el salvador

Bitfinex donates 36 BTC to Salvadoran businesses to support economic development

El Salvador officially made Bitcoin legal tender in September 2021; since then, the Latin American country has placed BTC near the center of its economic growth strategy.

Cryptocurrency exchange Bitfinex has donated 36 Bitcoin (BTC) and $600,000 worth of Tether (USDT) to small businesses in El Salvador as part of a broader pledge to support economic development in neighborhoods that have struggled with gang-related violence. 

The funds are being distributed in the socially-deprived communities of Ilopango, Soyapango and Apopa, where gang violence and extortion of small business owners are the most common, Bitfinex announced Thursday. The donations, which will be funded through recipients’ Bitcoin wallets, including the state-sponsored Chivo wallet, will support environmentally-friendly business initiatives that employ local workers.

In addition to funding the donations, Bitfinex’s parent company, iFinex Inc., is working with El Salvador’s government to create a new regulatory framework for digital assets and securities, the company said.

Since making Bitcoin legal tender in June 2021, El Salvador has increased its treasury reserves of the digital asset through several dip-buying purchases. The Salvadoran government now holds 2,301 BTC on its books, worth a cumulative $46 million.

While it appears that Salvadoran businesses have been slow to adopt Bitcoin, the state-sponsored Chivo wallet appears to be growing in popularity for its role in facilitating remittances. Salvadorans living abroad sent $52 million in remittances through the first five months of 2022, according to the El Salvador Central Reserve Bank.

Related: El Salvador president addresses bear market concerns with Bitcoin hopium

Among its many BTC initiatives, El Salvador is planning a so-called Volcano Bond offering worth $1 billion. The Bitcoin-backed bond will be tokenized by Bitfinex and Blockstream, with proceeds going towards the development of Bitcoin City. As Cointelegraph reported, the timeline for the bond issuance is unclear. 

Bitcoin vs bank: Nayib Bukele reminds Peter Schiff why banks can’t trump BTC

Peter Schiff’s bank closure highlights why Bitcoin is crucial for financial freedom, as the nascent asset class has already helped nearly 4 million unbanked in El Salvador to gain banking facilities.

Since the closure of his bank in Puerto Rico, Peter Schiff has been at the receiving end of Bitcoin (BTC) proponents, reminding him this wouldn’t have happened if he was using BTC.

The latest to taunt the gold proponent is none other than El Salvador President Nayib Bukele, who has had a fair share of interactions with Schiff ever since El Salvador adopted BTC as a legal tender last year.

Bukele responded to one of the tweets made by Schiff in January this year criticizing BTC and predicting that the likes of MicroStrategy CEO Michael Saylor and Bukele himself would eventually have to sell their BTC holdings as price drops. The President responded to the tweet by asking about his bank.

The exchange between the two critics comes when the global financial markets are in ruins. On the one hand, the crypto market has lost more than 60% of its market cap from the top, and on the other, the equity market is at an all-time low.

Schiff has been quite vocal about his bank closure and has blamed the corrupt local government for it. He has said that the government is illegally trying to extort him for criticizing them.

While Schiff claims the bank was closed due to his criticism of the government, it highlights how centralized financial institutions such as banks often curtail financial freedom. The price of BTC might fluctuate over time, but the owner is in full control of their funds if they haven’t put them on a centralized exchange.

Related: Deutsche Bank analysts see Bitcoin recovering to $28K by December

Critics often highlight the volatility in the crypto market. Still, the traditional financial market is in no better state either, with inflation touching decade highs and several top stocks registering more significant losses than BTC in 2022.

BTC has been crucial in offering financial freedom to nearly 70% of the unbanked population of El Salvador. Although the price of BTC has dipped more than 60% from its top and critics often like to point out the decline in the number of BTC purchases by the Central American nation, the country has onboarded 4 million unbanked using their national Bitcoin wallet.

El Salvador’s remittance network has been enhanced by the BTC adoption, accounting for millions in cross-border transactions with minimal fees. The country has proven that Bitcoin can offer financial freedom to the unbanked.

El Salvador’s Bitcoin wallet Chivo scores $52M in remittances in 2022

El Salvador payment app Chivo processed $52 million in remittances over the past six months, as expatriates make use of commission-free BTC transfers.

Salvadorans living abroad hsent over $50 million in remittances from January to May this year, according to the El Salvador Central Reserve Bank.

Douglas Rodríguez, president of the El Salvador central bank, unpacked the general economic outlook for the country on the local television news program Frente a Frente on Wednesday.

A major takeaway was the $52 million of remittances processed by national digital wallet service Chivo through the first five months of the year. This marks a 3.9%, $118 million increase in value when compared to the same period in 2021.

