Asset management firm VanEck expressed optimism at El Salvador’s bold Bitcoin (CRYPTO: BTC) bet, terming it as a model of innovation for the emerging world.
What Happened: A report penned by Matthew Sigel, VanEck’s Head of Digital Assets Research, took stock of the Central American nation’s experience with Bitcoin and its positive impact.
The report highlighted that nearly 8% of Salvadorans have used Bitcoin for transactions by 2024, terming it a “meaningful step” forward for a country with traditionally low electronic payment adoption rates.
Sigel touched down on the country’s soaring Bitcoin reserves, which represented 1.6% of the country’s GDP.
The idea of a “Volcano Bond,” the proceeds of which are aimed to fund the development of Bitcoin City, an economic zone powered by geothermal energy, was also lauded.
See Also: Crypto Analyst: Bitcoin Poised To Skyrocket To $180K and ‘Eventually’ Top $1M
Furthermore, VanEck bet on the country’s potential as a clean energy-powered Bitcoin mining hub. Interestingly, President Nayib Bukele floated the "rent your volcano to mine Bitcoin” idea just a day before.
The report also foresaw strong collaboration between the incoming Donald Trump administration and El Salvador.
“With Trump's well-documented support for Bitcoin and focus on reshoring and "friend-shoring" supply chains, El Salvador could emerge as a strategic partner in U.S. efforts to build regional alliances.”
Why It Matters: El Salvador has doubled down on Bitcoin ever since adopting the world’s largest digital currency as a legal tender in 2021. The country has adopted a plan to buy one Bitcoin every day, until it becomes unaffordable with fiat currencies.
As of this writing, El Salvador holds 5,945.77 Bitcoins in its treasury, worth nearly $561 million at current market prices.
But despite the promising figures, the Bitcoin adoption in El Salvador has not been a resounding success.
Earlier in August, President Bukele admitted that the uptake of Bitcoin in the country hasn’t been as widespread as anticipated. However, he emphasized that the government never forced anyone to adopt it, offering it as an option instead.
Price Action: As of this writing, Bitcoin was exchanging hands at $94,259.83, down 3.74% in the last 24 hours, according to data from Benzinga Pro.
Photo Courtesy: Shutterstock.com
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