The TRUE story behind bitcoin in El Salvador: Full Interview

16:50
have citizens complained or have you got
16:52
any feedback or pushback on kind of the
16:54
volatility of bitcoin or is it something
16:56
where they’re seeing it appreciate over
16:57
time so it’s a little more comfortable
16:58
or is there that day-to-day swing that
17:00
makes them a little uneasy
17:02
i mean i would say all i mean it’s it’s
17:04
there’s no denying that the volatility
17:06
is a challenge for bitcoin the fact that
17:09
you know the volatility has historically
17:11
been going up i think is helpful so
17:13
people have that kind of long view that
17:15
maybe you know they lose money you know
17:17
in dollar terms this month but you know
17:19
overall they’re going to be in a better
17:21
situation um but i think that’s just
17:23
part of the process of bitcoin
17:24
monetizing that it’s trying to find its
17:26
value and so you know i think we still
17:28
have several years of this which is why
17:30
i think it’s the gu it was very wise of
17:32
the government to put into the wallet
17:34
the ability for people to auto convert
17:37
uh there’s the ability for them to hold
17:39
their value in dollars but still utilize
17:41
the bitcoin payment rails and i think
17:43
that’s an important distinction that a
17:44
lot of people don’t understand
17:46
especially the mainstream press they
17:48
don’t understand the difference between
17:49
you know bitcoin the asset and bitcoin
17:51
the payment rails and so it’s the
17:53
bitcoin payment rails that are really
17:55
the most important for the country at
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this juncture
17:58
and that can be the
18:00
volatility can be mitigated by holding
18:02
in dollars and allowing
18:07
in that auto convert function
18:09
gotcha
18:10
john what questions you got yeah mike
18:11
thank you for doing this um really big
18:14
fan of what you guys are doing as joe
18:16
said but um i’m curious more about the
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the customers and the businesses how are
18:19
they interacting um and then like is it
18:22
kind of being adopted seamlessly by the
18:24
customers in the businesses and then
18:25
what tools are the businesses
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specifically using
18:28
to accept bitcoin as a payment to do any
18:30
loyalty programs that they have like
18:32
what is it like from their perspective
18:35
so most uh the businesses that we’ve
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been working with here and also are very
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small mom-and-pop businesses so they’re
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businesses that never would be qualified
18:43
to accept credit cards and so for them
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this is the first time for them to have
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any type of mobile payments um network
18:49
and they’re just fascinated by the fact
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that now you know somebody can send
18:53
bitcoin from across town without having
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to be physically present and they can
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send a little delivery boy to you know
18:59
go deliver them their papoosas or their
19:01
groceries and so for them it’s been a
19:04
huge asset to kind of have this whole
19:06
digital world opened up to them for the
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first time
19:09
most of them have been using the bitcoin
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beach wallet developed by galloway money
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and that’s because the team from galway
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spent several months here and have kind
19:18
of learned how the people used it they
19:20
saw the things that didn’t make sense to
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them there’s oftentimes a big disconnect
19:24
from the developers who kind of live in
19:26
their own bubble versus you know
19:27
specifically people in a developing
19:30
country and so i think it’s very
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important that we build wallets and
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tools that are actually what the users
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want not what the developers want
19:39
perfectly said
19:40
mike i got two more questions for you
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and then we’ll uh we’ll let you go is
19:44
one when you think about uh
19:47
bitcoin and the continued move forward
19:50
uh the president is tweeting and he
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tweeted yesterday that they bought 200
19:54
bitcoin he then tweeted they bought
19:56
another 200. uh and then today during
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the dip he essentially tweeted uh that
20:01
they bought the dip bought 150 bitcoin
20:03
said thanks imf uh you know kind of in
20:06
some way was using twitter um in a very
20:10
different way than most heads of state
20:11
use
20:12
how do you evaluate uh bitcoin the use
20:16
of twitter and the el salvadorian um or
20:20
the salvadorian like economy and and the
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people are they excited by this do they
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not like it like it just seems like it’s
20:28
so different that you could almost make
20:30
an argument that it’s good or bad we
20:31
were discussing earlier on the show is
20:33
you know it could be a positive for
20:35
bitcoin it could be a negative it could
20:36
be a positive for el salvador it could
20:38
be a negative same for the president how
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do you view it in terms of almost like
20:42
the real time uh information sharing and
20:45
the transparency and the engagement that
20:47
maybe other heads of state uh don’t
20:48
participate in
20:50
yeah i think for bitcoin there’s no
20:52
question it’ll it’ll be beneficial i
20:54
mean even even if things go sour or
20:57
something unexpected happens and you
20:59
know there’s a really negative impact
21:01
just the fact that people are exposed to
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bitcoin for their first time and you
21:05
know that sticks with them and so i
21:08
think regardless of what happens here on
21:09
the government level el salvador will be
21:12
a major hub for bitcoin just because
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once people are exposed to bitcoin they
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they rarely let it go
21:18
as far as for el salvador i think
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there’s huge opportunities um we’ve
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already seen it just the amount of
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earned media that they’ve gotten from
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from this decision i mean it’s worth
21:28
tens of billions of dollars just all the
21:30
focus that’s been on el salvador and
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mostly in a positive light you know
21:35
looking at them being forward thinking
21:37
and embracing new technology versus
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historically they’ve only the news is
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only focused on el salvador when there
21:42
was a you know big gang shootings or
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things like that and so it’s really
