While it was billed as the “one of the biggest announcements in Bitcoin's history,” the market seems to be puzzling over the landmark reveal that El Salvador’s sitting President will be submitting legislation to recognize Bitcoin as legal tender.
In a presentation at Bitcoin 2021 from Jack Mallers, CEO of Zap — developers of a previously low-profile Lightning Network wallet app named Strike — Mallers showed a short video from Salvadorian president Nayib Bukele where the leader of the 104th largest global economy announced the historic legislation. Strike currently has a 3.2 out of 5 star rating on the Google Play store.
“Next week, I will send to Congress a bill that makes Bitcoin legal money,” Bukele said in the video.
Bukele, who has been characterized as a strongman and an autocrat, consolidated his power last month by firing five judges as well as the country’s attorney general. A recent Reddit thread from a self-professed Salvadorian framed the move as one that will be popular both with Bukele’s supermajority party, as well as with the general populace.
The move has been long-awaited in Bitcoin circles, with some speculating that nation-states would come to accept, transact in, and hold the world's largest digital asset as part of treasury reserves.
A Tweet thread from Bitcoin advocate Caitlyn Long noted that it may be a “back door” way for banks to handle and custody BTC:
1/ THREAD ABOUT A HISTORIC DAY in #bitcoin: #ElSalvador president publicly announced support for legislation to make #BTC legal tender. *IF* it does become law, it wld have many secondary effects. Steel yourselves bc a big fight on this probably coming thohttps://t.co/BrrNxaLzpZ— Caitlin Long (@CaitlinLong_) June 6, 2021
While the announcement led to widespread elation at the conference, the market response has been tepid. BTC is effectively flat on a 24 hour basis, and down 3.5% on a 14-day basis.
Part of the muted response may be due in part to the exact nature of the announcement being unclear. A self-described hacker on Twitter noted that Strike is not trustless and is censorable, meaning that this implementation of BTC as legal tender won't be the anarcho-capitalist utopia some hodlers long for.
Tried installing strike, the app that will be used in El Salvador to pay with bitcoin. Looks like it's not permissionless and custodial which means they can block your account and funds any time.https://t.co/9wRD5w8DVo pic.twitter.com/wy6N1nIgp0— Patrick Aljord (@patcito) June 6, 2021
While it hasn't moved markets, Bukele noted in a recent Tweet that the new policy may be an important boon for many Salvadorians, especially the upwards of 70% of the population that does not have a bank account, regardless of the implementation technicalities:
“Financial inclusion is not only a moral imperative, but also a way to grow the country’s economy, providing access to credit, savings, investment and secure transactions.”