State of Bitcoin adoption in El Salvador
Since El Salvador became the first nation to make Bitcoin legal tender on September 7th 2021, it has bought 2381 BTC. Today, more Salvadorans use Bitcoin wallets than those using bank accounts.
There is one country on Earth, where there are more people using ... Prolly nothing. ~ Nayib Bukele
El Salvador Bitcoin purchase date & amounts
In recent months Bukele has bought bitcoin for his country during every major crypto market dip. Here is the list of dates when El Salvador goverment bought BTC:
These purchases have been adding onto the initial 400 BTC El Salvador government bought just before BTC formally became legal tender in the country.
Note: The totals on the table are approximations of how much bitcoin El Salvador owns in its national treasury. El Salvador also started mining bitcoin on October 1st.
As El Salvador continues to accumulate more bitcoin into its treasury, we'll keep updating the table.
Initial reaction to El Salvador making Bitcoin legal tender
Initially, the government of El Salvador faced harsh criticism for its BTC adoption policy. Critics warned about the effects of crypto's volatility on the economy. IMF, members of the US congress, economists & Salvadorans opposition leaders led the charge against what they saw as a reckless 'gamble'.
For a moment, the news of BTC adoption triggered protests. Hundreds of protestors - including pensioners, workers, and veterans, and pensioners – marched across the nation's capital, San Salvador. They were worried that BTC adoption of crypto would jeopardize their future welfare & pension.
Still, president Bukele stood firm and demonstrated that his government's Bitcoin policy was not a mere PR stunt.
In Bitcoin, Bukele saw a path to ensure that banking facilities were accessible to a more of his underbanked citizenry. Some people were concerned about BTC's price volatility. Others argued it was going to promote corrupt money laundering.
Bitcoin adoption and international remittances
Salvadorans are reaping the rewards of adopting BTC. El Salvador sees millions of dollars in remittance each day via hundreds of BTC ATMs.
Neighboring countries have been observing closely the effect Bitcoin as parallel legal tender in El Salvador has had over remittances. Most of these nations are heavily dependent on these remittances too.
President Bukele has also expressed interest to incorporate new features and services around Bitcoin.
Paxful Unveils Bitcoin Educational Center in El Salvador
Paxful, an online platform for peer-to-peer Bitcoin transactions has opened an educational facility in El Salvador to assist citizens to learn more about Bitcoin and how to use it more effectively. The effort, dubbed La Casa Del Bitcoin, intends to increase Bitcoin acceptance by providing free information, as the majority of Salvadorans are still unfamiliar with the technology.
In a statement, Paxful said the center would offer free training and events to the people of San Salvador, El Salvador, to raise awareness about the benefits of using Bitcoin as a means of exchange in the community.
"The center will further drive the next wave of Bitcoin mass adoption and equip growing segments such as small merchants and local businesses with tools to connect to a global community of users."
The center will open its classes and training to the public on Thursday, February 3, and welcomes anyone interested in learning more about Bitcoin and Lightning.
Paxful CEO Ray Youssef said in a statement:
"The center will provide education, accessibility and opportunity to a population that has been ignored by traditional finance, and demonstrate the real-world benefits of Bitcoin to emerging markets."
The facility will also contain Paxful and the Built With Bitcoin Foundation, a humanitarian organization dedicated to utilizing Bitcoin to promote equitable opportunity through access to excellent education, clean water, organic agriculture, and humanitarian assistance, in addition to instructional resources.
The director of philanthropy of Built With Bitcoin Foundation, Yusuf Nessary, said in a statement, "The projects that we are launching demonstrate the power of Bitcoin as a philanthropic tool to aid change and further financial freedom." "We're grateful for the opportunity to deliver resources and continue building equitable opportunities for countless people and communities who bring our mission to life."
Paxful is an international peer-to-peer service that allows users to conduct payments, exchanges, and transfer cash using Bitcoin as a medium of exchange. It was launched in 2015. Youssef and Nessary later partnered to form the Built With Bitcoin Foundation, which has constructed and renovated eight schools, seven solar projects, and more than a dozen water and farming systems around the world.
El Salvador will establish a Bitcoin City and a Bitcoin Bond
El Salvador intends to establish a "Bitcoin City" adjacent to a volcano. The city will be funded by the crypto, the country's President Nayib Bukele stated on Saturday.
Bitcoin City construction location
The city will be constructed near Conchagua volcano in southeastern El Salvador and will offer commercial and residential areas, entertainment, services, restaurants as well as an airport. Construction is planned to start in 2022 and apart from value-added tax (VAT), residents will not be subjected to taxes.
El Salvador President Nayib Bukele announced that his government will build an oceanside “Bitcoin City” at the base of a volcano.
In June, the country enacted a law making it the first nation globally to adopt Bitcoin as legal tender. However, not all of its citizens support the initiative.
For instance, in September, thousands of Salvadorians took the streets to protest against the bitcoin adoption legislation), expressing concerns the adoption of the cryptocurrency could lead the country to instability.
The Central American country has also created a Bitcoin wallet to enable citizens to use the crypto.
