El Salvador Becomes the World's First Country to Adopt Bitcoin as Legal Tender | Fed (Kind Of) Buys Crypto Bonds

Top stories and news you should know in the bitcoin, crypto, and decentralized markets

High Level

  • This Wednesday, June 9th, the legislative assembly of El Salvador made history for formally adopting bitcoin as legal tender

  • With 62 votes in favor, nearly three-fourths of the legislature, this new law holds potential to elevate El Salvador into one of the world’s most important financial centers

Drilling Down Deeper

At around 1 AM Central Time on June 9th, the Salvadoran President Nayib Bukele tweeted, “History!

How It Started…
On the morning of June 5th, the last day of the Bitcoin 2021 conference in Miami, there was a special announcement that Jack Mallers would surprise the audience with a special message dubbed, “One Small Step for Bitcoin, One Giant Leap for Man Kind.” The attendees as well as audience around the world waited and watched eagerly for the young entrepreneur and developer from Chicago, Illinois to take the stage and make one of the biggest announcements in Bitcoin’s history. Maller’s presentation did not disappoint, and by the end of his speech he had everyone in tears almost as he introduced the president of El Salvador for his grand plan of making bitcoin legal tender and finished by walking off the stage to embrace both of his parents with a hug. It was a beautiful moment.

A Spark of Hope…
By Sunday, the president of the Republic of The Savior had the taken the crypto and financial news headlines by storm. That next night, he took to Twitter talking about their move into bitcoin that spilled over into the early hours of the next morning. Bukele spoke about the recently announced Bitcoin Law in the hour leading up to its vote as well as plans around bitcoin mining and expanding infrastructure and stimulating development around the country’s source of geothermal energy (here’s the recording). Speaking of how using cheap, clean, renewable energy that the country loses in large amounts to oversupply or through transporting it to cities, using it instead for bitcoin mining positions El Salvador as an ideal location for operations from both an environmental and regulatory stance.

Bitcoin Bill to the Future
By Tuesday, it was clear that in El Salvador there would be no capital gains tax for Bitcoin in the articles of the bill since it will be recognized as a legal currency. The Bitcoin Bill proposal was simple, short, and sweet. The Bitcoin Law was sent to Congress by their president around 9PM Central Time on June 8th, and it was approved at 1:05AM Central Time in the Salvadoran Congress by a supermajority of 62 out of 84 votes. Over a span of four days in El Salvador, it became the bitcoin capitol of the world beginning with Nayib Bukele announcing BTC adoption, a simple three-page bill that he sent to Congress, the government votes to approve the bill, and then President Bukele joining Twitter to speak candidly about the entire situation. On Nic Carter’s Twitter Spaces, Bukele welcomed the idea of bitcoin mining via excess volcanic geothermal energy!

Volcano Money > Oil Money
Upon its passage, El Salvador’s Congress broke into applause after the bill was signed into law by the president to officially pass it. This move by El Salvador will be powerful in bringing economic and financial benefits to the nation, not to mention, makes it one of the most ambitious countries in adopting bitcoin as legal tender while embracing clean mining, the Lightning Network, and Maller’s Strike app for payments and remittances. Amazingly, these major developments came after recent aspersions against bitcoin by ESG fan-boys and fan-girls claiming ignorantly that bitcoin mining would consume too much energy while also using too many dirty sources in the process. There could not have been better timing for this news proving why bitcoin works for the billions, not billionaires, and proving how it can be mined using carbon neutral or even negative methods!

How It’s Going…
The news of El Salvador’s decision only got better over time. It was especially rich seeing the Reuters headline saying, “IMF sees legal, economic issues with El Salvador’s bitcoin move.” That led many in the bitcoin and traditional financial communities wondering, “Risk to who?” The only plausible risk that popped into mind for many of us was that if El Salvador follows through on its prospects in adding bitcoin to their national reserves, it could mean that if the price of bitcoin went parabolic that they may be able to pay off the loans made to them by the IMF. While the IMF can issue their own SDR’s (special drawing rights) that are tied to a basket of fiat currencies that they can always just be inflated and printed more of, the truth is they cannot compete that against a fixed and sound money like bitcoin unless they too started to recognize it as legal tender and joined in on the movement.

Bitcoin is run by rules, not rulers. Without them, we would live with the animals.

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TL;DR — Loan sharks at the IMF couldn’t believe that a sovereign nation could pass their own laws to enact bitcoin as legal tender, and after historically loaning unpayable loans to a nations around the world they’re figuring out that El Salvador may be able to service its debt owed to the fund and achieve freedom from central banks and fiat money for the citizens and country’s well-being. They’re worried about it inspiring other countries in their position following suit. We are witnessing the evolution of our fiscal and monetary systems in real-time.

News You Should Know

Bitcoin - Potential Savior vs. Unlimited Fiat (Bloomberg Analyst)

In the June 2021 edition of the Bloomberg Crypto Outlook, it asks “Bitcoin $20,000 or $100,000?” before stating, “Crypto Trend Is Upward.” The quote below says it all when it comes to their feeling for the future of bitcoin, and it questions if the current crypto bull market has been discounted because of the focus on Bitcoin’s energy consumption despite it highlighting the robustness of the world’s largest decentralized network as well as its ability to incentivize the use of more renewable energy sources. While discussing the competition between Bitcoin and Ethereum in the report it says, “Adoption is in the very early days, yet its the key and Bitcoin appears to have won the race, as evidenced by Tesla allocating a portion of its equity wealth to the digital asset.”

Read More Here

“Bitcoin is more likely to resume appreciating toward $100,000 resistance rather than sustaining below $20,000.”

— Mike McGlone, BI Senior Commodity Strategist, Bloomberg Crypto Outlook (June 2021 Edition)

Fed (Kind Of) Buys Crypto Bonds

Thanks to MicroStrategy Inc., best known as the biggest corporate advocate for Bitcoin, and its offering this week of $500M in junk bonds solely for the purpose of buying more bitcoin (on top of their roughly $1B worth of convertible notes they issued months earlier to fund its bitcoin purchases for its balance sheet) the Fed now indirectly holds bitcoin. As the junk bonks saw incredible demand, MicroStrategy was able to up the initial $400M to $500M then up to $1.6B after counting all of the orders from a large number of hedge funds among other bidders. The Fed holds both State Street’s SPDR Bloomberg Barclays High Yield Bond exchange-traded fund (JNK) and BlackRock’s iShares Broad USD High Yield Corporate Bond ETF (USHY), which both hold allocations to MicroStrategy’s 2028 secured notes with a yield of 6.125%. Interestingly, this headline was released on the same day that the Fed’s balance sheet and the S&P 500 index both reached new all-time-highs…

Read More Here

RECAP: Bitcoin 2021 Miami | June 4th & 5th

The largest bitcoin event in history was held in Miami, Florida last week that left many people talking about its announcements, events, and surprises well after it concluded. People from the bitcoin community came from all the globe to hear and see leaders in the space discuss the asset and network that’s been changing the world. It was filled with insights for newbies as well as seasoned veterans featuring speakers like Ron Paul, Senator Cynthia Lummis, Michael Saylor, Jack Dorsey, Lyn Alden, Sam Bankman-Fried, Robert Breedlove, Nic Carter, Hailey Lennon, Caitlin Long, Anthony Pompliano, Nathan Yusko, Preston Pysh, Marty Bent, Alex Gladstein, Jack Mallers, and many more…

Bitcoin 2021 Livestream - Day 1

Bitcoin 2021 Livestream - Day 2

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