Bitcoin Alliance helps El Salvador to use Bitcoin as legal tender
A few months ago Bukele, the governor of El Salvador announced his willingness to use Bitcoin as a legal tender, alongside the dollar.
September 7, 2021, will be remembered as the pivotal date for Bitcoin, as it has become, de facto, a legal currency.
Bukele, obviously assisted by his entourage, planned everything down to the last detail, even the $150 million fund to facilitate conversions from Btc to classic dollar.
Regardless of the feelings of denial on the part of some citizens, I think the strategy, especially at the macro level for the sustenance of the country is a winner.
Why?
If the accumulation plan can be done by all of us, all the more reason a government should do it! Capital gains can be used to lower taxation or allocate funds for development.
To support this "transition", which is not really a transition because Bitcoin will be parallel to the dollar, the Bitcoin Alliance comes into play.
This alliance includes API3, Banco Hipotecario, TESOBE, Qredo and Sovryn.
Of note is API3, which in collaboration with Open Bank Project have created Airnode. This project allows banks to send data directly to blockchain networks.
With this amount of data recorded on blockchain there is the possibility of real-time consultation of any data between banks.
As we know, Salvadoran Bitcoin transactions are all recorded on Layer 2: low fees and negligible transfer times.
Obviously as people are adapting to the use of this new currency, financial institutions have also faced a number of really interesting operational challenges.
API3, which is an oracle platform (they validate off-chain data for on-chain use), found itself driving these regulatory changes alongside Banco Hipotecario.
To be able to provide the right support, they used, first, the decentralized Sovryn platform, and then Qredo's Lightning network.
Clearly, API3's task will be to validate all off-chain information, which will happen thanks to Airnode.
In the diagram above is represented the functioning of this Bitcoin Alliance, where the fulcrum is, precisely API3.
It is interesting to make some points about the various actors in this partnership.
Banco Hipotecario of El Salvador
This is a national bank that offers a wide range of banking products and services on a large scale, including, individuals, small businesses, medium-sized companies up to large corporations.
API3
As I quickly wrote just above, this is a platform that offers the oracle service.
API3 is a Decentralized Autonomous Organization (DAO) and manages the transition between third-party legacy oracles, into proprietary oracle solutions, offering greater security and regulatory compliance.
The entire API3 ecosystem is managed by dAPIs (Decentralized APIs) that provide auditable data with quantifiable security.
Open Bank Project
It is an API Management platform, the software part of which is managed by the German TESOBE. Through this platform we offer to those banks that wish to improve their digital offerings. Through a database with over 450 standardized APIs, it is possible to create a customized Open Banking environment: a further step towards a concrete connection between banks and blockchain.
Sovryn
BTC's native DeFi platform, which gives people the ability to use their Bitcoins in decentralized applications.
The Sovryn protocol uses Lightning technologies that will set the pace for the new type of DeFi.
The volumes are really high so it is quite reliable.
Qredo
Somewhat along the lines of Sovryn, this is a DeFi platform that leverages Layer 2, allowing BTC, ETH and ERC-20 tokens to be transferred with fees that are much lower than the Ethereum network (especially for ERC-20 tokens).
On top of that comes Layer 1 banking security and institutional-grade governance.
The synergy of these companies will make the implementation of Bitcoin in El Salvador a success, and Governor Bukele will show the world that he understands that a state must be run like any business.