Nayib Bukele, the president of a small country in Central America El Salvador, became globally famous in the fall of 2021, when he announced that the country had declared Bitcoin its official (and the only) currency. This was the first time ever when a nation-state integrated BTC into its financial system.
Since then, the government of this country has been keeping to its Bitcoin-focused strategy, accumulating moderate sums of BTC from time to time. Soon after that a Bitcoin maximalist and former broker Max Keiser moved to El Salvador to become the president’s Bitcoin advisor. Recently, El Salvador has adopted a strategy of purchasing a single Bitcoin every day and has been committed to following this plan leveraging BTC for the financial growth of its state and citizens.
By now, Nayib Bukele’s government has reportedly bought close to 6,000 BTC in total, amassing Bitcoin reserves regardless of the crypto market’s short-term volatility.
El Salvador President’s Bitcoin Vision
The country’s Bitcoin holdings are only partly accessible publicly and they have brought a massive paper profit now as the largest cryptocurrency has been scoring one new all-time high after another, starting from $70,000.
El Salvador’s Bitcoin stash is now valued at more than half a billion US dollars, while the Bitcoin holdings of another developing country, Bhutan, which has recently adopted Bitcoin, are exceeding $1 billion now that Bitcoin has surpassed $90,000 for the first time ever.
Meanwhile, for El Salvador Bitcoin is much more than just a financial reserve – it is also a focal point of the president’s broader vision for the economic independence of his country and innovation in the sphere of finance. The presidential administration is certain that thanks to BTC transforming the local financial system, El Salvador may well turn into a hub for digital assets.
The recently adopted strategy of buying one BTC per day is part of the “dollar-cost averaging” approach, which allows minimizing the impact of BTC price volatility on the country’s BTC portfolio. Previously, El Salvador’s Bitcoin holdings dropped in value significantly when the coin’s price went down, particularly during the bear market of 2022, when the Russian-Ukrainian conflict began, causing a massive increase in energy prices, and a sharp decline in grain imports from Ukraine.
Still the newly-adopted Bitcoin purchase strategy helps the country to average out Bitcoin acquisition costs over time and reduces the risks caused by high volatility associated with large BTC purchases. Now that in the late 2023 and 2024 Bitcoin prices went up tremendously, El Salvador’s long-term plan on loading up BTC has begun to yield positive returns.
In November, after Donald Trump won the elections, the Bitcoin price soared and has by now topped the $93,000 level. This month, El Salvador’s BTC holdings have brought the country huge profits of around $68 million. It was this month that Bukele commanded 1 Bitcoin to be bought per day. Overall, since election day, Bitcoin has added a jaw-dropping 33%, soaring from roughly $67,150 to $89,380, where it is trading now. On Wednesday, November 13, BTC reached $93,274, establishing a new all-time high.
How Bitcoin Strategy Works for Citizens
Aside from building a Bitcoin reserve, Nayib Bukele’s decision to make Bitcoin a legal tender addresses painful spots within the country’s economy. Before BTC was adopted, the country heavily relied on the US dollar. However, back then, the largest part of the local population (roughly 70% of it) remained unbanked in 2021 and BTC gave those people a strong alternative to traditional financial inclusion, especially in the regions where banks are simply inaccessible.
The government developed and launched the Chivo Wallet, obligatory for locals to use, and it gave El Salvador citizens access to BTC, enabling them to both make savings and conduct transactions – payments, remittance, etc.
In daily lives of average Salvadorians, the role of Bitcoin is massive with hundreds of merchants and vendors accepting BTC for daily payments, allowing citizens to buy and sell using BTC. Thanks to the Chivo Wallet Bitcoin adoption became easier and much more efficient than before its rollout.
Tourists have also played an important role in the local Bitcoin adoption – there are many exotic places in El Salvador that have become highly popular with tourists where they pay for goods, food, drink, souvenirs, etc, with BTC. By the way, once Bitcoin got the status of the official currency, the inflow of tourists increased dramatically, which also ensured an additional inflow into the country’s budget.
Overall, so far Bitcoin has been making a positive impact on El Salvador and its economy, allowing local citizens to enjoy the benefits of using BTC in daily lives.
