MAJR News 094
A millennial president and bitcoin volcano money.
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MAJR NEWS BRIEF
Is this what it’s like to have a millennial president?
President Nayib Bukele lit a match when he proposed and signed the first bill legalizing bitcoin as legal tender for the country of El Salvador. This fire shed light on bitcoin’s promise for financial inclusion and economic growth. Since, passing the bill, six more South and Central American have signaled support for pro bitcoin legislation - Argentina, Brazil, Colombia, Ecuador, Mexico, and Paraguay.
The political leadership in El Salvador just started the greatest economic race of our lifetime as nation states will now compete for real estate on bitcoin’s blockchain. And, they showed the world what political leadership could look like - forward thinking, open minded and brave.
Nayib Bukele is the 46th President of El Salvador and is 39 years old. While, there’s some controversy surrounding his leadership as an autocrat, I want to bring attention to the bitcoin bill and how it was presented to congress. But, first let’s review the economic reasons for the bill.
Economic problems facing the country
70% of the country is unbanked without access to financial services
25% of GDP comes from remittances sent from other countries
Extreme gang activity and violence threatens businesses causing citizens to flee the country
1/3 of the people live on $5.50 a day / $300 per month
Factory jobs have moved to Asia leaving nearly 80,000 young adults out of the work as they enter the economy, but it only has room for 20,000 jobs
These are huge problems the country and many other developing nations. The president and 62 of the 84 congressmen saw bitcoin as a possible solution.
Why Bitcoin Fixes This
Anyone with a cell phone now has a secure way to store value using bitcoin and send payments over the Bitcoin network. Even faster with Lightning.
Bitcoin mining monetizes energy better than any other vehicle as the energy captured is not lost when transported and mining can create wealth from untapped remote energy sources.
Bitcoin is digital and can be sent without any intermediaries. Therefore anyone sending money back home via remittances won’t lose 1%-10% in fees. Families no longer have to show up at physical location to collect funds and put themselves in danger from gangs.
Bitcoin is an investment vehicle that can generate income via through platforms like Hodl Hodl that use peer to peer lending and trading.
Bitcoin is an emerging asset class driving huge capital investment. El Salvador will incentivize hundreds of entrepreneurs, developers and financiers to move to the country bringing wealth and jobs with them.
The Bitcoin Bill
The bitcoin bill presented to congress was short and sweet. It was only 3 pages long with 16 bullet points. The reasons and objectives were made clear. The bill was passed two hours after being presented to congress with a super majority. There’s no filibustering in El Salvador.
The Biggest Takeaways
Exchange rates between USD and bitcoin are determined by the market
Prices can be displayed in bitcoin
Taxes can be accepted in bitcoin
Merchants must accept bitcoin
No capital gains tax on bitcoin gains
USD will be used for accounting purposes
The state will provide instant convertibility between USD and BTC by establishing a bank with $150 million ready to buy bitcoin. The state will also provide training and education around the asset.
Conclusion:
El Salvador has its problems and the leadership sought out creative solutions. What started with a small project called Bitcoin Beach that introduced the technology to locals, caught the eyes of leadership who saw the promise of the technology. They looked past mainstream’s tired and reused bitcoin FUD, they recognized the impact it could have on their economy and moved with haste to present a clean and digestible bill to legislature. The bill wasn’t 1,000 pages long and there wasn’t any pork-barreling or filibustering.
The United States can’t be compared to El Salvador, but US politicians should take note because a developing country just leaped frogged the world’s greatest economy by adopting a monetary policy that enables more prosperity, freedom and liberty than any $5 trillion spending bill can provide.
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.
The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them.
About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.
Maybe they have to be crazy.
How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?
We make tools for these kinds of people.
