El Salvador› Bitcoin › Adoption
President Bukele tweets images of an architect’s model of Bitcoin City, including artists’ impressions of key sites.
2 min read
Updated: May 10, 2022 at 4:51 pm
Cover art/illustration via CryptoSlate
El Salvador’s President Bukele tweeted images of an architect’s model of Bitcoin City and the caption that things are ‘coming along beautifully.’
#Bitcoin City is coming along beautifully ❤️ pic.twitter.com/A6ay8aAREW
— Nayib Bukele (@nayibbukele) May 9, 2022
Bitcoin City is a futuristic concept
The pictures show a golden disc-shaped model with a hexagonal center and key landmarks, such as the airport, and artists’ depictions of various scenes, such as the lookout at the top of Conchagua Volcano and a picture of the city at night.
President Bukele assured people that the gold color was simply the architect’s choice for the model. However, the finished product will be mainly composed of greens for trees and blue for the sea.
“And no, the city won’t be made up of golden metal; that is just the architect’s choice of color for the scale model. The actual city will be mostly green (trees) and blue (sea).”
The artists’ impression at night depicts how the city will integrate with Conchagua Volcano. It shows the intersecting part of the city taking up most of the face of the volcano, leading to an incline. The city then levels off as it flows into the sea.
With the release of the mock-up, Bitcoin City takes a step closer to reality. However, the ambitiousness and several uncertainties, including BTC’s downturn in price, all count against the project ever being completed.
There are more questions than answers at this stage
News of Bitcoin City first broke in late November 2021, as President Bukele announced the plans during the closing ceremony of a crypto investors’ meetup.
As expected, not only would BTC be used as the main currency of the city, but President Bukele also said there would be zero taxes on income, capital gains, property, and payroll. There would, however, be a value added tax of 13%. 6.5% will go towards Volcano Bonds, and the remainder to fund municipal services.
The issuance of Volcano Bonds, to the tune of $1 billion, will fund the city’s construction. In return, investors get a 6.5% return, paid for by BTC miners powered by the geothermal energy of Conchagua Volcano.
Bitfinex CEO Paolo Ardoino mentioned that El Salvador’s Congress has yet to pass legislation approving the bond licensing system. He expects this to go through and Bitfinex to be granted the license in the coming weeks. But nothing has been confirmed at this stage.
Plus, with the price of BTC sinking, there are questions about whether mining income is sufficient to cover bond payments to investors. Until the numbers are released, these doubts will linger.
Fed’s annual report shows most American crypto investors have ‘disproportionately high income’
The report surveyed 11,000 respondents and shows that the financial well-being of Americans is at its highest since the report started.
2 min read
Updated: May 24, 2022 at 11:15 am
Cover art/illustration via CryptoSlate
Roughly 12% of Americans own crypto, with most of them using it for investment purposes, according to the U.S. Federal Reserve Board’s annual report.
A closer look at the demographics shows that crypto investors in the U.S. are mostly the rich. According to the report, these investors have “disproportionately high income,” and most have some form of a retirement fund. Additionally, 99% of them have traditional bank accounts.
The report surveyed 11,000 respondents and found that the financial well-being of Americans is currently at the highest level since the regulator began publishing the report.
Per the report, 78% of U.S. adults said they are “doing okay or living comfortably financially,” with 68% saying they could cover a $400 emergency using cash.
Of the 12% of U.S. adults who owned cryptocurrency, 11% held it as an investment option, 2% used it for payments or purchases, while 1% sent it to family and friends.
Only 29% of U.S. crypto investors had income below $50,000, while 46% earned more than $100,000 annually. Meanwhile, 89% of crypto investors still working have retirement savings.
However, the status of those using crypto for payments and transactions is quite different. 20% had income below $25,000, and 60% earned less than $50,000 per year, while only 24% of this group made over $100,000 annually.
Unbanked crypto users
Additionally, a significant percentage of people using crypto for transactions are unbanked, with 13% lacking a traditional bank account, compared to 6% of the average adult American population. Meanwhile, 27% of this group did not have credit cards — far above the 17% of U.S. adults.
The report also noted that those who use crypto for payments and transactions had lower education, with almost a quarter not having a high school diploma.
