El Salvador made headlines internationally with the legalization of Bitcoin. Now a small Pacific state is emulating the Central American country.
Since El Salvador declared Bitcoin the official national currency in September, the country has moved into the media focus. Since then, the world has followed the currency experiment in Central America with keen interest. BTC-ECHO got its own picture of the situation on site – more on this in the current one Cryptocompass. The government around President Bukele emphasized the great advantage of legalization, among other things, in the possibility of receiving cheap transfers (so-called remittance) from the Salvadoran diaspora.
The example of El Salvador could now also be extended to other remittances-dependent countries. Right at the forefront: the parliamentary monarchy of Tonga. Former Tongan MP Lord Fusitu’a confirmed At the request of a Twitter user that the archipelago is planning to raise Bitcoin to the national currency. The parliamentarian estimated the exact time of the introduction to October next year:
Step 2 – Legal tender = Parliament opens in June for the budget until July, in August there are visits to the constituencies, in September the government’s legislative package follows and then it starts. So October 2022. Volcano mining is to follow after that.
Lord Fusitu’a on Twitter
So far, El Salvador is the only country that uses energy from volcanoes by means of a geothermal power plant to operate Bitcoin mining. From a geological point of view, Tonga with its 18 (submarine) volcanoes would suggest a similar step.
Get out of the dependency on fiat GDP transactions
Just like El Salvador, the island state is also heavily dependent on transfers from abroad. According to data from the World Bank, the funds contributed just over 37 percent to gross domestic product (GDP) in 2019. So far, emigrants have mainly relied on transaction service providers like MoneyGram or Western Union dependent – with sometimes exorbitant fees in the double-digit percentage range. A problem that is sure to be a financial burden for many residents of Tonga. Therefore, Lord Fusitu’a sees the exemption from the dependence on fiat GDP remittance as an important first step.
Step 1 – Replace the reliance on Fiat BIP transfers with Bitcoin on Lightning, which is already in use.
Lord Fusitu’a on Twitter
In general, the efforts of the island state are getting a lot of support from the crypto community. Again and again you read about “El Salvador of the Pacific” on Twitter. Whether Bitcoin can actually be raised to the national currency in October 2022 will certainly also depend on how intensively Parliament will push its efforts forward.