El Salvador to Fund New School Developments with Bitcoin Profits

Yes, by purchasing 550 bitcoins in September — at a time when BTC was worth around $47,000 — the El Salvadoran government has made a profit of around $10 million (as of writing), while the purchase of 420 BTC at a price of $60,000 has also earned it around $2 million. While these are hardly gargantuan gains (at least for a government or large corporation), their use in funding new schools — and also El Salvador’s first veterinary hospital — shows just how transformative an embrace of cryptocurrency can be.

And with Ethereum founder Vitalik Buterin donating 500 ETH and over 50 trillion SHIB in May (now worth around $2.85 billion), crypto has been increasingly showing that it can be a force for good. This also comes at a time when people living in economically unstable nations have been turning to bitcoin and other coins in order to help preserve their wealth.

El Salvador’s Bitcoin Gamble Pays Off

In El Salvador, President Nayib Bukele announced on November 2 that the government will build 20 new schools, financed with gains the country has made from its purchase of bitcoin. Along with news of a veterinary hospital, he also suggested that more public works will be financed in the future, assuming that bitcoin continues appreciating in the coming months.

Source: Twitter

While details are sparse on how the financing and construction of the new schools will work in practice (i.e. will bitcoin fund 100% of the costs?), Bukele has said they will be “modern” and “fully equipped.” He has also recently suggested that even “more schools [are] coming” after bitcoin topped $68,000.

Regardless of the specifics, the news shows how Bitcoin and cryptocurrency can, under the right circumstances, benefit the general public, rather than just the few who’ve managed to buy it early in bulk. It also shows how you can win over converts to cryptocurrency, with El Salvador’s bitcoin-financed public spending likely to quell at least some of the protests that met the bug-ridden September rollout.

Cryptocurrency Charity

El Salvador isn’t the only place in the world to have benefited from cryptocurrency in recent months. In India, Ethereum co-founder Vitalik Buterin famously donated SHIB (and some ETH) to a Covid-19 relief fund, with the coins worth around $1.1 billion at the time of the donation (in May).

This fund — founded by Polygon co-founder Sandeep Nailwal — has been steadily distributing the proceeds of Buterin’s donation in the months since. As of late July, it had donated around $20 million (with another $20 million in the pipeline), mainly to organizations involved in distributing food across India and in financing new intensive-care units. And in August, it announced a donation of $15 million to United Nations Children’s Fund (UNICEF) India to procure 160 million syringes, in order to accelerate the deployment of vaccines.

Source: Twitter

India’s Crypto Covid Relief fund isn’t the only example of cryptocurrency-based charity. For example, Binance Charity has raised 1,783 bitcoin to date (worth around $120 million) for a variety of causes, from Covid-19 and earthquake relief funds to funding lunches for deprived children in Africa.

One other prominent crypto-based fund is The Giving Block, which this month opened new funds for 15 different causes. It currently helps over 700 charities accept donations in cryptocurrency, and helped raise “millions” in 2020. Helpfully, it also ran a series of blog posts on the ten biggest cryptocurrency donations of all time, with Fidelity Charitable’s receipt of over $100 million in cryptocurrency gifts being one of the most notable.

On top of this, a wide range of long-established charities now accept donations in bitcoin and other cryptocurrencies, including Save the Children, UNICEF, the American Red Cross, and many others. Some organizations, such as Oxfam, have also begun trialing the use of blockchain technology in order to help deliver aid to different parts of the world.

While such charities and NGOs don’t widely publish data on what percentage of their received donations are in crypto, a recent survey does indeed suggest that cryptocurrency owners are pretty charitable. Conducted by Fidelity Charitable, it shows that 45% of cryptocurrency investors donated $1,000 or more to charities in 2020. Assuming that a portion of this is in crypto, it might suggest that charities are sitting on a trove that could increase in value over time.

There are also a growing number of blockchain-based platforms that have their own native tokens, intended to facilitate donations and support charitable projects in various ways. For instance, AquaGoat is an ecology-focused DeFi token which takes a portion of every transaction fee and sends it to a fund supporting marine conservation efforts. Likewise, Aquari is a platform that takes a tax from transactions in its native token, sending a portion of this tax to a fund for its various conservationist projects.

Underdeveloped Nations Turning to Crypto

And if this weren’t enough, there’s a growing number of people in economically underdeveloped or unstable nations turning to crypto as a means of preserving or growing what little wealth they have. We see this in Nigeria, where rampant inflation has resulted in the world’s highest level of cryptocurrency ownership, and we also see this in places such as Vietnam, the Philippines, Turkey and Peru, all of which face similar problems that, to some extent at least, are eased by cryptocurrency ownership.

Of course, it needs to be said that not everyone can do what El Salvador has done. That’s because (cryptocurrency) trading is, ultimately, about redistributing wealth from buyers to sellers, that is, from people who buy an asset late to those who bought it early. El Salvador has made money because it bought bitcoin a couple of months before it broke its all-time high, and any government or charity buying bitcoin now might potentially lose money if BTC falls afterwards. So it’s probably not a means for most countries to improve their finances.

Still, Bitcoin (and other) maximalists will tell you that BTC (and other coins) will, on average, go up much higher in the long term. So investing in it now will benefit nation states, NGOs and individuals alike in months or years to come.