El Salvador Makes History As World’s First Country To Make Bitcoin Legal Tender
Businesses will have to accept the cryptocurrency or the U.S. dollar for goods and services in 90 days time.
El Salvador dropped the bomb. Wow.
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El Salvador has become the first country in the world to formally adopt cryptocurrency after its Congress voted overwhelmingly to approve a law classifying Bitcoin as legal tender ...
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Bitcoin is set to become legal tender in 90 days, meaning every business must accept the token for goods and services, alongside the U.S. Dollar.
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Other countries and banks may begin to adopt bitcoin, or other cryptocurrency tokens, in the future. Lawmakers in a number of Latin American countries have expressed at least a casual interest in following El Salvador’s footsteps, including Brazil and Panama.
El Salvador has installed its Chivo bitcoin ATMs across the US to make remittances cheaper for Salvadorans living abroad
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El Salvador has installed its Chivo bitcoin ATMs in cities across the US to make it cheaper and easier for people to send money to their family and friends who live in the world's first country to make bitcoin legal tender.
There are 50 commission-free Chivo ATMs in 10 cities in the US, locations where local legislation permit the machines, said El Salvador President Nayib Bukele said on tweets posted this week.
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... according to figures cited by The Block ... remittances from the US in 2018 made up 21% of El Salvador's GDP and that Bukele has estimated Salvadorans spend $400 million a year on remittance fees.
Chivo members can make withdrawals and recharge accounts at the ATMs and can use the wallet app to send either bitcoin or US dollars to people in El Salvador. People have usually used services such as Western Union to send money digitally from abroad for cash to be picked up.
Locations for Chivo ATMs include Atlanta, Chicago, Dallas and Los Angeles, Bukele said in a tweet.
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“Two new Chivo facts:
1 – People are inserting way more USD (to buy BTC) than what they are withdrawing from the Chivo ATMs (any media outlet can independently confirm this by visiting the ATMs).
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“Three million Salvadorans are already using Chivo Wallet.”
According to the World Bank, El Salvador has a population of 6.49 million, translating to slightly over 46% of the country’s population using the Bitcoin wallet.
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In this article, we’ll be taking a look at how El Salvador’s crypto adventure has been unfolding to better understand the impact of adopting Bitcoin as legal tender.
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... El Salvador’s investment in a ‘Bitcoin City’ could provide citizens with access to banking services and further legitimize the use of cryptocurrency. However, the adoption of Bitcoin in El Salvador has been relatively slow, and the country has seen significant (unrealized) losses on its BTC investments.
Ultimately, the success of El Salvador’s bet on BTC will depend on how Bitcoin performs in the next few years. ...
Risks over El Salvador's embrace of bitcoin "have not materialized," but use of the cryptocurrency still requires transparency and attention, the International Monetary Fund (IMF) said Friday in a statement after a visit to the Central American country.
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... El Salvador's move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.
While the lender noted that risks "have not materialized due to the limited bitcoin use so far," it said the cryptocurrency's "use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including tokenized bonds."
El Salvador's Congress last month passed a law regulating the issuance of digital assets by both the state and private entities.
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El Salvador is in discussions to open a "bitcoin embassy" in Texas, El Salvador's Ambassador to the U.S. Milena Mayorga said on Tuesday.
The Central American country wishes to open a bitcoin embassy in "new ally" Texas, Mayorga said on Twitter. The embassy will aid "expansion of commercial and economic exchange projects," Mayorga said following a meeting with the state's Secretary of State Joe Esparza.
El Salvador agreed to open a similar establishment in Lugano, Switzerland in October last year with the aim of encouraging adoption of bitcoin across Europe.
It can be assumed that an equivalent in Texas would have a similar aim for bitcoin adoption in the U.S.
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Two public schools in El Salvador are offering a vocational course that teaches Bitcoin as a skills-based diploma and counts towards graduation.
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The new curriculum consists of 10 lessons which include: an introduction to monetary systems, the consequences of fiat, monetary history, understanding bitcoin, wallets and the Bitcoin network, the double-spend problem and nodes, security and mining, the value of bitcoin, the Lightning Network and Bitcoin’s future, and the final project.
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... On April 1st, he followed through on his promise by introducing a bill to Congress that would eliminate income, property, and capital gains taxes on technology innovations.