Chivo was launched in September 2021 as the Central American country became the first in the world to adopt Bitcoin (BTC) as legal tender. The launch of the app reportedly attracted more than 2 million users in less than a month, leading to major teething problems for the state-endorsed payment platform.

The government-sanctioned payment service provider was relaunched in February this year, necessitated by the onboarding of an estimated 4 million users looking to make use of low fees for payments and transfers made in BTC. American cryptocurrency exchange software firm AlphaPoint came onboard to address scaling and stability issues.

Related: Central African Republic president launches crypto initiative following Bitcoin adoption

Chivo offers users commission-free transfers and payments in BTC and U.S. dollars. El Salvador’s president and Bitcoin proponent Nayib Bukele has previously claimed the app will save citizens some $400 million in annual commissions spent using conventional remittance and payment service providers in the country.

The application also makes use of the Bitcoin layer-2 payment protocol Lightning Network, which provides low-fee BTC transactions. The adoption of Bitcoin and Chivo in El Salvador has had a measurable effect on the uptick in Lightning Network transaction volumes — with a 400% increase in payment volume over the past year.

CAR president urges citizens to understand Bitcoin to bring long-term prosperity

For the past few weeks, the crypto market has been in a tailspin. While other investors may have given up on BTC, its ardent supporters continue to extol its virtues.

Despite the cryptocurrency market’s prolonged bearish trend, some of its most ardent supporters have not been discouraged. This includes the president of the Central African Republic (CAR), who remains bullish on Bitcoin (BTC) and crypto.

In a tweet shared on June 14, President Faustin-Archange Touadéra reaffirmed his country’s decision to make Bitcoin legal currency. He stated that “Understanding Bitcoin is crucial to acknowledge its disruptive power to bring long-term prosperity,” adding that:

“Mathematics doesn’t account for human emotions. Future generations will look behind at these very moments to [celebrate] our strength & unity in choosing the right path during hard times.”

Currently, the cryptocurrency market is facing one of its longest and deepest bear markets in history. BTC, the world’s largest digital currency by market capitalization, is down by almost 70% from its all-time high of $68,789 reached in November 2021 according to data from Cointelegraph Markets Pro. The term ‘hard times,’ as used by the President, refers to the recent crypto market downturn, which has harmed all digital assets and resulted in a total market capitalization loss of $370 billion over the course of a single week.

In late April 2022, the CAR government officially recognized Bitcoin as legal currency after passing a bill regulating digital assets in the country. The move made the central African nation the second country to recognize BTC as legal tender after El Salvador did so in Sept. 2021.

Related: ‘Nothing issue’ — MicroStrategy CEO plans to hodl Bitcoin ‘through adversity’

According to the World Bank, CAR is one of the poorest countries in the world, with a GDP of about $2.4 billion. The country has been beset by political instability and violence for years, making it difficult for residents to access banking services and leading many to turn to cryptocurrency as an alternative way to store value and make payments.

The CAR government’s decision to make Bitcoin legal currency was met with a variety of responses. The World Bank, for example, raised its concerns about the move and stated that it will not support the new “Sango” crypto hub launched in the country.

El Salvador ‘has not had any losses’ due to Bitcoin price dive, Finance Minister says

Salvadoran minister Alejandro Zelaya brushed off the media criticism of the nation’s investments in Bitcoin.

Alejandro Zelaya, the Minister of inance of El Salvador, reacted to the recent media attacks on the nation’s strategy of investing in Bitcoin (BTC) by calling the allegations of fiscal risks “extremely superficial.”

During a press conference held on Monday, Zelaya responded to a journalist’s question about the government’s reaction to Bitcoin’s sharp dip in an emotional manner:

“There is a clear criticism of Bitcoin as such, not of El Salvador’s strategy. El Salvador is what interests them the least, they [the media outlet] are not interested in what happens to our economy, they are not interested in what happens with our people, what happens with inflation.”

The official underscored the impropriety of allegations that around $40 million had been lost by the country’s budget because of the cryptocurrency rate drop since the highest point at which El Salvador has purchased its first potion for $60,300 per BTC in October 2021. Zelaya pointed to the hypothetical possibility of a BTC rebound:

“I have said it repeatedly: A supposed loss of 40 million dollars has not occurred because we have not sold the coins.”

Zelaya also rebuffed the assumptions about high fiscal risk as laughable and ignorant, while calling the risk “extremely minimal.”

Related: Falling Bitcoin price doesn’t affect El Salvador: ‘Now it’s time to buy more,’ reveals Deputy Dania Gonzalez

At the moment, El Salvador holds 2,301 Bitcoin, which amounts to around $50 million by press time. In fiat equivalent, that is less than half of the money the nation has invested in Bitcoin through its purchases in October 2021 and May 2022, when BTC was worth $30,700.

