El Salvador, the first country in the world to make bitcoin an official currency, was able to fully repay a large debt due on January 24, 2023. Last year, the crash in the price of bitcoin cast doubt on this possibility.
2022 has not been a good year for cryptocurrencies, especially for bitcoin. Due to a global bear market that saw prices fall very sharply, bitcoin fell at the start of 2022 from a value of nearly 47,300 dollars to 16,500 dollars on December 31, 2022. of 65% of the price of the currency, which had many consequences and damaged the entire cryptocurrency industry.
It is not just companies in the sector that have been affected by this decline. El Salvador, the first country in the world to make bitcoin an official currency alongside the US dollar, has come under scrutiny from many international observers. According to them, the country’s “bitcoin bet” was not going to be able to hold up any longer, between the decline in the value of the digital currency and the height of the country’s debt. Yet, as Nayib Bukele, the President of El Salvador, announced on January 24, 2023, the country has not been lacking.
$800 million debt repaid
In a lengthy Twitter thread, the somewhat annoyed president explained that in 2022, “almost all the international press said that because of our ‘ bet on bitcoin ‘, El Salvador was going to default on of his debt. The country had, in fact, a debt to pay of 800 million dollars, plus interest.“ They [newspapers] said that if we didn’t make a new deal with the IMF, we wouldn’t be able to repay our obligations because of our bitcoin losses,” he continues.
As proof, he points to the large number of articles on this subject that have appeared in newspapers such as the New York Times, the Washington Post, and numerous Spanish-language titles. The New York newspaper reported that the “poor country” was getting closer and closer to defaulting on cryptocurrency.
New York Times article cited by Nayib Bukele, had also echoed the country’s problems because of the price of bitcoin. We thus explained that El Salvador, which had “dipped into its reserves in order to buy bitcoins, now gone”, would have “fewer funds at its disposal”, which could have led it to default. Other media, like El Pais, took fewer chopsticks, and had simply titled that it was “expected that El Salvador fails”.
Nayib Bukele said via Twitter, the country was able to pay off its $800 million debt in full, including interest — and that’s reassuring news for the country. If the media were right to be skeptical and to evoke the hypothesis of bankruptcy, today we have to recognize that El Salvador got out of it, without needing help. It is however important to specify that, according to Bloomberg, “the Central American nation will succeed in paying its debts thanks to a last-minute loan, and after having undertaken the repurchase of two bonds”.
What will this change? Right now, absolutely nothing. The political and economic life of the country will remain the same, and this should not affect the price of bitcoin. But the experience of El Salvador, which is going reasonably well so far, despite a still fairly low bitcoin adoption rate, will perhaps motivate other countries to do the same. After El Salvador and the Central African Republic, perhaps 2023 will see new nations make bitcoin their official currency.