WBD363 Audio Transcription
Why El Salvador Made Bitcoin Legal Tender with President Nayib Bukele
Interview date: Wednesday 23rd June
Note: the following is a transcription of my interview with President Nayib Bukele. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In his first interview since the Bitcoin law was passed, I talked to El Salvador President Nayib Bukele. We discuss the decision to make bitcoin legal tender, education & infrastructure, volcano mining, and why he believes bitcoin is a ‘no-brainer’.
“This is just exercising our sovereign right to adopt legal tenders, like we adopted the US dollar in the year 2001...the only difference probably is the reasons why we are doing this; in 2001, it was probably done for the benefit of the banks, and this decision is done for the benefit of the people.”
— Nayib Bukele
Interview Transcription
Peter McCormack: Hello again, Mr President, thank you for having me here. You've made quite some history this past few weeks. You've put a bill in place that's been passed: Bitcoin is going to be legal tender. What made you decide to do this?
President Bukele: Well, thank you, Peter, for the interview. Nice shirt though, the Pink Floyd one.
Peter McCormack: Thank you.
President Bukele: I had to take away my President's suit, my President's costume, because I am having dinner with the First Lady and she wanted me to dress like a human being, so like you and me!
Peter McCormack: I've got the blue socks though!
President Bukele: Well, I got the blue socks last time and now I have to change. I had to take my President's costume off. No, thank you for everything. You see, when you make a decision, it can either be a decision that you take because it's a historical debt, or you can be forward-thinking. Both are necessary, for example if we have, like in El Salvador, huge crime rate they need to lower down, you have to take decisions to do that, because it's a historical debt; you owe that to the people. And we have done quite well in that area, even though we still have a lot of crime, but it has gone down quite a lot.
But sometimes, you also have to take forward-thinking decisions and try not to foresee the future, but at least to know where the world is going and try to get there first, so your people will get some benefit out of it. And in the case of Bitcoin, I mean the system is just beautiful. I mean, you have this guy, we don't know who he is, we know his fake name, inventing something, or probably a bunch of guys; but they invented this thing and it's beautiful in its thinking, and not only because it's free or because it's peer-to-peer, but every detail was thought well before it happened.
Mining, for example. At the beginning, you could mine with your laptop. Now, you need all these powerful computer systems. But at the beginning, the worth of Bitcoin was really low, so nobody would invest in these powerful machines. So, at that time, the blockchain and the puzzles were simple and they just needed your normal equipment, so everybody could invest in that and have these coins that were worth very little.
But with time, Bitcoin increased in price and at the same time, it got more complex and you needed more power in your computer and more investment to do that. So, nobody would have done the investment if the prices wouldn't have gone up. So, this guy, or this group of people, thought about it; everything would come in place right at the time that it would be needed to go in place.
So, when you look at everything that has happened since the beginning of Bitcoin until now, you can predict what's going to happen in the future and it's going to be a lot bigger than it is right now, which is quite big actually, but it's going to be even bigger than what it is now. So, I think a lot of not only countries, but people, are switching themselves to Bitcoin, and then have all of the problems with the current monetary systems; and the Bitcoin system is so perfect that I think it's going to be the future. And it is the present already in a lot of things, but it's going to be way bigger in the future.
El Salvador has not been the country that's recognised to be the first in innovation, but why not this time? So, be the first country adopting Bitcoin as a legal tender, it's a good thing for our country. And if you add up the practical reasons, like receiving remittances at the speed of light, and having almost no costs, like you would have with Western Union and those types of systems; having financial inclusion to 70% of people that don't own bank accounts; having a lot of investment in tourism that will come from this; and, not becoming independent, because we're not, but at least becoming a little less dependent on the output of new dollars and the new inflation that's coming with those new dollars, and we don't receive any of that. Because, when a country prints more money, there's a good side and a downside.
The good side, or the upside, is that the government has more money to spend. The downside is the inflation, because you're just pouring in more money with no basis. But the problem with using an international currency that is not yours to print is that you're only absorbing the cost. I mean now, your dollars are worth less, but you're not getting any of the new printed money, because they didn't print it for you. So, for a country like ours, and we're not the only country in the world with that reality, I think having Bitcoin as a legal tender, even though nobody has done it before, it was a no-brainer.
