Exactly one year ago on September 7, 2021. , the Central, American country El Salvador accepted the Bitcoin law to become the first nation in the world to accept Bitcoin (BTC) as legal cash.
President Nayib Bukele of El Salvador pledged that the introduction of Bitcoin will help the 70% of the country’s population that did not have access to financial services as of 2021 when he argued for Bitcoin as a legal tender last year.
The Salvadoran administration has also hailed Bitcoin as a tool for luring international investment, generating new jobs, and reducing the country’s dependency on the US dollar.
Given that Bitcoin has lost around 60% of its value since the country made the cryptocurrency official tender, one can doubt the acceptance of Bitcoin’s current benefits.
According to information from CoinGecko, BTC was trading at about $46,000 exactly one year ago on this day. The Salvadoran government bought its first Bitcoin on September 6, 2021, paying $10.36 million, or an average price of $51,800, for 200 BTC.
That is in stark contrast to the current BTC values, which on Tuesday fell below $19,000. At the time of writing, the price of Bitcoin is $18,806, a decline of more than 64% from the previous year.
El Salvador is currently down on all 10 Bitcoin purchases the government has made since adopting BTC as official cash, according to data from Nayib Bukele’s portfolio tracker.
In total, the Salvadoran government has acquired 2,381 bitcoins, which at the current price would be worth $62 million less than what El Salvador paid for its existing bitcoin holdings.
Alejandro Zelaya, El Salvador’s minister of finance, has previously underlined that even though Bitcoin prices fell, El Salvador did not lose money on its acquisitions of the cryptocurrency because it did not sell the coins.
Additionally, the Salvadoran government has repeatedly postponed its plan to issue Bitcoin bonds, citing bad market circumstances and geopolitical concerns.
Some industry watchers began referring to El Salvador’s adoption of Bitcoin as a “failed Bitcoin experiment” in the midst of falling cryptocurrency prices and the prolonged bear market.
Others argued that this might not be the case because the nation has reportedly had a good impact on El Salvador’s financial sector and economy, including the cost of transactions.
BitTorrent originator and Chia Network founder Bram Cohen noted on Twitter on Tuesday that the benefits are frequently “not really aligned with the amount of money it produces.” He asserted that the arrival of less expensive Bitcoin transactions in El Salvador forced certain banks to lower their prices.
The El Salvador Central Reserve Bank reports that from January to May 2022, remittances from Salvadorans residing abroad totaled more than $50 million. The adoption of Bitcoin and the Chivo wallet, which is supported by the government of El Salvador, both helped to boost Lightning Network transactions by 400% in 2022.
According to Jose Lemus, CEO of Ibex Mercado, “El Salvador is going to be the testing ground for so much innovation within Bitcoin.” No other country, he said, possesses the “regulatory structure, political will, adoption, range of instruments, and most importantly, the need for Bitcoin.” Added him:
“This makes El Salvador the perfect place to safely experiment with new Lightning applications and to build a thriving ecosystem of trusted, proven, and interconnected services.”
The Bitcoin Law in El Salvador has also been successful in luring tourists and outside investment. As was previously reported, 1.1 million tourists visited El Salvador this year, driving up tourism by roughly 82% in the first half of 2022.