This includes areas such as software programming, coding, apps and AI development, as well as the manufacturing of computing and communications hardware. ...
El Salvador’s ruling party lawmakers approved late Tuesday a bill to eliminate for 15 years taxes on companies developing artificial intelligence (AI) and other computer programming work in a bid to make the country a more attractive tech destination.
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Bitcoin Beach’s Pioneering Circular Economy Is Making a Global Impact
This coastal community famous as a surfing mecca has garnered over 3,000 bitcoin users including more than 500 families and 120 businesses. Its adoption model is now being replicated around the world. That’s why Bitcoin Beach is one of CoinDesk’s Projects to Watch 2023.
... El Zonte on El Salvador’s Pacific coast; a “world surfing mecca,” according to some. El Zonte has a sparse population of around 3,000. Many of the residents are either poor or on the brink of poverty – national per capita GDP sits at just over $4,500 (U.S. per capita GDP is about $70,000). But the beaches are great, attracting recreational surfers ...
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... The Bitcoin Beach team has grown to 15 contributors and over a dozen more volunteers. They have nailed down bitcoin adoption to a three-part process.
The first phase involves injecting bitcoin into the local community. This is done by encouraging local businesses to accept payment in BTC and establishing social programs that also pay participants in bitcoin.
In order for that to happen, locals must download a wallet, get some BTC and execute their first transaction. Peterson says it’s the toughest part of the entire process.
“The biggest hurdle is just getting people to make their first bitcoin transaction and help them get to that lightbulb moment of ‘Wow, this is so much better, it's so much cheaper, it's so much easier!’ Peterson explained. “It requires a lot of hand holding and going out and spending time with the people to get them to make their first transaction.”
The second phase addresses the meat of the matter – promoting consistent bitcoin usage. This is where a circular economy is actually created.
Given how remittances are central to the lives of so many Salvadorans, one way of creating consistent bitcoin usage is transitioning families from a traditional to a bitcoin- centered remittance infrastructure.
Enter Strike, an app that runs on the Lightning Network, a layer 2, or companion, scaling blockchain system that enables cheaper and faster bitcoin transactions. Funds sent from abroad via Strike can be received as local currency in the recipient’s bank – for free. Compare that to traditional remittance providers such as Western Union that take a hefty chunk of the transfer value, make you wait in line and require an hour-long bus ride that costs $2.
But it doesn’t stop there, El Zonte residents are now using bitcoin to pay their electricity bills and buy lunch for their kids.
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The third and final phase of the adoption process – the point of it all – is when bitcoin facilitates the creation of jobs, tourism and tech startups.
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Bitcoin Beach has now garnered over 3,000 bitcoin users across more than 500 families and 120 businesses. The project has expanded 3 hours east to Punta Mango, another popular surfing destination.
Similar initiatives have popped up all over the globe – Bitcoin Lake, Bitcoin Island, Bitcoin Ekasi, Bitcoin Beach Brazil (Praia Bitcoin Brasil), Bitcoin Jungle and Bitcoin Beach Vietnam to name a few.
Galoy, a bitcoin fintech firm, created the Bitcoin Beach Wallet in 2020 to help spur on the project’s goal of establishing a bitcoin economy.
But perhaps the project’s most impressive accolade was planting the idea of making bitcoin legal tender in El Salvador – something that was eventually achieved on Sept. 7, 2021.
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i wonder what the hold up is on the Volcano Bonds?
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MEXICO CITY, April 27 (Reuters) - El Salvador’s government should consider waiting for better market conditions to issue its much-publicized $1 billion bitcoin-backed bond, said Samson Mow, the strategist behind President Nayib Bukele’s project.
Two weeks ago, the Central American country rolled out legal framework needed to issue the bond, causing some to anticipate its launch in coming months despite no official announcement.
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El Salvador has broken ground on the construction of an airport for its Bitcoin City project.
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Criptonoticias and domestic media outlets reported that the airport construction will “go hand-in-hand with the construction of Bitcoin City.”
The city construction project will see El Salvador build a settlement at the foot of a volcano, where geothermal power will be used to provide power to the city and mine Bitcoin (BTC).
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... Bukele announced these so-called bonds were coming back in November 2021, bonds which were supposed to be created through a public debt scheme with bitcoin mining and holdings, with El Salvador as the counterparty. However, since 2021 the market conditions and plans have changed.
