El Salvador’s President Nayib Bukele announced Thursday night that the Central American country has moved approximately $400 million worth of Bitcoin cryptocurrency assets into a “cold wallet” secured in a physical vault within the country’s territory. .
“cold wallet” protects your cryptocurrency assets by storing the security keys needed to access them on a physical hardware device that is completely disconnected from the internet, preventing hacking attacks that could lead to the loss of your assets. This is a way to prevent intrusion.
Cold wallets themselves do not hold any assets. Rather, because Bitcoin resides within an online blockchain, it retains a means of accessing the assets in that account.
Bukele described the cold wallet on social media as El Salvador’s first “Bitcoin piggy bank” and attached a photo of the transfer of 5,689.68 Bitcoins, worth an estimated $406.6 million at the time of the transfer.
We have decided to move the majority of #bitcoin We will store it in a cold wallet and store that cold wallet in a physical storage location within the territory of our country.
You could say it’s our first #bitcoin Piggy bank🇸🇻
It’s not a big deal, but it’s steady work 😂 pic.twitter.com/dqzedykxT1
— Nayib Bukele (@nayibukele) March 14, 2024
In addition to an unprecedented crackdown on violent gangs in El Salvador, the adoption of the cryptocurrency Bitcoin is one of Boucle’s key policies.el salvador adopted Bitcoin became legal tender in 2021. Since then, both cryptocurrencies and the US dollar have become the country’s official currencies.
El Salvador officially abolished its currency, the Salvadoran colon, in 2001 and adopted the US dollar to avoid the country’s massive inflation problems. This process, commonly referred to as “dollarization,” has also been adopted by other countries in the region, such as Ecuador and Panama. In Argentina, President Javier Millay has promised to eventually dollarize the South American economy.
Bitcoin has experienced dramatic fluctuations in its value in recent years, and Bukele said,buy In 2022, a “dip” occurs and you buy more of the asset after the price falls.
Bukele reiterated that was fired When the value of Bitcoin continued to fall, it was feared that it meant a loss for the Central American nation at the time. Bitcoin prices have skyrocketed in recent weeks. reach A record high of over $72,000 per unit.
El Salvador’s President Nayib Boucle speaks to reporters at the National Palace of Mexico (AP Photo/Marco Ugarte, File).
Bukele’s announcement comes weeks before the next “”.cut in half” The effect is expected to occur in late April. By design, Bitcoin experiences a “halving” effect every four years, slowing down the rate at which new units are created on the blockchain.
Currently, approximately 19 million Bitcoin units are “mined” out of a maximum cap of 21 million. Any halving effect effectively increases the scarcity of the asset, thus increasing demand and potentially impacting the value of the asset based on supply and demand concepts. At the current rate, All 21 million Bitcoins Be expected It is expected to be mined and distributed sometime in 2140.
Neither Bukele nor the Salvadoran government has publicly disclosed the total amount of Bitcoin the country holds, but Thursday’s announcement reportedly The estimated amount of Bitcoin held in El Salvador is much higher than previously believed by cryptocurrency media.general tracker kThe company, now known as the Naib Bukele Portfolio Tracker, estimated its total holdings at about $205 million before Bukele’s cold wallet announcement.
Regarding public trackers, Bukele said: claimed The value published by the website through his social media accounts this week does not include any bitcoin the government receives from the passport program, cryptocurrency mining projects or the conversion of bitcoin to the U.S. dollar for local businesses. Stated.
The Congress of El Salvador law This would provide a fast-track path to citizenship for foreign Bitcoin investors who “donate” to the government’s social and economic development programs. The law does not set a minimum amount required to qualify.
There was another program called the “Freedom Visa.” launched In December, the Salvadoran government will offer citizenship and residency visas to up to 1,000 people per year who are willing to invest $1 million worth of Bitcoin or Tether (USDT). Tether is another cryptocurrency whose value is pegged to the US dollar.
Christian K. Caruso is a Venezuelan writer who chronicles life under socialism. You can follow him on Twitter here.
