The president of El Salvador stunned the world by appearing at a major bitcoin conference and revealed potentially gamechanging plans for cryptocurrencies.
Super rich crypto investors and geeks descended on the Bitcoin 2021 conference in Miami, Florida this weekend, and they erupted into cheers when President Nayib Bukele appeared on the big screen.
President Bukele said El Salvador may become the first country to make bitcoin legal tender saying he would soon propose a bill that could transform the remittance-dependent economy.
The move would make the Central American nation the first in the world to formally accept the cryptocurrency as legal money and would “allow the financial inclusion of thousands of people who are outside the legal economy,” Mr Bukele said.
“Next week, I will send to Congress a bill that makes bitcoin legal money,” the populist leader said during a video message to the conference.
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The bill aims to create jobs, he said, in a country where “70 per cent of the population does not have a bank account and works in the informal economy”. The El Salvador government is yet to give details of the bill, which will require approval from a parliament dominated by the president’s allies.
Remittances from Salvadorans working overseas represent a major chunk of the economy – equivalent to roughly 22 per cent of GDP.
In 2020, remittances to the country totalled $US5.9 billion ($A7.6 billion), according to official reports.
According to Mr Bukele, bitcoin represented “the fastest growing way to transfer” those billions of dollars in remittances and to prevent millions from being lost to intermediaries.
“Thanks to the use of bitcoin, the amount received by more than a million low-income families increases by several billion dollars every year,” said the President.
“This improves life and the future of millions of people.”
The cryptocurrency market grew to more than $US2.5 trillion ($A3.2 trillion) in mid-May 2020, according to the Coinmarketcap page, driven by interest from increasingly serious investors from Wall Street to Silicon Valley.
But the volatility of bitcoin – currently priced at $US36,127 ($A46,680) – and its murky legal status has raised questions about whether it could ever replace fiat currency in day-to-day transactions.
Musk slammed at conference
While President Bukele became a crypto hero, an aura of animosity towards Elon Musk loomed over the Bitcoin 2021 conference.
The hostile reception came after the Tesla founder and CEO tweeted a broken heart emoji about bitcoin on Thursday that some investors linked to the cryptocurrency’s Thursday price drop.
Max Keiser, host of the “Keiser Report”, began his fireside chat by repeating, “F**k Elon!” several times.
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A number of conference attendees posted on social media about their disappointment in the Tesla CEO, who recently announced Tesla would stop accepting bitcoin for vehicle purchases due to environmental concerns that were credited with sending the markets lower in May.
The cryptocurrency neared $US40,000 ($A51,000) ahead of the first day of the conference but fell to just above $US35,500 ($A45,000) late Thursday evening. Musk posted the broken-heart tweet around 9pm. EST.
The billionaire tech entrepreneur has expressed environmental concerns with the bitcoin mining process, or the process of creating the cryptocurrency. Bitcoin mining is done by solving mathematical puzzles on powerful computers that require large amounts of energy.
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But other cryptocurrency experts disagree with Musk’s assessment. Michael Saylor, co-founder of the business intelligence company MicroStrategy and a staunch bitcoin defender, said during the conference that he believes “bitcoin is the most efficient use of energy that the human race has yet come up with.”
“I think that bitcoin is an extraordinarily disruptive, beneficial technology to the entire energy industry, and as I studied it, it became clear to me that it’s the highest-value use of intermittent energy,” Saylor said. “It’s the highest-value use of renewable energy. It’s the highest-value use of wasted or stranded energy. And it’s just the highest-value use of energy period.”
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