El Salvador
Daily Ramble
194 countries left to go. With glee, Bitcoiners celebrated their triumph in El Salvador as it became the first nation in the world to accept Bitcoin for legal tender. The naysayers did what they always do, and talked down their noses about why this would never work, how it was only a small meaningless country, and how the rich and powerful would shut it down soon enough. They’re a curmudgeonly lot, those naysayers.
The real question: did you feel the tectonic plates of global finance creak and crack last night for the first time since 1971 when the US abandoned the gold standard? Doubtful, since the mainstream media is unlikely to break the bigness of El Salvador’s decision to the world properly. Let me take a crack. Take a deep breath because the enormity of these implications will reverberate across the globe — no exaggeration.
First off, there are now eight other Latin American (LATAM) countries with politicians signaling support for Bitcoin. Being the first at something new takes deep courage, which Nayib Bukele, the El Salvadorian President, showed. But being the first to follow is an easier pill to swallow, and it’s exactly what we’re seeing happen across LATAM as politicians step up to the Bitcoin plate. Here’s the text of the El Salvadorian bill, the template for LATAM. The simplicity of it is what grabs me most. 14 year-olds could get their heads around it. No loopholes, and despite the US State Department and IMF already reaching out to El Salvador, the wake from Nayib Bukele’s cannonball into the finance pond is spreading through LATAM like wildfire. The cultures in LATAM are distinct, but their heritage of colonization and scandal unifies them. Bitcoin offers a path out of the miserable loop most have been stuck in. Bitcoin is hope.
Second, because there are no capital gains taxes on Bitcoin in El Salvador, there’s a flood of capital already starting to pour into the country. Bitcoiners have already bought beach homes, looking for residency and tax avoidance in their home countries. I’m certain that many foreigners will be setting up companies to shelter their Bitcoin also to avoid taxation. We can finger-wag all we want about how people should pay their taxes, but if we know one thing, capital will flow to where it can pay the least in taxation. The offshore finance industry has stayed lucrative for years on this premise. El Salvador will be the victor here. But even more telling, this is the state-level competition the Sovereign Individual warned would arise as encrypted value, in the form of Bitcoin, makes it impossible to keep within borders. Instead, states like El Salvador will compete for these sovereign individuals.
Third, the globe now has to recognize Bitcoin as a form of currency. Just as Europe recognizes the dollar as the US’s legal tender and the US recognizes the Yen as Japanese’s legal tender for settling trade, the world will now recognize Bitcoin as legal tender when settling trade with El Salvador. Suddenly, the foreign exchange markets are forced to include Bitcoin as a legitimate currency. Most likely, that will be limited to a USD/BTC market pair since El Salvador’s primary trade partner is the US.
To summarize, the first country-level domino has just fallen. And it won’t be the last. Bitcoiners may be reveling in the success today, but give them another day, and they’ll have their eyes set on the other 194 countries. We’re a tenacious lot.
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Bitcoin Price Prediction
Yesterday: $28k - $34k
Today: $32k - $35.5k
Tomorrow: $30k - $38k
The market seems to be agog with the news that El Salvador has adopted Bitcoin as legal tender. After a sharp sell-off yesterday, reaching $31k, the news of El Salvador’s adoption created a strong bid under Bitcoin, shooting its price up to $35.5k, where it’s now taking a breather. The first support zone I’d been watching — $30k-32k — showed that it supports the price, so I’m cautiously optimistic we’ll see a bottom form here. That said, Bitcoin is a long way from being out of the woods, with heavy selling pressure still being applied. If it can hold this region through the end of the week, the weekly chart suggests we’re likely to see a bullish push next week. There’s a lot of water that needs to flow under the bridge before all that can happen. HODL on if you are still in the market — those stripes aren’t easy to earn.
Bitcoin Q & A
Q: Can I schedule automatic payments to be sent from my Bitcoin wallet?
A: I haven’t found a wallet with this feature.
Yesterday I wrote about how it’s only possible to push a Bitcoin transaction and not pull it from a wallet. Although feasible to send automated Bitcoin transactions, I have not seen a market solution. Difficulties with coin control, which is how the individual coins in each transaction are managed, and security risks are two likely reasons that have stopped developers from creating a Bitcoin wallet with automated payments.
Thanks for reading,
Kent
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