What is missing to know about El Salvador bitcoins?

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Key facts:
  • It is essential to know how much bitcoin, in total, the Salvadoran State has.

  • What will happen when they want to sell or transfer those BTC? Is there an established protocol?

The president of El Salvador, Nayib Bukele, settled an outstanding “debt.” Although bitcoin (BTC) has been legal tender in the Central American country since 2021, and the government has been purchasing BTC since then, the address that housed those coins was not known.

What if it was all a lie? What if there were no such BTC purchases? Were questions that were hovering not only among the Salvadoran people, but also among the entire bitcoiner community who, for 3 years, has had his eyes on “America’s little thumb.”

These doubts were cleared up yesterday, at least partially. As CriptoNoticias reported, the Salvadoran president published on his social network account X:

«We have decided to transfer a large portion of our bitcoin to a cold wallet and store that cold wallet in a physical vault within our national territory. You can call it our first bitcoin piggy bank. “It’s not much, but it’s honest work.”

Nayib Bukele, president of El Salvador.

Bukele’s message was accompanied by a link to the address in question, in which you can see 5,689 more bitcoin donations that people have been making since it was published.

Bitcoin address belonging to the Salvadoran State. Source: mempool.space

What happened is a great leap in terms of transparency. Precisely, One of the characteristics of the Bitcoin network is that it allows anyone to view and audit all financial movements. that occur in it.

It was striking that the address of BTC that was in the hands of the Salvadoran government had not been made known. For Bukele’s message It can be thought that they had them in some custody service, perhaps, in the hands of some national or foreign company..

But the race for transparency, although it took a gigantic leap last night, is not over yet, because there are several questions left to answer.

Who has the private keys?

Possession of private keys is essential to understand who has real control over the bitcoins stored by the government of El Salvador.

Private keys are, in essence, the method by which transactions can be authorized on the Bitcoin network. Whoever controls these keys has effective power over the funds.

Without knowing this information, There remains a significant unknown about management and security of the country’s digital assets.

It is important to know this detail because it makes the difference between a transparent and secure management of national assets in bitcoin and a situation where funds could be at risk of mishandling or even diversionwithout the appropriate consent of the competent authorities or the population.

In addition, It is likely that this will not be revealed, arguing that it is a sensitive issue for national security..

Who will sign with those private keys when they want to move the BTC?

Signing transactions with private keys is a critical step in the BTC movement process.

Knowing who is authorized to sign transactions clarifies not only who has access to the funds, but also How decisions are made regarding the use of these assets.

This information is vital to evaluating the security of assets and the integrity of the decision-making process within the government.

In a context of transparency and accountability, Knowing the process and those responsible for signing bitcoin transactions is essential for public trust in the management of these assets by the State.

Does the government really have a bitcoin wallet in El Salvador?

Physical and technical confirmation of the existence of a bitcoin cold wallet within Salvadoran territory is necessary to validate the government’s claims.

Although transparency has improved with the publication of the wallet address, the physical presence of the wallet, in the form of a cold wallet stored in a vault as indicated by Bukele, still needs to be independently verified.

This verification is important not only to confirm the authenticity of the statement, but also to ensure that assets are effectively under the jurisdiction and control of El Salvadorwhich has implications for the country’s financial sovereignty regarding its bitcoin holdings.

For now, You can only continue to trust that what Nayib Bukele says is true.

Bukele assures that the state bitcoin wallet is inside a vault in Salvadoran territory. Source: Dall-E, by OpenAI.

How many more BTC does El Salvador have?

The exact number of bitcoin held by the Salvadoran government remains a question that, for unknown reasons, remains open. Bukele’s X post makes it clear that there is more BTC in the hands of the State.

Transparency regarding the total amount of BTC the country has acquired is necessary to evaluate its financial position in relation to its bitcoin holdings.

Besides, Knowing the total volume of assets in BTC (because it is part of the national reserve) is relevant for the country’s economic policyespecially considering the fluctuations in the market value of BTC.

What will the transition to the next government be like?

Bukele will not be eternal. Someday he will be replaced by another president who may or may not be from the same political party.

The transition of the management of the private keys of that wallet to the next government raises questions about policy continuity, asset security and management transparency.

It is vitally important that there be clear and secure protocols for the transfer of information, private keys and responsibility for BTC. There should even be an emergency protocol in the event that the transition, for whatever reason, must be made unexpectedly.

How this transition is handled will affect not only the security of BTC but also the public’s trust in how the State manages public assets. The lack of a clear plan for this transition could result in vulnerabilities for both the security of funds and the financial stability of the country.

How will the private keys of Bitcoin be delivered to the next government, when Bukele leaves the presidency? Source: Dall-E, by OpenAI.

Answering these questions is essential to strengthen confidence in the management of bitcoins held by the Salvadoran State, while ensuring the transparency, security and responsibility in the management of these funds by the government. Clarity in these areas will further strengthen El Salvador’s success in its bitcoin experiment.

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