Bitcoin has lost more than half of its value since November. Still, El Salvador buys crypto coins. Critics fear that the vagaries of the crypto market are driving the country towards bankruptcy.
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In September last year, El Salvador became the first country in the world to introduce bitcoin as legal tender, alongside the US dollar. A much-discussed financial experiment pushed through by “millennial president” Nayib Bukele, who was elected head of state three years earlier at the age of 37. Bukele hoped with this to digitize the economy, reduce dependence on the US dollar and attract new investors to the small Central American country.
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The measure not only obliges local shopkeepers to accept bitcoin as a payment method in addition to the dollar, but also the government in El Salvador. Citizens can pay their taxes in bitcoins, the state buys bitcoins and recently even issued a (completely flopped) government bond of 1 billion to buy even more bitcoins with the proceeds or to ‘mine’ bitcoins themselves.
Price drop of 55 percent
This risky policy is met with a lot of criticism from the outside world. Not least because it means that public money is at the mercy of the crypto market. And how volatile that crypto market can be, has become apparent in recent weeks and days.
De Standaard focuses on in-depth journalistic research into what determines and turns our lives upside down, across generations and borders. Because understanding the issues of the day starts with grasping the zeitgeist.
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The price of bitcoin continues to fall and temporarily even briefly fell below the symbolic threshold of 30,000 dollars in the Asian market (only to recover somewhat in the European market). That is the lowest price since July 31, 2021 and no less than 55 percent below the historic bitcoin record of November last year. Coincidence or not, almost all cryptocurrencies share in the blows, which can lead to problems in several places in the crypto market. (see inset).