Peter McCormack: But why not launch your own currency?
President Bukele: Well, you know, the world's becoming smaller, more interconnected. Of course, we could do our own currency; we have the support in Congress. It would be normal; I mean, most countries have their own currency, we had our own currency, so yeah, why not? I don't think that would be as innovative or it would drive financial inclusion or it would help people that receive remittances or it would put El Salvador in the forefront of a new digital revolution.
I mean, yeah, it might be good monetary policy, but it wouldn't do more than that. So, we're taking in all of the things around Bitcoin, not only bitcoiners; and like I said before to your first question, we think it's the future, so why not go for the future and not go to the past by issuing this old paper currency that, yes, they're worth something but as time passes, a lot of people are switching away from them.
Peter McCormack: So, I mean you've obviously spent time thinking about it; what are the risks of this project for you, because there are internal risks, but there are also external risks?
President Bukele: Well, yes, of course. But what could be the risks? I mean, yeah, you could get some people angry or mad at us; they haven't been so good to us anyway. I mean, let's see how things are here. 70% of people, they don't even have a bank account, so some banks may be upset, yeah, but they are not taking care of 70% of our people.
I mean, it's not like we're doing good in the old system, so why not try a new system that looks good to me. I mean, for me, it looks bulletproof. I'm pretty sure this is going to work, not only for us, but for humanity, because it's a leap forward to humanity. And, if we can be part of it and an important part of it, our small country; we're the smallest country in the continent. And, if we can be at the forefront of an economic revolution, why not try that; and what are we risking?
Yeah, there's probably some small risks, but I really don't see them as big risks; only probably getting some people angry at us, but they haven't been so nice to us anyway, so why not try something new? But it's handled by anybody, instead of being in the hands of somebody that could decide your monetary future from one day to another without consulting you or anything, or without caring what's going to happen to your people. Why not the system that is open and free? It sounds a lot more appealing to me than the old system.
Peter McCormack: What is it like to be a president and be in this situation? This, just even sat here doing this interview, for me is very surreal. It's never something I thought I would do. You're a president and you're a president of a country. I know it's a country you love deeply and you love the people. You have to deal with the United States and international institutions. What is it like being a president, the responsibilities, the pressures; and also, what is it like dealing with these international institutions who hold a lot of power?
President Bukele: Wow, there are a lot of questions in one! I do love my country and my people, and I want them to thrive and succeed and I know how most of them are doing. And what I'm telling you now, I mean any politician can say that, but they know it's true and they love me back. That's why we're doing so good in the polls. And I've been two years in office; it's not like I'm honeymoon or anything.
It's not because I'm perfect or because all that we do is the best of the best. No; it's just that people know that we try really hard. And everything that we do, we are thinking of what's going to be the future of this country; what's going to be the future of our people; and how is humanity going to see us; and how is the rest of the world going to see us? But at the same time, when you talk about these big financial institutions, we have a lot of respect for them. They're very big, they're very powerful and frankly, we need help from them; and they have helped us in the past, and they will probably help us in the future.
Having said that, I am really more preoccupied when I say, "how the world sees us", I am more preoccupied how the real world sees us, because the real world is not in some office with five guys in a table. The real world is out there. And if you look at the news right now, or the conversations on social media, there's more conversation, there's tons or more conversation about El Salvador than a month ago, and most of it is good. Of course, there's always going to be some haters with everything; I mean, that's just how free speech works, right?
But most of the people are enthusiastic or at least curious about what's going to happen in El Salvador, and that's something I'm happy for; because, this might not be the biggest country in the world or the richest or the one with the most GDP, but it's our country and it's the country I most love. So, I'm very happy that this is happening here and I know it's going to help millions of Salvadorans and probably it's going to help billions of humans, because the example we're going to set up here, it's going to resonate all over the world.
You're already seeing politicians from Paraguay, Panama, Honduras, Guatemala, Costa Rica, Nigeria, Tanzania; today I think BBVA, the bank from Banco Bilbao Vizcaya, just said that they're going to operate with Bitcoin in Switzerland. So, you think all of these changes are happening; of course, not every change is driven by what we're doing here, but at least it's the influence, or this is being checked, or at least they're curious about what's happening. I'm just excited about what's going to happen to our country in a good way, and excited about the benefits that our people are going to receive in so many issues and so many benefits.