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flipped the script on people’s
21:48
perception of el salvador and i don’t
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think you can underestimate the value of
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that and then also the number of
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companies that are locating here that
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like literally could not have pointed
21:59
out bitcoin on a map six months ago and
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now are opening offices here
22:04
and not just paying better but they’re
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providing that opportunity for people to
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increase their education and the people
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that are working for these companies now
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will have the skills to go out and start
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their own companies and so
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i i think regardless
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of what happens and regardless of the
22:22
ups and downs el salvador is going to be
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the most prosperous country in central
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america maybe latin america you know 10
22:28
years from now and i think bitcoin is
22:30
going to increase because definitely el
22:32
salvador is not going to be the last
22:33
country to embrace it i’m hearing all
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kinds of rumors of other countries that
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are looking to go the same direction and
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so i think it’s just a matter of time
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till that happens i’m sure right now
22:43
they’re sitting back a little bit to see
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how this works out and if it works out
22:47
well they’ll jump in if if there’s some
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you know big stumbles along the way
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they’ll probably wait but you know that
22:53
might just be the difference between it
22:55
being six months before the next you
22:57
know announcement in 16 months so i
23:00
think it’s inevitable that that’s the
23:02
way the world’s going to go
23:04
yeah i tend to agree with you obviously
23:06
uh more so than not uh last question i
23:08
have for you which is a fun one uh
23:10
bitcoin is in uh what appears to be a
23:12
bull run any price predictions or
23:14
thoughts as to where bitcoin’s price
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goes through the rest of this year
23:19
i mean i i personally don’t think we’re
23:21
done with the cycles um i i like the
23:24
super cycle idea i would love to think
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that we you know are going to have
23:28
decreased volatility but
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i you know i’m hesitant to make price
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predictions because
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everybody knows how uh you know that’s
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worse than trying to predict the weather
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but i would guess somewhere in the 150
23:40
range you know into the end of the year
23:42
but i still think we’ll have a big
23:44
pullback in the next year i hope i’m
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wrong but that’s kind of what i’m
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assuming but i do know 10 years from now
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it’ll be you know at least 10x what it
23:53
is now and so that’s more what i’m
23:55
focused on so you think 10 years 500 000
23:58
or more is pretty safe bet
24:01
yeah i mean easy i
24:03
i would make that bet all day long
24:05
so so would i my friend i am making that
24:07
bet as i assume you are as well
24:09
[Laughter]
24:11
um all right uh we’ve got your twitter
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account here um where uh we’ve been
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telling people to go follow you and
24:18
engage uh at bitcoin beach is there
24:20
anywhere else that you want us to send
24:22
folks um to uh to find more about the
24:25
work you’re doing or check out anything
24:26
that you guys have built
24:28
yeah so we also have a website it’s just
24:30
wwe
24:33
but we are we are more current on
24:35
twitter the the website is kind of more
24:37
of a static page but it’s a good place
24:39
for people to go to to kind of see
24:41
pictures of the team there and that sort
24:42
of thing
24:43
all right and then actually i lied i
24:45
have one more question how good is the
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surfing down there
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the surfing in el salvador is horrible
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don’t come here
24:53
it’s absolutely horrible bitcoin sucks
24:55
and surfing in el salvador sucks perfect
24:58
great message
25:00
the surfing is amazing it really is it’s
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i’m a little hesitant to tell people
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that because i’m getting older so it’s
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harder for me to fight for waves so i
25:08
don’t want the crowds to descend too
25:09
fast but uh but yeah it’s an amazing
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it’s an amazing town it’s amazing
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country and lots of good waves and warm
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water and especially warm people
25:19
that’s awesome man well listen thank you
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so much for taking the time out of uh
25:22
out of this kind of historic day and uh
25:24
you know just thank you from me and my
25:26
brothers and everyone else in the
25:27
bitcoin community have been doing some
25:28
amazing work down there um and i think
25:31
the results speak for themselves so keep
25:32
up the great work and we’ll have to talk
25:34
again in the future as you guys continue
25:36
progressing
25:38
well hopefully next time we talk you’re
25:39
here in el zante so uh just let us know
25:42
when you’re ready to come down i i i i
25:44
don’t know if you know this but i almost
25:46
made a trip uh with uh the second best
25:49
bitcoin podcaster in the world peter
25:51
mccormick but uh we couldn’t make the uh
25:53
the dates work so i’m gonna come down
25:55
there uh but hopefully i come when he’s
25:57
not there so everyone thinks that i’m
25:59
cool because he’s not there to uh to
26:01
outshine me right
26:03
well he must have got hung up on
26:04
something because he told me he was
26:06
gonna come barge in and uh you know
26:09
crash our podcast today so he he’s
26:11
probably off interviewing the president
26:13
or something right now
26:15
no no don’t give him any credit he’s
26:16
probably he’s probably down the street
26:19
uh either uh
26:21
surfing drinking or on twitter trying to
26:25
figure out how he can get my attention
26:26
by tweeting at me incessantly stupid
26:28
things
26:29
[Laughter]
26:31
awesome man listen thank you so much for
26:32
doing this we’ll definitely do it again
26:34
all right sounds good we’ll see you guys
26:35
bye

