Power over … El Salvador is not the unlikely leader to accept Bitcoin as money

Turn on… is a monthly opinion columnist for Marc Powers who has spent much of his 40-year legal career handling complex securities cases in the United States after joining the SEC. He is currently an Assistant Professor at Florida International University College of Law, teaching a course on Blockchain, Cryptocurrency and Regulatory Considerations.

When I attended the Bitcoin 2021 conference in Miami two weeks ago, several things made me feel interesting and important. While many others have covered the conference, I will focus on some of the comments or events that I think are important to the crypto and blockchain space.

At first, the conference was full of church believers or people curious about crypto and bitcoin (BTC). Miami Mayor Francis Suarez opened the celebrations with grandeur, noting that Miami was the first US city to publish a Bitcoin white paper on a government website in 2008. As a transplanted New Yorker who now lives in Miami and teaches blockchain law to law students there, that makes me proud.

When the curator asked how many viewers had attended this particular Bitcoin conference in recent years, many of the strong 12,000 people gave their support. These participants are long-term owners, developers, investors and entrepreneurs. And they have a strong liberal bias, as evidenced by the well-received keynote address by Ron Paul, a former senator from Texas, who said that “dictators” rule the government, our government, and the Federal Reserve, depriving us of our freedoms and rights. Rub! I didn’t know Paul had radicalized or become that radical.

MicroStrategy CEO Michael Saylor says that Bitcoin is the life force of the world. Draper Fisher Jurvetson founder Tim Draper commented that Bitcoin represents “freedom and trust”. I love Winklevosses, who used the metaphor that “Bitcoin is software to the hardware of gold” and wowed the crowd by stating that the US dollar was “the greatest of them all”. Twitter CEO Jack Dorsey justified this with the fact that “the Internet needs a local currency”.

It is remarkable who was Not present: “the right ones” and “the unbelievers” so to speak. According to Satoshi Nakamoto, the marginalization or elimination of financial intermediaries, capitalists and their henchmen is the real promise and main purpose of the blockchain. In absenteeism include traditional commercial and commercial banks, private equity and venture capital firms, traditional investment banks and hedge funds, and corporations and professionals like law firms and accounting firms to help them catch up – or help them figure out how to use the blockchain and thus consumers and the public through licensed blockchains.

For me, I find that quite refreshing. It feels like the cool shows I went to in 2018, at a time when those absent players were calling Bitcoin a hoax or a scam and excited about its 2018 price drop. While not everyone of 2018 understands the rules of the road, be it for mass adoption or the best way, there is still sincerity, great camaraderie, and trust can benefit economically and politically from this unconstrained financial system that BTC can create. They are the ones who recognize that rampant inflation is a clandestine and clandestine devaluation of citizens’ wealth. As Paxos co-founder and CEO Charles Cascarilla said at Bitcoin 2021, Bitcoin is not just a good idea, it’s a legitimate idea for an alternative financial system.

Cryptocurrencies are legal

Also interesting for me is the lack of discussion about the legitimacy of cryptocurrencies as an investment nowadays, both at conferences and elsewhere. I remember sitting on a pro blockchain and cryptocurrency panel at the time and a board member, a former Goldman Buck, disapproved of crypto by saying he would only accept stocks or notes for any investment in a blockchain startup .

Remember, as infidels and others who prayed for the demise of BTC, found that owning a cryptocurrency is a dumb game because the coin doesn’t give you the same dividend rights as shareholders, rights to startup or ecosystem profits, or governance -Grant rights? It’s amazing how that worry has almost disappeared from crypto chats, now with a market cap of around $ 1.2 trillion and electronic money futures trading on the Chicago Mercantile Exchange and New York’s parent company Intercontinental Exchange Stock Exchange. Perhaps DeFi gets some credit for this, as it allows investors to earn “interest” by lending and depositing their funds, and part of the credit comes from its growing popularity as well.

El Salvador

The head of the show, however, is neither Tony Hawk nor the woman who appears to be yelling at Dorsey in the front row about Twitter’s privacy policy. It is the young President of the Republic of El Salvador, Nayib Bukele, who comes from the most populous country in Central America. He appeared on video broadcast at the end of the conference. Since 2001, El Salvador has given up its own fiat currency, the Colón, and uses the US dollar as its official currency.

At the conference, Bukele announced that the country would introduce Bitcoin as the second domestic fiat currency alongside the US dollar. A few days later, the local legislature passed a new law on this. In Miami, he stated that this assumption “will create jobs and help fund thousands of people outside of the formal economy”. (According to reports, around 70% of the adult population in El Salvador do not have a bank account or credit card.)

According to the report, not only does the law require all merchants to accept BTC for goods and services in commerce, except for those who lack the technology to do so. It also removes any capital gains tax on exchanging BTC for transactions to add more stability to the digital asset. Eventually, a development bank will be set up holding $ 150 million in BTC so traders can instantly convert BTC into US dollars. Rub!

Connected: Adopt the Bitcoin Standard? El Salvador is inscribed in the history books

Today we have many countries and cities testing use cases for blockchain beyond the financial promise, including providing supply chains and recording real estate transactions. Examples are Sweden, Georgia, the United Arab Emirates – and with the help of the International Monetary Fund, Bolivia, Peru and Argentina. But no country has yet equated the assets developed by computer code with the US dollar!

It will be interesting to see how the rest of the sovereign states react to this. I’ve read about studies by economists who claimed that El Salvador’s economy will collapse because of this law. And the IMF ensures. Let’s look at the next country that will do the same. I assume that there will be many in the next few years so that this dual system can coexist in these countries. That’s something I’ve been predicting since 2018.