I really don't see the downside. The only downside, like I told you before, was if you're going to get some people mad, but we know how to try to calm them down; we're not doing anything bad here, we're just looking for the best interests of the people. We could do something centralised around our own currency, whatever, but we're looking to do something that's open, free and most importantly, that it will work.
So, we're looking that this will be a huge game changer for El Salvador. I think that's a no-brainer also; it's going to be a huge game changer. One way or the other, everybody -- I mean, you have to see it; this is going to be a game changer. It has already been a game changer and the law hasn't gone into effect yet. So, imagine when it goes into effect, this is going to be huge; huge for us and a huge example to humanity.
Peter McCormack: Well, all the eyes are on El Salvador right now, especially in the Bitcoin world; a lot of people have come to visit. I get emails and texts on a daily basis asking me what it's like, where they should travel to, what they should see. And it's been a big year for Bitcoin. We had Michael Saylor make big bets on Bitcoin; we had Elon Musk make a big bet on Bitcoin; but bitcoiners are also naturally sceptical of politicians. Satoshi wanted to separate money and state, which kind of this project does anyway, and we always say, "Don't trust, verify".
We got very badly burned, or a lot of bitcoiners feel that they got badly burned by Elon Musk, so then I really put to you, why should people trust you?
President Bukele: They don't have to, because Bitcoin is an open and free system. So, they don't have to trust us; they have to trust the system, and we trust the system. I mean, we have spoken very candidly and everything, but I don't have to trust you, you don't have to trust me; it's just that we both trust the system and it's going to work.
I mean, if you're a proponent of Bitcoin, being used by people and by communities and by countries and by banks and by merchants, you have to be on board with this project. I mean, you can't be if you don't want to, but why would you, both a project that is aligned with your ideals, it's aligned with what you think, it's good, that you know it's going to benefit the people? I mean, you don't have to trust me; you have to trust the system, and it's going to work and it's going to benefit a lot of people.
So, if you want to get on board that, you can; and if you don't want to get on board that, you just don't get on board. But I think it's going to be very good. You don't have to trust me; I mean, I would like people to trust me. We're human beings, we're social animals, we love people liking us; that's part of the way we function. But bitcoiners do not need to trust me; they don't need to trust me, they just need to trust the system and they need to trust Bitcoin working for Salvadorans. And if that works, we're all served and we're all happy. And if they want to like me, fine; but they don't have to like me or you.
We're just human beings, we're just imperfect human beings and I actually may like some things about somebody and some things you don't like about somebody, but that's something personal and we're not talking about something personal here; we're talking about a new monetary system. We're not talking about personal. We don't know about if Satoshi was very nice or not very nice, or was he a man or a woman or 100%; you don't have to like him as a person, you just have to like the system.
Peter McCormack: I mean, the wheels are in motion now, but are there any scenarios where this stops, this project stops; are there any scenarios where you think, "You know what? We don't do this anymore"; or is this happening, this is real?
President Bukele: No, it's happening. It's the law of the land, it's just approved by more than a super majority in Congress. Our Congress has 84 seats; you only need 43 to change monetary policy, which is half plus one. That's a majority, right? But we have something called a super majority here, that you need two-thirds, which would be 56 out of 84. We got 63 votes. I mean, we got more than two-thirds; we actually got almost three-quarters of the votes.
I don't see this being stopped; this is just going forward every day. We're just going to announce a lot of interesting things that's going to move the project even forward; mining, energy, a lot of things. And, like you said, a lot of people are already coming and developing apps and things. I've just seen promotions just for Salvadorans. I've just seen this company advertising; this company just said, "Just for Salvadorans, if you join in now, you get $25" and this is happening every day. A lot of people are coming, a lot of people want to see things by themselves; El Zonte and Bitcoin Beach, which actually they were the pioneers in all of this, and the lad that proved that it can be done in our country.
They were very smart, and I know I'm changing the subject a little bit --
Peter McCormack: No, that's fine.
