Unless you have been living under a rock for the last week you will of course be aware that on June 8, El Salvador became the first country in the world to adopt bitcoin as legal tender.
The idea was first floated during the Miami Bitcoin conference by the country’s president Nayib Bukele, three days later the country’s lawmakers approved the bill by a 62-22 vote.
Within hours of Tuesday’s announcement Twitter was awash with crypto devotees claiming El Salvador to be the worlds next great tech hub; “looking into buying a home in El Salvador” and asking “how to begin the residency process”, and “what the price of Salvadoran beachfront property would be in bitcoin”.
Justin Sun, founder of Tron (TRX) predicted “Crypto investors and entrepreneurs will start to move to El Salvador!” Bukele responded to Sun on Twitter, listing tax savings, surfing beaches, and lax immigration requirements as further reasons why moving to El Salvador is a good idea for crypto entrepreneurs. Changpeng Zhao, CEO of Binance tweeted “enticing” to his 2.7 million followers and Avik Roy, policy editor at Forbes commented “El Salvador is best known in the U.S. as a source of migrants. In the future, it may become best known as a destination for emigrants from the United States”
So, is El Salvador in line to become the world’s next great crypto hub?
This is not the first time we have witnessed influential entrepreneurs exhorting their followers to move en-masse to newer, friendlier tech hubs such as Puerto Rico, Nevada, and Austin, in fact just a week prior to the Bitcoin 2021 conference the host city Miami was being touted as the next beachfront tech haven. In the early 2010s, the economically disadvantaged downtown Las Vegas invested hundreds of millions of dollars to attract tech workers to the area, many of whom lost interest and left just a few years later.
In theory, the new Bitcoin Law creates a safe and predictable legal environment for bitcoin entrepreneurs to build new and innovative tools, what Bukele calls “a sanctuary country for crypto”. An environment such as this could attract many of the industry’s most talented and creative people to El Salvador, at the same time enriching native Salvadorans and also accelerating the development of a more inclusive global financial system.
With Elon Musk and other bitcoin critics arguing against Bitcoin’s excessive carbon footprint in recent months, it is interesting to note that El Salvador is rich in clean, carbon-free geothermal energy generated from volcanic heat. Two-thirds of this geothermal energy, enough to power 3 to 4 percent of the global Bitcoin network, is still untapped, opening the door for Bitcoin miners to operate with very cheap, 100% clean, 100% renewable, [zero-emissions] energy.
Whether or not El Salvador becomes the next crypto hub, the fact that a single sovereign nation-state would adopt bitcoin as legal tender is of great consequence.
If El Salvador’s bitcoin law is successful, if a low-income country where 70 percent of the residents lack bank accounts is able to prove that bitcoin is usable as a store of value and as a medium of exchange, they will have proven that bitcoin is usable everywhere.
This article was written by Lee Mockler for The London Crypto Exchange.