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Will El Salvador's big cryptocurrency gamble pay off?


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A June 16 article on the BBC website, originally titled: Bitcoin: Will El Salvador's big cryptocurrency gamble pay off? The recent collapse in the price of cryptocurrencies like bitcoin is affecting investors around the world, including the government of El Salvador. The Central American country has pumped huge amounts of money into bitcoin and made it legal tender nine months ago, encouraging the population to use it in everyday transactions. People can buy almost anything in El Salvador with bitcoin, from trinkets and tacos to gasoline and even houses. Shopping with cryptocurrency at roadside stands and large chain stores is an extraordinary experience.


It Started at "Bitcoin Beach"


The recent cryptocurrency crash has raised more questions about the Salvadoran government's bitcoin policy, especially since the government used nearly $100 million in public funds to buy bitcoins. Today, the value of the 2,300 bitcoins purchased by the country has fallen to half of what it was when it was purchased, but the finance minister is unfazed by the criticism, claiming that the "fiscal risk is minimal.


El Salvador's "bitcoin movement" began in the surfing and fishing town of El Centro in the south of the country, where an anonymous donor began offering bitcoins to local cryptocurrency enthusiasts in 2019 and has made multiple donations since then. No one admits to knowing who he is, and the town holds these digital currencies on the premise that they cannot be exchanged for dollars. The idea is to create the world's first circular bitcoin economy, where people can pay in bitcoin and make a living from it.


It's a radical idea. In other parts of the world, bitcoin can be used for online purchases, but it's not yet possible for people to use it on the street, except for a few trendy cafes or one-off items. So far, Elsonte has received about $350,000 worth of bitcoin from that donor, no small amount for this decaying but beautiful town. Today, it's known as "Bitcoin Beach".

What do you think?

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10 hours ago, BDLLTD said:

It Started at "Bitcoin Beach"

Grab Your Sunblock, Your Digital Assets, and Head to Bitcoin Beach

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(Bloomberg) -- El Salvador’s millennial president Nayib Bukele is no tourist when it comes to Bitcoin. Last year, under his leadership, El Salvador became the first country in the world to approve Bitcoin as a form of legal tender. That means if you want to pay for something in El Salvador, you have two currency options: Bitcoin or US dollars.

Since then, President Bukele has bought more than 2,000 Bitcoins using public funds. And whenever there’s a particularly sharp decline in the crypto market, he is fond of tweeting that he’s “buying the dip” and adding to those Bitcoin holdings. He doesn’t appear to be stressed by the market volatility, or by the drumbeat of international organizations like the IMF that have criticized his crypto decisions. He’s even created a so-called “Bitcoin beach” in the coastal town of El Zonte as a pilot project.

 

By Victoria Vergolina
June 22, 2022 | Bloomberg

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