The Fed conducted the survey between October 2021 and November 2021, with respondents filling the responses online.
The report noted that the percentage of those using crypto among the overall population might be much lower than the sample population.
Posted In: U.S., Adoption
44 nations converged to discuss bitcoin in El Salvador: The Davos of crypto?
Guest Post › El Salvador› Bitcoin › Adoption
The current traditional financial system has failed many countries leaving them subservient to the US Dollar, the meeting from 44 countries in El Salvador shows nations want change and see Bitcoin as a opportunity to do so.
3 min read
Updated: May 24, 2022 at 9:25 am
Cover art/illustration via CryptoSlate
What happens when a government defaults on its ability to pay debt? On April 18th, Sri Lanka missed its deadline to pay $78 million in global bond payments.
Now, the country is on a trajectory of the biggest default in its history, worth $12.6 billion in overseas bonds.
The default trajectory is followed by mass riots amid food, power, and petroleum shortages. In such a scenario, a nation without much in the way of natural resources and monetary power is left with little recourse except to engage in money “printing” to pay for wages temporarily.
As the Federal Reserve increased its balance sheet by $4.5 trillion over the last two years, the central bank triggered an inflation rate above 8%, 4x higher than its 2% target. Yet, this is small compared to Sri Lanka’s nearly 30% inflation, going to 40%.
Such volatility is traditionally found in small-cap penny stock trading—not national currencies. Yet, this is the difference between having a global reserve currency as a cushion and depending on that currency.
From this subservient fiat currency position, Sri Lanka’s energy minister summed up the dire situation as “There aren’t enough dollars available to open letters of credit.”
In other words, despite the Fed’s unprecedented money supply increase that caused its inflationary devaluation, the dollar is comparatively superior to any other currency. This is its Bretton Woods legacy. As such, it is so high in demand that indebted nations can’t even use it for more debts—or is it?
El Salvador: The Beginning of a New Bretton Woods?
On Monday, May 16th, El Salvador’s president Nayib Bukele said he hosted a major central banking event. Already dubbed the Davos for Bitcoin, it gathered 32 central banks and 12 financial institutions from 44 countries. Without being the first nation to make Bitcoin legal tender, it is highly unlikely that this small country would become a host for such a gathering.
Many of the attendees represent developing nations on the Sri Lankan road to economic turmoil.
Banco Central de São Tomé e Príncipe
Banco Central del Paraguay
Banco Nacional de Angola
Bank of Ghana
Bank of Namibia
Bank of Uganda
Banque Centrale de la République de Guinée
Banque Centrale de Madagascar
Banque de la République d’Haiti
Banque de la République du Burundi
— Nayib Bukele (@nayibbukele) May 16, 2022
The topic of the conference is financial inclusion. This term has been abraded from use. As the Bretton Woods byproduct, the not-invited International Monetary Fund (IMF) has been using it to onboard nations into its debt system. While the organization was tasked to help developed countries and manage financial crises, there is little evidence for this.
Nathan Jensen, professor of political science in Arts & Sciences at Washington University in St. Louis, author of an IMF study published in the Journal of Conflict Resolution, says,
“My analysis of economic trends in 68 countries over nearly three decades shows that countries signing IMF agreements attract about 25 percent less foreign direct investment than countries not under IMF agreements,”
To check the IMF’s performance level today, one only has to see the Bank of England’s recent statement warning of “apocalyptic” famine. The governor said that:
“There’s a major worry for the developing world as well. And so if I had to sort of, sorry for being apocalyptic for a moment, but that is a major concern.”
When extra fat is stripped away, the world’s core issue is scrambled money allocation signaling. Central banks use their monetary tools to deal with temporary issues, often under political pressure. In turn, they create a domino of unintended consequences that keep piling up.
As a decentralized money network outside of central banking, Bitcoin was designed to solve this money allocation problem, as noted by its embedded Genesis block message. El Salvador’s conference is the first step in educating central bankers on how this could happen. In charge of this education is the team with practical know-how, having developed their very own Bitcoin wallet.
Nicolas Burtey, the founder of Galoy Money behind the Bitcoin Beach wallet, noted that central bankers from developing countries have much to learn, but he was pleased to answer the most common questions.
