Bitcoin and AI Adoption Could Skyrocket El Salvador's GDP, Says ARK Invest CEO
Summary:
El Salvador's focus on Bitcoin and artificial intelligence could potentially trigger a tenfold growth in its gross domestic product (GDP) over the next five years under President Nayib Bukele’s leadership, according to Cathie Wood, CEO of ARK Invest. If the nation's GDP climbs to $300 billion, it will be on par with countries like Romania, the Czech Republic, and Chile. However, obstacles such as a technologically-illiterate population and issues during the 2021 roll-out of El Salvador’s Chivo Wallet have stunted widespread Bitcoin adoption. Despite these hurdles, there's been increased merchant uptake spurred by Bitcoin's early 2023 price rise.
El Salvador's economy may witness a tenfold growth in the next half-decade should it continue to capitalize on its Bitcoin and artificial intelligence strategy under Nayib Bukele’s administration, comments Cathie Wood, the CEO of ARK Invest. She credits the potential economic elevation to Bukele's vision of transforming his country into a hub for Bitcoin and AI – two of the most transformative socio-economic and technological phenomena in recent history. Wood expressed her insights in a May 28 X post after discussing El Salvador's integration of Bitcoin in its capital markets, AI, and tax policy reforms with Bukele.
The CEO outlined how the nation could potentially boost its GDP to $300 billion by 2029. Bitcoin proponent Max Keiser, who advises Bukele on Bitcoin matters, shared the discussion insights, referring to how Wood "guided them through the numbers."
The assembly also included Bitcoin supporter Stacy Herbet, US economist Arthur Laffer, and Marc Seal, a research associate at ARK Invest. El Salvador reported a GDP of $32.4 billion in 2022, marking a growth of over 30% since Bukele assumed power in June 2019 (World Bank data). A GDP of $300 billion would place the nation's economic output nearly at par with countries like Romania, the Czech Republic, and Chile.
Under Bukele's reign, El Salvador legalized Bitcoin, exempted tech innovation from taxes, and abolished income tax on foreign earnings and money transfers in March. Google broadened its presence in the country with a $500 million strategic partnership in April 2024. As of now, El Salvador's treasury holds 5,764 Bitcoin, worth around $396.2 million – a 58.6% uptick from the initial purchase value.
However, Bitcoin integration at the grassroots level seems to be lagging. Roadblocks such as low tech-literacy, a lack of business compliance, and complications during the 2021 launch of El Salvador's Chivo Wallet have been obstacles, according to Jamie Robinson, Chief Strategy Officer at The Bitcoin Hardware Store. A January survey by the José Simeón Cañas Central American University found that Bitcoin usage among locals for transactions was down to 12% in 2023, dipping from 2022.
Nevertheless, Robinson acknowledged the positive impact of Bitcoin's price increase in early 2023 on local merchant uptake, with companies like Walmart, Starbucks, and Domino's paving the way.
Published At
5/29/2024 8:39:26 AM
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