It was the second day of the historic Bitcoin 2021 conference in Miami, and an excited and emotional Jack Mallers presented the work he is doing in El Salvador. All of a sudden, he puts on a video in which Nayib Bukele — the President of the small Central American country — begins speaking with the terminology of a typical politician. But he ends by stating that the following week he will send to Congress a bill with which El Salvador will adopt bitcoin (BTC) as legal tender.

So, without anyone being able to predict it, a new chapter in the history of Bitcoin was started. This historical moment marks the beginning of the second stage of the life of Bitcoin — the final leg of the road to hyperbitcoinization.

This article is the first chapter of a saga that will attempt to narrate a holistic vision of the road to hyperbitcoinization — the next evolutionary step of the human race. The author is looking to inform the reader of the current big developments in Bitcoin and frame them in an appropriate historical context. The laboratory for this exploration will be what is currently happening in El Salvador, and always with a view as to how this influences hyperbitcoinization.

Bitcoin as legal tender

Two days after the announcement of what could have been yet another unfulfilled political promise, Bukele tweeted that he did indeed send the bill to Congress.

Bukele then participated in a Twitter «Spaces» and a few hours later the El Salvador Congress approved the law.

Bitcoin had now become «currency of legal tender, unrestricted with liberatory power, unlimited in any transaction and to any title that the natural or public or private juridical persons want to realize» in El Salvador.

In the Spaces session, the President explained that the law is a public order with immediate effect, and that it will not be applied for accounting purposes, since USD will continue to be used for this purpose. He also recognized — in what seemed to be an atypical gesture of humility among politicians: «We do not know what the limits of this are, we will see it over time».

He also commented that there will be a fund established by the State, to make sure citizens do not suffer from the volatility of BTC since they are obliged to accept it as payment. In this way the State assumes the risk of temporary volatility. It will be interesting to see the executive branch of El Salvador essentially becoming a trader, since it will be making brief but continuous BTC longs against USD shorts. I can’t imagine a better and more moral source of income for a state. Can we already think about eliminating taxes, or is it still too early? Let’s not forget that Bitcoin fixes taxes.

The President also spoke about a new residency law, where you get permanent residency if you invest 3 BTC. The unit of measure for the residency investment will always be BTC, not USD. It would be desirable for this amount to be reduced over time, to make immigration popular for more people.

He also said that they will work on improving internet connectivity and that he wants El Salvador to become a sanctuary country for cryptocurrencies.

Among his statements I highlight the following:

«This law will not change our macroeconomy». This statement is, in this author’s opinion, clearly erroneous. He is wrong because this legal change will indeed profoundly affect the macroeconomy, not only in El Salvador, but in the whole world. We do not know whether he made this assertion by mistake due to economic ignorance, or by lying to buy time and thus solidifying the paradigm shift before the attacks begin. It’s hard to imagine a United States sitting on its hands while the USD collapses along with it its strong imperialism.

«We don’t want to de-polarize, we want to attract investors and developers. We will have both coins as a form of legal payment». Interesting statement, that will allow us to have a perfect laboratory to see the USD collapse — in real time — against BTC.

Finally, he acknowledges having been inspired by the Bitcoin Beach project, a local Bitcoiner community, before saying goodbye because it was time for the congressional vote.

Minutes later the law was passed, serving as a red carpet of welcome for the President and El Salvador to enter through the big door into the history books of Bitcoin.

The context

Bitcoin is a much stronger instrument for social change than agriculture, printing or the internet. Money is half the part of any exchange and there is no other human institution that influences culture as strongly as this.

We find ourselves in the eye of the storm, in the beginning of the end of fiat coins, possibly the triggering the «Fiat-apocalypse» or “de-fiatization” (the counterpart of bitcoinization). This may lead us to an utopia or maybe a dystopia, we don’t know. But , without a doubt history was put on a path towards profound change after January 3, 2009.

Throughout human history, the market organically created the money that individuals used. In almost every case, money represented a value in itself: salt, silver, gold, cattle, cigarettes and even certain stones or seashells.

During the belle epoque (1850-1914) we lived in the Gold Standard, “monometallism”. That is, the currency remained gold, but thanks to the technology of banknotes, cheques, credit notes, banks and financial technologies in general, the gold could be moved, safeguarded, verified and accounted much more easily than in its pure metallic version. This mechanism was adopted globally as a Standard. While Government created the money, the reality was that each bill was exactly backed by the amount of gold it claimed to represent. And everything worked well.

In this context we should not lose sight of two things:

1) Gold was indeed the currency

2) Above gold there was a second layer that provided more convenience and flexibility for transactions (the layer of financial services backed one hundred percent in gold).

Since 1914, the world started to abandon this gold standard and in 1971, by U.S. decree, the final nail was put in the coffin. This marked the beginning of the largest and most nefarious economic and human social engineering experiment in history: the Fiat Standard. That is, the imposition of monetary socialism on a global level, exported from the U.S. to the rest of the world.

During the Fiat Standard, with some minor exceptions, the currencies were fiduciary — fiat — without any backing by gold or other property, and they were administered at the sole discretion of the states. In reality, the U.S. manipulated all other currencies through the USD.

The Fiat Standard did not have any contender, nor any hint of evolving or changing, until January 3rd of 2009. Starting with the creation of the Bitcoin genesis block, humanity began to abandon the Fiat Standard by migrating to the Bitcoin Standard.

In this migration, many historical events from the life of Bitcoin has been transcendent:

• The sending of the first transaction of Satoshi to Hal Finney

• The expansion of the network

• The determination of the price in USD for the first time based on the cost of electricity consumption

• The purchase of two pizzas

• The improvements to the protocol

• The creation of the Lightning Network

Along with a myriad of other events that could have been mentioned here.

If this author had to choose the two most powerful historical events on the road to hyperbitcoinization, he would  pick the creation of the genesis block and the determination of Bitcoin as legal tender by the first nation state that recognizes it.