NEW YORK (Reuters) - The International Monetary Fund said on Thursday it has a number of economic and legal concerns regarding the move from El Salvador to make bitcoin a parallel legal tender.
El Salvador has become the first country in the world to adopt bitcoin as legal tender, with President Nayib Bukele touting its use for its potential to help Salvadorans living abroad to send remittances back home.
“Adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” said Gerry Rice, an IMF spokesman, during a scheduled press briefing.
“We are following developments closely, and we’ll continue our consultations with the authorities.”
Rice said the Fund will later on Thursday meet with Bukele to discuss the bitcoin law. El Salvador is in discussions with the IMF seeking a near $1 billion program.
El Salvador’s law means bitcoin will have equal footing with the dollar, which became its official currency 20 years ago.
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In a recorded announcement played today at the Bitcoin 2021 conference, the president of El Salvador, Nayib Bukele, announced that the country’s government would declare bitcoin as legal tender.
"Next week I will send to congress a bill that will make bitcoin a legal tender,” he said.
The presentation was hosted by Jack Mallers, founder of Lightning Network payments platform Strike, who has been working with Bukele to determine the logistics of this historic move.
"Over 70% of the active population of El Salvador doesn't have a bank account. They're not in the financial system,” Mallers said. "They asked me to help write a plan and that they viewed bitcoin as a world-class currency and that we needed to put together a Bitcoin plan to help these people.”
In declaring bitcoin legal tender, El Salvador has become the first country to onboard to a non-fiat currency. Because bitcoin is issued programmatically and does not fall under the control of any third party or central bank, El Salvador is now uniquely positioned to take advantage of Bitcoin’s unique properties, particularly as a store of value that is provably scarce and natively digital.
For the first time, customers of some U.S. banks will soon be able to buy, hold and sell bitcoin through their existing accounts, according to crypto custody firm NYDIG.
The company, a subsidiary of $10 billion New York-based asset manager Stone Ridge, has partnered with fintech giant Fidelity National Information Services (FIS) to enable U.S. banks to offer bitcoin in the coming months, according to the two firms.
Hundreds of banks are already enrolled in the program, according to Patrick Sells, head of bank solutions at NYDIG. While the firm is in discussions with some of the biggest U.S. banks, many of the lenders that have agreed to participate are smaller institutions like Suncrest, a California-based community bank with seven branches.
“What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships,” Sells said. “If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.”
Until now, bitcoin adopters have relied on apps from a new generation of fintech players like free trading brokerage Robinhood, payments giants PayPal and Square, or crypto-centric firms like Coinbase. Banks, on the other hand, have steered clear of bitcoin for retail customers, only recently announcing plans to allow rich wealth management clients to be able to wager on the cryptocurrency.
According to the thread, the individual kept their private keys in Google drive. More details should be posted soon.
Just in case you didn't know - Metamask can be paired with a hardware wallet. This is a much safer way to protect your coins and I recommend anyone using Metamask to consider learning how to do it. It's not that hard.
Ethereum miners have recently begun coordinating a possible 51% attack in direct response to the EIP-1559 proposal, which burns a majority of the transaction fees rather than giving them to miners. There are a wide variety of benefits to this proposal, such as potentially making Ethereum deflationary, providing users with a better user experience, and embedding ETH's economic value at a protocol level.
Miners have strongly opposed this change, as it will significantly decrease their revenue, and they have even went as far as creating a website dedicated to stopping its integration. The currently listed mining pools on this website that are against EIP-1559 far exceed the required 51% hash power. While this EIP evidently benefits the Ethereum ecosystem at large, some miners believe they can turn things around to keep their exorbitant block rewards by blocking the upgrade altogether.
Like clockwork, the Ethereum community has quickly organized potential solutions to this possible 51% attack, with Vitalik leading the charge. In an informal document titled "Quick merge via fork choice change," Vitalik describes how Ethereum can perform a "quick merge" by rapidly moving from proof-of-work to proof-of-stake with limited changes required to Ethereum clients.
This quick merge would prioritize quickly moving to proof-of-stake while leaving the fine tuning for a future hard fork of ETH 2.0. In fact, Vitalik states that "the minimal merge will make these things easier to work on, as it would no longer be needed to worry about merging two chains at the same time." This appears to indicate that a quick merge may be the preferred course of action, regardless of any potential 51% attack.
Status completely and unambiguously supports the EIP-1559 upgrade, and will be glad to assist both the community and the developers to ensure this critical change is fully integrated into Ethereum.
This started as a way to avoid retyping the same ideas, 140 characters at a time. In keeping with that environment, topics were as short as possible, and informal. I did not intend to write a book, and still could not. Most of the topics (including this one) were written on my phone, on a flight, train or in a coffee shop. Many are quick observations that arise from intimate knowledge of core Bitcoin code or long self-study and experience in various disciplines.
Over time topics began to interact, a necessary taxonomy erupted, and what had been a casual process of ad-hoc observation started to become work. The topics are as short as possible and assume some knowledge of both Bitcoin and economics. I made an honest effort to rationalize relations and terminology, but my focus remains on consistency and expansion of understanding. Fortunately, others have come along to help with illustration, review and publication.
I have used the terms Catallactics and Praxeology to describe the underlying discipline. People also use the term Austrian Economics . I find each of these unsatisfying, so have started referring to the discipline as “Rational Economics” (not to be confused with economic rationalism ), a system based entirely on deductive reasoning from a set of axioms.
The second edition of Cryptoeconomics - Fundamental Principles of Bitcoin just became available as a free PDF. Top notch resource from a very talented engineer.