https://bitcoinmagazine.com/culture/mileis-presidency-implications-for-argentina-el-salvador-and-bitcoin-adoption

On November 19, 2023, Argentine voters elected Javier Gerardo Milei, an Austrian economist known for his candid and unconventional style, as their new president. He ran on a platform promising substantial reforms: cutting spending, reducing government intervention, addressing inflation, and eliminating the central bank.

Milei’s path to victory was unexpected. In the general elections, he secured second place with 30% of the vote, trailing Sergio Massa of the Peronist establishment, who garnered 37%. Patricia Bullrich, former Minister of Security under President Macri’s administration, obtained 24%. These results forced Balotaje, or a run-off election between Massa and Milei.

On the run-off election night, it became apparent early on that Massa’s camp wouldn’t prevail, leading him to concede before official results were released, extending well-wishes to Milei.

Milei’s Victory Speech

During his victory speech, Milei conveyed several key messages:

– He emphasized the start of Argentina’s reconstruction and thanked pivotal figures, including poll watchers from his party and PRO, an establishment coalition party. He also thanked former President Macri and his election opponent, Patricia Bullrich, acknowledging their contribution to bringing about change.

– Milei declared an end to what he called the “Argentinian Decadence,” denouncing a system favoring a privileged few and vowing to revisit the principles of liberty, Alberdi’s ideas (an Argentine Libertarian), and the vision of Argentina’s founding fathers.

– He invited all Argentinians to join this new transformational project in embracing liberty, highlighting unity over differences while acknowledging resistance from those entrenched in the existing system. His message to his opponents was striking, as he warned them that under a Milei administration, “everything within the law, and nothing outside the law.”

– Asserting the need for immediate and drastic changes, he warned of an impending crisis if the country doesn’t rapidly address critical issues like inflation, poverty, security, and unemployment. He emphasized that his administration could not afford gradualism, lukewarm implementations, and half-measures and that changes must be swift.

– Milei extended a global commitment to democracy, free markets, and cooperation with other nations for a better world, culminating in his passionate rallying cry: “Viva la libertad, Carajo!“—Long live liberty, dammit!

The Allure of Post-Partisan Politics in Latin America

While Milei’s victory signifies a milestone for Latin America in advancing post-partisan politics, which Salvadoran President Bukele leads this movement, and potentially influencing Bitcoin adoption, some caution is warranted. Milei himself is not a Bitcoiner, but as an Austrian economist, he understands the need for Bitcoin to counteract central bank and Keynesian policies. In fact, one of his main policy planks is to dollarize the Argentinian economy to more closely reflect the reality of what is already happening on the ground. The dollarization of the country alone is one of the most anti-Bitcoin measures he could take; however, this is where idealism meets reality, and Milei must do what is best for Argentina.

Milei’s alliance with the conservative and center-right party, PRO and Patricia Bullrich, might require compromises for political support. His challenges echo Macri’s, including the need to move towards market-friendly policies, address corruption allegations, and avoid the perception of favoritism to the Argentinian elite.

Despite Milei’s limited support in Congress, his need to garner votes may lead to political compromises, possibly deviating from his intended policies. El Salvador’s President, Bukele, was in a similar situation when he was blocked from running in his own party and then chose to run with a political rival GANA. While Bukele did not capitulate to GANA and eventually garnered enough votes in Congress, it is still uncertain how Milei’s situation will impact his policies.

Don’t Trust Milei, Verify

It’s crucial for Bitcoiners to exercise patience and manage expectations, as Milei did not run on Bitcoin as a main economic policy. While Milei aims to address deep-seated issues in Argentina, his primary focus might not align with Bitcoiners’s vision of Bitcoin adoption. Argentina, with its size and resources, has the potential to achieve greatness, but Milei recognizes this, and he will likely proceed cautiously in some areas and be swift in others, and not all will be to the satisfaction of Bitcoiners.

As My First Bitcoin’s founder, John Dennehy, put it best, “There’s been a lot of cheerleading on here because Argentina’s president-elect, Javier Milei, has said positive things about Bitcoin. If we judge politicians not based on what they have done but on what they promised during their campaign, then we have learned nothing. Don’t trust, verify.”

