This is an opinion editorial by Nazar Taras, head of content and partnerships PowerInside.
You want to pay your taxes in Colorado with bitcoin? No problem. You want to buy a beach property in El Salvador with bitcoin? Come on over. You want to send money abroad without paying banks’ high fees? There is an app for that, and your grandma will instantly have the money in her bitcoin wallet.
At the Bitcoin Amsterdam conference this month, government representatives took center stage, telling people to come and see for themselves how bitcoin adoption is impacting 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 of 2021, the GDP grew at a record 10.3%, while income from tourism surged 52%. Previously unbanked, 70% of the population is now stepping into the digital age, making online financial transactions for the first time.
Steve Tangoa, speaking on behalf of the Central African Republic, bets on bitcoin adoption bringing needed infrastructure investments to the country. Additionally, bitcoin could cut out the middleman and eliminate the need to pay legacy transaction fees to the Bank of France.
Bitcoin Mindset To Citizenship
Speaking on another panel, Katie Ananina, from Plan B Passport, noted much higher demand for her services helping people obtain a second passport. She sees her clients increasingly seeking “jurisdictional arbitrage.” Along with Russian businessmen fleeing their homeland for safer shores, less wealthy folks are now also getting a second passport.
Katie urged the audience to “Take the bitcoin money mindset to citizenship,” meaning hedge your options, protect your freedom and stay sovereign.
The Race To Attract Nomads
Consider this. A year ago, just 25 countries were offering extended stay residence visa schemes for remote workers. As of this writing, 49 countries are vying for digital nomads’ dollars. Remote work has given us many options for residency and potentially a quality of life only dreamed of by previous generations.
Whole industries have sprung up to serve this untethered generation — borderless digital banking, tailored nomad travel insurance, coworking and co-living communities and even eco-hotels for the environmentally conscious seeking work-life balance.
Those jurisdictions that fail to attract freedom-loving global citizens will lose out. How then, does a small country or region compete in this environment? How can it stand out?
Estonia Digital Experiment
Let us look at the small Baltic nation of Estonia in the year 2000 when it too was trying to stand out and leap-frog from its post-Soviet economic stagnation. The vision was bold: to become the world’s most advanced digital nation. The transformation was rapid — and now, with services like e-Health, e-Police, i-Voting, e-Residency and e-Tax, you can apply online for nearly any service, plus vote for your favorite politician. Getting married or divorced is life’s only decision deemed so consequential as to require face-to-face mediation (lest the ritual is unduly trivialized, perhaps).
Now a model for many nations, Estonia succeeded because a young breed of leadership arose, took risky, bold steps and moved quickly. Nowadays, we can look to El Salvador and even the island archipelago of Madeira for the next generation of digital innovations.
Madeira Bitcoin Project
Around 1,000 kilometers away from Lisbon, Portugal, Madeira has become a digital nomad hotspot, thanks to the work of some entrepreneurial locals. In May of 2022, its president Miguel Albuquerque convinced the bitcoin community that he was serious about developing the bitcoin ecosystem on the islands.
Speaking about the Madeira project at the conference, entrepreneur Jeff Booth pointed to governments’ exploding sovereign debt and possible fiat currency defaults as a good enough reason to start courting bitcoin.
“As the system breaks down, governments are going to be faced with choices, and they are going to ride the fiat horse or the Bitcoin horse, and for a while, they are going to have to ride two horses and then they are going to have to choose.” — Jeff Booth
Bitcoin Adoption Lessons
So, what lessons can we draw from the current bitcoin initiatives? Here are some ideas a careful listener could have overheard among the swarming enthusiasts in Amsterdam.
- Governments must have a bold vision. El Salvador, for instance, is planning to launch a $1 billion bitcoin bonds project. It is building a Bitcoin City — no income tax, no property tax, no payroll tax and it has volcano-powered bitcoin mining infrastructure.
- As the story of El Salvador shows, technical cliches are common, particularly during the initial rollouts. They will get fixed.
- Patiently carry out education across a broad spectrum of the populace. Arm the vulnerable with knowledge, for example, against malevolent phishing attacks.
- Bitcoin usage adoption will not be overnight in a nation where cash has always been king. It is a long road.
- Incentivize, incentivize. El Salvador famously gifted $30 worth of bitcoin — a three-day minimum wage — into every new wallet.
- Be honest about risks, such as bitcoin’s volatility against fiat currencies.
- Find a magic recipe to marry bitcoin’s decentralized philosophy with a need for centralized government’s strong push for the necessary legislative and structural changes.
- Be ready for some strong objections from the likes of the IMF and the World Bank. They will be less-than-thrilled when governments diversify away from fiat currencies.
- Articulate tangible benefits from bitcoin adoption and sing its praises to the world.
- Business case one: Bypass bank fees on remittances. Each year, El Salvador receives foreign bank wires totaling $6 billion. Take Mexico, where annual remittances are at $51.6 billion. By switching to bitcoin and sending it over the Lightning Network, the nation can keep around $2 billion instead of gifting it to Wall Street. Any country can save on remittance fees, both senders and receivers.
- Business case two: A hedge 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 in cryptocurrency ownership rates.
Bitcoin remains the world’s most popular cryptocurrency. Governments everywhere would be remiss to overlook the benefits of bitcoin adoption.
At times, historic movements start small, be it on a beach in El Salvador or with initiatives like Bitcoin Beach Brazil and Bitcoin Jungle Costa Rica. They signify what is coming. Would you also like to ride this merry orange-colored wave?
Asked what it would take for other governments to carry out a technological and economic transformation on a scale of the one in El Salvador, Ambassador Landaverde, without hesitation, somewhat humbly remarked, “Once you dream it, there is a will.”
This is a guest post by Nazar Taras. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.