El Salvador Bitcoin as legal tender. Bitter-sweet news for me.

I wrote in the Past an article about El Salvador Bitcoin beach city, which pretty much exposed that Bitccoiners are promoting the usage of custodian services as the real deal. It seems that the Bitcoin Cash community hasn't been quiet about it. Silence is often a sign of approval, and the BCH community will never agree to use custodian services as if it was Bitcoin itself.

At the Bitcoin conference 2021, the President of El Salvador announced that he would introduce Bitcoin as a legal tender in a video. It is legislation exclusively for Bitcoin Core BTC, but not all cryptocurrencies with the same characteristics.

Bitcoiner has been using Wallet of Satoshi in El Salvador, and they have been promoting that service as the real deal. They encourage the Wallet of Satoshi as if it was the same as using Bitcoin. We all know that using custodian services is not using the real Bitcoin whatsoever but just that, a service or yet another bank with fewer protections than even a regular bank.

I don't know if I am the only soul saying this but using WoS is not Bitcoin, and as far as I know. Now I am asking myself, where are the Kim DotComs and the Rover Vers denouncing this fraud.

Even at the Bitcoin conference, the presentation said that Lightning Network works. I guess the vision of Bitcoiner for a lightning network that works is for everyone to use custodian services like Wallet of Satoshi. At the Bitcoin conference, they promoted LN as if it was working because people in El Salvador have been utilizing the custodian services without any issues.

I have used Wallet of Satoshi in the Past, but at least I don't lie to myself and others about what that service is a custodian service. Yet, in the Bitcoin conference, they report that LN works even when in El Salvador they have been using Wallet of Satoshi service as wallets.

Maybe I am wrong, and the whole Bitcoin Cash community is also wrong. Maybe custodian services are the future for Bitcoin. Perhaps the Bitcoin Cash community also wants custodian services to take over the world deep down. I am being sarcastic here.

If people adopt real Bitcoin and not custodian Bitcoin, I would agree it could become something great.

That means that over 6 million people could benefit from a decentralized economy. It will also help that El Salvador already uses the dollar as a local currency making the trade of cryptocurrencies even easier.

El Salvador could see investment coming into the nation thanks to cryptocurrencies. It won't be fantastic if you could move your exchange house into El Salvador with laws that help crypto businesses. Regulations in El Salvador mean that there will be a straightforward way to navigate the country's laws.

If your laws are clear, investors can move on into your location, knowing they have a legislative advantage in doing business in cryptocurrencies. It is a good start and an example to follow.

The first domino has fallen, and I never thought it would come from such a small country. Add your commentary in the comment section, and I would love to read your comments about this topic.

Bitcoin law has been approved in El Salvador.

Art. 7. Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.

Art. 12. By evident and notorious fact, those who do not have access to the technologies that allow them to carry out transactions in bitcoin are excluded from the obligation expressed in Art. 7 of this law. The State will promote the necessary training and mechanisms so that the population can access bitcoin transactions.

It means that you will be obligated to accept Bitcoin if it is offered to you as payment, and you will only have the right to refuse it if you don't have the means to carry out the transaction and it is evident that you can't. If you don't know how the technology works won't be possible for you to refuse the payment because the government will provide training and mechanism to the population. And it seems that it doesn't matter if the transaction is made on-chain or using a custodian service like Strike or Wallet of Satoshi. You will be forced to accept intermediaries as if it was the real Bitcoin because everyone else recognized those services as if it was the real Bitcoin.

Art. 14. Before entering this law, the State will guarantee the automatic and instantaneous convertibility of bitcoin by creating trust at the Banco de Desarrollo de El Salvador (BANDESAL) to USD necessary for the alternatives provided the State mentioned in Art. 8.

It means that banks will also have to accept your deposits in dollars and convert them into Bitcoin if you desire that, and the government is working on a trust account that will make the easy exchange from dollars to Bitcoin. It is a bank-link thing, which means banks will have the layer of who owes what to who. It only gives banks the power to hold your Bitcoin in your bank accounts and the easy convertibility from dollars to Bitcoin and from Bitcoin to dollars again.

