“China’s authoritarian crackdown on crypto, including #Bitcoin, is a big opportunity for the U.S.,” the senator tweeted on Friday.
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Brazil-based BTG Pactual, Latin America’s biggest investment bank, is launching its own crypto asset platform that will initially support bitcoin and ether trading. The platform will be called Mynt and allow customers to purchase bitcoin and ether, BTG Pactual’s Head of Digital Assets André Portilho tells The Block. Eventually, the platform will support other digital […]
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Crypto derivatives exchange FTX is in the process of moving its headquarters from Hong Kong to the Bahamas.
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Digital artist Pplpleasr chats with The Block’s Frank Chaparro.
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It’s rare that I agree with David Gerard, the British writer who has made a career out of cherry-picking the crypto industry’s problems to savage those of us who argue in good-faith for crypto’s long-term potential.
But I find myself agreeing with many of his recent assertions about a badly handled rollout in El Salvador of Bukele’s bitcoin project, with its bug-riddled Chivo wallet. I wouldn’t call the experiment a “farce,” per the headline for Gerard’s Foreign Policy piece, but it’s hard to disagree with his point that “if Bukele wanted Salvadorans to hate everything about bitcoin…Chivo has been a worked example of how to get there.”
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It’s an unfortunate coincidence that bitcoin has dropped almost 25% since the government first purchased 400 bitcoins on Sept. 6, when its controversial bitcoin legal tender law went into effect. More importantly, the combination of that price drop with Chivo’s continued glitches, with concerns about some of the law’s more draconian elements and with harsh treatment of one of its critics, has fueled a mini “bank run” on the bitcoin that was distributed to Salvadorans. (Each person who submitted their national ID to sign up for a wallet was to receive $30 worth of bitcoin, a value that has since significantly declined.) This will leave a bad taste in the mouth of many Salvadorans.
Unlike Gerard, who would undermine his brand if he ever delivered a positive message about cryptocurrency, I think an opportunity remains for the government and thoughtful crypto industry leaders to turn this around. El Salvador’s experiment can still evolve into a lasting source of empowerment for that country’s impoverished masses.
But it’s going to take a different mindset. We must proactively demonstrate to Salvadorans that bitcoin is part of a decentralizing strategy of local empowerment that allows them to participate in new business and energy development models
Over time, bitcoin can bolster the Central American country’s monetary independence from international lenders. More importantly, its promise of “self-sovereign money” can improve the interests of its poor viz-a-viz those of the political and economic elites from both the left and the right who’ve used and abused them for decades. The problem is bitcoiners’ dominant “marketing” message does a terrible job of conveying that.
Whether we like it or not, the value proposition that drives bitcoin adoption among middle-class Americans and their peers in other developed countries is that you can “HODL and get rich.” That’s a tone-deaf message to deliver to people who live hand to mouth, where every additional scrap of money they find is put to immediate use. If there ever were an environment in which the “have fun staying poor” slogan is out of place, it’s within the harsh realities of day-to-day life for people in one of the world’s poorest countries.
Here I can imagine Gerard, who repeatedly uses the ugly excesses of a small but vocal “crypto bro” subculture to tar the entire cryptocurrency movement with the same brush, smugly thinking “I told you so.” But he’s wrong to assume this means there is no use for bitcoin for the poor of El Salvador (or anywhere for that matter). That is most definitely not my belief. What matters is how bitcoin is adopted in the country, for what purpose. And that’s where the messaging and the design of the rollout has failed badly.
It has failed because it did not take into account the deep-seated mistrust that people in countries like El Salvador have in governments generally and the fraught relationship they have with money as a result.
There’s a reason El Salvador uses the dollar, and why Ecuador and Venezuela do, and why Argentina, where I lived for six years, had de facto dollarization throughout the 1990s. In all these cases, reverting to the world’s reserve currency as the national medium of exchange is a last resort move, a mark of profound institutional failure brought on by hyperinflation and a history of exchange rate instability. It’s an acknowledgement that the people of the country in question cannot trust the stewardship of their money with their leaders, whatever their political persuasion, and the bankers who work with them.