This is a guest post by Jaime Garcia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

https://bitcoinmagazine.com/el-salvador-bitcoin-news/bukele-likely-to-step-down-as-president-to-seek-a-second-term

In recent weeks, the Salvadoran media has been abuzz with speculation that Bitcoin Country President Nayib Bukele will step down from his current role to pursue a second term in office. This move hinges on obtaining a special license from the Salvadoran Legislative Assembly, a process that requires three-quarters approval from the body. Previously, it was widely believed that Salvadoran presidents were limited to a single five-year term. However, a landmark Supreme Court ruling has opened the door to the possibility of a second term, provided the incumbent steps down at least six months before the next presidential term commences on June 1, 2024.

The Constitutional Framework

The Supreme Court’s ruling introduced a nuanced framework for seeking a second presidential mandate in El Salvador. It stipulated that a candidate can serve a maximum of two terms within a ten-year period, but crucially, they cannot hold the presidency and campaign simultaneously. This unique provision is designed to ensure that a candidate must “humble” themselves to the status of a citizen without a position of power within the government. This safeguards against the misuse of state resources for campaign purposes, an issue that has plagued many democracies around the world.

The Race Against Time

As of now, President Bukele has not yet registered as a candidate for the upcoming elections. The Supreme Electoral Tribunal has set a deadline of October 26, 2023, for presidential candidates to submit their registrations. However, it is increasingly likely that Bukele will need to step away from the presidency in order to meet this crucial deadline. This adds an extra layer of complexity to an already intricate political process.

In a recent press conference, Bukele indicated that he would register as a candidate on October 24 or earlier, but definitely before the deadline and according to the law. What is unclear is whether he will step down before registering or not, and there may be two options for Bukele:

1. To step down from the presidency before the October 26 deadline and register as a candidate; or
2. To register as a candidate while still in the presidency by the October 26 deadline and step down later to meet the constitutional requirement. This scenario is only viable assuming that the Supreme Elections Tribunal would rule that Bukele’s candidacy is provisional, provided that he does not campaign until he steps down, which must happen by November 30.

Implications for El Salvador

This development carries significant implications, particularly for the Bitcoin project in El Salvador, a flagship initiative of Bukele’s administration. Additionally, it holds paramount importance for Salvadorans who have experienced notable gains in terms of security and overall improvements in their country. The upcoming elections, scheduled for February 4, 2024, will undoubtedly shape the future trajectory of El Salvador.

Bukele’s Popularity and Controversies

President Bukele enjoys a staggering approval rating of over 90%, making him the clear frontrunner in the upcoming elections. However, not everyone agrees with his bid for a second term. Detractors and members of the political opposition argue that the Supreme Court ruling that enabled his candidacy is unconstitutional. This dissent has sparked heated debates on the legality and ethical implications of his potential second term.

The Road Ahead

As the presidential electoral campaign officially kicked off on October 3, 2023, all eyes are on Bukele and his next move. When he decides to temporarily vacate his post to seek a second term, the question of who will step in as interim president becomes vital. Both local and international observers will closely monitor this transition period.

The political landscape in El Salvador is undergoing a seismic shift as President Nayib Bukele readies himself for a bid for a second term. The Supreme Court ruling, the electoral deadlines, and the intricacies of Salvadoran politics converge in this pivotal moment. The outcome of these events will not only shape the future of El Salvador but will also have far-reaching implications for the region and beyond. As the nation stands at the precipice of this historic juncture, the eyes of the world remain fixed on Bitcoin Country.

This is a guest post by Jaime Garcia. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

https://bitcoinmagazine.com/guides/liquid-vs-wrapped-bitcoin

Given the increasing transaction fees caused by Ordinals activity in the Bitcoin timechain, many Bitcoiners have sought alternative solutions to keep their transaction fees low during these periods. While Bitcoin Layer 2 options like the Lightning Network offer low transaction fees, it may not be practical for Bitcoin hodlers to migrate their entire holdings to Lightning, as many Lightning wallets are custodial, meaning users must rely on a trusted third party to hold their funds. While this custodial approach may be suitable for small amounts that users are likely to spend, many Bitcoiners will feel uneasy about not having self-custody of their bitcoin. Additionally, achieving self-custody of a substantial stack on Lightning would require significant technical knowledge and still necessitate dealing with the Bitcoin timechain. However, the appeal of low transaction fees has driven some Bitcoiners to explore alternative solutions.

