Mon, September 16, 2024 at 13:31

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I have some significant news regarding El Salvador's financial strategy.

  • President Nayib Bukele announced during his Independence Day address on September 15 that the country will abandon external debt to finance its national budget starting in 2025.

  • 
• Annie

  • Wow, that's a bold move!😮 How is El Salvador planning to achieve this?

  
• 

  Kang-hoon

  • Indeed, it is.

  • The country's Bitcoin strategy has played a significant role in this development.

  • Since adopting Bitcoin as legal tender in September 2021, El Salvador has been leveraging the cryptocurrency to boost its economy.

• Annie

  • Bitcoin as legal tender?

  • That sounds risky.

  • How has it worked out for them so far?

  
• ADward

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• 

  Kang-hoon

  • Surprisingly well.

  • In November 2022, the government initiated a '1 BTC a day' program, purchasing one Bitcoin daily.

  • As of now, they hold 5,875 BTC, valued at approximately $345 million.

• Annie

  • That's impressive!

  • But how do they manage the costs of mining Bitcoin?

  
• 

  Kang-hoon

  • El Salvador uses volcano-fueled geothermal energy for its mining operations.

  • This method is more cost-effective than traditional electricity, making their mining operations sustainable and efficient.

• Annie

  • Volcano energy?

  • That's fascinating!🌋 Are there any other strategies they are using to attract investments?

  
• 

  Kang-hoon

  • Yes, earlier this year in June, President Bukele proposed the creation of private Bitcoin banks.

  • These banks are designed to provide easier access to Bitcoin for investors, with fewer restrictions compared to traditional banks.

• Annie

  • Private Bitcoin banks?

  • That could really change the financial landscape.

  • How has the international community reacted to these moves?

  
• 

  Kang-hoon

  • The reactions have been mixed.

  • Some see it as a revolutionary step towards financial freedom, while others are skeptical about the volatility of Bitcoin.

  • 

  • However, notable figures like MicroStrategy's co-founder Michael Saylor have shown support by adopting similar Bitcoin strategies.

• Annie

  • Michael Saylor?

  • Isn't he the one who made significant investments in Bitcoin for his company?

  
• 

  Kang-hoon

  • Exactly.

  • Since 2020, MicroStrategy has been buying Bitcoin and including it on their balance sheet.

  • Just last week, they made their largest single purchase of Bitcoin worth $1.11 billion, which resulted in an 18% increase in their stock value.

• Annie

  • That's quite a success story!

  • Do you think other countries might follow El Salvador's lead?

  
• 

  Kang-hoon

  • It's possible.

  • For instance, former President Donald Trump has promised to create a strategic Bitcoin reserve if re-elected.

  • The US already holds the largest amount of Bitcoin, primarily from seizures, including those from the Silk Road dark web marketplace.

• Annie

  • Interesting!

  • So, overall, would you say this news is a positive development for El Salvador and the market?

  
• 

  Kang-hoon

  • Yes, I would.

  • El Salvador's move to abandon external debt and leverage Bitcoin is a bold and innovative strategy.

  • If successful, it could set a precedent for other nations and further legitimize Bitcoin as a viable financial asset.

  • This is definitely a positive development.

  • Upon comprehensive consideration, this news is perceived as a 😍Bullish.