Bitcoin is legal tender…in El Salvador

On By mehranmuslimiblogIn BitcoinLeave a comment

On 9th June 2021 something quite historic happened: the government of El Salvador voted to recognise bitcoin as legal tender. The bill didn’t pass with a slim majority, it got a supermajority vote in the nation’s legislature, and it was expected that President Nayib Bukele would sign it into law immediately. The next step after that is to discuss it with the International Monetary Fund.

President Bukelele presented the parliament with his vision for the leading cryptocurrency, pitching it as an effort to boost financial inclusion in a country where only 30% of citizens have access to financial services. Furthermore, he said in a Twitter conversation that bitcoin users would not be pressed to use a government-issued wallet for their funds.

The president also said that the new law would mandate “all businesses to accept bitcoin for goods or services,” but added, “the government will act as a backstop for entities that aren’t willing to take on the risk of a volatile cryptocurrency.” He described how this will work: the government will set up a trust at the Development Bank of El Salvador to instantly convert bitcoin to U.S. dollars and this fund will assume merchants’ risk. It will hold about $150 million in dollars, and will keep the fund topped up by selling bitcoin for dollars.

Bukele ssiad: “If there’s an ice cream parlor, he doesn’t really want to take the risk, he has to accept bitcoin because it’s a mandated currency, but he doesn’t want to take the risk of convertibility, so he wants dollars deposited in his banking account, when he sells the ice cream, he can ask the government to exchange his bitcoin to dollars. Of course, he can do that in the markets also, but he can ask the government to do it immediately.”

Bitcoin mining and volcanic energy

Bukele also indicated that the government may promote bitcoin mining, and it looks as if it is ready to make use of its excess geothermal energy for this purpose. Less than 14 hours after getting approval for his bill, Bukele was talking to El Salvador’s geothermal company, LaGeo and directing them to let power-hungry bitcoin miners plug into his country’s volcanic resources. He tweeted “I’ve just instructed the president of @LaGeoSV (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanoes.” The 39-year-old leader then added, “This is going to evolve fast!”

He did admit that he hadn’t really thought about an efficient use for all his volcanic energy before now, but since he had a lightbulb moment, he’s ready to tap into the country’s hundreds of megawatts of untapped geothermal potential as well as a network of underutilized power plants. It’s a well-spotted opportunity and the speed at which Bukele has moved with respect to bitcoin as legal tender and the use of excess energy for mining underscores the levels of power this young president has.

Residency only costs 3 Bitcoin

And there was other good news for anyone looking for a new country of residence: President Bukelele announced that he is creating a new law that will allow any individual who invests three BTC into El Salvador’s economy to have permanent residency. With bitcoin today at $36,841, that means residency would only cost around $110,000. It could be time to investigate the benefits of being an El Salvador resident.

Last night Bukele tweeted, “Every day is going to be a new idea.” As they say: watch this space, and the rest of Latin America.

The cost of becoming a Cardano millionaire

On By mehranmuslimiblogIn cardano, cryptoLeave a comment

On 13th May 2021, Cardano’s token ADA broke an important all-time-high by hitting the $2 mark.  Plus, it was the only top-ten cryptocurrency rising in value during a historic sell-off period. Remarkably, given its price, it is the fourth most valuable token in the world.

Isaiah McCall writes, “I’m confident it will be the next Ethereum and have a massive role in web 3.0,” and if he is correct, it may be a good time to ad Cardano to your portfolio before the price rises even more.

Cardano community members believe that one day ADA will reach $100. To do that, it would need a market cap of $3 trillion. That’s an issue, as Bitcoin’s market cap has a 1 trillion market cap and has been around since 2009. To put this in perspective, Cardano is 4-years-old and has a current market cap of $61 million.

Cardano’s battle will not really be with Bitcoin, which serves an entirely different purpose. Instead it will be with Ethereum, and Cardano has already positioned itself as the ‘Ethereum killer’ (or its fans have). This does make it sound as if it is a heavyweight boxer looking for a title fight.

Both Ethereum and Cardano are smart contract platforms, and McCall says they “stand to become crypto-Google (and maybe crypto-Yahoo).” Google’s market cap is $1.5 trillion, but McCall suggests that the smart contract platforms can double that.

However, here is what you need if you fancy becoming a Cardano (ADA) millionaire. Based on ADA reaching $100, (it’s just under $2 at the moment) you would need to buy anywhere between $15,000 to $20,000 worth of Cardano to become a millionaire. It will take several years to get to this point – McCall says about four to five years – but Cardano is using some interesting tactics to speed this up.

Cardano’s founder Charles Hoskinson invited Elon Musk to tea and a chat about ADA and Tesla on 13th May, and it could be that Musk will see the value in this particular blockchain. McCall says, “Cardano is an institutional investor’s wet dream. It’s available on every mainstream exchange, doesn’t have any SEC allegations against it, unlike XRP.” It is also a more stable blockchain.

