Bitcoin as a Part of El Salvador’s Growth Strategy
El Salvador faces major economic challenges. Around 70% of the country’s population doesn’t have a bank account. They heavily rely on money transfers sent by migrants. According to the World Bank, around 26% of the GDP comes from remittances. High international transaction costs make the country dependent on the global economy. El Salvador’s national currency is the US dollar, which means dependence on the US monetary policy and lack of control.
Bukele adopted Bitcoin as a solution to the described challenges. In 2021, he announced making Bitcoin a legal tender to increase El Salvador’s economic freedom, financial inclusion, and economic growth. Bukele said Bitcoin’s use in the country would increase the GDP, and reduce remittance costs, which would improve the lives of millions. Now, while the US dollar remains the primary currency for official purposes and economic standards, El Salvador allows conversion and use of Bitcoin through an automatic system, as explained by PwC. The automatic conversion system allows businesses to instantly convert any Bitcoin payments to U.S. The government also launched a digital wallet app, called Chivo, to allow citizens to manage their Bitcoins easily. In less than 3 weeks, Chivo was actively used by 2.1 million Salvadorans.
Bukele's Bitcoin strategy also includes investing in cryptocurrency for the national treasury. In November 2022 El Salvador started “The 1 Bitcoin a day” program, which suggests buying one Bitcoin every day until it becomes unaffordable with fiat currencies. In March 2024, Bukele said the country had stored over $400 million in Bitcoin.
That’s not all. Since 2023, foreigners can gain Salvadoran citizenship in return for $1M in investments in Bitcoin or USDT/ The initiative, named the “Adopting El Salvador Freedom Visa Program,” is limited to 1,000 participants a year, who can receive a Salvadoran passport with their spouse and children.
https://www.gncrypto.news/news/nayib-bukele-the-pro-bitcoin-president-of-el-salvador/
