This is an opinion editorial by Nazar Taras, Head of Content and Partnerships PowerInside.
Do you want to pay your taxes in Colorado with Bitcoin? No problem. Looking to buy a beach property in El Salvador with Bitcoin? Come over. Would you like to send money abroad without paying high bank fees? There’s an app for that, and your grandma will have the money in her bitcoin wallet instantly.
At this month’s Bitcoin conference in Amsterdam, government officials took center stage, urging people to come and see for themselves how Bitcoin adoption is affecting their countries.
Deputy Ambassador of El Salvador to the Kingdom of the Netherlands, Hector Enrique Celarie Landaverde, credited Bitcoin with helping the nation chart a new course for “peace, education and prosperity.” After bitcoin became the nation’s legal tender in September 2021, GDP grew by a record-breaking 10.3%, while tourism revenue increased by 52%. 70% of the previously unbanked population is now entering the digital age and conducting online financial transactions for the first time.
Steve Tangoa, speaking on behalf of Central African Republic, is betting on Bitcoin adoption to bring needed infrastructure investments to the country. Additionally, Bitcoin could cut out the middleman and remove the need to pay legacy transaction fees to the Bank of France.
Bitcoin mindset on citizenship
In another panel, Plan B Passport’s Katie Ananina noted a much higher demand for her services that help people get a second passport. She sees her clients increasingly looking for “court arbitrage.” In addition to Russian businessmen fleeing their homeland to safer shores, less well-off people are now also getting a second passport.
Katie urged the audience to “bring the mindset of bitcoin money to citizenship,” which means hedging your options, protecting your freedom, and staying sovereign.
The race to attract nomads
Consider it. A year ago, only 25 countries offered long-stay visas for teleworkers. As I write this, 49 countries are vying for digital nomad dollars. Remote work has given us many options for residency and potentially a quality of life that previous generations only dreamed of.
Entire industries have sprung up to serve this disengaged generation — borderless digital banking, bespoke travel insurance for nomads, coworking and co-living communities, and even eco-hotels for eco-conscious individuals striving for work-life balance.
Those jurisdictions that fail to attract freedom-loving global citizens will lose. How can a small country or region hold its ground in this environment? How can it stand out?
Estonia Digital Experiment
Let’s look at the small Baltic nation of Estonia in 2000, as it too tried to emerge from its post-Soviet economic stagnation and take a leap forward. The vision was bold: to become the world’s most advanced digital nation. Change has been rapid – and now, with services like e-Health, e-Police, i-Voting, e-Residency and e-Tax, you can apply online for almost any service and vote for your favorite politician. Marrying or divorcing is the only life decision considered so consequential that it requires personal mediation (perhaps lest the ritual be overly trivialized).
A model for many nations today, Estonia has been successful because a young generation of leaders emerged, took risky, bold steps and moved quickly. Today we can look to El Salvador and even the Madeira archipelago for the next generation of digital innovation.
Madeira Bitcoin Project
Around 1,000 kilometers from Lisbon, Portugal, Madeira has become a hotspot for digital nomads thanks to the work of a few enterprising locals. In May 2022, its President, Miguel Albuquerque, convinced the bitcoin community that he was serious about developing the bitcoin ecosystem in the islands.
Speaking about the Madeira project at the conference, entrepreneur Jeff Booth pointed to the skyrocketing government debt and possible fiat currency defaults as reason enough to tout Bitcoin.
“When the system collapses, governments will be faced with choices and they will ride the fiat horse or the bitcoin horse and for a while they will have to ride two horses and then they will have to choose.” – Jeff booth
The Madeira Bitcoin Experiment with André Loja, Knut Svanholm, Jeff Booth, Troy Cross and Daniel Prince
Link to embedded video.
Bitcoin Adoption Lessons
So what lessons can we learn from the current Bitcoin initiatives? Here are some ideas that an attentive listener might have caught among the swarming enthusiasts in Amsterdam.
- Governments must have a bold vision. El Salvador, for example, is planning to launch a $1 billion Bitcoin bond project. It’s building a Bitcoin City — no income tax, no property tax, no payroll tax, and it has volcano-powered bitcoin mining infrastructure.
- As the history of El Salvador shows, technical stereotypes are rife, especially during the early rollouts. They will be fixed.
- Patiently conduct education across a broad spectrum of the population. Arm the vulnerable with knowledge, such as against malicious phishing attacks.
- The adoption of Bitcoin usage will not happen overnight in a nation where cash has always been king. It is a long way.
- Incite, stimulate. El Salvador famously gave $30 worth of bitcoin — a three-day minimum wage — to every new wallet.
- Be honest about risks like Bitcoin’s volatility versus fiat currencies.
- Find a magic recipe to combine Bitcoin’s decentralized philosophy with the need for a strong push from centralized government for the necessary legal and structural changes.
- Be ready for some strong objections from the likes of the IMF and World Bank. They will be less than thrilled when governments diversify away from fiat currencies.
- Articulate the tangible benefits of Bitcoin adoption and sing the praises of it to the world.
- Business Case One: Avoid bank transfer fees. Each year, El Salvador receives a total of $6 billion in foreign bank transfers. Take Mexico, where annual remittances total $51.6 billion. By switching to bitcoin and sending it over the Lightning Network, the nation can keep around $2 billion instead of giving it away to Wall Street. Each country can save money transfer fees, both sender and receiver.
- Business Case 2: Protection against inflation. With an inflation rate of 81.22% in 2022, Turkey is an ideal case for diversifying into Bitcoin. And Turks know it — the country ranks fifth in the world for cryptocurrency ownership rates.
Bitcoin remains the most popular cryptocurrency in the world. Governments everywhere would be reluctant to overlook the benefits of Bitcoin adoption.
Sometimes historical movements start small, whether it’s on a beach in El Salvador or with initiatives like Bitcoin Beach Brazil and Bitcoin Jungle Costa Rica. They mean what’s to come. Would you also like to ride this cheerful orange wave?
When asked what it would take for other governments to carry out a technological and economic transformation on the scale of El Salvador, Ambassador Landaverde unhesitatingly remarked humbly: “Once you dream it, there is a will.”
This is a guest post by Nazar Taras. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.