While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
- Steve Job’s Apple 1997 Think Different Ad Campaign
IN OTHER NEWS:
Ledger Hardware wallet used for cold storage for digital assets raised a $380 million Series C funding round led by 10T Holdings. Other investors included Cathay Innovation, Draper Associates, Digital Currency Group, Korelya Capital and Wicklow Capital. Ledger is valued more than $1.5 billion. Funding will be used for innovation around DeFi solution and expanding enterprise capabilities.
El Salvador, the first country to pass a bill declaring bitcoin as legal tender is on a mission to innovate around the asset. The President Nayib Bukel has directed El Salvador’s geothermal company LaGeo to create a plan for bitcoin mining facilities using the clean renewable energy derived from volcanos. El Salvador has hundreds of megawatts of untapped geothermal energy underutilized by power plants. “Every day is going to be a new idea,” said the President.
Coinbase to offer investment through a 401(k) provider ForUsAll with plans allowing for 5% of their contributions. The firm handles $1.7 billion in retirement plans.
Invesco, US investment firm with $1.3 trillion in assets filed applications for two crypto ETFs - crypto mining companies and companies that hold digital assets on their balance sheet. Invesco is attempting please the SEC by not directly holding crypto, but gaining exposure to the asset class through crypto adjacent companies.
Solana secures $300 million in funding led by Polychain Capital and a16z, along with Coinfund, Blockchange Ventures, Alameda Research and ParaFi Capital.
European Central Bank will follow the Fed’s lead with regard to tapering their $2.2 trillion bond buying program. The ECB and all central banks are stuck. They can’t raise rates before the Fed or their currency will strengthen hurting exports.
STATS
According to the World Bank, about 120 million additional people are living in poverty as a result of the pandemic, with the total expected to rise to about 150 million by the end of 2021.
Half of the poor are children. Women represent a majority of the poor in most regions and among some age groups. About 70 percent of the global poor aged 15 and over have no schooling or only some basic education.
New research estimates that climate change will drive 68 million to 132 million into poverty by 2030. Climate change is a particularly acute threat for countries in Sub-Saharan Africa and South Asia — the regions where most of the global poor are concentrated.
TOP STORIES
BITCOINBitcoin Climbs as Regulators Propose Banking Capital Rules, Bloomberg
Elizabeth Warren, US Lawmakers Put Bitcoin on Trial in Senate CBDC Hearing, Coindesk
Volcano-Powered Bitcoin Mining Goes From Twitter Idea to State Policy in El Salvador, Coindesk
Coinbase to Offer Crypto Investment Through 401(k) Provider, Coindesk
New York's Stand Against Bitcoin Mining Passes Senate, Decrypt
CRYPTOHardware Wallet Maker Ledger Gets $380M in Series C Funding Round, Coindesk
Nasdaq-Listed Victory Capital Plans Entry Into Crypto, Coindesk
Invesco Joins ETF Hopefuls After Filing Two Crypto Applications, Decrypt
NFT Startup Mythical Games Raises $75M From Gary Vee, Galaxy, Others, Decrypt
Solana Labs Secures $314M in Funding as SOL Token Rises 20%, Decrypt
Stablecoins not that radical, says Bank of England official, Cointelegraph
MACROConsumer Prices Likely Rose Strongly Again in May as Economy Rebounded, WSJ
ECB Set to Fall Behind Fed in Phasing Out Stimulus, WSJ
U.S. Retail Sales Forecast Rises Sharply as Covid-19 Restrictions Ease, WSJ
Bank of Canada Holds Steady Ahead of Possible July Taper, Bloomberg
MEDIABTC029: Jack Dorsey's Bitcoin Involvement & Jack Maller's El Salvador Announcement w/Alex Gladstein
THIS IS NOT FINANCIAL ADVICE. IT’S IMPORTANT TO DO YOUR OWN RESEARCH. INVESTING IN CRYPTOCURRENCY OR ANYTHING FOR THAT MATTER COMES WITH RISK. THE INFORMATION PRESENTED IN THIS NEWSLETTER IS FOR INFORMATION AND ENTERTAINMENT PURPOSES ONLY.