President Bukele: -- but they were very smart, if you go into a place that's not rich. Because, they didn't go to a rich neighbourhood and try it there; he would say, "Oh, but they're rich, they have savings". No; they went to a poor community, a very poor community, and they proved that it worked. And if it worked in El Zonte, it will work in El Salvador. So, I don't see anything stopping it. Everything done by humans can be stopped, but I just don't see how. This is law; the government is working 24/7 and going into effect in 80 days; so, we're going to do things as fast as we can.
And remember, Bitcoin works by itself, so it's not like it depends on what we do. But of course, the things that we are doing, it will protect the decision and guarantee that there will be more benefits for the people. So, this is happening; I just don't see how it's not going to happen.
Peter McCormack: When I first came here about 20 months ago, I think Bitcoin Beach had been live for a couple of months. I met Michael Peterson in Uruguay, he invited me out here, so I came two days later. And when I got to the airport, he picked me up and he said, "We have a new president", and this always stuck with me, because he said, "He campaigned on the slogan, 'There's enough money when no one steals'".
You've obviously got a history of some presidents who have filled their pockets and protected themselves. It feels like you've come in as President and want to genuinely change the country and genuinely want to do something different to the country. And you're also young, you're younger than me --
President Bukele: That's not that young, right?
Peter McCormack: I mean, for a President.
President Bukele: For you, it's very common!
Peter McCormack: Come on!
President Bukele: Most people in the world are younger than you; something like 75% of the population!
Peter McCormack: That's true. I feel young.
President Bukele: I'm joking!
Peter McCormack: But, compared to the US President; I don't know how old he is.
President Bukele: It's very easy to be younger than him.
Peter McCormack: Yeah, but do you think this is your advantage in that you're able to relate to younger people, but you're able to build a future for people of a similar generation; do you think that's been the difference you've been able to make?
President Bukele: It should be one of them. I mean, not the only. It's not like being young guarantees anything; being young is just a normal process, a biological process of getting old. I mean, the minute you are born, you've started to get old. So, being young is just a process; it doesn't guarantee anything. But it has to be a factor, a new way of thinking, the way that you relate yourself with the world, social media, where you consume your information. I mean, do you consume more information in social media, or do you go to legacy TV networks?
It has to be a big factor, but it obviously doesn't guarantee anything. It's a big factor, but you can have good people of older age and bad people of younger age, and the other way around; it's just, you know, it's also a matter of decency. It's a matter of, where do you see yourself in the future. I don't want to see myself in jail or something, so I just want to see a good future for me, for my family, for my daughter, for the world, for my country; and, money's important, but I think it's overestimated the importance of it.
Peter McCormack: I get it.
President Bukele: Money is nice, but you need freedom and natural equality to spend it and to enjoy it and not being prosecuted. I'm not just going to be stupid.
Peter McCormack: I mean, what do you want your legacy to be with this, because like I said, there's a history of presidents here who have let the country down and you're in this position to do something unique; how important is your own legacy? We all have an ego and this is peak ego for me! But, what is the legacy that you want to build?
President Bukele: Well, it's not only in currency of course, but when I was running as President, we had a homicide rate, a very, very high homicide rate; we had a country with no hope; we had a country that was probably unknown for the majority of people and the people that knew about it, knew about it because of the gangs or because of the civil war or because of immigration to the US. So, changing that will take more than adopting Bitcoin as a legal tender, but that will be part of it; and I just want to see my countrymen proud of our country and proud of our roots and proud of our culture, proud of who we are.
Of course, I can't do everything as President, because there are limits to what you can do, and not only legal limits but also time limits, the capacity limits, I mean you do have magic wand, right? I wish, but we don't have a magic wand. But I want Salvadorans to be proud, proud of their country and about being Salvadorans, about who we are, and yeah, we have egos, but the problem is not having egos; the problem is, what does your ego want? If your ego wants to be proud of the job you've done; if your ego wants the love of your people; that's good things having on your ego. Now, if you want to get rich by stealing money, or you want to be a crook; that's a bad ego, right?
So, I do want to leave a legacy, as big as it can be, but I don't know how much I'm going to be able to accomplish. But my dream will be that El Salvador will translate its way from the Third World to the First World. It's probably not going to be done in a couple of years, but probably at least we can set up the path so eventually it goes there.
