I See Fire

Obi Nwosu is the CEO and co-founder of Coinfloor, the UK's longest-running Bitcoin exchange. He has over 20 years’ experience building online marketplaces and bringing virtual currencies to tens of millions of people. Obi writes The Road to Bitcoin Hegemony, a weekly recap of some of the most impactful developments in Bitcoin.

For anyone still unsure what the El Salvador news means, I’ll tell you. It means Bitcoin has won: completely, finally, and irrevocably.

Less than thirteen years ago, Bitcoin was just an idea in an obscure whitepaper. Today, it is set to be the fully-fledged currency of a sovereign nation, with enormous implications for any future attempt to strangle, stifle, or censor Bitcoin. That in itself is astonishing, even to believers like me who knew this day would come eventually.

Of course, some people have scoffed that if any nation adopted Bitcoin, it would be somewhere like El Salvador. They’re right: it is the perfect country for Bitcoin. But not for the ignorant reasons you’ll see on social media. 

El Salvador isn’t a rich country, but it’s not an especially small one. With a population of almost seven million, it’s larger than many European nations like Ireland and Denmark, whose wealth gives them influence on the world stage that’s out of proportion to their population. El Salvador, though, can only dream of wielding such clout. 

Its problems are poverty and geography. This is a nation where 70% of people still don’t have a bank account, and where topography and geology have both played their part in keeping the people poor. Agriculture, industry, communications, and all the other requisites of a strong economy are difficult when you have a chain of volcanoes running the length of your country.

But what makes El Salvador such an unlikely destination for inward investment is precisely what makes it perfect for Bitcoin. That’s because Bitcoin isn’t just a coin or a currency: it is a ready-made financial ecosystem, open and available to anyone — individual, institution, and now nation state. El Salvador has been trying to build a banking infrastructure for decades, with little success. Bitcoin will provide this almost overnight.

Bitcoin also frees El Salvadorians from extortionate fees for remitting money from abroad. 

In 2016, remittances accounted for almost 20% of the country’s entire economy, but the eye-watering expense of international transfer fees is yet another factor helping keep people in poverty. Again, problem solved. With Bitcoin, those earning abroad can bypass these fees and remit money home quickly and cheaply. And given that Bitcoin is now legal tender, recipients won’t have to exchange it to another currency to use it.

So yes, it was always going to be a country like El Salvador that adopted Bitcoin first. As I’ve written before, Bitcoin may be a store of wealth for the “haves” in the West, but for the “have-nots” in the global South it’s a way out of poverty. Remember that the next time you see someone sneer that Bitcoin and “banana republics” are made for each other. They’re just showing how little they care about the financial self-sovereignty of the poorest, most left-behind people on the planet.

But there’s one thing neither I nor anyone else (to my knowledge) predicted, which is that the first country to adopt Bitcoin would turn a historic encumbrance into an advantage. But that’s exactly what El Salvador plans to do, by using geothermal energy from its volcanoes to power Bitcoin mining facilities. By harnessing this inexhaustible reserve of cheap, renewable, zero-carbon energy, El Salvador will become a Mecca for miners, attracting the crucial inward investment it’s lacked for so long.

Believing in Bitcoin hasn’t always been an easy ride, especially in recent weeks. It’s a matter of shredded nerves, sudden hope, dashed dreams, and faith tested (almost) beyond endurance. So let us enjoy this victory, both for ourselves but just as importantly for the have-nots of this world.

But what about the global “haves?” How will they react to the end of dollar, euro, and yuan hegemony? Like anyone in grief, they will go through five stages. We’re already seeing plenty of denial; but Hell has no fury like a nation state scorned, so get ready for the flames of anger. It doesn’t matter that every new claim about Bitcoin will be more and more outlandish, and ever-less rooted in reality. The “haves” will always find an angle to attack Bitcoin, no matter how bonkers.

So brace yourselves, bitcoiners, for more eruptions — and not just the beneficial kind. Victory is now inevitable, but there will be fire and brimstone to navigate on the Road to Hegemony.