Like the whole crypto market at large, BTC has been declining since its all-time high in November 2021 (around $69,000) with the downtrend accelerating for the last month and a half following a series of the shake-ups such as the failure of Terra (LUNA, now L and the fiasco of a major DeFi lender, Celsius, as well as the global inflation rise.

Here’s how blockchains are helping to advance the global energy grid

Governments and environmentalists are quick to criticize the amount of electricity Bitcoin mining uses, but investors’ growing interest in crypto is leading to positive steps in the energy sector.

The blockchain industry’s impact on the energy sector has been a major source of controversy over the past five years. Governments and environmental protection advocates have routinely expressed concerns about the amount of energy required to keep the Bitcoin network secure. Data shows the network’s energy consumption now rivals the yearly energy consumed by some small countries.

Historical Bitcoin network power demand. Source: CCAF

While much of the debate has centered around the negative environmental impacts of Bitcoin (BTC) mining, the drive to maximize earnings from mining and integrate blockchain technology with the energy grid has also introduced new developments that have the potential to be beneficial in the long term.

Here’s a look at several developments that have arisen out of the demand for energy to operate blockchain networks and the positive effects cryptocurrency mining is having on the energy industry.

Recapturing wasted energy

One of the fastest-growing segments of the cryptocurrency mining industry is the monetization of historically wasted sources of energy such as natural gas that is flared at oil drilling facilities.

Discovering natural gas pockets is a common part of the oil drilling industry, and up until recently, this gas was typically burned in a process called “flaring” because the infrastructure needed for its collection was non-existent or there had not been sufficient demand for LNG.

As the value of Bitcoin rose over time, the search for inexpensive energy sources led to the installation of shipping containers filled with mining equipment at drilling sites that can utilize the energy generated from flaring to mine BTC.

While the process still results in carbon dioxide emissions, income is generated during the process and these funds could be redirected toward mitigating environmental concerns.

Most recently, several companies have been exploring the integration of mining via flared gas in the Middle East, which accounted for over 38% of the global flaring in 2020 and presented one of the biggest opportunities to turn wasted energy into value.

Blockchain technology can make energy generation more efficient

A second side-benefit of the push to maximize crypto mining profits is improvements to the energy infrastructure and an increased focus on developing sustainable forms of energy generation.

Studies by the Bitcoin Mining Council have shown that there has been a noticeable increase in the amount of energy derived from sustainable sources, as opposed to sources like oil and coal.

Less developed countries like Kenya and El Salvador have also been able to benefit from improvements in energy generation from sustainable sources like geothermal power plants, which have given their economies an additional source of income.

Whether it’s the utilization of excess power generated by hydroelectric power plants or an increase in the use of wind and solar power, crypto mining is providing a financial incentive to help further optimization of energy efficiency and generation.

Related: Marathon Digital moves Montana BTC mine to pursue carbon neutrality

Smart grid technology

Another energy-related blockchain development is the formation of blockchain-based smart grids that aim to improve energy distribution on a large scale.

Inefficiencies in electricity distribution have largely been traced to the retail level, where smaller firms who own very little of the electrical grid infrastructure mainly provide simple services such as billing and monitoring meter usage.

These types of services can easily be handled by blockchain technology and Internet-of-Things- (IoT)-devices that help consumers bypass retailers and connect directly with wholesale distributors, potentially reducing electricity bills by up to 40%.

Connecting consumers with a smart grid also allows them to shop around with different providers to obtain the best rates possible. This could help to level the playing field in an industry that has historically been dominated by one local energy company.

Projects like Grid+ and Energy Web Token are helping to lead the way in this field as the old grid design of physical substations and monitoring equipment is replaced with a network of distributed energy resources (DERs) that include battery energy storage systems, solar arrays and natural gas generators.

While the sector is still in a nascent phase, it’s a trend worth keeping an eye on because, in the coming years, blockchain technology is bound to be further integrated into the energy sector.

Want more information about trading and investing in crypto markets?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin Lightning Network capacity charges through 4,000 BTC

The layer-2 technology built on Bitcoin now has 4,000 Bitcoin or $120 million locked up allowing for near-instant payments around the world.

There’s cause for celebration from the world’s largest cryptocurrency. The Lightning Network hit the 4,000 Bitcoin (BTC) public capacity milestone, meaning $120 million in value is ready for peer-to-peer payments.

The Lightning Network first broke the 1,000 BTC barrier in August 2020 and the 2,000 BTC barrier in July 2021. The capacity has doubled in the space of 18 months.

Lightning Network capacity growth since January 2022. Source: Glassnode.

CoinCorner CEO Daniel Scott told Cointelegraph that “we had slow and steady growth with Lightning capacity to begin, but since Jan[uary] 2021, the uptick has been strong.”

