El Salvador and Future Crypto Riches
With its ongoing purchases of Bitcoin, coupled with being the first country in the world to officially acknowledge Bitcoin (BTC) as legal tender, El Salvador has thrust itself into the spotlight across the crypto sphere in recent times.
It has purchased 1,120 Bitcoins to date, translating to $76.16 million (at $68,000 per BTC). A small amount at a national level, but when you factor in the anticipated growth of the crypto space, notably Bitcoin, its potential of the asset to go beyond $1 million per coin and El Salvador’s GDP of roughly $24.64 billion*, its initiative as an early mover (relative to other countries) could reap massive rewards in the coming years for the Latin American state.
Moreover, measures to help boost education across their country, particularly in relation to technology, investment in the blockchain/distributed-ledger-technology (DLT) sector and friendlier regulations to facilitate large-scale investing in El Salvador, could all help position itself as a major player across its region in the coming decades.
Notwithstanding these abovementioned ideas, governments at all levels need to be held accountable and there should be transparency in terms of how money is being obtained and invested (or spent). To his credit, President Nayib Bukele made an announcement about the plan to build 20 schools, funded by these Bitcoin profits, and to educate residents about how digital assets work.
Such windfalls (let alone general taxes) should be spent efficiently for its general population, with ample investment in education, healthcare, utilities (especially for improved Internet reliability and speeds), and so on. However, if global data are anything to go by, many would understandably be sceptical about how much will be allocated to those most in need, as opposed to a small elite who often wield a disproportionate amount of political clout on an individual level.
Nonetheless, there is strong potential for positive change in developing nations such as El Salvador (with a GDP per capita of $3,279) by giving Bitcoin a go. Additionally, it is possible that ongoing improvements to, and the use of DLT across various aspects of society, could help improve transparency, reduce inequality and foster greater innovation.
Whilst it is too early to ascertain how much of an impact Bitcoin and DLT will have in achieving this, President Bukele and his team are certainly living up to the name of their political party, Nuevas Ideas (‘New Ideas’ in Spanish) by giving the crypto and its underlying technology a fair go in their country.
References and additional resources:
https://coinmarketcap.com/alexandria/article/el-salvador-to-build-20-schools-using-bitcoin-profits
https://futurethinkers.org/industries-blockchain-disrupt/
https://hbr.org/2020/05/building-a-transparent-supply-chain
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