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Adoption

El Salvador is on track to Bitcoin adoption

Despite some domestic opposition and lack of support from the World Bank and the International Monetary Fund (IMF), the government of El Salvador is rapidly moving towards bitcoin adoption.

El Salvador’s President Nayib Bukele announced an airdrop of $30 worth of bitcoin to all adult citizens who will sign up on government-developed commission-free Bitcoin wallet Chivo and go through the facial recognition process.

Since the Bitcoin network cannot handle more than approximately 250K transactions per day, critics argue that Chivo is not a permissionless Bitcoin wallet, but a Lighting Network wallet with mandatory KYC. Another concern is that most Salvadorians won’t be able to open their own LN channels to receive an airdrop due to lack of bitcoin to pay the onchain fees, because channel factories are still in development. That raises questions whether users will hold real bitcoins or some form of an IOU.

While the technical details of Chivo are still vague, the president clarified that the new wallet will hold both BTC and U.S. dollars, and Salvadorans won’t be forced to use Chivo over other crypto wallets.

Bukele also addressed many concerns regards the new law on the What Bitcoin Did podcast. According to the president, merchants will have to accept bitcoins as a form of payment, making sure that the unbanked population will be able to fully participate in the economy. At the same time, merchants who don’t want to hold any bitcoins, will have a choice to settle bitcoin payments in USD via the government Bitcoin app.

Additionally, American company Athena Bitcoin announced its plans to install 1,000 Bitcoin ATMs in the country to prepare the infrastructure for the transition to a crypto-based economy.

Since El Salvador uses the US dollar as its currency, the Central American nation is at risk of suffering from high inflation triggered by the unprecedented expansion of monetary supply - also known as money printing - by the US Federal Reserve amid the pandemic. While the US can spend those trillions of newly issued dollars on various government programs, El Salvador doesn’t get any benefits from such cash injections.

El Salvador’s Congress approved bitcoin as legal tender in June. The law will come into force 90 days later in September.

Justice?

Earlier this year, the websites Bitcoin.org and Bitcoincore.org received allegations of copyright infringement of the Bitcoin whitepaper by representatives of Craig Wright. While Bitcoincore.org complied with the request, Bitcoin.org refused, prompting Wright to commence legal proceedings against the website’s maintainer who is known by the pseudonym Cøbra.

According to Finance Magnates, since Cøbra decided not to appear to defend themselves in front of London’s High Court, a default judgement was made in favor of Wright.

The court has ruled that the Bitcoin whitepaper must be removed from the Bitcoin.org website and its pseudonym maintainer will have to pay £35,000 of Wright’s legal fees.

Craig Wright has previously filed defamations lawsuits against other notable Bitcoin personalities, including Roger Ver and Peter McCormack.

In other news

  • Bitcoin miners continue their exodus from China, following a recent crackdown on cryptocurrencies. Major mining pool BTC.com is relocating to neighboring Kazakhstan, while Bitmain is moving to the United States. The Bitcoin total hashrate fell sharply to its lowest point in 2 years amid China clampdown.

  • Ethereum’s controversial upgrade EIP-1559 has successfully launched on the Ropsten testnet. If all goes well, the upgrade will go live by August. EIP-1559 will make gas prices more predictable and increase scarcity of ETH by burning transaction fees.

  • Around $3.6 billion worth of bitcoin vanished from the South African crypto platform AfriCrypt, which was mainly targeting high net-worth investors, promising up to 10% daily returns, and utilizing a multi-level marketing strategy to expand its user base.

  • The anonymous team behind Polygon-based Malt Protocol announced a reimbursement plan after its algorithmic stablecoin depegged from the US dollar. The team decided to allocate the whole development fund for the $13.8 million reimbursement - or 74% of lost funds - to all affected victims.

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