The Bitcoin conference at Miami has ended on a high note, with an announcement that the President of El Salvador - Nayib Bukele - will send a bill to parliament to adopt Bitcoin as a legal tender in the country. Enjoying huge popularity in his country, and a majority in the parliament, passage of this bill in the next week is considered a formality.
This news is a step in the path of adoption of Bitcoin, and will prove to be a fascinating test case for developing countries looking to transform their economy away from reliance on the USD.
After what has been a fairly cringe Bitcoin conference for BTC maxi's to make Bitcoin look like a cult, this announcement is undoubtedly the best news to come out of Miami. The news reports are spreading quickly, here are a couple of mainstream reports on the news:
CNBC report
While details are still forthcoming about how the rollout will work, CNBC is told that El Salvador has assembled a team of bitcoin leaders to help build a new financial ecosystem with bitcoin as the base layer.
Business Wire report
Making bitcoin legal tender is a leapfrog moment that can help countries like El Salvador shift from a largely cash economy to an innovative, inclusive, and transparent digital economy where your bank account is your phone. That is especially meaningful in El Salvador, where about 70% of people do not have bank accounts or credit cards. In addition, remittances account for more than 20% of El Salvador’s GDP, and incumbent services can charge 10% or more in fees for international transfers that take days to arrive and must be collected from a physical location. That amounts to hundreds of millions of dollars a year that people could save or spend with local businesses in their communities – demonstrating the powerful use cases and addressable market opportunities from scaling Bitcoin and the Lightning Network for everyday uses.
Coindesk article
El Salvador’s plan sits in stark contrast to a competing vision of money gaining traction among central banks. About 80% are studying central bank digital currencies (CBDCs) in a global push to make fiat more compatible with the digital economy.
None, however, have seriously considered implementing that through a cryptocurrency beyond their control.
The adoption of BTC by El Salvador will be an interesting development to watch. A nation adopting a hard currency at is one of it's legal tenders, alongside the USD, will be the ultimate test of whether Bitcoin can become a currency of the future, and an integral part of peoples lives, rather than just a tool for speculation and "numbers go up" mentality. The potential is there for El Salvador to transform it's economy from being one that people are trying to escape, to a successful and vibrant nation.
Time will tell how this move is treated by the US and other nations. El Salvador will be working with Bitcoin industry leaders and solutions like Strike (a Bitcoin Lightning network payments App) and Blockstream to transform the economy into one based on Bitcoin. 70% of the nation don't have a bank account, many are reliant on remittances from family that have left the country, but a mobile phone is all they will need to access a monetary system.
To me this is more like what I have been hoping for from Bitcoin. Western institutional adoption and companies holding Bitcoin on their balance sheet is nice, but fulfilling Bitcoin's potential as an alternative financial system providing hope and opportunity to any one in the world, is more in line with my vision for the future. There are so many people in the world that have been locked out of opportunity and hope for a better future, whether through lack of access, corruption or just the misfortune of being born in a poor nation.
Maybe, just maybe, Bitcoin can actually fix that.
I for one will be paying close attention to how El Salvador transitions to a Bitcoin economy, and what this could mean for other developing nations of the world.
Thanks for reading,
JK.