The new strategy will tweak the investment scheme from issuing public debt to private equity funding rounds by the Volcano Energy initiative.
“The reason behind this change is that after looking closely at the economics of our model, we realized that the potential benefits for all stakeholders were much greater doing equity funding, rather than debt,” Volcano Energy’s Chief Executive Officer, Josué López, explained to me in an interview.
But this also means that investors in the $1 billion initiative, which already have received $250 million in investments, had to dilute their equity to share a part with the local government, which was supposed to get 23% preferred equity participation.
“This exchange of equity for economic freedom will enable El Salvador to reap the benefits of this project without having to spend a single penny,” López added.
Now the investors will own 27% of the revenue, and 50% will be reallocated to develop the energy facility and the bitcoin mining section. ...
On September 7, 2021, El Salvador made headlines worldwide by becoming the first country to pass a groundbreaking Bitcoin law, officially recognizing the cryptocurrency as legal tender alongside the U.S. dollar.
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... The law was met with both excitement and skepticism, though any rumors the move would cause the country to default have proved exaggerated.
As have claims that El Salvador would waver on its commitment to Bitcoin as a technology due to its ongoing decline from its 2021 highs.
So far, in 2023 the nation has unveiled a series of initiatives aimed at strengthening its support for Bitcoin, these have included:
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Here in El Salvador, passionate Bitcoiners are actively working to increase trust in the Bitcoin network among the local populace, through education. I met with a New Yorker named John Dennehy, founder of Mi Primer Bitcoin – My First Bitcoin – a company focused on helping provide curious non-Bitcoiners with their first exposure to the digital commodity.
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Mi Primer Bitcoin holds monthly events at restaurants around San Salvador, with the goal of “orange pilling” both the restaurant owners and the attendees at the events. Dennehy's collaborators give out free satoshis to encourage attendees to make their first bitcoin transaction when buying food and negotiate with the store owners for slightly lower prices during the event. He shows both business owners and consumers how to use bitcoin. During the event, members of the Mi Primer Bitcoin team walk around to answer any in-depth questions that consumers might have.
Additionally, Mi Primer Bitcoin organizes a 10-week course for people who are curious about learning more about Bitcoin, and they receive a Bitcoin diploma upon graduation. Mi Primer Bitcoin does not mention Bitcoin until about halfway through the program, as the focus is primarily on financial literacy.
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Mi Primer Bitcoin is just the first step. I spoke with a former teacher at CUBO+, a coding academy that provides an technical understanding of Bitcoin to students. He goes by Alex ...
Alex explained how there are now four pillars to Bitcoin education in El Salvador, with Mi Primer Bitcoin serving as the most basic. He recently left CUBO+ to create another program called Node Nation, with the goal of installing Lightning nodes in high schools and providing highly technical classes to talented teenagers. From there, students can apply to CUBO+, a six-month long program that is highly selective. Next, students who want to become core developers can apply to Chaincode Labs, the highest tier of education currently available in-country. The curriculum is entirely open-source and decentralized.
The path to mass-adoption in El Salvador might take decades. In the words of Ray Dalio, the Great Reset and rotation to a new global reserve currency will happen slowly, then all at once. That gradual process is evident here on the ground ...
In collaboration with Bitcoin mining software provider Luxor Technology, Salvadoran renewable energy and mining firm Volcano Energy has introduced a groundbreaking initiative called "Lava Pool." This milestone marks the establishment of the very first cryptocurrency mining pool in El Salvador.
According to Investing, the primary objective of this venture is to leverage the country's abundant geothermal energy to mine Bitcoin effectively.
Volcano Energy commits to mining Bitcoin exclusively through the "Lava Pool" and pledges to allocate 23% of its net income to the El Salvador government. This financial contribution is part of a larger public-private partnership initiative to strengthen the nation's economy.
Volcano Energy is co-led by Josue Lopez, a 23-year-old Bitcoin advocate from El Salvador, serving as the CEO. Additionally, renowned figure Max Keiser, who acts as chairman and advisor to El Salvador President Nayib Bukele, lends guidance and expertise to the project.
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The El Salvador government intends to reinvest the mining profits from this partnership into its energy infrastructure. This reinvestment strategy aims to bolster economic growth and pave the way for further advancements in the country's renewable energy sector.