Bitcoin Must Be Accepted By World Bank, According To Charter

The World Bank has poured cold water on El Salvador’s adoption of bitcoin as legal tender, saying it cannot support the move due to “environmental and transparency” concerns.

But the developmental body may soon be forced to accept bitcoin payments from countries that have embraced the cryptocurrency.

Its founding document, the 1944 Articles of Agreement, outlines the procedures and principles by which the World Bank pledges to engage with sovereign governments. A central theme in the document is its commitment to accept payments from member states in local currencies.

Section 12 of Article V defines acceptable “forms of holdings of currency” as follows:

 

  • The Bank shall accept from any member, in place of any part of the member’s currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest-bearing and payable at their par value on demand by credit to the account of the Bank in the designated depository.

 

So, as well as allowing payments in “the member’s currency”, the charter allows central banks to pay with “notes or similar obligations” backed by their reserves.

These are effectively IOUs from governments. They can be backed by dollars. They can be backed by precious metals (the US Federal Reserve guaranteed its notes with gold until 1934, and with silver until the 1960s). Or they can be backed by bitcoin; perhaps, in El Salvador’s case, the $150m bitcoin fund being established by Banco de Desarrollo de El Salvador, the national development bank.

Things gets more awkward. Section 9 of Article II states that holdings paid into the bank by members should be continually re-valued (presumably against a “real” benchmark like USD). If the local currency has appreciated, it says, the World Bank should do the decent thing and hands the gains back:

  • Whenever the par value of a member’s currency is increased, the Bank shall return to such member within a reasonable time an amount of that member’s currency equal to the increase in the value of the amount of such currency

 

Conversely, if the local currency has depreciated, the member gets margin called and has to “pay to the Bank within a reasonable time an additional amount of its own currency sufficient to maintain the value”. Or, put another way: when bitcoin starts tanking, the World Bank starts stacking. Nice.

All of this depends, of course, on whether or not the body will respect El Salvador’s sovereign right to choose its own currency.

That’s not a foregone conclusion. Reuters asked them about that yesterday and got a decidedly arsey response. “We are committed to helping El Salvador in numerous ways, including for currency transparency and regulatory processes,” a spokesperson waffled. “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

The World Bank, by the way, has invested more than $12bn in fossil fuel projects over the past six years, representing at least 6% of its total investment portfolio. It also accepts gold payments from members, despite gold mines emitting on average 0.8 tonnes of CO2 for every ounce of gold produced.

Still, they’re worried about bitcoin’s carbon footprint. So they’ll be happy to know that, by some estimates, 76% of bitcoin miners are already using renewable energy.

Oh yes, and every transaction ever made on the bitcoin network is recorded on an immutable digital ledger that is fully visible to all market participants. That makes it, by far, the most transparent monetary network that has ever existed. No funny business allowed.

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Legalizing Bitcoin will ‘completely collapse El Salvador’s economy’ – Steve Hanke (Pt. 1/2)

Watch part 2 of this interview: https://www.youtube.com/watch?v=Bpsdh… Steve Hanke, professor of Applied Economics at Johns Hopkins University (https://twitter.com/steve_hanke) discussed the practicality of actually using Bitcoin as legal tender in a country like El Salvador with David Lin, anchor for Kitco News (