A particular challenge faced by Bitcoiners who follow a dollar-cost averaging (DCA) stacking strategy is withdrawing small amounts, ranging from $5 to $100 worth of bitcoin, from exchanges to the timechain. This practice often leads to a buildup of numerous and small unspent transaction outputs (UTXOs), complicating coin control management and potentially leading to higher fees when combining UTXO inputs for larger transactions. Consequently, alternative low-fee options have emerged to address this issue.

Liquid-Bitcoin (L-BTC) on Blockstream’s Liquid sidechain and wrapped bitcoin (WBTC), an ERC-20 token on the Ethereum network, are two prominent alternatives that aim to enhance liquidity and functionality while, in theory, minimizing transaction fees. Let’s delve into the differences between L-BTC and WBTC, as well as the pros and cons of each:

Liquid-Bitcoin (L-BTC) On Blockstream’s Liquid Sidechain:

• L-BTC operates on the Liquid sidechain, which is a separate blockchain built on top of the Bitcoin network.
• Liquid employs a federated consensus model, where a group of trusted functionaries validate transactions on the Liquid network.
• L-BTC facilitates interblockchain transactions with other assets issued on the Liquid sidechain, providing enhanced privacy features and confidential transactions.
• Pros of L-BTC: Faster transaction confirmations due to shorter block times, improved privacy features, compatibility with other assets on the Liquid sidechain, and the ability to leverage Bitcoin’s liquidity in cross-chain transactions. Participants in the network can run their own node to verify proof-of-reserves and peg in their bitcoin into Liquid without the need for a federated third-party member. Liquid does not perform KYC / AML procedures for users to obtain L-BTC.
• Cons of L-BTC: Reliance on a federated consensus model, limited availability of “decentralized” applications compared to Ethereum, and the need for trust in the functionaries. Additionally, users require a federated third-party member to peg out from Liquid to the main chain.

Wrapped Bitcoin (WBTC) On Ethereum:

• Originally jointly initiated by Kyber, BitGo, and the now defunct Republic Protocol (REN), WBTC is an ERC-20 token on the Ethereum blockchain, utilizing Ethereum’s smart contract functionality to lock up bitcoin and issue WBTC tokens.
• WBTC’s governance involves multiple entities that form part of a decentralized autonomous organization (DAO), merchants who provide liquidity, a single custodian, BitGo, who holds the bitcoin reserves, and token holders who participate in voting.
• WBTC benefits from the extensive Ethereum ecosystem (if that’s what you’re into), enabling seamless interoperability with Ethereum-based decentralized applications (dApps) and smart contracts.
• Faster transaction transfers and cheaper fees compared to Bitcoin’s main chain.
• Pros of WBTC: Integration with the Ethereum ecosystem, wider availability of so-called “decentralized” applications, decentralized governance involving multiple stakeholders, and the ability to leverage Bitcoin’s liquidity within the Ethereum network.
• Cons of WBTC: Slower transaction confirmations and higher fees during network congestion on the Ethereum network, reliance on a single custodial entity for holding bitcoin reserves, and the need to trust the custodian. In contrast to L-BTC, WBTC carries less certain counterparty risk, as its governance is not as well defined. You cannot run your own node, and peg ins and peg outs are solely dependent on the WBTC merchants. Finally, WBTC merchants are required to perform KYC / AML procedures to verify the user’s identity.
• Note: WBTC has some limited use for those using the Tron protocol.

Regarding possible failures or potential risks, it’s important to note that both L-BTC and WBTC rely on trusted intermediaries and custodians for their operations. Failures in custody, governance, or regulatory compliance could pose risks to users’ funds or the stability of these systems. While there have been no major reported failures, risks exist and users should exercise caution and perform due diligence when engaging with L-BTC or WBTC.

