This is opinion editor Samson Mow, CEO of JAN3 and former CSO of Blockstream.
About a year ago I had the opportunity to perform at Feel The Bit with President Bukele in El Salvador. During the event, we announced Bitcoin Vulcan Bonds, while President Bukele made an important announcement of his own: the creation of Bitcoin City. By recognizing Bitcoin as legal tender and founding Bitcoin City, President Bukele took a bold step toward nationwide acceptance. This decision helped accelerate the timeline for bitcoin to become a nationally recognized currency.
After the announcements, I received numerous requests from bitcoiners around the world to help implement Bitcoin projects in their local communities or their governments. This interest came from both individuals actively involved in the Bitcoin community and investors. The enthusiasm was largely inspired by the events in El Salvador and their impact on the global Bitcoin landscape.
It is driving the nation-state adoption of Bitcoin
I have been considering the idea of promoting the adoption of Bitcoin by nations for some time. After careful consideration, I have decided to leave Blockstream in 2022, set up my own company JAN3, and dedicate myself to developing the acceptance of Bitcoin as a global currency known as hyperbitcoinization and its adoption by nations. Now many may ask, why help nation states, why accelerate hyperbitcoinization?
The traditional fiat currency system greatly aggravated the credit cycle, a wave-like pattern characterized by periods of prosperity and recession. Under the gold standard, credit is backed by assets such as gold deposits or real estate. In contrast, under the fiat standard, credit is issued by governments and secured by debt such as government bonds. During an economic expansion, more loans are issued and businesses grow. However, at some point there may be too much credit in circulation relative to the actual production or productivity of the economy, leading to a mismatch between the financial and real economies, resulting in bubbles or market corrections. These events occur more frequently and with more extreme highs and lows.
The mechanisms that central banks have traditionally used are less effective than a diabetic who needs more insulin. If this trend continues, we can expect a serious economic depression in the future. Without clear price discovery, a dynamic economy, and technological and market forces to reduce competitive pressure, nation-states can degenerate into conflict and war. When the cake is not expanded, it is easier to take it from someone else.
Under the Bitcoin standard, states have more incentive to make better use of their resources because there is a real cost. This promotes a peaceful, diplomatic solution, like a standard game theory equilibrium. Adopting the Bitcoin standard and accelerating hyperbitcoinization may be our best hope to prevent the collapse of civilization and ensure a free and prosperous future for humanity. Simply put, it can help prevent conflicts and wars caused by economic competition.
I announced the formation of JAN3 at Bitcoin 2022 in Miami. JAN3 is, of course, named for January 3, 2009, the day Bitcoin was created, also known as Creation Day.
As our director of operations, a former Royal Marine named Doogie, told me, establishing a presence in El Salvador was essential to gaining a foothold for Bitcoin and allowing it to take root. That’s why we decided to open an office there.
In order for the Bitcoin network to become more robust, it is important that more countries adopt the Bitcoin standard. While Bitcoin doesn’t need anyone’s help, it can be accelerated and supported by more countries, territories and cities adopting it. For example, if a country mines Bitcoin, it does not attack the network. If a country made bitcoin legal tender, it probably wouldn’t try to ban “unhosted wallets”. Overall, more countries adopting the Bitcoin standard is a positive for the network.
Hashing by 2022
2022 has been an interesting year for many reasons.
Madeira, Portugal President Miguel Albuquerque announced the creation of FREE Madeira, giving Bitcoin a firm foothold in the European Union. The autonomous nature of the Madeira region allows it to make bitcoin a de facto legal tender.
Próspera, Honduras has become one of the most active Bitcoin centers in the world. President Joel Bombar announced that bitcoin is legal tender at Próspera in Bitcoin 2022. Recently, the Bitcoin space has been opened there, and a legal framework has been created to enable the issuance of Bitcoin bonds.
On April 27, the government of the Central African Republic announced that it would accept bitcoin as legal tender. The news was welcomed by Bitcoin enthusiasts, but the government also announced a project called Sango, based on an alternative cryptocurrency. It is clear that the adoption of Bitcoin in the country has not grown as fast as some expected, but we are hopeful that the Central African Republic will continue to accept and support the use of Bitcoin.
The cryptocurrency market has experienced a bear market due to a variety of factors, including the collapse of the FTX exchange, the Luna/Terra crash, and the bankruptcy of companies such as Celsius and Three Arrows Capital.
At the Panama Blockchain Conference in July, Towerbank, a leading Panamanian bank, announced plans to offer crypto banking services throughout Latin America and beyond, and asked for our help in implementing the Liquid network. Liquid, a Bitcoin sidechain, allows you to extend the capabilities of Bitcoin by using smart contracts, without issuing a native token. This relationship with Towerbank is a promising development in the world of crypto banking and could help further establish Bitcoin as a powerful and versatile financial instrument.
On October 28th at Lugano’s Plan B Forum, Senator Zuri Rios from Guatemala presented a video to the Bitcoin community in which he expressed his interest in potentially including Bitcoin in his future political plans. He started a dialogue with the public and invited them to share their thoughts and ideas on the issue. El Salvador also announced the opening of an office in Lugano, which intends to exchange knowledge and benefit commercially. Thanks to the incredible efforts of Bitfinex and Tether CTO Paolo Ardoino, Lugano is making great progress in attracting merchants to Bitcoin. They have already managed to get thousands of merchants to accept cryptocurrency and continue to bring more.
At the “Adopting Bitcoin” conference in El Salvador in November, it was clear that the gang situation in El Salvador has improved significantly. Public safety has increased significantly with a marked decrease in homicide and other crimes. This improvement is a testament to the effective measures taken to address the problem and bring peace and tranquility to the people of El Salvador.
El Salvador’s economy minister unveiled a new digital securities bill that paves the way for the country to issue bitcoin-backed bonds. The legislation would create the National Digital Assets Commission, which would be responsible for regulating digital asset issuers, service providers and other participants involved in the digital securities public offering process.
There’s more, but unfortunately I can’t discuss it yet. Change is coming and Bitcoin will be the main topic around the world.
Visions for 2023
2023 is shaping up to be a promising year for Bitcoin. El Salvador’s digital securities laws that will underpin Bitcoin Volcano Bonds have been sent to Congress for approval. These bonds may soon be available on Bitfinex Securities.
El Salvador’s star will indeed continue to rise. El Salvador has already seen a lot of interest in accepting Bitcoin, and many other countries are closely watching how things develop there. As El Salvador continues to lead the way in Bitcoin adoption, we expect it to continue to grow in popularity.
We expect to see more adoption of Bitcoin next year as it continues to gain traction despite the current lows. The world needs bitcoin at any price. For those living in wealthy countries, Bitcoin is optional, but for people living in the global south, it is a necessity. Mind you, the gap between the “rich county” and the “global south” is closing fast.
On JAN 3, we were receiving numerous requests from people from different countries for help with accepting Bitcoin. In addition to our work in El Salvador and Madeira, we also focus on countries such as Costa Rica, Ecuador and more. Last week, Fijian Prime Minister Sitiveni Rabuka announced that he considers bitcoin to be legal tender.
Despite the current bear market, we believe there is no better time to build a strong foundation for the future of Bitcoin adoption. What we are doing now will lay the foundation for a freer and more prosperous economic future by accelerating hyperbitcoinization and embracing the nation-state.
This is a guest post by Samson Mow. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.