You don’t need to be Elon Musk to benefit from a Cardano investment, although as with every market there is risk involved, so please don’t invest money you can’t afford to lose. Its proof-of-stake protocol means transactions are much more fluid by not rewarding miners with a block reward but with the transaction fee.

Furthermore, there are massive amounts of on-chain liquidity on Cardano’s blockchain. Around $16 billion ADA is circulating around the network and $22.2 billion is staked on the Cardano blockchain. According to the stats, Cardano is also the second most staked blockchain, coming in just after Polkadot.

While Ethereum has the first mover advantage on smart contracts, Cardano arguably has it on POS. although Ethereum is transitioning to POS this year. What it does need, and it is something that Etheruem has, is “institutional support and an ecosystem of dApps to become the next Ethereum.”

But it is still worth taking a punt on Cardano, even if it has a relatively small share of your crypto portfolio, and certainly while its price remains in single digits.

The Black Wall Street App: A Road to Financial Inclusion

On By mehranmuslimiblogIn apps, DeFi, Innovation1 Comment

Consensus 2021 is always a fount of new ideas and initiatives, and the Black Wall Street App is one of them. As Jordan Muthra writes at Coindesk, it aims “to increase access to financial education in Black and other communities of color.”

The project from Hill Harper and his team states on its home page, “You can’t be free if the cost of being you is too high.” Not only is this the world’s First Black-Owned Digital Wallet, it has also been built and designed by the Community, with the Community and for the Community.

Last week, Harper told CoinDesk’s Consensus 2021 event, ““When you really, actually peel back the onion, 90% to 95% of the financial products and services that have historically been offered to Black, brown and marginalized communities have been either predatory on their face or hidden predatory.” Perhaps this is an aspect of finance you haven’t considered, or to say it as Black Wall Street app does – Black Cash Matters™.

Muthra points out, “We are entering a phase of increased collective consciousness but not without a wide wealth gap, institutional racism and proud racists surfacing.” What is more, as he says, we have become jaded “by the widespread evidence of prejudice due to the proliferation of social media,” and this has a tendency to stop us thinking about the many facets of prejudice and how they are intertwined.

It is systemic prejudice that is behind Muthra writing the following, “As a community, Black folks have always strived to own and operate both infrastructure and the means of production but have been continually held back by structural inequality and attacks from extremists and the government alike.” If it didn’t exist, this would not be a necessity. Nor would the existence of the Black Wall Street app be necessary, but it is.

I’ll leave you with this thought: Black Americans hold only 1% of US wealth, and are systematically refused access to the financial system. With this app, people can learn about financial wellbeing and investing, invest in cryptocurrency, start building wealth and send/receive cash and crypto with community members. Being in charge of your finances and understanding the system, as well as making it work for you, is a necessary step on the road to freedom at a bearable cost.

Total anonymity or enhanced privacy for payments?

On By mehranmuslimiblogIn Digital Innovation, Fintech2 Comments

Anonymity in payments is a complicated topic with no easy answers. There are those who favour complete anonymity, and then there are those who see that position as dangerous. Even the regulators aren’t too sure about which way to turn, as evidenced in the US Government Accountability report on “Emerging Regulatory, Law Enforcement, and Consumer Protection Challenges” (May 2014). It concluded, “that virtual currency systems “may” provide greater anonymity than traditional payment systems.”

Fintech expert David G.W. Birch, who has been pondering the issue for some time, and who has a ‘pseudonymity’ solution, examines it by looking at lottery winnings. He cites the case of a US lottery winner who took a case to court (as Jane Doe) because she wanted to retain privacy about her winnings. Why was she so desperate to do that? Perhaps another case Birch tells about explains it: “In November 2015, Craigory Burch Jr. matched all five numbers in the Georgia Fantasy 5 drawing and won a $434,272 jackpot only to be murdered in his home by seven masked men who kicked in his front door.”

However, in the case of Jane Doe it is clear that even if she managed to keep her winnings private, some people would know about it, namely the lottery people and her bank. As Birch says, “Being anonymous is really difficult in an infrastructure that has no anonymity.” On the other hand, if you have an anonymous system it is relatively easy to add non-anonymity to it if desired.

So, if we are designing future infrastructures, should they allow for the kind of anonymity the lottery winner wanted? Birch gives the example of New Hampshire, which allows people to form anonymous trusts and these trusts can buy lottery tickets. However, the money still has to go to a bank account.

Cryptographics could be the answer. For example, if you win the lottery, your money can be sent to your cryptocurrency address (which is in the ticket) without the lottery owner or anyone else having the slightest idea to whom it belongs.

However, there is resistance to the idea of electronic money, and central bank digital currencies in particular, to be anonymous. But there is a case for “a privacy-enhancing digital Dollar. This would be very appealing on a global scale in contrast to digital currencies subject to continual state surveillance.”

If that can be achieved, it will be to the advantage of digital currencies.