Danny Brewster, CEO of United Kingdom-based Bitcoin exchange Fast Bitcoins told Cointelegraph that Lightning Network capacity “likely passed 4K a long time ago with private channel metrics not being publicly available.”

“With that being said, the constant growth has been a great start for the Lightning Network and I foresee it continuing into the future, as long as all stakeholders, from developers to entrepreneurs building businesses continue to push forward.”

A layer-2 payment protocol built on Bitcoin’s base layer, the Lightning Network allows for near-instant transaction finality. In the following video, Paco de la India — a Bitcoin-powered world traveler — buys a pair of shorts from Mozambique-based Bitcoiner Jorge, using the Lightning Network:

Lead on-chain analyst for Glassnode, James Check, told Cointelegraph, “The expansion of Bitcoin’s Lightning Network appears to be transitioning out of the “reckless” phase, and into proper experimentation by early adopters.”

Related: The Lightning Network Lunch: A Bitcoin contactless payment story

“As wallet designs and user experience improve, more kinks can be worked out, and the network will mature. The persistent growth of public Lightning capacity and channel count is a reflection of this vote of growing confidence and growing utilization,” he said.

Scott agreed, sharing that the positive trend is likely to continue “as more companies adopt Lightning and we see more use cases come to fruition.”

“The influence of El Salvador adopting Bitcoin seems to have been an inflection point for Lightning, giving it confidence and proving a real-world use case.”

According to data from 1ML, the average and median transaction cost for sending Satoshis (the smallest denomination of a Bitcoin) over the Lightning is well under $0.01, proving it packs a punch as payment technology. 

Brewster concludes, it’s an “awesome start but a long way to go. It really is still early!”

Bitcoin bond still on hold, El Salvador accused of human rights violations

El Salvador’s finance minister believes the ongoing price volatility of Bitcoin means the awaited “Bitcoin bond” won’t be launched anytime soon. Meanwhile, the country faces a “human rights crisis.”

El Salvador’s Finance Minister Alejandro Zelaya has said the country will further delay launching its anticipated billion-dollar Bitcoin (BTC) bond, citing price volatility and uncertain market conditions resulting from the ongoing Russia-Ukrainian war.

The news comes at the same time that Amnesty International accused the Salvadoran authorities of “flagrant violations of human rights and criminalizing people living in poverty.”

In a Wednesday interview on the local “Frente a Frente” (Face-to-Face) news program, Zelaya was asked if the situation with the $1 billion Bitcoin bond issuance from a “few months ago” had changed.

“No, not yet, the [Bitcoin] price continues to be disrupted by the war in Ukraine,” he said according to a rough translation. He added that “in the short term the variations are constant but in the long term it always tends to appreciate in value:”

“There is a future and there is an economic innovation [in Bitcoin] that we must bet on.”

The plan for the bond was originally announced in November 2021 by El Salvador’s president Nayib Bukele. Half of the $1 billion expected is to fund the construction of a Bitcoin City built near a volcano, with the idea that its geothermal energy could be harnessed for Bitcoin miners. The other half of the funds raised would be invested into Bitcoin.

The $1 billion bond was originally scheduled to launch in mid-March 2022 but ​in an interview in March, Zelaya delayed the launch, citing price volatility, giving a possible launch date around June with a timeline extending until September 2022.

Mounting fears that the country could default on an $800 million bond due in January 2023 caused rating agency Moody’s to downgrade El Salvador’s credit rating on May 4, citing a “lack of a credible financing plan.”

El Salvador’s government has been buying Bitcoin since September 2021, with Bukele announcing that the country purchased a further 500 BTC on May 9. El Salvador is estimated to have lost more than $35.6 million from its BTC investments so far.

Amnesty International: “Human rights crisis”

Meanwhile, human rights advocacy nonprofit Amnesty International accused El Salvador’s government of committing “massive human rights violations” through arbitrary arrests, ill-treatment and torture of prisoners.

A state of emergency (SOE) was declared by President Bukele on March 27 due to a rising homicide rate, which the government blamed on gangs and organized crime. The SOE has since been extended twice.

The human rights group said the SOE changed laws and legal procedures which undermine the rights to defense, the presumption of innocence, effective judicial remedy and access to an independent judge.

Related: El Salvador’s Bitcoin play: What does the current slump mean for adoption?

During the crackdown, more than 35,000 people have been imprisoned in less than three months, with the increase in arrests causing 1.7% of the country’s population over 18 years old to be in detention, resulting in overcrowding of over 250% of the prison capacity.

But, despite the abuses, many El Salvadorians agree with Bukele’s harsh measures, as the president remains popular in opinion polls. The most recent poll released by local media on Wednesday shows a near 87% approval rate for the current president.