To American bitcoiners, the dollar is a symbol of entrapment by a profligate Federal Reserve. But to Salvadorans, it signifies security, an escape from the abuses of government and the reason why they’ve enjoyed relative price stability since 2001 after formal dollarization overcame decades of chronic inflation. And for the poorest Salvadorans – the 25% who earn less than the poverty line of $5.50 a day – those for whom a bank, with its exorbitant fees and constrictive identify requirements, is a non-starter for managing their meager savings, the clearest manifestation of that security is in banknotes.
Now, give these people a malfunctioning state-run Chivo wallet that could potentially give the government digital surveillance powers, tell them they are getting $30 worth of this strange new currency called bitcoin but then let the market take a full day’s wages off of that amount while they struggle to work out the kinks in the wallet.
Is it any wonder that Salvadorans started lining up at the new Chivo ATMs this week? (I’m not sure this called for a love heart emoji, Bitcoin Magazine.)
Lines are building up at El Salvador’s #Bitcoin ATMs 🧡 pic.twitter.com/Va4fF5Jv77
— Bitcoin Magazine (@BitcoinMagazine) September 21, 2021
It’s hard to imagine many were lining up to buy bitcoin; it looked much more like doubters grabbing their $25 bird in the hand – a month’s worth of household food – before it shrinks any further. They wanted cold hard dollar notes. Not digital dollars. And not bitcoin – no matter how much you or I might believe that HODLing will serve them better in the long run.
Not everyone has withdrawn, of course. Many are likely betting on a bitcoin rebound. Others who’ve been lucky enough to get a working Chivo connection may have converted into digital dollars on the app, which they can use to make payments or cheaply send and receive remittances in bitcoin or dollars. It’s very early days in El Salvador’s experiment.
But the danger is that expectations formed around a “to the moon” narrative have been dashed by a combination of market declines and technical problems. Maybe the problem was the value proposition itself.
The pitch to El Salvadorans should not have been “HODL,” but “BUIDL.” Rather than tokenistic handouts, show them how they can use bitcoin in their daily lives – regardless of its ups and downs in the market – to build independent wealth and sustainable prosperity.
The low-hanging fruit lies in better explaining the value of low-cost, near-instantaneous remittances in either bitcoin or dollars via Chivo. To make that work properly will require integrations with providers in the U.S. and other places where Salvadoran expatriates live. But there’s a real demonstration of the power of cheap money transfers here as Chivo uses the Lightning Network’s low-cost, near instantaneous settlement process to move either dollars or bitcoin into its users’ wallets.
A bigger deal would be to do as I’ve argued previously: Roll out bitcoin mining projects that underwrite the development of collectively owned renewable energy plants around the countryside – solar, wind or using “mini-geo” technology to tap El Salvador’s rich geothermal sources. In contrast to the government’s “volcano money” project, in which the state will capture bitcoin for its centralized coffers via a mining facility attached to a state-run geothermal plant, this aligns the bitcoin project with the principles of decentralization in energy and other infrastructure. It would not only provide a steady source of bitcoin for rural communities but also provide them with affordable, sustainable power upon which to develop their local economies.
Such a nationwide project would require coordination. It would require sorting out security issues with gangs that hold sway over money-earning activities in many areas. Non-governmental organizations would need to get involved, and perhaps even foreign governments. It’s complex policymaking based on system design and socio-economic modeling.
This is difficult, but doable. And if, as many of us believe, the bitcoin that Bukele’s government is required to buy back from its citizens rises in value in the near future, it will have plenty of resources with which to invest in such a future.
Delivering on a vision for an interoperable global standard for dollar digital currency, Circle and TRON have partnered to make USD Coin (USDC) available on the TRON blockchain, which has grown to more than 56 million accounts and nearly 2.5 billion transactions since its founding just four years ago. TRON is home to a broad ecosystem for digital assets in Asia and around the world, and the TRON community can now benefit from easy access to the world’s fastest-growing, regulated dollar digital currency.
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Sparkpool said more details about the suspension will be released shortly but the decision is in response to China’s latest regulatory policy
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Celsius, the crypto lending group, has been ordered to stop offering interest-bearing accounts in the state of Kentucky.
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