In June, Volcano Energy secured $1 billion in investment commitments, with Tether Energy leading the charge. Already deploying $250 million towards developing renewable energy and Bitcoin mining operations, these investments will undoubtedly catapult El Salvador's efforts to the next level.
The International Monetary Fund's engagement with El Salvador has been "very productive" following a recent visit from a negotiating team, but an agreement is "not there yet" for a new financing program, an IMF official said on Friday.
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The IMF said in late September that it was working with El Salvador on "technical issues" and on minimizing the risks from the country's adoption of bitcoin as legal tender.
Asked whether a change in bitcoin's status was part of the discussions, Valdes said: "I would prefer not to identify the exact measures that have to be taken, but it is a well known fact that we don't see ... we're not supportive, in general, of having bitcoin as a legal tender."
The Salvadoran government did not respond to a request for comment on whether removing the cryptocurrency's status was being discussed.
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Several reports about El Salvador's security policies, economic recovery, bond strength, and even tourism booming due to the influence of bitcoin and its community are part of the news about this Central American country. We had an exclusive interview with vice-president Felix Ulloa to better understand these topics.
At the end of July, Bloomberg reported that despite being concerned about the country's adoption of bitcoin as legal tender in 2021, Wall Street investors have been interested in the growth of El Salvador's bonds. The 70% returns in 2023 are the best-performing among bonds from emerging markets. For example, even with a return of 180% on its position, Converium Capital Inc. decided to hold it, but why?
For Vice-president Ulloa, this is not a random issue, "but is the result of applying a financial policy from the government of the president Nayib Bukele, exercised by our entities in charge." And it's also related to bitcoin. In fact, for Ulloa, it's clear that the Bitcoin BTC Law was a crucial element in the new position that El Salvador took globally.
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An El Salvador town has grown tired of waiting for President Nayib Bukele to build Bitcoin City – and will instead build its own “Bitcoin City” project “a few kilometers away.”
Residents of Berlin, a town in the Usulután Department, say they want to build the “real Bitcoin City,” instead of waiting for government efforts to materialize.
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The community behind Berlin’s initiative is named Bitcoin Berlin, Criptonoticias reported.
And its masterminds say the town “seeks to follow in the footsteps of El Zonte’s Bitcoin Beach.”
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Berlin’s fast-growing community of bitcoiners, some of whom hail from overseas, says it wants to “establish an economy without fiat money,” where the economy is entirely based on peer-to-peer financial transactions.
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But Berlin, as its name suggests, is a town founded by German migrants to El Salvador, in the foothills of the Tecapa volcano mountain range.
Unlike El Salvador’s sun-baked beaches, Berlin enjoys a cooler climate, and is based near volcanos and the Alegría Lagoon.
The town is also famous for its many nearby coffee plantations, and traditionally draws in a large number of coffee-loving tourists.
Bitcoiners in Berlin claim that the local community is backing the plan.
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El Salvador can follow Singapore’s lead and become a financial center in the Americas, according to Gabor Gurbacs, strategy adviser of investment management firm VanEck.
“I say often to portfolio managers and asset allocators that El Salvador has the potential to become the Singapore of the Americas,” Gurbacs explained in an Oct. 28 X (formerly Twitter) post.
Similar to what Singapore achieved in the late 1990s, Gurbacs expects new capital investment and immigration to be the main drivers behind El Salvador’s increased economic growth over the next few years.
His comments come in response to an Oct. 28 post by United States broadcaster and Bitcoiner Max Keiser, which was captioned “Move to #ElSalvador, The New Land of the Free.”
Keiser, who now lives in El Salvador, listed Bitcoin (BTC) and the U.S. dollar’s legal tender status, a clean-up of Salvadoran crime, great beaches and great coffee as some of the main reasons the Central American country should be on everyone’s radar.
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El Salvador is also tapping into its volcanic resources to power a Bitcoin mining operation startup, Volcano Energy, which launched in June after a $1 billion investment. Keiser serves as the company’s executive chairman.
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Athena Bitcoin, the company responsible for operating a prominent chain of cryptocurrency ATMs in El Salvador, has unveiled plans to integrate the Lightning Network into its machines. This strategic move aims to enhance the efficiency and functionality of the ATMs, promoting faster transactions with minimized fees. The Lightning Network, widely recognized as a “layer 2” payment protocol, will be incorporated into 100 of Athena Bitcoin’s ATMs in the coming months.
