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El Salvador Safeguards Bitcoin in Physical Vault within National Territory

Published March 15, 2024 9:11 AM
Teuta Franjkovic
Published March 15, 2024 9:11 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • El Salvador plans to move a significant portion of its Bitcoin holdings to an offline, cold storage wallet for safekeeping.
  • El Salvador’s Bitcoin stash has reached a value of approximately $407 million.
  • The community has reacted positively to an announcement by donating “rare sats” and Ordinals.

President Nayib Bukele announced  on Thursday that El Salvador plans to move “a substantial portion” of its Bitcoin holdings offline.

A device will be securely stored in a physical vault located within the Central American nation’s borders.

El Salvador Stash Hits $407 Million, Transparency Concerns Linger

On Thursday, President Nayib Bukele revealed that El Salvador’s Bitcoin portfolio is worth around $407 million.

El Salvador still needs to completely reveal the exact size of its holdings. However, the recent surge in Bitcoin’s value has renewed global interest in the cryptocurrency.

According to Bitcoin explorer Mempool , the wallet presently displays a Bitcoin balance valued at $388 million.

Nevertheless, just a few hours following El Salvador’s declaration, Bitcoin enthusiast filled the wallet with “rare sats” and Ordinals.

Encrypted Messages and Historic Code

According to Ordiscan , the wallet now holds a minimum of 67 Ordinals donations. These contributions include BRC-20 tokens and text inscriptions, images, a 3D “runestone,” and notably, a copy of the “Cypherpunk Manifesto .” Written by Eric Hughes in March 1993, this advocates for the protection of privacy through encryption.

Ordinals donated to El Salvador
Credit: Ordiscan

The wallet has also received around $700 in donations in the form of satoshis, some of which are “pizza” and “vintage” sats. Pizza sats trace back by early Bitcoin contributor Laszlo Hanyecz. In May 22, 2010, he used 10,000 BTC to buy two Papa John’s pepperoni pizzas, the first ever BTC real-world transaction. Vintage sats, meanwhile, are those mined within the first 1,000 blocks of Bitcoin’s existence.

In total, El Salvador’s new wallet address has had 56 transactions, with the bulk of these transactions being of small value.

Gerson Martínez, a strategist at the Salvadoran Bitcoin mining project Volcano Energy, expressed admiration  for the Bitcoin community on a March 15 post on X, noting the influx of donations to El Salvador’s cold wallet.

The wallet accumlated its balance of 5,689 BTC through multiple transactions. Initially, 1,120 BTC valued at $76.5 million were transferred on March 13, authorized by a 3/5 multisignature mechanism, with the approval of four signatories as reported by Mempool .

The most significant transaction involved the transfer of 4,000 BTC, equivalent to $273 million, which took place at 9:38 pm UTC on March 14, roughly two hours following President Bukele’s announcement.

El Salvador’s Gamble: Soaring Crypto, Low Adoption Rates

In September 2021, El Salvador made history by becoming the first country to adopt Bitcoin  as legal tender, placing it on equal footing with the US dollar. Regarding the initiative to transfer a significant portion of the country’s Bitcoin assets to an offline wallet, President Nayib Bukele remarked, “It’s not much, but it’s honest work.”

This week, Bitcoin’s value briefly soared above $73,000 before experiencing a pullback. This surge followed American authorities’ decision to make access to the cryptocurrency easier for investors. Alongside Bitcoin, other digital currencies, like Ethereum, have also seen their prices climb.

Despite this, a January survey by Central American University (UCA) revealed  88% of Salvadorans did not use Bitcoin in 2023. Bukele’s administration has promoted the use of Bitcoin, aiming to cut the cost of overseas remittances and increasing financial inclusion among Salvadorans, 70% of whom are unbanked.

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