Peter McCormack: Well, that reminds me of something my friend, Balaji, says. He says, "We often refer to the First and the Third World; but actually, we should be referring to the ascending and the descending world". It certainly feels like El Salvador is part of the ascending world now.
President Bukele: Well, hopefully.
Peter McCormack: Yeah.
President Bukele: Yeah, hopefully. But I wouldn't think the whole First World is descending and the whole First World is ascending, but you can pinpoint some examples of transition from being very good to not so good, and being bad to being better; yeah, you would find some examples of that.
Peter McCormack: Is five years enough to do this job; does that put a lot of pressure on you, because I wasn't aware it was a one-term presidency, or you can't do consecutive terms, when I came here? That was explained to me and I've been to Bolivia, where Morales has changed things, and I've spoken to locals and some people have been concerned that you may consider changing the Constitution to do a second term. But I also felt like, at the same time, five years as a president is a short amount of time?
President Bukele: It is, but even 10 years, even 20 years; I mean, it's not the amount of time, because there's not going to be a fixed amount of time to fix things. But like I said before, you won't achieve such a big switch in a country in 10 years or in 15, so you would have to set things onto a path and try that path to be followed by example. And, you would see that in other places. There's a lot of world leaders that weren't even presidents, but they set up their country on the right path.
So, I just think that if we do things the right way, we will set up a path that is going to be followed by example and even the people are going to ask for the good things to continue. There are some things that they might not like and say, "Let's change these couple of things", but the good things, they are going to have to continue. And in a democratic society, even though we may be poor, but we're democratic; and in a democratic society, the power of the people is very strong, because they're going to the polls and they're deciding which president you want.
If you see, in El Salvador's history, you just mentioned there about presidents; from the last four presidents, three of them have been indicted for jail. I mean, one of them died in house arrest; the other one is in prison; and the other one is exiled in Nicaragua because he has seven arrest warrants. So, it's not that we live in a country where presidents do as they wish. We have a history of letting people get away with crime, so I just don't think that if we do things the right way, people will allow somebody to come and destroy everything we have done, and they will probably elect somebody who promises to continue with the good things.
Peter McCormack: So, I'm going to switch gears into a bit of Bitcoin now. People always want to know someone's Bitcoin story and whenever there's an interview; can you remember when you first took a look a Bitcoin? Did you get it straight away; did you dismiss it; tell me your journey?
President Bukele: I'm not as huge a bitcoiner as you are.
Peter McCormack: It's my life's work!
President Bukele: I've read your history. No, just when I saw the system, I just thought it was very, very smart. But at the beginning, you'd be sceptical about how big would it get, or how would it be stopped, or would people accept it, or is it just a good idea? There would be thousands of good ideas that are just managed with time or in the era; or because they're not adopted by people, they're not strong enough to persist with time and grow.
But now, after several years, this is not personal, this is just as President, seeing Bitcoin growing; like they say, if you see a dip, just zoom out; if you see Bitcoin getting bigger and not only in price, because that thing about pitting everything against the price with the US dollar, I think it defeats the purpose of the whole -- it's for transition purpose, you have to do it. But I don't know, I just thought from the beginning the system was beautiful, but now I'm more convinced since it has withstood the pressure of time and the changes in the global landscape and political landscapes.
I mean, three US Presidents now, countries changing totally, the world stage changing, social media exploding; I mean, you have all of these things and Bitcoin has not only persisted, but has impacted, has grown. So now, I just don't see a very nice idea that is probably going to get to something very important, but actually it is a very important thing now; it has proven itself. And at the beginning, it was interesting; now it's a reality and that's probably the majority of my personal opinion of it which, by the way like I told you before, doesn’t matter anymore.
Peter McCormack: Well, almost all classical economists have rejected Bitcoin.
President Bukele: Of course, because they're classical economists. I mean you just defined them, so of course.
Peter McCormack: They don't understand.
President Bukele: Well, I don't think they don't understand, I think they don't want to understand, because all of their preconceptions, their theses, their works, their books, their prizes would be meaningless, because they were wrong. So, they have to defend. I don't think they doubt against Bitcoin; I think they're more trying to defend their personal stories.
I mean, imagine somebody that's very well-known, a recognised person in economy, and having attacked Bitcoin for a decade, now it would be very hard for him to see Bitcoin succeed, because it would mean that he was wrong; it would mean that all the prizes he got, at least they're outdated. Sorry, I interrupted you with a question.
