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- The upcoming introduction of bitcoin bonds in El Salvador is mainly reliant on retail investors, but institutional distrust threatens the project’s success.
- According to a top bank official, 0.01 percent of the debt was paid in bitcoin outside of remittances.
One entrepreneur, Jose Pais, intends to purchase around $200 of the bitcoin bond in order to support the country because “it’s a large, appealing gamble.” Indeed, it appears that President Nayib Bukele is banking on individuals like Pais, as well as retail investors across the world, to ensure the success of the bitcoin-backed bonds, which are expected to go online this week.
Since last year, the Central American country’s sovereign bonds have been rated junk, and the government is battling to pay off existing debt. The International Monetary Fund has pushed Bukele’s administration to remove Bitcoin’s six-month-old legal money status, worrying that it would be misused.
Benefits are concern
Analysts feel that the bond’s benefits are limited since sovereign bonds provide a better return than the bitcoin bond’s 6.5 percent payment.
Some have been irritated by Bukele’s secrecy around the acquisition of bitcoins for the city. “Obscurity with public money is the clearest government policy,” says Ruth Lopez, a senior official of the anti-corruption non-profit Cristosal.
According to bankers and investors, the bonds will be issued by thermal energy business La Geo, and Americans will not be able to acquire bonds through Bitfinex since they are prohibited from utilizing the company’s services. Salvadorans will be able to acquire the bonds using Bitfinex.
Mixed sentiments on bitcoin
According to a top bank official, 0.01 percent of the debt was paid in bitcoin outside of remittances, while a competitor stated it had handled an “irrelevant” amount of transactions.
Bukele’s bitcoin bets have largely gone unmet, as just 2% of remittances in January were transferred from digital wallets, despite the government previously noting expensive international remittances in fiat as a reason to adopt bitcoin as legal money.
Many people appear to distrust bitcoin or are unfamiliar with it. “I’m not really sure how to utilize it, it terrified me that it goes up and down, it’s quite unpredictable,” said Alejandro Jimenez, a contact center employee.
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Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