It bears noting that 11 of the 15 Liquid Federation functionaries would need to collude in bad faith to rug-pull users from their pegged-in bitcoin, thereby, reducing the possibility of acting in bad faith. The way by which a rug-pull would take place in WBTC is less certain, but with only a single custodian of their locked-in BTC, a central point of failure is one of WBTC’s major weaknesses. What is evident is that for both L-BTC and WBTC, there are increased risk trade-offs from self-custody.

From a Bitcoin-only perspective, using L-BTC or WBTC may raise ethical implications, as it could be seen as deviating from the original vision of Bitcoin as a standalone, decentralized network. Bitcoiners could argue that tokenizing Bitcoin undermines the core principles of the network and introduces additional risks and complexities. They emphasize the importance of Bitcoin’s sovereignty, security, and censorship resistance.

However, proponents of L-BTC and WBTC may contend that tokenized versions of bitcoin can enhance liquidity, scaling, and functionality, thus benefiting the overall ecosystem. Both tokens could be alternatives that allow bitcoin hodlers to access the advantages of other blockchain networks — such as faster transaction confirmations, interoperability with dApps, and additional financial instruments.

WBTC has an advantage over L-BTC when accessing other crypto ecosystems and activity. However, Blockstream’s Liquid Network provides a platform where L-BTC can be exchanged for various digital assets, including stablecoins like USDT (tether) and L-CAD (Canadian dollar-denominated gift certificates issued by Bull Bitcoin). This feature enables users to access different digital assets and expands their options for trading, remittances, and other financial activities within the Liquid ecosystem.

Additionally, as per previous announcements, the Liquid Network will be utilized for the issuance of the El Salvador Bitcoin Bond (recently amended to a Volcano Mining Equity). This demonstrates the network’s capability to facilitate the issuance and management of tokenized financial instruments, further expanding the use cases beyond simple asset exchange.

Everything considered, L-BTC is a superior option compared to WBTC due to its distinct advantages over transaction fees and the speed of transfer times. While WBTC relies on the Ethereum (and Tron) network, which are prone to frequent congestion issues and high fees, L-BTC provides faster and more cost-effective transactions. By leveraging the Liquid Network, L-BTC offers low fees, quicker confirmations, and improved scalability, making it a more efficient and practical solution for willing bitcoin holders. With L-BTC, users can enjoy the benefits of Bitcoin’s main chain while bypassing the limitations and challenges associated with WBTC on the Ethereum network.

To make the most of L-BTC for the purpose of low fees, it is well-suited for short-term and medium-term holding strategies.

Three-Step Process To Leverage The Benefits Of L-BTC

1. Withdrawal from exchange to L-BTC: There are a number of exchanges which support L-BTC and allow you to withdraw directly to a wallet that supports L-BTC (Green Wallet or Aqua). This allows you to bypass additional conversions or transfers, ensuring that you retain the advantages of L-BTC throughout the process. An additional advantage is an option to store L-BTC in cold storage with a hardware device such as Blockstream Jade.
2. Wait for ideal UTXO denomination: Keep adding to your L-BTC stack until you accumulate a sufficient amount of satoshis to create a desirable unspent transaction output (UTXO) denomination. This step helps optimize coin control and simplifies future transactions.
3. Peg out using SideSwap or a similar service: When transaction fees are low you should peg out to reappropriate the funds back to the Bitcoin main chain. You can utilize a service like SideSwap, which facilitates the conversion of L-BTC to BTC, taking into account the conversion fee of around 0.1%. It’s important to consider this fee when planning your transactions to ensure accurate cost calculations.

By following this flow, you can effectively utilize L-BTC for short-term and medium-term hodling, and take advantage of its low fees and faster transaction confirmations. This approach can be particularly useful in a permanent high-fees environment, where L-BTC offers a cost-effective solution compared to on-chain Bitcoin transactions.

