Ley Bitcoin de El Salvador cumple su primer año entre luces y sombras

Only a year ago, the legislative assembly of El Salvador was the center of all eyes of bitcoiners in the world, after the approval of the so-called bitcoin law, promoted by the president of that Central American nation, Nayib Bukele.

After a long day of debate, around midnight on June 8 last year, El Salvador became the first country in the world to give legal tender to the first cryptocurrency.

Reading: Que es la ley bitcoin

The approved legislation establishes, among other things, that bitcoin may be used “in any transaction and in any capacity that natural or legal persons, public or private, require to carry out”, as reported by crypto news at that time.

Now, after a year, the bukele government continues to focus on giving bitcoin a greater role in the daily lives of salvadorans. one of his strongest bets has been to acquire bitcoins, the most recent being last May.

On this last opportunity, 500 bitcoins were bought at an average rate of USD 30,744, which is equivalent to an investment of just over USD 15 million. el salvador already has more than 2,301 accumulated bitcoins.

however, the only way to know the amount of btc they bought is because bukele notifies it through twitter. This is one of the questions made by the Salvadoran developer and bitcoiner, Nelson «ishikawa» garay, when consulted by crypto news.

In the words of garay, there is no access to public data on bitcoin purchases made by the government, there is no way to confirm it officially. it is also not possible to know if they have sold the bitcoins.

the shadows of bitcoin adoption

With the approval process of the bitcoin law, in June of last year the Salvadoran government began to deploy other policies that revolve around bitcoin, one of them was the launch of a state purse called chivo wallet.

This tool does not generate payment of fees or commissions for the transactions carried out by users. includes sending or receiving remittances, making or receiving payments, conversion of bitcoin to dollars or vice versa. merchants are not charged commissions either. however, the crypto news after an evaluation concluded that in some cases there are problems in its use, giving rise to incentives not to use this wallet.

in this regard, garay commented that chivo wallet had between 3.4 million and 4 million downloads and this was motivated by the USD 30 bonus in bitcoin granted by the government.

although for the developer “those figures do not match reality, it would be expected that many people would use it to purchase goods and services, but this is not the case. very few merchants have decided to accept bitcoin.”

The experience of salvadoran merchants with the tool called goat trade, which was designed for the commercial sector, has been “very bad” in garay’s opinion, because “it has problems in its operation and that has made the businesses avoid receiving bitcoin.

See also: How and where to buy crypto in Nevada |

in this regard, a survey of the chamber of commerce and industry of el salvador (chamber), confirms the perspective of garay. For 91.7% of entrepreneurs from various sectors of the economy, the entry into force of bitcoin as legal tender has been indifferent. while 4.7% of those consulted assured that bitcoin has generated complications for their businessor has caused them to have fewer sales.

in the same vein, a survey by the francisco gavidia university (ufg), carried out last may, showed that, out of ten salvadorans, six are against the decision of the bukele government to use bitcoin as a second national currency.

62.3% said they did not agree with the use of bitcoin, while 23.7% of those surveyed did support the decision and 11.2% still doubted whether It was a right decision or not.

Based on this data, Garay believes that one of the biggest problems has been education about bitcoin. pointing out that there are no educational plans designed by the government to instruct the population about bitcoin.

In that sense, those who have led the educational initiative are NGOs, bitcoin enthusiasts who are dedicated to education and also private companies, which, although they are having a minimal impact, make bitcoin have little impact on the population, Gary said.

the developer cited among the main plans of private companies the program «school of bitcoin», sponsored by the exchange paxful; and the NGO “my first bitcoin”, assuring that they are having a “significant impact throughout the country”. He also spoke about the initiative in which garay himself is involved, with high-level education, called “torogoz dev”, where they teach about the development, programming of bitcoin and lightning.

fmi looking at el salvador

among the repercussions of the bitcoin law, it is worth mentioning that financial organizations such as the international monetary fund (imf) have assured that the arrival of bitcoin in el salvador «involves serious risks for financial and market integrity, financial stability and consumer protection”.

