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Bukele, El Salvador and hyperbitcoinization, chapter zero

This article was written by Camilo Jorajuría de León, lawyer, philosopher and economist. Graduated from UNLP and self-taught in Objectivist Philosophy, Stoic Philosophy and Austrian Economics. He defines himself as a “bitcoin fanatic and working with him since 2016.” He is a writer focused on issues related to anarchy. He works as an advisor to «crypto-fintech companies» for the consulting firm camilojdl.com.

Every new beginning comes from the end of some other beginning


It was the second day of the historic Bitcoin 2021 -Miami- conference and an excited and emotional Jack Mallers presents the work he had been doing in El Salvador. Suddenly, he slides to a video in which Nayib Bukele – the President of the small Central American country – begins speaking with the typical terminology of any politician. But he ends by stating that the following week he will send to Congress a bill with which El Salvador will adopt bitcoin (BTC) as legal tender.

That way, without anyone else doing it. could predict, a new chapter in the history of Bitcoin has opened. In this way, the historical event that this author understands marks the kickoff to the second stage of the life of Bitcoin: the final path to hyperbitcoinization

occurred in this way. .

If the gods so wish, this is the first chapter of a saga whose main focus will be on recounting from a holistic perspective the path to hyperbitcoinization , that is, the next evolutionary step of the human race. The aim is in this way to help the reader to take current news of Bitcoin, but framing them in an adequate historical context, having as a laboratory what happens in El Salvador and always with a view to how this influences hyperbitcoinization.

Two days after the announcement of what could have been a simple broken political promise, Bukele tweeted that he did indeed send the Bill to Congress .

After that Nayib performs a “Spaces” -which comes to be the replacement of what used to be the radio programs prior to the internet – and a few hours later Congress approves the law. In this way, bitcoin is converted in El Salvador to “legal tender, unrestricted with liberating power, unlimited in any transaction and to any title that public or private natural or legal persons want to carry out.”

Bitcoin was declared legal tender in El Salvador.

In the Spaces, the President explains that the law is of public order, effective immediately and that will not apply for accounting purposes since for this the USD will continue to be used. Likewise, he acknowledges in what seems to be an atypical gesture of humility among politicians: “we don’t know what the limits of this are, we will see it over time.” Bitcoin is really very difficult to understand and it is difficult to find people who do not fall into the trap of believing they have fully understood it.

He also commented that there will be a fund – Trust fund – organized by the State , so that traders do not suffer from BTC volatility as they are obliged to accept it as payment. In this way, the State assumes the risk of temporary volatility.

It will be interesting to see how the Power Executive from El Salvador thus becomes a trader . It would basically be a trader who is essentially doing short but continuous longs of BTC against shorts of USD. I cannot imagine a better and more moral source of income for a state. Can we start thinking about eliminating taxes or is it still too early? Let’s not forget that Bitcoin fixes taxes.

The President also spoke about a new residency law in which if you invest three bitcoins you give permanent residence . The unit of measure will always be BTC, not USD. It would be desirable for that amount to be modified downwards over time and reduced faster than BTC rises in price. In this way, there could be a more popular immigration and not only for the strata with better economic situation.

He also affirmed that they will improve internet connectivity and that he wants to become a country-sanctuary for crypto-enterprises.

Among his sayings I highlight the following: “This law will not change our macroeconomy.” This statement is, to my knowledge, clearly wrong. This author affirms that he is “literally” wrong because this legal change will affect the macroeconomy one hundred percent, not only in El Salvador, but in the entire world. We do not know if he made this statement only in error due to his economic ignorance or lying to buy time to solidify the paradigm shift before the attacks begin. It is hard to imagine a United States with its arms crossed while the USD collapses and with it its strong imperialism.

Bukele also stated: “we do not want to de-dollarize, we want to attract investors and developers. We will have both currencies as a legal form of payment. Very interesting point that will allow us to have a perfect laboratory to see the USD collapse against the BTC.

Finally, it recognizes having been inspired and taken as a precedent the Bitcoin Beach project, a local bitcoiner community . And then he says goodbye because it was time for the vote.

Minutes later the law was approved that served as a red welcome carpet for the President and El Salvador to enter through the front door to the Bitcoin history books.

In what context did all this happen

Bitcoin is a instrument of social change much stronger than what were agriculture, printing or the internet. Money is the medium of all exchange and there is no other human institution that influences culture as strongly as this.

We are in the eye of the storm in the middle of the beginning of the end of fiat currencies, possibly from the unleashing of the “fiat-apocalypse” or de-fiatization (the counterpart of bitcoinization). This will lead us to a utopia or perhaps a dystopia, we do not know. But what we do not doubt is that nothing will ever be the same after January 3, two thousand and nine.

Throughout human history the market freely created the money that individuals used. In almost every opportunity, money represented a value in itself: salt, silver, gold, cattle, cigarettes and even certain stones or seashells.

During the belle epoque (1850-1914 ) we live the Gold Standard, monometallism. That is, the currency was still gold, but thanks to the technology of banknotes, checks, credit notes, banks and financial technologies in general, that gold could be transferred, protected, verified and accounted for much easier than in its version pure metallic. This was called metallic sign money and it was adopted globally. Although the states created the banknotes, the reality is that each banknote was exactly backed by the amount of gold it claimed to support.

In this context we must not lose sight of two things: 1) gold was effectively the currency; 2) over gold there was a second layer that provided more convenience and advantages for transactions (the layer of financial services backed one hundred percent in gold).

El Salvador is the only developed nation, says Twitter user @bitstein.

As of 1914 the world was abandoning this gold standard and it was finally broken in 1971 by US decree .

At this moment I eat It started with the greatest and most nefarious experiment in human economic and social engineering: the Fiat Pattern. That is, the imposition of monetary socialism at the global level , exported from the USA to the rest of the world.

Except for inconsequential exceptions, during the Fiat Pattern the currencies were fiduciary with no backing in gold or any other good and managed in a totally discretionary manner by the states. Basically by the US manipulating the other currencies through the USD.

The Fiat Pattern had no contender or hint of modification until January 3, two thousand and nine. From the generation of the genesis block of Bitcoin, humanity began to abandon the Fiat Pattern migrating towards the Bitcoin Pattern.

In this context every historical fact in the life of Bitcoin was transcendent : the sending of the first transaction from Satoshi to Hal Finney, the expansion of the network, the determination of the price in USD for the first time based on the cost of electricity consumption, the purchase of two pizzas, the improvements to the protocol, the creation of the Lightning Network and an infinity of other facts that it is not worth mentioning here.

Without prejudice to them, if this author had to choose two historical facts on the way to hyperbitcoinization, would remain with the beginning of the operation of the network and the determination of Bitcoin as legal tender by the first nation state that recognizes it.

In the following talk about legal issues and accounting s they talk about the possible local consequences of the new Law of El Salvador, what tax implications a law like that of El Salvador has and what legal consequences would an analogous law approved in Argentina have.

Link to the talk.

See you soon.

by @Camilojdl at block 687.073.

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Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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