At the same time, El Salvador anticipates raising approximately $1 billion through a "Bitcoin Bond" in conjunction with Blockstream, a virtual assets infrastructure firm. According to the government, half of the money will be used to purchase Bitcoin, while the other half will go toward Bitcoin mining and energy infrastructure.
Mining is an energy-intensive process through which new Bitcoin are created by solving cryptographic puzzles. The government said it intends to utilize geothermal energy sourced from the volcano to power the crypto mining.
Samson Mow, chief strategy officer at Blockstream said, "There is a five-year lock-up on the bond which is designed to take $500 million of Bitcoin off the market for that period of time."
According to Blockstream, Investors in the bond will earn an annual special dividend.
Bitcoin has dropped by about 16% from its record high of $68,990.90 which it hit earlier this month, still, the crypto is up over 90% this year.
El Salvador’s bitcoin bond
El Salvador announced the launch of the first-ever bitcoin bond towards the end of last year. Much has since happened towards making the dream achievable including key partnerships with major industry players who are driving the process forward and making key moves to realize the dream by end of the first quarter in 2022.
January 22nd, 2022
Blockstream’s Simon Mow explains
One key person in the process is Blockstream’s CSO Simon Mow. Simon is the Chief Architect of the $1 Billion Bitcoin Bond. In a recent interview with a leading magazine, Mow explains what his company is doing to bring the Bitcoin Bond to reality. Mow coins that history is being created in El Salvador and leading the world in the area of crypto-based bonds.
Blockstream is at the heart of bond issuance. The bond will be issued on Blockstream’s Liquid Network. The Bitcoin Bond is designed to attract investment towards bitcoin mining in the South American Nation. Proceeds from the bond are will be divided between a $500 million direct allocation in BTC and energy and mining infrastructure.
The legislation required to grant legal certainty towards the management of the Bitcoin Bond is already underway. The finance minister Alejandro Zelaya stated that about twenty bills are ready to be tabled at El Salvador's Congress.
Mow answers the question of why he is referred to as the Bond’s Chief Architect. Mow notes that he bridged the gap between the idea and the creation of an instrument to actualize the idea of the bond. To do this, Mow notes that he had to join all the working parts of the bond and most importantly Liquid and Bitfinex. Mow adds that a lot is going into prepping the bonds for release. For instance, legislation on securities as well as licensing Bitfinex Securities to manage the issuance.
Mow adds that Bitfinex is an ideal partner as one of the largest crypto exchanges and has vast liquidity hence the choice. Further, Mow notes that Bitfinex supports Liquid and Lightning networks, with much success.
Mow also revealed in another interview that holders will get a further 50% of what the El Salvadorian government makes after it recoups the first $500million apart from 6.5% bond earnings. Mow further adds that they have structured the bond to accommodate smaller investors to purchase from as little as $100.
"You could model it in a number of ways," Mow said. "You could say that Bitcoin will gain 5 percent YOY [year-over-year] or 10 percent YOY, whatever you want, but as long as it gains something, this bond is probably better than any other bond on the market just from a traditional finance perspective."
Whether this will happen remains to be seen. Investors have made verbal commitments of almost $500million, according to some press reports. Mow however says that he has not been keeping track of the commitments and has instead been focusing on the operational side of the bond issuance.
El Salvador also recently purchased more BTC to add to its Bitcoin reserves in readiness for the issuance. El Salvador currently owns at least 2381 BTC.
March 23, 2022
El Salvador halts Bitcoin bond citing unfavorable crypto market conditions
El Salvador's finance minister, Alejandro Zelaya, has revealed that the Central American nation's much-anticipated Bitcoin-backed bond will be shelved until market prospects improve.
Between March 15 and March 20, the government intended to sell $1 billion in bonds to investors. El Salvador plans to convert $500 million into Bitcoin and use the remaining $500 million for Bitcoin mining infrastructure. Investors are then required need to hold the bond for at least five years in order to receive dividends as the government liquidates the BTC. Due to the intended exploitation of the Conchagua volcano as a power source for mining, the idea has been dubbed "volcano bonds."
Zelaya says the war in Ukraine and the current market volatility have caused the authorities to delay the launch, perhaps until September. He says, however, that going out to international markets in the fall is difficult.
Zelaya stated, "Now is not the time to issue the bond." He is optimistic about a release in the first half of the year.
El Salvador will issue a Bitcoin bond through Blockstream, a company that uses the blockchain developer's Liquid protocol to expand Bitcoin adoption. Liquid Network is a Bitcoin layer-2 that facilitates the issuance of security tokens and other digital assets.
The first Bitcoin diploma program is launched in El Salvador
El Salvador has launched the first-ever Bitcoin diploma program in its public education system. The majority of the 200 students in this 10-week course will be 16 and 17 years old.
This pilot program will be easily replicable and then extended countrywide later this year. The goal is to create precedents and resources that can be copied both in and outside of El Salvador.
Aiming for roughly 1.5 Bitcoin, they plan to raise funds in stages so that funds may be used for early work as quickly as possible.
One-time expenses include creating new classrooms and conducting high-quality surveys repeatedly. In the future, operating costs will be significantly lower.
First published on Nov 16, 2021