For the past 665 days, El Salvador has been consistently buying 1 Bitcoin per day, regardless of market price fluctuations. This demonstrates the country's commitment to adopting Bitcoin as part of its economic strategy.
Long-term Bitcoin purchase strategy
According to SpotOnChain, 3046 Bitcoins of El Salvador's total holdings were purchased at an average price of $43,888 per coin. This daily purchase strategy began over a year ago, and El Salvador seems unaffected by market volatility. This is a bold and unusual strategy for a developing country, showing El Salvador's willingness to take greater risks for potential future rewards. With continuous Bitcoin accumulation, the country also shields itself from the inflation risks often affecting fiat currencies like the US dollar.
Crypto-based trading proposal
El Salvador's next step appears to be more ambitious, as the country prepares a proposal to introduce a crypto-based trading system aimed at facilitating transactions between El Salvador and Russia. According to Alexander Ilyukhin, the First Secretary of the Russian Embassy in Nicaragua, El Salvador has adopted Russia's policy on cryptocurrency use, particularly for international trade. Such adoption could reduce dependence on the US dollar and expedite cross-border transactions. If implemented correctly, this move could also encourage other countries to consider using cryptocurrencies in their international trade amid global economic uncertainties and increasing sanctions against certain nations.
Challenges and potential benefits
While El Salvador has established itself as a pioneer in Bitcoin adoption, this move is not without challenges. Although some parts of the society and international community react positively, there are also critics who claim that reliance on cryptocurrency can be risky due to Bitcoin's notorious volatility. However, the Bukele administration seems confident that the long-term benefits of this adoption will outweigh the risks. Additionally, El Salvador must consider international regulations and the impact of this policy on its relationships with other countries, including the US. The move to collaborate with Russia on crypto-based trade might attract attention from those concerned with Russia's influence in Latin America.
El Salvador's steps towards Bitcoin adoption and utilization reflect the country's drive for innovation and economic independence. Despite the challenges, the country continues its confident path towards a long-term perspective.
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