El Salvador has just bought its first stash of Bitcoins ahead of adopting the currency as legal tender alongside the US dollar. In a series of tweets published on Monday, the country’s president Nayib Bukele revealed that the country had purchased a total of 400 Bitcoins and plans to accumulate “a lot more as the deadline approaches.”
El Salvador Accumulates 400 Bitcoins One Day Ahead of BTC Adoption
According to Reuters, El Salvador has purchased $20 million worth of Bitcoin, one day before legalizing the currency. On September 7, the Central American country will become the first in the world to use a cryptocurrency as legal tender.
Earlier on Monday, Bukele took to Twitter to share that El Salvador had bought its first batch of 200 Bitcoins. Hours later, he returned to the social media site and added that the country had accumulated 400 tokens of the flagship crypto.
Meanwhile, Bitcoin’s price jumped by 1.49% to $52,680, which is the highest since the crash in May. Analysts from Reuters estimate that the crypto is on track to hit $56,000-$56,300 in the near term.
El Salvador’s Bitcoin law is an unprecedented move in the financial world, which has invited both enthusiasm and criticism from spectators. Last month, protests erupted across the country as people voiced their concerns about Bitcoin’s volatility. Many feared that their pension payouts would get affected and that cryptocurrency use would encourage rampant corruption in public life.
Bukele’s government has also come under fire from environmentalists who’ve questioned the sustainability of cryptocurrencies. In response, Bukele shared that the state-owned geothermal energy company was instructed to develop Bitcoin mining facilities that use energy from volcanoes.
The Pros and Cons of Bitcoin Adoption
As per reports, 23% of El Salvador’s gross domestic product in 2020 was made up of remittance money. Bukele believes that Salvadorans can save $400 million on commissions every year if remittances are transferred via Bitcoin. However, World Bank data indicates that the dollarized country already has some of the cheapest remittance costs in the world. So, it’s difficult to determine the accuracy of Bukele’s claims.
Also, rating agency Fitch has claimed that Bitcoin would be credit negative for insurance companies in the country due to its inherent volatility. Despite this, there are hopes that Bitcoin would prove to be a crucial foreign exchange earner as long as there are no obstacles to currency conversion.