This is an editorial opinion by Samson Mow, CEO of JAN3 and former CSO of Blockstream.
About a year ago, I had the opportunity to speak at Feel The Bit in El Salvador together with President Bukele. During the event, we announced the Volcano Bitcoin Bond, while President Bukele made an important announcement of his own: the creation of Bitcoin City. By legally recognizing bitcoin as tender and establishing Bitcoin City, President Bukele took a bold step towards national adoption. This decision has helped shorten the timeline for bitcoin to become a nationally recognized currency.
After the announcement, I received many requests from Bitcoiners around the world asking for help in implementing Bitcoin projects in their local communities or with their governments. This interest comes from both individuals who are actively involved in the Bitcoin community as well as from investors. The passion was inspired by the developments taking place in El Salvador and their impact on the global Bitcoin landscape.
Driving Nation-to-Nation Bitcoin Adoption
I have been considering the idea of promoting Bitcoin adoption by countries for some time. After thinking carefully, I decided to leave Blockstream in 2022, start my own company called JAN3 and devote myself to promoting the adoption of Bitcoin as a global currency, known as hyperbitcoinization, and adoption by nation states. Now, many may ask, why help the country, why accelerate hyperbitcoinization?
Traditional fiat currency systems have increased credit cycles, wave-like patterns characterized by periods of prosperity and recession. Under the gold standard, credit was issued based on assets like gold deposits or real estate. In contrast, under fiat standards, credit is issued by the government and backed by debt, such as government bonds. During economic expansion, more loans are issued and businesses grow. However, at a certain point, there may be too much credit in circulation relative to the output or real productivity of the economy, leading to a mismatch between the financial and real economy and resulting in the formation of a bubble or market correction. This has happened more often and with more extreme highs and lows.
The mechanism used by the central bank is becoming less effective, just as diabetics need more insulin. If this trend continues, we can expect severe economic depression in the future. Without clear price discovery, a dynamic economy and the forces of technology and markets to reduce competitive pressures, countries may end up in conflict and war. When the pie is not expanding, it is easier to take it from others.
Under the Bitcoin standard, countries have more incentive to use their resources better, because there are real costs involved. This favors peace, a diplomatic resolution is a standard game theory equilibrium. Adopting the Bitcoin standard and accelerating hyperbitcoinization may be the best hope to avoid 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 after January 3, 2009, which is the day Bitcoin came into being, also known as Genesis Day.
As our director of operations, a former Royal Marine named Doogie, told me, establishing a presence in El Salvador is important to gain a foothold for Bitcoin and allow it to take root. We made the decision to open an office there for this reason.
In order for the Bitcoin network to become stronger, it is important for more countries to adopt the Bitcoin standard. Although Bitcoin does not need help from anyone, it can be accelerated and supported by more countries, regions and cities adopting it. For example, if the country is mining Bitcoin, it does not attack the network. If countries had made bitcoin legal tender, they probably wouldn’t have tried to ban “unhosted wallets.” Overall, more and more countries adopt the Bitcoin standard positively for the network.
Hashing through 2022
2022 is an interesting year for many reasons.
Madeira, the president of Portugal, Miguel Albuquerque, announced the creation of Madeira FREE, which gives Bitcoin a foothold in the European Union. The autonomous nature of the Madeira region gives it the ability to make bitcoin a de facto legal tender.
Prospera, Honduras has become one of the most active Bitcoin hubs in the world. President Joel Bombar announced that bitcoin is legal tender in Próspera during Bitcoin 2022. Recently, the Bitcoin board was inaugurated there, and the legal framework has been implemented to enable the issuance of Bitcoin bonds.
On April 27, the government of the Central African Republic announced that it would use bitcoin as legal tender. This news was welcomed by Bitcoin enthusiasts, but the government also announced a project called Sango, which is based on an alternative cryptocurrency. It is clear that the adoption of Bitcoin in the country is not progressing as quickly as expected, but we remain hopeful that the Central African Republic will continue to embrace and support the use of Bitcoin.
The crypto market experienced a bear market due to various factors, including the collapse of the FTX exchange, the Luna/Terra crash and the collapse of companies like 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, Bitcoin’s sidechain, allows for the expansion of Bitcoin’s capabilities through the use of smart contracts, without introducing native tokens. This relationship with Towerbank is a promising development in the world of crypto banking and could help make Bitcoin a powerful and versatile financial tool.
On October 28, at the Lugano Plan B Forum, Senator Zury Ríos from Guatemala presented a video to the Bitcoin community in which he expressed his interest in integrating Bitcoin into his future political plans. He opened a dialogue with the community and invited them to share their thoughts and ideas on the matter. El Salvador also announced that it will open an office in Lugano, intending to exchange knowledge and gain commercial benefits. Through the extraordinary efforts of Bitfinex and Tether CTO Paolo Ardoino, Lugano made great progress in onboarding merchants to Bitcoin. He has succeeded in getting thousands of traders to use cryptocurrency, and he continues to generate more.
At the Adopting Bitcoin conference in El Salvador in November, it was clear that the situation with gangs in El Salvador has improved significantly. Public safety is greatly improved, with a decrease in homicides and other crimes. This increase is proof of the effective measures taken to solve the problem and bring peace and security to the people of El Salvador.
The economy minister in El Salvador announced a new digital securities bill, paving the way for the country to issue bitcoin-backed bonds. The law will establish a National Digital Asset Commission, which will be responsible for regulating digital asset issuers, service providers and other participants involved in the digital securities public offering process.
There is much more to be done, but unfortunately I cannot discuss it yet. Change is coming and Bitcoin will be a major topic around the world.
Vision For 2023
2023 will be a promising year for Bitcoin. In El Salvador, the digital securities law that will form the basis of the Bitcoin Volcano Bond has been sent to Congress for approval. This bond may be available on Bitfinex Securities soon.
The star of El Salvador will continue to rise. El Salvador has attracted a lot of interest in embracing Bitcoin, and many other countries are watching closely to see how things progress there. As El Salvador continues to lead the way in Bitcoin adoption, we hope it will continue to rise in prominence.
We expect to see more Bitcoin adoption in the coming year, as it continues to gain traction even today. The world needs bitcoin, at any price. For those living in prosperous countries, Bitcoin is optional, but for those living in the global south, it is a necessity. Remember, the gap between the “prosperous counties” and the “global south” is closing fast.
At JAN3, we have received many requests from people in different countries for help with Bitcoin. In addition to our work in El Salvador and the Madeira region, we also focus on countries like Costa Rica, Ecuador and others. Just last week, Sitiveni Rabuka, the prime minister of Fiji, announced that he was considering making bitcoin legal tender.
Despite the current bear market, we believe there is no better time to build a solid foundation for the future of Bitcoin adoption. The work we are doing now will lay the foundation for a freer and more prosperous economic future through the acceleration of hyperbitcoinization and nation-state adoption.
This is a guest post by Samson Mow. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.