El Salvador Bitcoins: A Nation’s Journey into Digital Currency

By Eddie Galdamez  | Updated on May 5th, 2024
El Salvador BitcoinsBitcoin is a legal tender in El Salvador.

El Salvador continues investing in Bitcoin. As of May 5, 2024, El Salvador possesses 5,740.76 Bitcoins, valued at $367,850,429 US dollars, equivalent to $64,077.00 per Bitcoin.

President Nayib Bukele’s unprecedented decision to make Bitcoin a legal tender in El Salvador in 2021, has sparked intense discussions globally, reshaping perceptions of Bitcoin and other cryptocurrencies and its potential implications on the future of traditional financial systems.

El Salvador Bitcoins

El Salvador’s Bitcoin Cold Wallet

To protect the country’s Bitcoin investments by keeping them offline, President Bukele announced on March 14 the transfer of “a big chunk” of the country’s Bitcoin holdings into a cold wallet.

President Bukele also noted that the cold wallet would be securely located within the country’s borders, stored in a physical vault. Employing a cold wallet reduces the risk of hacking by keeping Bitcoins offline and isolated from the internet.

We’ve decided to transfer a big chunk of our Bitcoin to a cold wallet and store that cold wallet in a physical vault within our national territory. You can call it our first Bitcoin piggy bank. It’s not much, but it’s honest work. President Nayib Bukele.

How Much Bitcoin does El Salvador Have?

According to the address disclosed by Nayib Bukele concerning Bitcoin holdings, El Salvador currently possesses 5,740.76 Bitcoins.

These holdings are as of today; you can “click here” to view the latest information about the country’s Bitcoin holdings.

The Bitcoin count fluctuates continuously as El Salvador is acquiring one Bitcoin daily. Additionally, the country is mining its own Bitcoins, and since Bukele made public the wallet address, individuals are making Bitcoin donations regularly.

The precise profit El Salvador could have obtained from Bitcoin remains unknown. Public information regarding the purchase cost per Bitcoin, the country’s mining activity, the quantity of donated Bitcoins, and any Bitcoin sales is unavailable.

Buying One Bitcoin per Day

As part of its investment strategy, El Salvador is acquiring one Bitcoin daily. President Bukele announced on November 16, 2022, that the country would commence this daily purchase starting the following day.

Based on the total Bitcoins owned by the country, Bukele maintained its investment strategy; however, no information is available regarding each purchase, such as cost and commissions paid.

“The 1 Bitcoin a day program just deposited today’s Bitcoin. This continues until Bitcoin becomes unaffordable with fiat currencies,” said Nayib Bukele on his X account on March 15, 2024.

Mining Bitcoin Within El Salvador

Soon after El Salvador made Bitcoin a legal tender, the government started infrastructure projects aimed at mining Bitcoin using the energy from volcanoes.

It is unclear how many of these mining projects are being used today. The Salvadoran government has not made this information public. However, news reports of these projects are available online, here are two of them, Reuerts.com and Nasdaq.com.

Bitcoin Donations

Since Nayib Bukele introduced the Bitcoin wallet address, the reception of donations has emerged as a new development. These donations, ranging from less than $1.00 to over $50, may appear modest individually but hold considerable potential when accumulated over time.

El Salvador Bitcoins as a Legal Tender

El Salvador’s adoption of Bitcoin as legal tender in 2021 marked a significant shift in the financial landscape for the country and other nations worldwide.

Despite generating both praise and controversy, this move by the Bukele administration exemplifies the nation’s commitment to exploring unconventional avenues for economic growth and financial inclusion.

El Salvador faces challenges with Bitcoin’s low usage. Factors such as public skepticism and technology have contributed to a slower-than-expected integration of Bitcoin into everyday transactions within the country.

Bitcoin Currency Effects

Even though making Bitcoin a legal tender has caused problems between the Salvadoran Government and international organizations such as the International Monetary Fund, Bitcoin has produced beneficial results for the country.

The Salvadoran tourism industry has benefited immensely from the Bitcoin implementation. According to the head of the Ministry of Tourism (MITUR), Morena Valdez, “More tourists and investors have come to see how Bitcoin works in El Salvador.”

Also, in February 2022, the Chivo Pets Veterinary Hospital opened in El Salvador. This animal care facility is the first government-owned pet hospital in the country.

El Salvador Bitcoins Issues

El Salvador’s Bitcoin adoption has encountered challenges, including public resistance, technological barriers, and transparency. These issues have delayed the integration of Bitcoin into the country’s economic framework.

Bitcoin has received public resistance since becoming a legal tender. The number of Salvadorans who have used it is minimal. Also, family remittances via Bitcoin, which was used as an argument by President Nayib Bukele to justify the adoption of Bitcoin, are low.

According to the Salvadoran Central Bank (BCR), less than 2% of remittances entered the country through digital wallets. One of the principal technological issues is the Chivo Wallet.

The Chivo Wallet was created by the Salvadoran Government to help Salvadorans facing financial exclusion and aid the transfer of money from Salvadorans abroad to individuals living in El Salvador.

One issue Salvadorans using Chivo Wallet face is transferring money to local banks, which is vital for individuals using Bitcoins.

Finally, there is the issue of transparency. The Salvadoran Government has placed under reserve all information regarding Bitcoin.

There is no information on who purchases Bitcoins, who decides when to purchase, and any fees regarding the transaction. Also, there is the issue of information regarding the Chivo Wallet, such as the cost.

Bitcoin Future in El Salvador

Although converting Bitcoin into legal tender was met with strong criticism from the International Monetary Fund and other international entities, El Salvador’s economy has continued to grow.

Despite economists and the IMF asking El Salvador to reverse its position on Bitcoin, President Bukele, and his administration have made it clear that Bitcoin will continue to be a legal tender in El Salvador.

Bitcoin’s integration into El Salvador’s culture is increasingly evident as it becomes a part of everyday life. From President Bukele’s initiatives to citizens embracing digital currencies, Bitcoin is shaping economic practices and societal norms, reflecting a significant cultural shift.