El Salvador and Bitcoin
due to the past The overall cryptocurrency market has fallen sharply. until the company Financial institutions or funds that have invested in cryptocurrencies received a lot of damage Some have even declared bankruptcy, such as in the case of 3Arrow Capital (3AC) funds or the famous CeFi platform Celcius and many exchanges around the world are experiencing liquidity problems. Customers cannot withdraw money.
So when news like this comes out a lot. As a result, many people have turned their attention to El Salvador, the first country in the world to declare its support and investment in Bitcoin, where El Salvador is seen as at risk of bankruptcy due to its debt burden. And it also lost 60% of the investment in Bitcoin.
Not to mention Bitcoin, El Salvador already has a lot of debt.
But if we really look at it in detail El Salvador currently has $23 billion in debt, or about 80% of its GDP, and next year El Salvador will have to pay back $800 million to the IMF. El Salvador’s public debt could reach 95% of its GDP by the next 4 years, raising many concerns that El Salvador could be at risk of bankruptcy.
But if we look at the liabilities incurred from the losses in Bitcoin holdings, El Salvador owns 2301 BTC, which has been gradually bought from $51,760 BTC down until the end of the year. El Salvador currently has a holding cost of $45,300 per Bitcoin. Compared to the current BTC price of around $19,000, El Salvador will lose about 60%, or $52 million.
Bitcoin losses only accounted for 0.22% of the debt.
Compared to El Salvador’s $23 billion in total debt and $52 million in Bitcoin losses, Bitcoin losses are only 0.22%, so we can conclude that El Salvador’s Bitcoin losses are not. resulted in the bankruptcy of the country.
On the other hand, the adoption of BTC in El Salvador can answer many questions. For example, El Salvador is a small country with a population of only 6 million and over 70% of its population lacks access to the financial system. of the bank And a portion of the population had to go to work abroad and remit money back to El Salvador if it was the old financial system. Sending money back from abroad took quite some time, but with El Salvador adopting BTC, transactions were quicker and more convenient. This is a good example of creating adoption for BTC.
In addition, the adoption of BTC also contributes to the country’s reputation. Make the world more interested and talking about El Salvador, helping to become familiar with the tourism sector. Last year, El Salvador was a frequent venue for seminars dealing with crypto currencies, and recently, El Salvador’s GDP grew at an all-time high of about 16% compared to last year.
summarize
Thus, it can be concluded that losses in BTC are not about bankruptcy countries. This is because it is a very small percentage of the country’s total debt. But investing in Bitcoin and building a fundamental system that uses Bitcoin technology is behind this time. It is a point that can attract the attention of many people around the world. And if investing in El Salvador’s Bitcoin-based financial system works, we might see more countries turn to Bitcoin in the future.
Article written by Arisawan Nilpanich – Researcher at Cryptomind
Compiled by Bitcoin Addic Thailand Team