Bitcoin is assisting El Salvador in regaining control over its currency, presenting its people with financial opportunities, and resolving issues the nation has encountered in the past.

Since El Salvador adopted Bitcoin (BTC) as legal tender in September 2021, there have been a number of hasty rulings issued declaring this decision a failure. Some pundits have even gone so far as to claim that Bitcoin is somehow to blame for El Salvador’s economic problems, which predated Bitcoin’s creation. But those advocating this point of view, including the conventional financial gurus, talking heads, and even IMF officials, completely miss the mark.

El Salvador’s sovereign debt reached $20 billion when President Nayib Bukele of El Salvador declared his intention to offer to repurchase publicly owned bonds expiring between 2023 and 2025 in July. Although it was a sizable sum in terms of the Salvadoran economy, it had nothing to do with the choice to recognize Bitcoin as legal cash.

El Salvador’s debt is actually influenced by numerous things. 39 years before Bitcoin was made legal, in 1982, El Salvador borrowed $85 million from the IMF, adding to its massive fiscal debt and giving its people nothing in the way of benefits during a civil war. After that, the nation’s choice to adopt the US dollar as its official currency in 2001 further hampered its capacity to control its own finances. El Salvador was unable to adopt its own monetary strategy to cover local expenses like social programs or infrastructure since the USD served as its base currency. To pay for these crucial projects, it was compelled to expand public sector borrowing.

El Salvador’s struggles with debt are not a result of its investment in cutting-edge financial systems like Bitcoin. Instead, El Salvador’s acceptance of Bitcoin is a step toward reclaiming its financial independence, giving its people access to financial services and possibilities, and addressing the kinds of structural issues that have historically left Salvadorans without a voice.

El Salvador has spent a little over $100 million on Bitcoin since last year, when it became legal tender. All companies in the nation were required to accept Bitcoin as payment under the new regulation. At the same time, the government launched its digital wallet “Chivo Wallet,” giving citizens who downloaded it $30 in Bitcoin, and established a trust with $150 million in public monies to assist dollar transactions.

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