El Salvador was the first country to recognize Bitcoin as a legal currency. President Nayib Bukele purchased almost $300 million worth of Bitcoin in 2021 to fund infrastructural development for the Central American nation.

Read also: Here is why you should be cautious about investing in Bitcoin for now.

Bitcoin prices peaked in 2021 as the world recovered from the COVID-19 pandemic.

At the time, investing heavily in the coin seemed like a brilliant idea. President Bukele gave out $30 worth of the popular coin to about 6.5 million citizens while using $100 million from government coffers to make further investments in the cryptocurrency.

Read also: Bitcoin is waning in global popularity as Web3 gains relevance- Google trends report.

Bukele’s Resolve To Solve El Salvador’s financial issues by Investing heavily in Bitcoin.

El Salvador is a remote and debt-scarred country where many citizens earn their living by farming. The government was determined to take advantage of the crypto market to improve the citizens’ quality of life. After Bukele offered $30 worth of the crypto to every citizen, he erected Bitcoin ATMs in every suburb and instructed every business owner to begin accepting the coin as payment.

While some Salvadorians were sceptical, Bukele enjoyed support from foreign crypto enthusiasts determined to see a wider adoption of cryptocurrencies as legal tender.

Though several critics pushed for his head and renounced his decision to invest so much of the country’s funds into a volatile venture, Bukele did not fret.

He furthered his resolution by trolling critics via a tweet, saying he had completed the transaction on his phone, stark naked in his bathroom.

Assured that he would save his country from the steep, he told international creditors that his country’s financial redemption was close, not far-fetched; he tweeted: “#Bitcoin is FU money!”

Read also: Bitcoin has plunged below the $20,000 mark, but it is not yet a sign to sell

El Salvador’s Bitcoin Project

El Salvador’s crypto project is concentrated on a software application processed on smartphones. The app called Chivo loosely translates to “cool” among Salvadorians. This app ensured users could send and receive dollars or the popular crypto according to their discretion.

The user scanned a QR code to purchase $1 pupusa, and after the completion of the scan, Chive would forward $1 worth of Bitcoin at the present exchange rate. The fees deducted for each transaction were cost-friendly. Users could withdraw US dollars from their virtual wallets and do this at the country’s 200 Chivo ATMs.

The ATMs are in a blue-covered hut, hosting a desk designed for two workers to help users navigate easily, while there are soldiers at the back, heavily guarded to oversee and protect the place 24 hours a day. Unfortunately, a week after the app got released, a deluge of protesters crammed the street lifting podium with placards saying “No to Bitcoin” and “No to Dictatorship.”

The Market’s Meltdown and El Salvador’s Loss

It has been a year already since El Salvador invested so much of its government funds into the popular cryptocurrency. There has been a reverberating meltdown in the crypto market, and the losses accumulated have been stupefying. 

Almost no one in the country is using cryptocurrency, and the few who bought the coin after Bukele made it legal tender would’ve lost big.

Bitcoin has suffered a drop of 61% since September 2021. In an environment where many survive daily with less than $10, Bukele has made a terrible mistake by pouring the country’s financial largesse into Bitcoin, portraying himself as a crypto influencer.

Salvadorans are currently stuck in this debacle, and it seems there are no escape routes for them out of this mess.