Some of the questions asked:
– how do we ensure consumer protection with bitcoin?
– if the price go down, how can we refund the user for what they lost?
– why are the benefits of bitcoin versus CBDC?
– how to prevent money laundering?
— Nicolas Burtey ⚡️🇸🇻🇨🇫⚡️ (@nicolasburtey) May 16, 2022
While only 20% of El Salvador’s adults are using the state-sponsored Chivo wallet, the country has seen a 30% tourism spike just on the back of passing the Bitcoin tender law. Yet, it is safe to say this is just the beginning of a trend.
Central bankers lining up to get help downloading and using Bitcoin Beach Lightning wallet pic.twitter.com/CWupR1Td4K
— Bitcoin Beach (@Bitcoinbeach) May 16, 2022
After all, it took ten years of Bitcoin development, including a variety of different Bitcoin wallets that progressively improved user experience and lowered entry barriers, to achieve the nationwide adoption milestone. A year from that, there was already a central banking conference in the same country to spur acceleration.
Whether El Salvador’s conference marks the beginning of a new Bretton Woods or not, it is clear that the Davos Agenda is pushing for digital financial inclusion. However, the WEF’s vision of this inclusion is through CBDCs. While central bank digital currency may be digital money, it doesn’t represent a monetary system reset.
On the contrary, central banks would have more leeway with programmable CBDCs than ever before, once again led by the Federal Reserve and the European Central Bank. Developing countries now have the option to pick an alternative path that would not lead to the same repeat of failed central banking policies.
Guest post by Shane Neagle from The Tokenist
Shane has been an active supporter of the movement towards decentralized finance since 2015. He has written hundreds of articles related to developments surrounding digital securities – the integration of traditional financial securities and distributed ledger technology (DLT). He remains fascinated by the growing impact technology has on economics – and everyday life.
Learn more →
Report: African crypto startups venture funding grows by over 1000% in 2022
Africa› Bitcoin › Adoption
Most venture capital funding in the region has gone to fintech companies and crypto exchanges.
2 min read
Updated: May 24, 2022 at 12:15 am
Cover art/illustration via CryptoSlate
The African Blockchain Report 2021 by Crypto Valley Venture Capital (CV VC) and Standard Bank has revealed that crypto startups in Africa saw more venture funding in the first quarter of 2022 than in 2021.
Blockchain startups on the continent raised $91 million in 2022 Q1 compared to the same period in 2021, representing a 1,668% year-on-year (YoY) increase in cash inflow.
Crypto unicorns might emerge in 2-3 years from Africa
The report stated that the continent might see unicorns appear within two to three years from its crypto scene.
The surge of African crypto unicorns is possible with the increased interest in the region from venture capital firms primarily funding finance-related crypto companies. Per the report, most venture capital funding has gone to fintech companies and crypto exchanges.
Gideon Greaves, CV VC’s managing director for Africa, said that blockchain was the highest-funded sector in the continent.
“We see this development as a key enabler for African enterprises, giving them rapid entry to markets by using blockchain as the catalyst to build new businesses.”
The executive also pointed out that the absence of legacy infrastructure in the continent gives blockchain startups an opportunity. They can fill the gaps with innovative technologies. He believes that the continent has everything it needs to create large-scale crypto companies.
Nigerian startups account for the highest funding in 2021, with 18 companies in the country raising 39.05% of the funds raised on the continent. Seychelles comes second with 26.06%, while Kenya and South Africa have 15.75% and 14.87%, respectively.
Crypto adoption in Africa
Crypto adoption in Africa has been rising in the past few years due to inflation and limited access to financial services.
A report by crypto exchange KuCoin discovered that 35% of Nigerians between 18 and 60 years had traded crypto in the last six months. The report also highlighted that 17.36 million people have invested around half of their assets in cryptocurrencies.
While this shows high adoption in the most populated African country, looking at other countries on the continent shows high crypto adoption. Kenya leads the rest of the world in peer-to-peer crypto trades, while the Central African Republic recently made Bitcoin a legal tender.
In another report, crypto adoption on the continent grew by 1,200% between July 2020 and June 2021, making it the fastest-growing region globally.
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