Peter McCormack: You're fine, that's fine.
President Bukele: Yeah, but I just think you defined the answer with the question itself.
Peter McCormack: Yeah. So, we heard from the World Bank this week, they're not going to help with the Bitcoin integration due to concerns over the environment and the transparency; did you expect this?
President Bukele: Yeah. Well, I don't know. It makes no sense. I'm not going to get into a fight with the World Bank. They are free to support us and they are free in not supporting us, and they support us in other issues, like education and health. So, they don't want to support us in this new currency adoption? They're allowed to. I mean, they don't have to do as we told them, so it's fine.
Peter McCormack: It doesn't change anything.
President Bukele: No, it doesn't, because we didn't ask them to fund the Bitcoin project or anything; we just asked them for technical support. There is huge talent right here before, so it's good to have the World Bank CEO on a project, because they give you prestige, but now we have enough talent. I mean, these people designing the wallets, designing everything.
With the guys who designed Bitcoin Beach and everything, the ecosystem, the wallets, the Lightning Network, I mean we have enough talent, so we're not lacking talent here. Way before we announced the adoption of Bitcoin as a legal tender, this place was full of talent working 24/7 to make this work; and it's going to work, because most of these people, they're not here to make money. They're here because they're idealists and they want this thing to work and to make a difference for the people that need it the most, and that's not something common.
It's not easy to find a country where we have a lot of people from other countries working almost for nothing, rather than making the lives of the people of their country better. So, what's happening here is not only the adoption of Bitcoin as a legal tender; but what's happening here is having all of this talent and all of these people that want to prove themselves that this is the right thing to do and this is going to be good for their people, not for the rich people; it's going to be good from the bottom up. And, they're giving their time, their money, their names, their credibility, their passion, everything.
Having the World Bank advisors or technical support would have been nice, but we really don't need it. I think the talent that is here working this, it's way more than enough.
Peter McCormack: What about the IMF? There's a lot of interest with your meetings with the IMF.
President Bukele: They're concerned, but we're a full member of the IMF, a full member of the World Bank, a full member of the IDB. I mean, El Salvador is not a pariah state, or a quasi country, or whatever; we're a full member. We have a governor in the IMF. El Salvador is a full member of all the organisations, financial and non-financial, like the UN, the OIOS, and we're a good-behaving and law-abiding country. This is just exercising our sovereign right to adopt legal tenders, like we adopted the US dollar in the year 2001; what's the difference?
The only difference probably is the reasons why we're doing this. In 2001, it was probably done for the benefit of the banks, and this decision is done for the benefit of the people. But that shouldn't be a case of too much concern. So, I think we have been explaining the things to the IMF, we have been explaining them, and we'll do more explaining if they want to. But the best explaining will come up in September when the law comes into effect and everybody sees how it works and how it benefits the merchants, small businesses, how it benefits everybody, how it benefits the country and jobs and economic development in everything.
So, I mean they're a little concerned, but I think they're fine with it and they will be fine with it.
Peter McCormack: Well, it's an aggressive rollout strategy; 90 days. Why so fast?
President Bukele: Well, why should we slow it down?
Peter McCormack: It's a lot to do in 90 days?
President Bukele: Yeah, there's a lot to do, but we like to work under pressure. I think it's going to be enough time to roll it out. And the law has some considerations if we're not fully rolled out, so it's going to work; 90 days, I think it's enough. We're going to prove ourselves that we can work fast enough. Like I said, we have a lot of support and a lot of talent for people that just love this project and they are working their asses in this project, just because they love it.
Peter McCormack: Why, within the law, did you make it a requirement for economic agents to accept Bitcoin, because that is one thing a lot of people have asked about?
President Bukele: Well, Article 7 is very important, but you cannot look into Article 7 without looking into Article 8 and Article 12, because they work together. I mean it's like getting Article 7 without looking into Article 8 and 12, it's getting Article 7 out of context.
Now, Article 7 actually protects the people; why? Because, imagine people in El Zonte who work in the ecosystem with Bitcoin, right, and this is 70% of the population; because, El Zonte represents 70% of the population, even though it's a very small population. But it represents 70% of our population, which have no bank accounts. It's also the financial system. Not only don't they have bank accounts, but they don't have credit cards.
