the Central American country and declared Bitcoin legal tender, which has restored hope to Bitcoiners.
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