The suspicions of the multilateral organization focus on the increase in the fiscal deficit and public debt, a fact reported by crypto news.

Even last February, the US risk rating agency, Fitch Ratings, lowered the long-term credit rating, known as the Issuer Default Rating (IDR) of El Salvador. this implies that there is a high probability of not being able to pay their financial commitments.

a bitcoin city and some bonuses that haven’t been published yet

the bitcoin law brought with it more planes to el salvador. Salvadoran President Nayib Bukele announced last November the construction of the Bitcoin City. this would be the first financial city in the world to base its economy on the first cryptocurrency.

To finance the construction of the city, the government chose the option of issuing a state bond of USD 1,000 million. 50% of this would go to energy infrastructure works and bitcoin mining in the bitcoin city, while the other 50% would be blocked for the purchase of more bitcoin.

but the launch of the bonus has been suspended repeatedly since March of this year, the month in which the government had planned its activation. initially it was delayed by the conflict between russia and ukraine. more recently, the finance minister, alejandro zelaya, indicated that they had not published it because there were no favorable market conditions for its launch and they expect the digital asset to rise in price.

Until now it is unknown when the date on which the bonds will be issued will be, it seems that we will have to wait for a bitcoin bullish rally to start. The government has also not provided details on the regulatory framework envisaged for the issuance of the bonds.

Bitcoin has benefited tourism and investment

See also: Understanding the Crypto Tax Rate – SpendMeNot

One of the most positive aspects left by the bitcoin law is related to tourism. The Ministry of Tourism of the Central American country has made announcements indicating that expectations were exceeded regarding the economic and visitor impact that bitcoin would attract for the tourism sector in El Salvador.

According to the information, the arrival of 1.1 million tourists was expected, but the figure reached 1.4 million between November and December 2021. in fact, more than 40 bitcoin investors have gone to el salvador with the intention of investing in tourism in that country, in november of last year.

For Garay, this is related to the fact that El Salvador has successfully launched its country brand. In his opinion, the Central American nation had never reached the levels of publicity and popularity that it has at the moment if it were not for bitcoin.

«bitcoin gave us the opportunity to be on everyone’s lips, for this the figure of bukele and bitcoin has been combined. many people want and are coming to the country, especially to the beach el zonte where bitcoin beach was born”, emphasized garay positively.

El Salvador is attracting foreign investors, especially from the area of ​​cryptocurrencies. exchanges, digital wallet providers, payment processors and bitcoin custodians have arrived in the Central American country.

for example, the el zonte capital investment fund (ezcap), created by journalists max keizer and stacy herbert and focused on the hyperbitcoinization of el salvador, received a considerable contribution from the exchange bitfinex.

In that aspect, for Garay, although foreign investments have arrived from the bitcoin sector, it has not been the amount that neither the government nor the population expected. although the government of el salvador also launched a program, based on bitcoin, with the aim of granting financing to small and medium-sized companies in the country.

micro and small companies with funds in bitcoin, can access loans to cover their liquidity needs or promote new projects that require investment.

On the other hand, the Salvadoran government has managed to keep inflation at bay. Last May it was announced that inflation slowed down between the months of March and April, going from 6.7% to 6.5%. placing el salvador asthe third largest economy with the lowest interannual inflation rate in Central America for the month of April.

This result is due to a clear response by bukele to the financial organizations that predicted the failure of his bitcoin-focused monetary policy, as mentioned earlier in this report.

thanks to the profits left by the rise in the price of bitcoin to the fidebitcoin trust in October 2021, a public veterinary hospital was built, called goat pets.

The medical facility for pets has 12 offices and they give approximately 384 daily consultations. The medical center is divided by stations, the hospitalization of cats or dogs and has four operating rooms.

With all the data and information that emerged over the course of a year, it could be considered that it is too early to fully measure the impact of bitcoin in El Salvador. Garay believes that the future will be positive for El Salvador, although he prefers to be conservative.

See also: New Bitcoin ETF allows you to easily short the cryptocurrency | Fortune

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