El Salvador buys $15.5 million in bitcoin as the world’s most popular cryptocurrency continues to fall in value. The president of El Salvador tweeted on Monday that the country bought 500 bitcoin disregarding the price crash. They purchased bitcoin for a price of $30,744. This buy is the largest purchase the government has made since it officially made digital currency legal. The cost of bitcoin has dropped 8% in value over the last 24 hours. It is more than 50% lower than the all-time high it reached in November. According to Bloomberg data, the country’s total reserve is up to 2,301 bitcoin or $71.7 million at current rates. They added digital currency to their balance sheet in Sept of 2021, all while becoming the first country to consider bitcoin legal (bitcoin city) as well as the US dollar.
The country’s choice to accept bitcoin is not without its skeptics, who have grown in number in recent months. One of the many that have bemoaned Bukele for accepting bitcoin is the International Monetary Fund. In January, they pressed the country to ditch bitcoin. The IMF directors “Stressed that there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.”
In addition, as El Salvador announced bitcoin as legal tender, they also launched a wallet called Chivo. This wallet offers no-fee transactions and enables traders to make quick payments worldwide. Chivo is there to provide a fast service for people who have never been a part of the banking system. This is a country where 70% of citizens do not have access to traditional financial services, unlike other places.
The directors of IMF agreed that this could give the country the “boost of financial inclusion” it needs. They mentioned that “strict regulation and oversight” are necessary. There have been complaints from users of the wallet that hackers have managed to make an account to gain the $30 bitcoin. This is a bonus given as a gift by the government. According to a report published, only 20% of users that downloaded the wallet used it consistently once, claiming the $30 bonus. The IMF believes that at this pace, public debt is to rise to 96% and will put the country on “an unsustainable path.”
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El Salvador to build first “Bitcoin City”(Opens in a new browser tab)