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The Lightning Network is designed to facilitate quicker withdrawals and reduce transaction fees. One of its key advantages is the avoidance of recording transaction data in the primary network’s accounting. Athena Bitcoin aims to activate Lightning support in 100 of the state-owned Chivo ATMs it operates in El Salvador by December 2023. Subsequently, the remaining kiosks, including those under the Athena brand, will follow suit in the first quarter of 2024. Presently, there are a total of 215 cryptocurrency teller machines operating in El Salvador.
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Not really any new news here, but I didn't know that Max had moved to El Salvador. Looks like he's fully invested in this...
Bitcoin-friendly El Salvador can become ‘Singapore of the Americas’ — VanEck adviser
VanEck strategy adviser Gabor Gurbacs says Bitcoin-friendly El Salvador could become the “Singapore of the Americas.”cointelegraph.com
NAKA, the European fintech powerhouse, unveils the world's first EMV-compatible on-chain payment scheme and self-custodial card during the "Adopting Bitcoin 2023" conference in the capital. ...
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The NAKA card seamlessly integrates with existing payment infrastructures, guaranteeing universal acceptance in line with EMV standard (Europay, Mastercard, and Visa). Salvadorians can now send funds 24/7 via blockchain from anywhere in the world directly to the NAKA card and start spending it instantly, all with nearly zero costs.
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So, with all these factors pointing to Bitcoin serving a major role in the economic development of the country, it seems natural that this policy will become a well-established feature of the nation for years to come, right? There’s just been one hiccup with this plan, and it’s that the population has still shown some reluctance to adopt Bitcoin on a mass scale. Although it certainly has no small number of adherents, the country is far from a status of hyperbitcoinization, where most people use the currency on a regular basis or exclusively. Since the largest part of Bukele’s domestic popularity has come from his reputation as a crimefighter, it’s not inconceivable that even a successful re-election could see Bitcoin gradually de-emphasized.
However, it seems as if increasing institutional support will prevent this backslide from happening. The government has consciously undertaken actions to facilitate a powerful domestic Bitcoin community in the country, like its ongoing contributions to the Lava Pool project, which seeks to encourage local companies to sprout up in the business of Bitcoin mining, all using renewable energy. Although projects like this have been useful for creating a new ecosystem, the government cannot do this alone. Luckily, it won’t have to, as major investments are taking place without the direct encouragement of the state. Distribuidora Morazán, the second-largest distributor of goods in El Salvador, announced that it would be accepting and encouraging Bitcoin through a partnership with the wallet and API platform Blink. The firm does not directly supply goods to consumers themselves, but acts as a middleman: Selling its wares to some 40,000 merchants across the country.
In other words, Distribuidora Morazán is hoping to increase Bitcoinization with business-to-business (B2B) transactions, and it is actively encouraging these businesses to accept and promote Bitcoin, too. Company CEO Jacir Garcia-Prieto claimed that “our distribution operation, until today, has been predominantly managed in cash and this presents a series of logistical, time, and operational difficulties that slow our day-to-day ability to visit more points of sale. Bitcoin solves that.” He added that “The vast majority of our customers do not have access to banking services and this is the perfect way to introduce them to their first financial tool.” Within days of its launch, the plan was rolled out to dozens of merchants, and they hope to reach 1,000 in the next year.
This is not the only major business initiative to take place at this time ...
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According to the Nayib Bukele Portfolio Tracker website, the government currently owns 3,124 BTC worth $118.3 million. That’s down 6.44% – or $8.1 million – from the nation’s cost basis.
It’s hard to know exactly how much BTC El Salvador holds since the bank managing the government’s Bitcoin funds has remained curiously tight-lipped on the matter.
However, the website offers a rough estimate using the many public tweets from El Salvador’s Bitcoin-loving president Nayib Bukele – which include exact amounts and buy-in prices for the nation’s BTC investments.
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Unlike El Salvador, MicroStrategy’s BTC ownership is verifiable through its quarterly financial reports. It’s also substantially in the green, boasting $1.28 billion in profits on its immense 158,400 BTC stack, now worth over $6 billion.
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