A year of ups and downs

Sept. 7, 2022 marks exactly one year since El Salvador became the first country in the world to adopt Bitcoin (BTC) as legal tender by enforcing the Bitcoin Law.

Advocating for Bitcoin as legal tender last year, El Salvador President Nayib Bukele promised that Bitcoin adoption would benefit the 70% of the local population that had a lack of access to banking services as of 2021.

The Salvadoran government also touted Bitcoin as a tool to attract foreign investment, create new jobs and cut reliance on the U.S. dollar in the country’s economy.

One may question the current real benefits of Bitcoin adoption in El Salvador as Bitcoin has lost roughly 60% of its value since the country adopted the cryptocurrency as legal tender.

Exactly on this day one year ago, BTC was trading at around $46,000, according to data from CoinGecko. On Sept. 6, 2021, the Salvadoran government made their first Bitcoin purchase, buying 200 BTC at $10.36 million, or at an average price of $51,800. That makes a huge contrast with current BTC prices, as Bitcoin tumbled below $19,000 on Tuesday. At the time of writing, Bitcoin is trading at $18,806, down more than 64% over the past year.

According to data from Nayib Bukele’s portfolio tracker, El Salvador is now down on all 10 Bitcoin purchases that the government has made since adopting BTC as legal tender. The Salvadoran government has bought a total of 2,381 BTC so far, which is at current prices worth $62 million less than the price El Salvador paid for its current BTC holdings.

El Salvador’s minister of finance, Alejandro Zelaya, previously emphasized that despite dropping prices, the country didn’t experience any losses on its BTC purchases because they did not sell the coins. The Salvadoran government has also repeatedly delayed its Bitcoin bond project, citing unfavorable market conditions and geopolitical issues.

Amid plummeting crypto prices and the ongoing bear market, some industry observers started referring to El Salvador’s Bitcoin adoption as a “failed Bitcoin experiment.” Others suggested that that might not be the case as the country has apparently had some positive impact on El Salvador’s economy and financial market, including the cost of transactions.

Bram Cohen, the creator of BitTorrent and founder of Chia Network, took to Twitter on Tuesday to point out that the amount of benefits often “isn’t very…