Alejandro Zelaya, the Finance Minister of El Salvador, remarked that the adoption of bitcoin has proven to be beneficial for the unbanked population of El Salvador. Further, in an interview with Bloomberg, he said that despite the 50% losses incurred by the government on its purchases, the adoption of bitcoin as a legal tender is still in process.
According to Zelaya, it is high time that new technologies like digital business impose themselves.
Background
Since September 2021, El Salvador has spent about $103.9 million to purchase 2301 bitcoins. However, this portfolio was only worth $46.6 million at the start of July 2022, a decline of about 55%. At present, the value of the portfolio stands at $55.3 million. Mainstream financial institutions heavily criticized the adoption of cryptocurrency by El Salvador. For example, the International Monetary Fund (IMF) urged El Salvador to discontinue the legal tender status of bitcoins in the country.
According to Zelaya, cryptocurrency is a new phenomenon that is gaining ground in the country and will continue to do so in the future. El Salvador had intended to issue a $1 billion bitcoin bond earlier this year but postponed it in March owing to adverse market circumstances. According to Zelaya, the government will review this when the situation improves.
The majority of consumers still favor paying with traditional currency over Bitcoin, according to a survey by the U.S. National Bureau of Economic Research. Zelaya, though, still thinks that digital tokens will play a bigger part in the future.