So, imagine these people in El Zonte or in some other places working in the ecosystem with Bitcoin and then having their sats and going into a pharmacy to buy medicine with their sats they just got from a tourist. The pharmacy would say, "I'm not going to receive your sats, because I'm a private agent. I just don't want your sats". So, it would be a discrimination against 70% of the people that you want to benefit, because if you want to benefit the people that don't have bank accounts, so they don't have savings, but they have another way of payment, and they would earn Bitcoins with hard work and selling pupusas, then they have to be able to go and buy medicine or food and have them receive their sats.
Now, there's something in Article 8 which protects the pharmacy, because you would say, "Well, Bitcoin is something that promotes freedom, so you need the freedom to either accept or not accept Bitcoin, right?" But, Article 8 gives you the power to immediately and automatically exchange the Bitcoin that they're giving to you into dollars. So, the pharmacy, which is required in Article 7 to accept Bitcoin so it doesn't discriminate on the woman that comes from the community and is buying medicine; Article 8 protects the pharmacy, because if they don't want to receive Bitcoin, they just press the button and then they will receive US dollars.
So, why would they reject accepting Bitcoin from this lady that comes from the pupusa shop if they will receive the dollars that they are asking for their product; because, if their product sells at $5.50, they will receive $5.50 in their app? So, why would they reject this lady's sats? It doesn't make any sense, so we need Article 7 to protect 70% of the people, and we need Article 8 to protect 30% of the people.
Now, we also have Article 12 which, if somebody says, "Okay, I don't have the technology, I don't have a smartphone, I don't have internet access. Where I live, internet is not so good", or, "I cannot use this thing; I don't know how to use the app", that's why Article 12 is there so he doesn't have to use it he can't use it. And of course, we will promote the use of it, because we don't want him to be left behind the benefits of Bitcoin, so we will promote them to use it, but of course it will be at their own pace. We will try that it takes less, but if it takes us five or ten years to implement it fully, well it will take what it takes, but it's not…
First, let's be clear on something. Having something as legal tender, it means that you can pay all your public or private debts with it; that's the definition of legal tender. You cannot do a legal tender that is not accepted; it won't be legal tender. It would probably be foreign currency, or it will be something else, an asset; but it won't be a legal tender. But, Article 7 is not there just to enforce the legal tender issue; it's there to protect the people that are going to work in this ecosystem. And, Article 12 is to protect the people that would get the money from the people that are working in the ecosystem; and Article 12 is to protect everybody.
So, at the end, it's a very simple, short law, very few articles, very clear, no fine print, no earmarks, no pork. It's very clean, simple, short, easy to read, easy to understand, nothing hidden; and totally optable, because you can actually opt out. I mean, you have to accept the sats, but you don't have to receive them; so, you can actually receive US dollars. So, how can you complain; you're receiving what you asked for? You're asking for US dollars, you're receiving US dollars; what's your problem that the other person is benefitting for exchanging his sats?
It doesn't make any sense, because you have full freedom to choose between Bitcoin or US dollars, and the person paying has full freedom to choose between Bitcoin or US dollars, so it's full freedom for both of them. And it's probably the only system in the world where the payer can pick one of the choices that is different from the seller; and both of them have full freedom. So, this is beautiful like Bitcoin; it's just something made for Bitcoin because it gives full freedom to the seller, but also gives full freedom to the buyer. What could be better than that; full freedom for both of them?
Peter McCormack: And, are you planning to hold Bitcoin in the country's reserves?
President Bukele: No.
Peter McCormack: You're not?
President Bukele: No, we're not. We're planning to hold Bitcoin in a trust fund. We're going to have a Bitcoin trust fund in our country's Development Bank, and we're going to hold Bitcoin and we're also going to hold US dollars so we can do the automatic exchanges. So, we're actually going to protect the volatility, so if it changes in the five minutes, or one minute that it took to make the transaction, it doesn't matter because the government will deposit in your account the amount of dollars you asked in the retail price.
