El Salvador is buying 500 more bitcoins amid rapid cryptocurrency

El Salvador is buying 500 more bitcoins amid rapid cryptocurrency devaluation

The Central American state of El Salvador continues to experiment with cryptocurrencies – according to the latest data, the authorities spent another $15.5 million to buy rapidly cheaper bitcoins. This replenished the “portfolio” by another 500 coins.

    Image source: David_Peterson/pixabay.com

Image source: David_Peterson/pixabay.com

This is El Salvador’s largest cryptocurrency purchase since the country began topping up its reserves with cryptoassets in September 2021. That same month, El Salvador became the first country to legalize bitcoin as legal tender on par with the US dollar.

In recent days, the price of the cryptocurrency has fallen sharply, now it costs a little over $ 30,800. According to the tweet of the country’s President Nayib Bukele (Nayib Bukele), El Salvador has bitcoins at an average price of $ 30,744 The country’s total reserves today are 2301 bitcoins with a total value of about $72 million.

This is the latest in a series of cryptocurrency purchases initiated by President Bukele, who linked his political fate to the cryptocurrency project. For many months, the International Monetary Fund (IMF) has regretted the President’s decision and has repeatedly called for such a risky initiative to be abandoned. The IMF emphasized that there are major risks associated with using Bitcoin.

The fund also expressed concern about El Salvador’s intention to issue about $1 billion worth of Bitcoin-backed bonds in partnership with blockchain firm Blockstream. However, the project was shelved in March due to “unfavorable market conditions”.

    Image source: anncapictures/pixabay.com

Image source: anncapictures/pixabay.com

It is known that in parallel with the recognition of Bitcoin as the legal currency in the country, they have released a nationwide Chivo crypto wallet that offers free transactions and fast cross-border payments. It was expected that in a country where 70% of the population does not have access to traditional financial services, using Chivo would provide a way for citizens who have never participated to participate in the public financial system.

Although even the IMF recognized the potential benefits of Chivo, many citizens began to complain about attackers opening wallets on their behalf — to attract citizens, the government put $30 on the balance of each new wallet. However, according to data released by the US National Bureau of Economic Research, only 20% of those who used a wallet at all continued to use it after the “free” $30 ran out.

Since the beginning of 2021, El Salvador has been seeking a $1.3 billion IMF loan, but in the context of new initiatives, a positive decision does not seem to be expected. In addition, according to IMF forecasts, the country’s public debt will reach 96% of GDP by 2026 if current fiscal policies are maintained, putting the country on an “unsustainable path”.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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