While it might not be as large as President Nayib Bukele would like, El Salvador arguably boasts the world’s most famous Bitcoin-buying strategy and a national reserve. Several thousand BTC is now owned by the state, yet it remains to be seen what the investment looks like years from now.
Of course, there is risk applied to every investment strategy – from buying gold to putting cash in stock indexes – but it is obviously not a gamble in the same way as relying on the luck of spinning a roulette wheel or playing casino slot games. That said, there are some pitfalls, so we wanted to objectively parse out some of the pros and cons of El Salvador’s and other nations’ Bitcoin strategies:
Why Do It at All?
For those not fully aware of Bitcoin’s raison d’être, going back to the philosophy of the currency’s mysterious creator, Satoshi Nakamoto, Bitcoin is designed to be hard money, i.e., a hedge against inflation. Only 21 million Bitcoin can ever be mined – and we have recently just passed 20 million – so the concept is simple: Central banks print more and more money over time, deflating the value of currency. There can only ever be 21 million Bitcoin, thus it becomes “hard money”.
The Perception of Value
One of the criticisms thrown against investing in Bitcoin is the claim that it is fictitious “internet” money with no intrinsic value. Yet, the same criticism can be made of real money – it’s just paper and coins, and it’s no longer backed by tangible assets like physical gold. Money is backed by faith and, to an extent, trust in the government that issues it.
The Hedge Against Inflation
It has been argued for a long time that Bitcoin represents a hedge against inflation, thus it makes sense to add it to a treasury. El Salvador has had relatively – the stress is on relatively – low inflation in the 2010s and 2020s, but older folks will remember the rampant inflation of the 1970s and 1980s, which sometimes touched 30%. Bitcoin’s make-up does act as a hedge against the US Dollar, though it is a little more nuanced than what some proponents claim.
Bitcoin as Currency
This is an area where there has been a shift change. Some Bitcoin Maxis believe that BTC should be a medium of exchange, like money. We saw in the 2010s plenty of businesses announce that they would accept Bitcoin as payment. Yet, if you believe Bitcoin is the best payment method for a cup of coffee while simultaneously believing it is a long-term asset that will rise in value, there is a contradiction at play.
Bitcoin: The Parabolic Bull Case
If you have spent any amount of time on X, you’ll have invariably seen predictions for BTC reaching $1 million, even $10 million, over time. Essentially, these predictions are meaningless, especially when they provide timeframes. Black swan events, or even the possibility that something like quantum computing could eventually hack the Bitcoin network, could also be possibilities.
All Finance Is a Gamble But…
Bitcoin has been declared “dead” several times, but it also seems to bounce back stronger each time. Some critics laughed at President Bukele when he announced the 1 BTC per day purchase plan in 2021, but they were quite silent after the price rose to all-time highs in 2024 and 2025. Even today, as Bitcoin has fallen back to $70,000, the El Salvador treasury is sitting on a healthy profit.
What Must Go Right
El Salvador’s bet was that – eventually – traditional financial institutions and nation states get on board. The first is now in the bag after behemoth US companies like BlackRock launched Bitcoin ETFs. As for nation states, rumor has it that several others have quietly started adding Bitcoin reserves. If – and perhaps when – more get on board, it will be El Salvador that is viewed as the early adopter. Right now, that feels like a gamble worth taking.