In El Salvador, Bitfinex’s tokenization project to fund a Hampton by Hilton hotel failed, raising only $342,000 of the expected $6.25 million. This result highlights the difficulties of tokenization adoption and the skepticism of local investors towards these initiatives far removed from Bitcoin.
El Salvador's Tokenization Project Is Unconvincing
Adopting the Bitcoin law in 2021, and making BTC a legal currency like the dollar, then setting up visas specially created for investors who would like to settle there, El Salvador is today positioning itself as a welcoming land for Bitcoin enthusiasts.
Led by Paolo Ardoino, Tether and Bitfinex are companies with a strong presence in El Salvador and generally in the main Bitcoin-related events around the world. Bitfinex has thus become the first company in the cryptocurrency sector to obtain its license in the country.
🌎Are you interested in the topic of Bitcoin in El Salvador? Read our interview with Découvre Bitcoin, a team of French speakers working with the Salvadoran government
In April 2024, Bitfinex Securities, the platform's branch dedicated to tokenization, launched the first fundraising project by tokenized asset in El Salvador. Investors could acquire tokenized shares of a new Hampton by Hilton hotel via Liquid, a Bitcoin sidechain.
The goal was to raise $6.25 million through minimum investments of $1,000, offering a 10% coupon over a 5-year period.
Unfortunately, According to the media Cointelegraph, the project seems to have failed and Bitfinex should soon reimburse investors..
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Why did the project fail?
The hotel was to be located at the Salvador International Airport, cover 4,500 square meters, rise 5 floors, have 80 rooms, a restaurant, a work area, a swimming pool, a gym and a garden.
Illustration of the Hampton by Hilton project
The project will have raised only $342,000 before the first deadlinean amount that represents only 5% of the $6.25 million that the platform hoped to obtain to begin construction of the hotel.
This failure can be explained by several factors. First, investors may have judged thatsuch a hotel would lack demand and visitors at this location. Then, access to tokenization on The Liquid network is a major obstaclegiven the low adoption of this blockchain.
Finally, investors in El Salvador are mainly focused on Bitcoin and show little interest in the tokenization narrativewhich doesn't make much sense to many of them.
📰 Also read in the news: The German government is selling Bitcoin again, how much does it still have?
During 2023, several Bitcoin mining projects were launched in El Salvador and found some success, including the launch of a billion-dollar mining project in which Bitfinex also invested. Additionally, government-owned mining farms are proving to be very productive, having mined nearly 500 BTC since their launch.
In November 2021, Nayib Bukele, the president of El Salvador, announced the creation of “Bitcoin City”, a metropolis financed by BTC bonds. More than 2 years later, work on this very ambitious project has still not started.
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Source: Cointelegraph
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First attracted by the lure of gain, I am now trapped deep into the rabbit hole. With no way out, I have no choice but to share my knowledge and transmit the passion I have for the blockchain universe. I am also the creator of Adopt a Block, an educational site dedicated to Bitcoin.
Marius Farashi Tasooji
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