With the current supply of Bitcoin in circulation and a price close to USD 9,500, its use to pay off the foreign debt of some Latin American countries is quite flattering.
In a hypothetical case where some of these countries – or BTC holders – decided to use all of their outstanding Bitcoin to pay their foreign debt, at least nine Latin American countries could do so without any problem.
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The countries in question would be Uruguay, Ecuador, Peru, Colombia, Costa Rica, Guatemala, Honduras, Bolivia and Nicaragua. For this group of countries, the external debt is on average around 22 percent of the demand for all Bitcoin in circulation in order to cancel their international commitments.
Currently, the total circulating supply of Bitcoin according to the CoinMarketCap crypto market indicator is about 18,427,250 BTC, which is almost 88 percent of the 21 million units minted in the Nakamoto white paper.
The data correlated between each country’s foreign debt as reported by its official institutions and the total supply of Bitcoin reflected that Colombia is the country that requires the most BTC currently in circulation, with 80.67 percent of the 18 million units available.
The above table also reflects that the small Central American nations of Guatemala, Honduras, and Nicaragua require the least amount of BTC in order to pay off their total foreign debt, minus an average of six percent.
On the other hand, Bolivia is the fourth country with the least amount of BTC outstanding to honor its commitments, closing a group of countries next to those mentioned above that only need one percentage digit of total BTC outstanding to pay their foreign debts.
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More interestingly, the entire current supply of Bitcoin would allow for the cancellation of the global external debt of at least 7 countries in this group studied: Bolivia, Honduras, Nicaragua, Guatemala, Costa Rica, Uruguay and Ecuador.
For this group of seven countries, they would only need 80.19% of the 18 million BTC units currently in circulation to cancel all their foreign debts.
It is not enough for them
In the adverse context, the foreign debt of countries like Venezuela, Argentina, the United States and Spain is so large that even the 21 million Bitcoin projected to circulate on the network at the current price would not allow them to honor their commitments.
With a very large tax burden on their backs and inflation being the norm, Venezuela and Argentina require more than 100 percent of the current Bitcoin supply to cancel their commitments.
The situation is getting worse as we move to countries with larger economies in the region such as Mexico and Brazil, which demand up to 800 percent of Bitcoin’s current supply in the case of the southern giant, which boasts the world’s 10th largest economy.
The most negative note is for the United States and Spain, who due to their poor fiscal situation have been forced to print so much money without support and get into debt in order to balance their coffers, with a future that is increasingly bleak due to the current situation of the coronavirus, which is not possible to pay off its commitments nor with the entire current market of cryptosystems.
With a record of 23 trillion dollars for the US, the situation is unthinkable with the total supply of Bitcoin to be able to eliminate its foreign debt, not even with an average asset price of half a million dollars as some adventurers have predicted.