El Salvador Says Tourism Went Up Since Bitcoin Inception—Is It True?

El Salvador, the first country in the world to recognize Bitcoin as legal tender, has claimed that its tourism numbers have spiked 30% since legalizing the cryptocurrency.

The nation’s Minister of Tourism, Morena Valdez, told El Salvador News English the 1.4 million incoming visitors surpassed the government’s estimate of 1.1 million, with Americans accounting for 60% of all tourists.

However, the picture may not be as rosy as it’s painted out to be. 

According to Fortune, Bitcoin’s value has decreased 17.5% since the start of the year, having shrunk a total of 44% from its all-time high in November 2020. 

Furthermore, the cryptocurrency habits of the country’s President Nayib Bukele have lost the nation as much as US$22 million in reserves since it began, as per a report from the Los Angeles Times.

At the moment, the country hasn’t made it clear how it’s purchasing Bitcoin, though it claims to have set aside a US$150 million fund to back its cryptocurrency holdings. 

In reality, Bitcoin could be hurting El Salvadorans in many ways, such as making remittances more expensive—which is a problem for the nation most reliant on remittances from citizens living abroad in the Western Hemisphere. 

As such, global authorities, including the International Monetary Fund (IMF), has been watching the escalating situation closely, issuing advice that recognizing Bitcoin as legal currency may not be the best idea. 

In January this year, the IMF even sent out a press release telling El Salvador to halt its use of Bitcoin as legal tender as it “entails large risks for financial and market integrity, financial stability, and consumer protection.” 

For a country struggling with debts—which now exceeds its GDP by a whole 50%—perhaps it should slow down on being the first to legitimize cryptocurrency, as it risks going on the “gray list” of countries suspected for financial wrongdoing by the Financial Action Task Force.

“El Salvador recognizing Bitcoin as official currency opens the door for money-laundering cartels and undermines US interests,” said Senator Bill Cassidy.

But, as Insider pointed out, with plans in place to build the world’s first ‘Bitcoin City’ powered by geothermal energy from a volcano, it’s likely the country will plunge both feet first in the growing cryptocurrency craze. 

[via Fortune and Insider, cover image via Allexxandar | Dreamstime.com]