President Nayib Bukele is bankrupting his country with an absurd Bitcoin experiment
El Salvador's president, Nayib Bukele, declared late Wednesday that his government will begin purchasing one Bitcoin every day on Thursday. And, while Bukele hasn't indicated when he'll stop purchasing bitcoin, it's likely to be a breathtakingly stupid choice, given the large loss he's already incurred by buying bitcoin at an all-time high last year.
"We are buying one #Bitcoin every day starting tomorrow," Bukele tweeted about 11:30 p.m. on Wednesday. El Salvador
The current price of one Bitcoin is at $16,540, down 1.5% from the previous day and 73% from a year ago. When El Salvador purchased massive amounts of Bitcoin in November 2021, Bitcoin was trading at an all-time high of almost $68,000.
According to the most recent Bloomberg News assessments, President Bukele has already cost El Salvador millions of dollars. El Salvador has not officially stated how many bitcoin purchases the nation has made, but we can deduce from Bukele's tweets that he has acquired 2,381 Bitcoin since the start of his experiment. According to Bloomberg, the purchase price for all of the country's Bitcoin assets was $105 million, while the current value is at $39.4 million. Even with annual inflation of over 8%, Bukele would have been better off simply retaining US dollars in cash.
Despite El Salvador designating Bitcoin an official currency in late 2021, few individuals use the cryptocurrency to make purchases in the country. And one of the most commonly touted grounds for proclaiming it a currency, remittances from overseas, has also been a flop. According to Reuters, over $6.4 billion in remittances were transferred to El Salvador from September 2021 to June 2022, although fewer than 2% of those were in bitcoin.
According to CoinDesk, El Salvador's credit rating has been continuously lowered as a result of the Bitcoin experiment, with the country's rating presently resting at CC, due to the risk that it may fail on bond payments due in 2023.
Bitcoin, like all cryptocurrencies, is a complicated system for channeling money from the impoverished to those who are already wealthy and powerful. According to a recent survey, most people lose money while trading bitcoin. But that doesn't stop many ordinary folks from trying. And the same ordinary folks are suffering financially as crypto exchanges declare bankruptcy one after the other.
As massive scams like FTX have demonstrated, recent explosions in the crypto business have dampened enthusiasm. The founders of FTX took real money from users and gambled it away on a hedge fund called Alameda Research, all while inventing at least two cryptocurrencies to hold on their books as "assets." Those assets were garbage, and when rival CEO Changpeng Zhao of Binance tried to cash out $580 million of those garbage assets last week, the entire house of cards at FTX collapsed.
Is any of this going to deter consumers from buying Bitcoin? Clearly not, as we witness probably the world's largest Bitcoin promoter doubling back on his disastrous investment. Bukele is like the gambler who believes he is only one hand away from a big win. But the house always wins, and El Salvador's people will suffer as he gambles away the country's future.
#BTC #Bitcoin #ElSalvador #CoinDesk #FTX
SOURCE: gizmodo
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