The president of El Salvador is rejoicing after the Bitcoin stockpile that he acquired using public funds has become profitable, buoyed by the persistent increase in the value of Bitcoin.
Since 2021, Nayib Bukele has put more than $120m (£95m) of El Salvador's resources into acquiring Bitcoin.
He encouraged his detractors on X (which used to be referred to as Twitter) to issue corrections and apologize.
Despite the enthusiasm, economists caution that it is premature to applaud the gamble taken by the individual driving the initiative to promote Bitcoin adoption.
This week, Mr Bukele resigned from his position of president to start his campaign for a second term that is predicted he will most likely gain due to his current standing with people in the Central American nation.
Data from a website monitoring his Bitcoin portfolio showed that the 2,764 coins he purchased were worth more than he had paid for them, by Tuesday afternoon. If he had sold them when the article was published, he could have earned around $3.7 million.
The estimates of the figures were made exclusively from Mr Bukele X's posts informing of every purchase. As for who created the website, they are unidentified and could not have been contacted for a statement.
Mr Bukele posted a picture of the website's graph on Monday claiming it was a testament to his success - however, X users pointed out an error in the maths and it emerged that the milestone had in fact been reached 24 hours later.
"Mr Bukele announced that El Salvador's Bitcoin investments are in the plus column,"
He stated that there had been a huge number of articles and critical pieces mocking their supposed losses. He emphasized that it was essential that the doubters and the writers of those critical pieces retract their comments.
Posts by Mr Bukele have been met with mostly positive feedback, with Bitcoin fans praising him for his insight and the possibilities of digital currencies.
At one point, the value of Mr Bukele's bitcoins dropped to half of what he initially invested. However, in the last seven days, the price has advanced to $44,000 per coin, largely attributed to the possibility of modifications in the US's financial regulations pertaining to digital currency.
Nevertheless, certain economists from El Salvador and other places do not consider the present to be as momentous as Mr Bukele desires.
His government has allocated $120m for the purchase of Bitcoin coins, which is just a fraction of the public funds that have been utilized to promote the cryptocurrency in El Salvador following its status as the first nation to make it a legal tender on par with the US dollar, the primary currency of the country.
"Oscar Picardo, director of the Institute of Sciences at Francisco Gavidia University, in San Salvador, El Salvador, stated that the government expended a considerable amount of money on the production of the Chivo Wallet application, the setup of ATMs (most of which are not operating) a $30 bonus for all persons aged 18 and over, as well as for publicity and overseas events," reported Picardo.
When the total of all expenses is calculated, the outcome cannot be favorable. It is a loss - and a major one.
In June, a BBC documentary about Bitcoin adoption in El Salvador delivered findings which suggested that, despite a considerable investment, the digital currency was receiving less use by the people than Mr Bukele and other Bitcoin proponents had hoped. It is not a sign of economic growth, but of one more opportunity to make a speculative gain."
Tatiana Marroquin, an independent Salvadorean economist, has remarked that President Bukele's enthusiasm regarding the growth of Bitcoin's value is deceptive. Instead of being indicative of an economic advancement, it only presents another chance to speculate for financial gain.
The economic costs of the Bitcoin project cannot be counterbalanced.
Around two hundred million dollars of public money has been invested in efforts to convince people to accept digital currency, according to Ms Marroquin.
She states that it's a complete disappointment, as very few people in El Salvador use Bitcoin, and it doesn't appear to be of interest even in the tourism sector.
Lourdes Molina, a senior economist at the ICEFI think tank, acknowledged that Bitcoin's adoption for the purpose of reducing the costs associated with transferring money abroad had declined lately, even though the coins' value had increased. This was because Salvadorans preferred the stability offered by dollars in physical form.
"She expresses that, in the face of consistent and ever-growing poverty and lack of food, dispatching public money for betting has an effect on society."
The public funds could have been allocated to ensure that the citizens of El Salvador had their basic rights respected, such as the right to food and a suitable income.
Economists have also commented on the lack of transparency regarding accounting for spending on Bitcoin or the status of President Bukele's $100m reserves; there is no public agency which tracks these numbers.
Frank Muci, a policy fellow at the London School of Economics and Political Science's School of Public Policy, states that no official information is available other than President Bukele's Tweets. He further suggests that a Bitcoin block-chain wallet address would "trivially prove" the government's ownership of the claimed bitcoin at no cost.
Some Bitcoin fans have voiced their grievances concerning the dearth of details.
Pledditor, a crypto investor, expressed regret that Bitcoin accounting isn't being presented formally by them.
It is more mysterious than the gold kept at Fort Knox in the United States.
Mr Bukele's office declined to respond to inquiries made.
Dr Saifedean Ammous, the author of The Bitcoin Standard, was reportedly appointed as economic adviser for Bitcoin to the Bukele government in May. When asked about the absence of transparency, he did not answer but remarked that the increase in the value of the Bitcoin reserve was something to rejoice in.
He noted that it was noteworthy that Bitcoin and El Salvador's investment had regained their footing after two years in which they had been worth less than their initial cost, since politicians, economists and global entities had consistently labeled the Bitcoin strategy of President Bukele as a failure due to the price dip. The achievement also revealed that Bitcoin was a viable replacement for national currencies and government bonds that chronically decreased in worth.
Dr Ammous commented that despite the notion of El Salvador's Bitcoin strategy being disregarded due to lack of immediate consumer usage, this does not consider the greater perspective.
The criticality of Bitcoin to El Salvador's economic autonomy and treasury is far more significant than it is for customer payments. It provides a store of value that increases in worth over time and has an extensive, and ever-expanding, international liquidity source.
Mr Bukele has often expressed negativity towards institutions such as the IMF, who cautioned him concerning the potential dangers of utilizing the cryptocurrency for El Salvador, emphasizing that obtaining a loan from them would be hard.
The IMF did not make any remarks concerning the latest news.
Mr Bukele recognized that the cost of Bitcoin would keep on being unstable - yet he has no intentions to dispose of the reserve.
Comments