That bank is also now known as the Chivo wallet.

Here is my opinion that I wrote in the Past.

In El Salvador, people will use custodian services like Strike and Wallet of Satoshi as if they were the real deal, and banks will be forced to accept that payment and the whole population. Banks would be able to hold your Bitcoin and convert what USD you may have into Bitcoin if you decided that. If we put, for example, the usage of Colones and Dollars, you will realize that people don't use Colones any longer and that almost every transaction is done in dollars now. That will mean more and more Salvadorians will use Bitcoin and only use dollars as a price reference.

My only concern is that this law doesn't add any other cryptocurrency as legal tender. Still, it doesn't make it illegal for Salvadorians to carry, hold or use other cryptocurrencies. And the law doesn't make any effort to distinguish what is on-chain payment or custodian service, which means that in El Salvad0r, custodian payments are recognized as legal tender.

We will see more and more payments made with custodian services in El Salvador as time passes. Still, since it doesn't make it illegal to use other cryptocurrencies, Salvadorians will have the alternative to exchange their Wallet of Satoshi credits for other altcoins. But since the law doesn't mention custodian services and doesn't distinguish between the kind of transactions, little by little, all transactions in El Salvador will be all custodian services.

Suppose the law is not changed in a few years. In that case, all transactions will eventually be made using custodian services of some kind, either from the applications already in use or because banks will call their balances Bitcoin. I could add the risk of Bitcoin printing once all Salvadorians use custodian services only. Since the law doesn't emphasize on-chain and custodian transactions, before you know it, all transactions will be custodian transactions either because people use apps or central banks.

My only advice is that if you live in El Salvador, you exchange your custodian balance for the real Bitcoin or any other on-chain altcoin in the top 10. I would prefer if Salvadorians start to use the real Bitcoin, which is Bitcoin BCH.

In El Salvador, at least internally, banks will have Bitcoin balances on their customer's accounts. Still, once everyone uses custodian services and no one demands the withdrawal of funds on-chain, the banks will realize that and will start fractional reserve Bitcoin strategies where they will print unlimited Bitcoin for themselves. The only way to fight this is if Salvadorians demand the delivery of Bitcoin to their addresses, but this won't happen because transaction fees will prevent this. Because of the same transaction fees, Salvadorians prefer to hold their balances in custodial accounts either with banks or third-party applications.

Bitcoin law was the first sign of a dictatorship in El Salvador.

The Bitcoin law was written in El Salvador. It doesn't make any difference if you use Bitcoin using wallets, third-party custodian services, or even printed Bitcoin by central banks. To the law, they are all Bitcoin. It pretty much forces you to accept such payment regardless of its origin, which means that at first, you will also be able to exchange into fiat, the real Bitcoin, custodian Bitcoin, or printed Bitcoin. With time the Bitcoin that banks print will be more than the others two, and you won't have a choice but to accept it.

At first, banks won't print Bitcoin in El Salvador. Still, because people won't know the difference between the real Bitcoin, custodian, and the Bitcoin from bank layers, you will get a result that more bank-printed Bitcoin will be accepted by the population, which will make it simple for banks to print. People won't understand the difference.

The law doesn't define what Bitcoin is, so a central bank could say that a digit is Bitcoin, and the population will be forced to accept it because the law says you are forced to take it. I am trying to say that if the law doesn't know what it is, then humans can define what Bitcoin is, and in the end, central banks will dictate what Bitcoin is to the population, and the people will have to accept it by force. Yes, you will be forced to get it. It sounds like a dictatorship because it sounds more and more like a law that a dictator wannabe would write.

Nayib Bukele has the power to become a dictator because he controls the three power in El Salvador, and this law is the first reflection of that. We will have to wait three years to see if he will leave the power or try to reelect himself. By to way, he can change the constitution now.

Making people accept a payment that doesn't have clear definitions within the law is just the first step into a dictatorship.