The Bitcoin Office in El Salvador is born
El Salvador, a well known Bitcoin friendly country, has just announced that all taxation related to technological innovations such as software programming, coding, app and artificial intelligence development and hardware manufacturing will be removed.
Will this be the prerequisite for El Salvador’s growth and prosperity?
Let’s take a look at all the details of this together.
No tax in El Salvador to innovate the country technologically
El Salvador was the first country that accept Bitcoin as legal tender.
It is now on the verge of accelerating the country’s economic and technological growth by removing all taxes on software programming, code and app development, as well as hardware manufacturing.
This is a real one turning point for the country: the introduction of Bitcoin as a currency on September 7, 2021 was only the first move President Nayib Bukelewho want to utilize new technology to fight hyperinflation and poverty in the country.
In fact, it is well known that Bukele planned to use possible future capital gains from the purchase and sale of Bitcoin to modernize El Salvador.
As was promised by the President himself last week, he would send a bill to Congress proposing to eliminate all taxes on income, property and capital gains from technology-related activities.
The promise was kept: On March 31, Bukele tweeted the following:
Done ✅ pic.twitter.com/vzKJ5rI3qv
— Nayib Bukele (@nayibbukele) 31 March 2023
What will happen now? Will there be a successful transition of the country to a situation of economic prosperity?
At the moment, it is not possible to predict what the consequences will be on the economic front for El Salvador.
These tax incentives will definitely help the country’s internal development and will also ensure opportunities for adjacent populations, who may decide to start businesses located in software, hardware and AI development while enjoying the tax breaks just described.
In addition, countries such as Guatemala, Honduras and Nicaragua may decide to do so Follow in El Salvador’s footstepseffectively pushing the adoption of the cryptocurrency world throughout Central America.
If, however, you think that people from more prosperous countries like the US, Canada, Germany, China and Australia will move to El Salvador to start technology-based businesses, you are on the wrong track.
It is worth remembering that El Salvador is one of the most dangerous countries in the world: in 2022 the homicide rate was 12.6 inhabitants per 100,000.
To give you an idea, in Italy there are 0.6 murders per 100 thousand inhabitants. This is about 20 times the price.
Consider that only yesterday President Nayib Bukele proudly tweeted that in April there were no murders for two consecutive days.
No tweets today, so there’s probably been at least one murder: think for yourself.
Segundo día de abril with 0 homicides.
Como se puede ver en la gráfica, abril 2023 ya se compara con abril 2022, mes en el que ya estaba funcionado el Regime de de de de de Excepción.
— Nayib Bukele (@nayibbukele) 3 April 2023
The Bitcoin office is born in El Salvador
With the news of zero tax on technology activities in the country is the announcement of the creation of the “Bitcoin Association of El Salvador”, also known as Bitcoin Office.
This body will be responsible for regulating initiatives among pro-Bitcoin entrepreneurs and companies.
The association’s stated goal is to “position the country in the world as a technological and economic powerhouse.”
Bukele is trying hard to grow El Salvador using Bitcoin.
Earlier this year, he passed a bill that would allow the issuance of bonds backed by Bitcoin. This will be a somewhat risky financial product, but quite interesting to watch.
The president’s efforts are not only about the country’s technological economic environment, but include activities to promote tourism, fight terrorism and create regional economic units.
Ayer timos una reunión muy especial con la @bitcoinofficesv
Las empresas de #Bitcoin y los reguladores llevan initiativas conjuntas para aportar aún más a #El Salvador
Como miembro de @asobitcoin you will receive este y muchos mer beneficios exclusivos! pic.twitter.com/OFgzpO4GA6
— Asociación Bitcoin de El Salvador (@asobitcoin) 30 March 2023
El Salvador: how the investment in Bitcoin is going
How’s El Salvador’s Famous Bitcoin Investment Going?
In September 2021, in addition to declaring the leading cryptocurrency by market value as legal tender, Nayib Bukele bought several Bitcoins on several occasions to make up for the country’s poverty and decay.
According to the available data, El Salvador currently holds 2,381 BTCbought at an average price of $43,357: This is an expenditure of around 100 million dollars.
As of today, considering that the price per Bitcoin is $28,140, the value of the investment is around $67 million.
This is a total unrealized loss of $33 million.
Assuming that Bitcoin has not yet been sold, and therefore the current value may change over time, we can still say that Bukele does not really represent a trader to be taken as an example.
The same can be said about the famous Michael Saylor, CEO of MicroStrategy, a public company with the largest number of BTC on the balance sheet, viz 138,955.
For Saylor, the unrealized loss is all around 240 million dollarswell over El Salvador’s loss.
However, in this case, the average purchase price for MicroStrategy is $29,817
MicroStrategy repaid the $205 million Silvergate loan at a 22% discount. From 23.03.23, $MSTR bought another ~6,455 bitcoins for ~$150M at an average of ~$23,238 per #bitcoin & held ~138,955 BTC bought for ~$4.14B at an average of ~$29,817 per bitcoin.
— Michael Saylor⚡️ (@saylor) March 27, 2023