Currently, popular Bitcoin exchanges like Swan, Strike, CoinCorner, Relai, Amber, River and Bitonic do not currently have support for L-BTC withdrawals. However, just like many have integrated Lightning withdrawals, they will likely respond to a demand for L-BTC.

For Bitcoin hodlers seeking an alternative to the main chain, L-BTC offers a compelling option compared to WBTC on Ethereum. L-BTC’s advantage lies in its utilization of bitcoin itself, ensuring a closer alignment with the principles and vision of the Bitcoin network. By leveraging L-BTC, users can benefit from faster confirmations, enhanced privacy features, and compatibility with other assets on the Liquid sidechain. From the perspective of preserving the integrity of Bitcoin’s core principles, L-BTC stands as a preferable choice for Bitcoin hodlers seeking alternative low-fee options while maintaining a direct connection to the Bitcoin network. 

https://bitcoinmagazine.com/culture/ordinals-hurt-el-salvador-bitcoin-mission

Support for a government-supported Ordinal collection from El Salvador demonstrates misunderstanding of what Bitcoin is really for.

This is an opinion editorial by Jaime García, a Salvadoran-Canadian Bitcoiner and co-host of Global Bitcoin Fest.

The hype around Bitcoin NFTs, made possible through inscriptions that use the Ordinal protocol, is undeniable. Trader and art dealer Steven Hay has even suggested that the government of El Salvador release an official Ordinal art collection to potentially raise money to fund its proposed Bitcoin City or otherwise accelerate Bitcoin adoption.

Unfortunately, this suggestion seems to lack an on-the-ground Salvadoran perspective and, in my view, is a blatant attack on El Salvador’s Bitcoin objectives.

El Salvador turned to Bitcoin because of the qualities that make it sovereign money, one that is not beholden to foreign powers or organizations. While a couple of the leading value propositions for using Bitcoin in El Salvador are to attract private, foreign investment and to spur tourism, the promise of hard money that is unconfiscatable, uncensorable and resistant to manipulation is why El Salvador made bitcoin legal tender.

However, Ordinals do not provide any of the hard money benefits of Bitcoin.

NFTs On Bitcoin Are As Bad As NFTs Elsewhere

The Bitcoin community has seen recent, vivid examples demonstrating that NFTs are bad investments.

For example, a Malaysian investor who bought Jack Dorsey’s first tweet NFT for $2.5 million struggled to find bids when he later tried to sell it. Even El Salvador President Nayib Bukele appeared to recognize the lack of real value in NFTs as he auctioned his tweet announcing the country’s Bitcoin Law approval in its legislative assembly — the NFT was never sold and Bukele did not pursue the endeavor any further.

Numerous maximalists and Salvadorans have been discouraging Bitcoin NFTs because they believe that folks who get rug-pulled could suffer significant financial harm. For many of these critics, defending Bitcoin’s social layer and calling out potential scams is essential to keeping the Bitcoin network secure.

There are several key elements that critics consistently bring up, which could demonstrate that Bitcoin NFTs on the Ordinal protocol are grifts and no different than NFTs on other protocols. These are as follow:

1. The hype around NFTs is arbitrarily assigning exaggerated values to things that are not inherently scarce.
2. The Ordinal protocol cannot actually track individual satoshis as claimed by the creators and promoters of the protocol.
3. The Bitcoin protocol is unaware of the inscriptions or Ordinals, so none of it is verifiable by the network.
4. There are debatable concerns on the impact of inscription activity on storage resources of node runners.
5. The NFTs scams are a significant distraction from the integrity of Bitcoin’s primary purpose.
6. Finally, the intellectual dishonesty that markets Ordinals as “art investment” that will increase in value over time.

Taking the above elements into account, an El Salvador Ordinals buyer risks purchasing an expensive, low-quality, reproducible image that’s likely to decrease in value. While there is a valid argument that the marketplace will decide whether it wants such a digital product, critics point out that people should be aware of the inherent grift of the NFT space and the similarities to promotions of Ordinals.

To paraphrase the creator of Timechain Calendar, TC, who has spoken on this topic in several Twitter Spaces conversations that I’ve heard, “A blockchain makes a very poor database. It only works in Bitcoin because it is only verifying the truth about Bitcoin transactions.”

