The link between Bitcoin and El Salvador continues and seems to be growing stronger!
The link between Bitcoin and El Salvador continues and seems to be growing stronger!

The link between Bitcoin and El Salvador continues and seems to be growing stronger!

By Andrea Porcelli - 30 Nov 2022

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Bitcoin is gaining in importance in the Central American nation of El Salvador.

By following El Salvador’s actions and strategic moves, one can see how much the state is valuing the Bitcoin ecosystem for its policy decisions. 

El Salvador wants to buy back its outstanding debt, focusing once again on Bitcoin

The link between El Salvador and the world’s most capitalized cryptocurrency officially materialized in September 2021, following the adoption of Bitcoin as legal tender. Critics have been divided on the issue, on one side some have called El Salvador’s move a failure, on the other side there are those who think it is a truly futuristic move for the Central American nation.

On Tuesday, El Salvador’s President Nayib Bukele announced his plan to buy back public bonds maturing between 2023 and 2025; the debt has now exceeded $20 billion. However, contrary to the thinking of many, this figure is not related to the decision to accept Bitcoin as legal tender. 

In fact, the factors behind El Salvador’s debt lie many years before the nation’s digital evolution. Almost 40 years before the legalization of Bitcoin, in fact, El Salvador borrowed $85 million from the International Monetary Fund, growing its debt during an unstable period for state policy.

Moreover, in 2001 the decision to make the US dollar the national currency further deteriorated the possibility of restoring this debt. The use of the dollar as legal tender, gave El Salvador no way to implement a monetary policy, forcing the country to further increase its public debt. 

Therefore, the debt that El Salvador wants to rehabilitate is not the result of the investment in Bitcoin in 2021. On the contrary, the adoption of Bitcoin could be the appropriate step toward regaining its monetary sovereignty and debt restoration.

The investment would bring citizens into a better situation, with access to new services and opportunities, launching El Salvador directly into the future with Bitcoin

The benefits Bitcoin brings to El Salvador 

By making Bitcoin a legal tender, the government of El Salvador has taken an important and very forward-looking step. El Salvador currently has spent less than $100 million on Bitcoin, but with the goal of increasing the share day by day.

There are many benefits that Bitcoin has brought to the Central American state. This investment on the part of El Salvador, has given citizens more freedom and financial opportunities. It is enough to think that since Bitcoin was declared legal tender in the state, bank accounts in El Salvador have increased by 70%.

Bitcoin is improving the lives of citizens by immersing them in the big economy, the new digital sector, and creating opportunities to grow their wealth. El Salvador has decided to adopt a new era, taking a step forward for the future. Without a shadow of a doubt, it will be one of the leading countries in the next digital step, the progenitor of a movement that will probably soon spread around the world. 

The improvement of tourism thanks to Bitcoin

There is no need to mention how badly the tourism sector has been affected by the pandemic. The whole world has suffered severe economic losses in tourism, including El Salvador. The Central American state was one of the first to lift tourism back to pre-pandemic levels, and all thanks in part to Bitcoin. 

Nayib Bukele comments on this:

“Only a few countries have managed to restore tourism to pre-pandemic levels. And this is international tourism, so the underlying reasons are mainly Bitcoin and surfing. But domestic tourism is growing even more, mainly because of our crackdown on gangs. Google just updated their mobility data for August 3 (when our August vacation starts). It looks like domestic tourism will grow even more than we expected.”

El Salvador’s president explains that the key factors that have allowed the country to return to its pre-pandemic numbers in the tourism sector are Bitcoin first, as well as surfing and reduced crime. 

In addition, Nayib Bukele’s forecast is for a disproportionate increase in tourism in the coming years. Among the data also shared by Google Mobility Report, a compendium of data that shows the change in the number of visits that occur to certain places, it appears that El Salvador has increased its revenue in Tourism by 6% over 2019

This number arrives after that, back in February, Morena Valdez, the country’s Minister of Tourism, stated that the tourism industry had increased by 30% soon after BTC became legal tender.  

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