El Salvador, the first country in the world, to adopt Bitcoin as a legal tender, is still under the scrutiny of Bitcoin critics. Under the current crypto market conditions, the bet of the Salvadorian government can go both ways.
Recently, commenting on the matter of Bitcoin reserves, El Salvador President Nayib Bukele confirmed his aim to accumulate more.
As per the latest remark, Bukele claimed that he plans to purchase one new Bitcoin each day. However, his remarks have sparked a new conversation about whether it is a good idea or something that can backfire.
He campaigned for Bitcoin adoption as a legal tender alongside USD and got it done in 2021. Since that time, he has come out as a staunch Bitcoin evangelist.
El Salvador and Bitcoin Adoption
The transition and adoption of Bitcoin as a blockchain technology were filled with hurdles in El Salvador. In a country where around 70% of the masses are unbanked, getting familiar with Bitcoin was naturally thought of as an outrageous undertaking.
Therefore, the business community and external forces such as IMF also condemned the Bitcoin adoption in Salvador.
Meanwhile, Bukele kept a firm stance on Bitcoin adoption and tethered it to new projects like the geothermal power plant and the production of Bitcoin City.
However, at present, the average cost of the purchase in the Salvador Bitcoin reserve is greater than the spot price of the flagship crypto. As per Economist Ricardo Castaneda, the loss of the country is estimated at around $70 million.
The New Mission of President Bukele
As per Ethereum co-founder Vitalik Buterin, the adoption of Bitcoin as a mandatory currency is not a good idea. He claimed that the country has yet to fully grasp how blockchain functions and could end up losing money that lacks a long-term vision.
Meanwhile, a new survey collected feedback from 1270 Salvadorians, where 71% claimed that Bitcoin did not grant them any financial benefits.
The adverse impact of the mass introduction and adoption in largely unbanked El Salvador is that most people are unaware of services like savings. The greater part of the population lives under the poverty line, and the average income does not leave room for savings.
After the cascading waves of FTX collapse, Bitcoin prices can remain shaky for a while, which could be detrimental for one day Bitcoin purchase plan.