Another Bitcoiner, Magoo, has opined in similar Twitter Spaces that adding engineering complexity to the Bitcoin timechain or any software is congruent with increasing possible attack vectors. These attack vectors can appear not only in the network itself but also in the social layer. As such, Ordinals have the potential to manifest attack vectors in each of these layers. It has encouraged people to focus their energy on an activity that Bitcoin was not designed or optimized for.

Ordinals Contradict Proof Of Work

While the CEO of BTC Inc (which operates Bitcoin Magazine), David Bailey, has argued that Bitcoin NFTs on the Ordinals protocol are compatible with Nakamoto consensus, they are antithetical to Bitcoin because their marketing suggests that they will increase in value, and that violates the concept of proof of work.

In the same line of thought, Hay proposed that a government Ordinal collection would be all benefit and no risk, implying that it’s easy money — but the principles behind proof of work demand that money should not be easy to generate through natural law.

Saifedean Ammous wrote about this topic in several sections of his book “The Bitcoin Standard,” emphasizing that creating hard money requires an effort to provide value and benefit to the market and society. Ordinals are a high-time-preference activity based on easy money and speculation; therefore, encouraging El Salvador’s Bitcoin adoption acceleration by releasing an Ordinals collection is peak fiat mentality.

Salvadorans Don’t Need Ordinals

El Salvador has a rich pool of artistic talent, including musicians, actors, filmmakers, dancers, folklorists, writers, architects and visual artists. Those Bitcoiners eager to help the country with its adoption will do well to support the existing artist community by promoting them and paying for their crafts by using bitcoin.

As a starting point, Bitcoiners can go to the National Artisan Market, where people can find paintings, indigo-dyed apparel, hammocks and sculptures. Bitcoiners can also provide opportunities to digital artists, such as graphic designers, through contracts for working on web projects, apps and in print, and they can support digital content creators by giving value-for-value tips for their published works.

Ultimately, Salvadorans are more concerned about improving their day-to-day situations than collecting JPEGs on mobile phones. The everyday Salvadoran demands that their government focus on security, infrastructure, public transit, traffic, health and education. Therefore, issuing an NFT collection is far from what Salvadorans value.

Given that El Salvador has had relatively positive success with its Bitcoin adoption, it’s easy to forget that its current government had a rough start and faced much criticism with its formal Bitcoin adoption launch.

Many criticized the government’s release of the Chivo wallet over insufficient accompanying education and the technical challenges experienced by some users. The primary recipient for much of this negative feedback was not the government itself, but Bitcoin as a whole, thereby hindering Bitcoin adoption.

Heading into Bitcoin’s second anniversary as legal tender in El Salvador, some of the negative perceptions created around Bitcoin are finally beginning to fade. But if the government were to release a Bitcoin NFT collection, that would only rewind the progress made.

The government must not promote Ordinals or NFTs, as many perceive them as scams. El Salvador needs to generate confidence and trust, and when Ordinals, like NFT projects of the past, inevitably crash, El Salvador cannot be associated with them. Unfortunately, any negative perception about Ordinals would lead to reputational damage for the country, which is precisely where the attacks on Bitcoin adoption continue.

The Bitcoin Mission is Clear

The Ordinals lobby has mounted an all-out psyops front, particularly as specific groups of altcoiners are claiming that they are making Bitcoin “fun again.” Additionally, some are trying to gain favor and buy influence by donating proceeds to non-governmental organizations (NGOs) NGOs like the Human Rights Foundation, which has been critical of El Salvador.

Despite being inundated with all of the Ordinal noise, it is refreshing to see folks like South Africa’s Bitcoin Ekasi work toward the Bitcoin mission with absolute clarity. In a recent tweet, the Bitcoin Ekasi team said it is “not here to have fun” but to change the world. There is a real chance of failure for groups like Bitcoin Ekasi due to these distractions from the primary mission of adopting the hardest money in the world. With that same level of clarity, El Salvador must remain undeterred from these attacks.

This is a guest post by Jaime García. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.