James Doogue

El Salvador has become the first country in the world to make the cryptocurrency Bitcoin legal tender when 1 Bitcoin was worth US$52,656 on 6 September 2021.

When Bitcoin peaked at A$66,938 in November 2021, El Salvador's President Nayib Bukele, probably thought he was a financial genius.

By 10 May 2022 Bitcoin had dipped to A$44,700. Like many gamblers, President Bukele chased his losses and cheerily tweeted that his country just bought 500 more Bitcoin, 'on the dip'. The current low price was not a problem, but an opportunity.

El Salvador has spent an estimated US$205.6 million on this Bitcoin gambit. About US$105.6 million of taxpayers’ money was used to purchase bitcoin, and another US$100 million rolling out bitcoin ATMs, developing software, and giving US$30 worth of Bitcoin to so far 4 million El Salvadorans who opened the special wallets.

Each time its value has dropped, Bukele has bought more Bitcoin, live-tweeting the purchases.

Having drunk from the same broth as his President, El Salvador’s minister of finance Alejandro Zelaya told a press conference on 13 June that the risk of the bitcoin fund was "extremely minimal” and that the country hasn’t lost anything as it hasn’t yet sold its holdings.

At the current price of US$20675.70 El Salvador's reported 2,300 Bitcoins are worth just US$47.6 million. They will need Bitcoin to increase in value by more than 330% just to break even on their investment to date yet the President and his Minister of Finance keep smiling.

They remind me of the Monty Python And The Holy Grail's Black Knight as he loses a limb. 'It's just a flesh wound.' Then when he's left with just a head and torso he refuses to be defeated and says to the King he's been duelling, "We'll call it a draw then."

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