Update Sept. 7, 12.48 pm UTC: This article has been updated to include quotes from Harshit Gangwar.
El Salvador is celebrating its Bitcoin anniversary, marking three years since the country adopted Bitcoin as legal tender.
El Salvador became the world’s first country to adopt Bitcoin (BTC) as legal tender three years ago, on Sept. 7, 2021, to promote financial inclusion, facilitate more efficient remittance payments and attract financial innovation.
President Nayib Bukele’s decision to adopt Bitcoin made the country a historical digital asset pioneer, according to Alex Momot, founder and CEO of crypto trading platform Peanut Trade.
He told Cointelegraph:
“El Salvador’s experiment with Bitcoin can be seen as a success. The country acted as a pioneer, taking risks and trying something radically new. While it’s too early to declare whether all aspects of the reform were successful, it’s clear that El Salvador has reaped some benefits.”
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El Salvador in profit
El Salvador has been dollar-cost-averaging into Bitcoin since 2021, buying 1 Bitcoin daily as part of its adoption plans.
The country’s wallet is currently sitting on over $31 million worth of profit, according to the Nayib Bukele Portfolio Tracker website.
El Salvador bought its Bitcoin holdings at an average price of $43,877 per BTC. Bitcoin traded at $54,300 as of 10:55 am UTC, Sept. 7.
According to Momot, El Salvador’s $31 million Bitcoin profit makes the decision a net positive in economic terms despite the initial criticism.
The CEO told Cointelegraph:
“This financial gain further strengthens Bukele’s position, as the initiative now appears to be yielding tangible benefits, adding another layer of validation to his bold cryptocurrency experiment.”
El Salvador currently holds a total of 5,865 Bitcoin worth over $318 million, according to the country’s treasury website.
President Nayib Bukele’s decision received widespread criticism after Bitcoin fell from its previous all-time high of $69,000 in November 2021 after the collapse of the FTX exchange. El Salvador’s Bitcoin holdings fell deeply in the red after Bitcoin fell as low as $16,000 during the bear market.
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Why haven’t major economies followed suit?
Since Bitcoin’s economic model benefits early adopters, crypto investors anticipated a wave of countries following El Salvador’s bold decision to adopt Bitcoin as legal tender.
However, only one additional country has since adopted Bitcoin as legal tender, while major economies remain hesitant.
In April 2022, the Central African Republic became the second country to adopt Bitcoin as legal tender and legalized the use of cryptocurrencies to bolster the economy and financial inclusion.
Larger economies will likely stray away from Bitcoin adoption due to their dependence on relations with international creditors, explained Momot:
“The bigger the country, the less likely it is to take such risks. This is because larger economies often depend on relationships with international creditors, who are strongly opposed to such moves.”
Even El Salvador was pressured by the International Monetary Fund to reverse its 2021 decision, according to Harshit Gangwar, the head of marketing and investor relations at Transak.
He told Cointelegraph:
“In hindsight, El Salvador was a trailblazer for normalizing Bitcoin as both an everyday currency and as a national investment, and the subsequent institutional adoption in other global regions has vindicated that decision. If El Salvador had left it until today to make Bitcoin legal tender, it’s fair to say there would be much less pushback.”
Brazilian lawmakers have expressed interest in establishing a legal framework for Bitcoin adoption, but concrete regulations have yet to be developed.
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Bitcoin in El Salvador: 1 year later | Major success or failed experiment? Source: YouTube
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