In a press conference a few hours ago, El Salvador’s president, Nayim Bukele, announced something that would have been no less than Science Fiction just a few months ago: every citizen of El Salvador will receive $30 equivalent in Bitcoin, by using a wallet called Chivo. It is not the biggest airdrop in history, far from it. If we look back at how many trillions US printed when Covid-19 circus started, this almost doesn’t even count.
Almost.
Because, in fact, it counts big time.
First, let’s run some numbers.
At the current price, $30 in Bitcoin means roughly 0.0009 BTC. El Salvador has a population of 6.8 million people (Wikipedia). I don’t know the exact numbers (and couldn’t find in such a short time a reliable source), so I would assume the adult population is somewhere around 4 million. If every adult citizen will opt in for this, there will be 3600 Bitcoin in circulation, liquid, transferable, with a real use case. The total amount in USD is roughly 123 million, so I think this is the “fund” that president Bukele talked about when he first announced the Bitcoin Law, a few weeks ago. So basically the government bought 3600 Bitcoin, that it transfers to its adult population.
Countries print money out of thin air all the time, only it’s the first time a country chooses to airdrop Bitcoin, instead of paper money. Bitcoin has a limited supply. You cannot airdrop more, if you don’t buy more.
Starting September 7, these 3600 Bitcoin will be out of exchanges, out of cold wallets, and into the hands of real people who will use them just as they use USD right now. Buy things, invest, exchange for other currencies, etc.
I don’t expect the establishment to watch this peacefully. The “best” outcome would be that IMF will frown upon and tighten their money hose, putting some strain on El Salvador economy. The “worst” outcome, the one that I’m more worried about, is to see a wave of international sanctions surrounding El Salvador, all coming from the “good” part world, which will suddenly realize El Salvador is a country filled with terrorists, money launderers, enemies of democracy or whatever reasons may appeal to the sleep-walking, paying taxes, afraid citizens who are waiting for the government to save them. From anything.
We live in interesting times.
Initially published on my blog.
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Great news!
You are the first person to break this news again.
Great news indeed.
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It certainly gets publicity. I don't know how much it will affect the local economy. A lot of people are likely to just sell what they get as they will want 'real money'. Anyway Bitcoin is not a great crypto for actually buying stuff.
It looks just like another "stimmy check", that's right, and people may be selling it fast. But that's the whole point, to distribute it, to make it available to people. For every seller there will be a buyer.
As for "actually buying stuff", Lightning works quite well. Not as good as Hive, which is free, but well enough.
Will people understand the technicalities? I expect some 'entrepreneurs' will offer to buy it off people at a low price to save them the hassle.
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Haha I was thinking the same thing.
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BEER.No it’s not. I listened to him directly on Twitter spaces the morning the bill was passed. The “funds” is meant to be a reserve so that people who want to exchange the btc they recieve from trades for cash can do so immediately. This airdrop fund is another one entirely
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Interesting, thanks for the comment.
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According to Twitter chivo Wallet will be live September 2021. Lets see where #bitcoin is priced at that time
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Yeah, I made the calculations based on the acquisition price. If El Salvador bought at today's prices, or close, and Bitcoin doubles by September, then by then they'll have a $300 million fund, instead of a $150 million.
Of course, if it tumbles, they will have $75 million and it will be difficult to keep their promise, they'll have to buy more BTC.
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How will the airdrop work, i expect there will only be an airdrop to people who sign up rather than the entire adult population.
Really interesting news!
Yeah, you have to opt in. I don't know the details, all I know it will be done through a mobile wallet, Chivo. From the press conference, Chivo will work via GSM even if you don't have a data plan. Probably you will have to somehow link your official identity to the wallet. Seems it will work on Lightning.
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This is great news.
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Excellente . If you want to create a Bitcoin economy, you need Bitcoin circulating in the economy.
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