Last Updated: 30 July 2022
It has been almost a year since El Salvador adopted bitcoin as legal tender. There have been many instances where the government has spoken out against this, especially after bitcoin’s steep decline. On the other hand, the government still stands firmly behind this choice.
Bitcoin brought an inclusive financial system
According to Bloomberg, Alejandro Zelaya, the Salvadoran finance minister, said that bitcoin is still positive for the country. He argued that the currency has brought financial services. Only 30% of Salvador’s population had access to the financial system before the bitcoin standard came around.
Bitcoin gave the population, most of whom did not have a bank, more options. In addition, bitcoin adoption also brought tourism and investment to the country. Still, the use of bitcoin as a medium of exchange remains low, but Zelaya continues to believe.
Time is money
He also mentioned that the government is still planning to issue a bitcoin bond using blockchain technology. This could attract even more investors to the Latin American country, but bodies like the IMF are far from agreeing. That leaves Zenaya cold.
“For some, it’s something new and something they don’t fully understand, but it’s a phenomenon that exists and is gaining ground and will continue to do so in the years to come,” he said. He also says it will take time to notice the positive effects of bitcoin by default. “We will not see results overnight. We cannot go to bed poor and wake up millionaire.”
Not yet able to reap the benefits
“I believe in the traditional, international monetary system, just as I believe that new technologies are going to help people in the future. So I think making that transition is vital, and it would be wrong of us not to pursue financial innovation that can benefit El Salvador.”
So far, this financial innovation has not borne fruit. But as Zenaya said, this will take time. The government has bought 2,381 Bitcoins with public money, and they are currently worth only half of what the government paid for them, according to Bloomberg calculations based on tweets from President Nayib Bukele.