So, if you're selling this pair of shoes for $50, you will receive $50. It doesn't matter if the price of Bitcoin changed against the dollar in the time you were doing the transaction; you will receive the $50; you will get that deposited into your account. So, we will hold some Bitcoin in the trust fund, but not in the national reserves. That's in the Central Bank; it's a different story there. Probably in the future.
Peter McCormack: In the future, yeah.
President Bukele: Yeah, probably. We believe in it, it's just that it's not part of the law. The law enacts the trust fund, but it doesn't enforce the Central Bank to buy Bitcoin in its reserves. But of course, that could be a Central Bank's decision.
Peter McCormack: Have you planned to roll out an education programme, because you know Bitcoin's complicated, there's a lot to learn. How do you plan --
President Bukele: Well, you know, it's not that complicated, because you don't have to understand it fully. It's like the fiat system. Nobody really understands the fiat system.
Peter McCormack: No!
President Bukele: I mean, people know that if they have $5 and the thing they are going to buy is $4, they're going to get $1 in return; everybody knows that. But people don't know actually how the system works, how the money's backed, how is it printed, how is it issued, who controls it. People don't really know how the system works, the traditional system, the fiat system; they don't really know how it works. But they know how it works for them.
So, what we actually need to do is that we should roll out this huge education campaign, but we've no need to explain all the details of how it works, because probably not even you know all the details of how it works. I mean, do you know how to solve the puzzle? You have to provide enough information for the people to know how it works and don't be scammed; how it functions in their best interest; that's very important. But how the full system works? I mean, probably very few people in the world know how the full system works.
It works the same way with traditional monetary systems. Very few people in the world actually know how a traditional monetary system works.
Peter McCormack: So, talk about the infrastructure. Are you planning to launch a government wallet, or are you planning to open it up to the market for competition for people to come in; what are you planning on doing?
President Bukele: Both.
Peter McCormack: Okay.
President Bukele: We announced this before. We're going to do a government wallet we're developing with Strike. Jack Mallers and his team are putting this up. They're doing really well here. The Strike wallet is the most downloaded app in El Salvador, more than Facebook, Instagram, Tik Tok, Twitter, WhatsApp; it's the Strike wallet right now.
And they are designing the government wallet that will of course compete with their wallet, because they love the project and they want it to succeed and they know that the government wallet is very important for the project to succeed; because we're going to guarantee, especially for low-income people, to have access to a wallet that's free on the internet. I mean, you can access without having an internet plan; you can access the wallet because it's a governmental one. So, the cellphone carriers will give you free access to it. And, we're going to guarantee the automatic compatibility of Bitcoin to the US dollar and vice versa with that app and with the trust fund, and we can actually send people some benefits with their wallets, with their digital wallets.
So, it's going to be very important to the adoption of Bitcoin, especially for the most vulnerable population, but of course it's going to be open to the market. A lot of people would prefer, you know, international wallets that work better when they travel, so it's going to be interesting. We're just going to put one more option up there.
The government is not in it to make money. We're not launching a wallet because we want to be a wallet company; we're just doing it because we want to fill in the holes or the gaps that the system might have. And since Article 12 says, we have to provide the technology, we have to provide the capacity and education so everyone can have access to the benefits. We don't want a law that is only for the rich or not even only for the middle class; we want a system that works for everybody. And we want the most vulnerable economically to benefit from that. So, I think the governmental wallet will be a very important piece in it.
Now, they showed some numbers, you know; in India, for example, they made a governmental wallet that's used by less than 1% of the population. Sometimes, it doesn't work. Sometimes, the free-market system is the best system in the world and sometimes, it just develops better things than the government can develop. But I think, at least for the beginning, it's very important that the government has an option, a public option.
So, we'll fill in the gaps and the doubts and the risks and the volatility and we'll make sure that everybody is able to benefit from this project. So, we're going to do our own wallet, but it's going to be open to all the wallets. There's no monopoly or oligopoly involved with this project.
Peter McCormack: There are a lot of people now interested in El Salvador, a lot of companies looking. After we tweeted that I'd met with you, I had a lot of people getting in touch and saying, "Can you introduce me; we want to invest in the country?" We also have an industry with altcoins, you know; we call them "shitcoins". Bitcoin itself is hard to understand; there's a lot to understand. But how do you feel about the entire crypto industry being opened up to the people of El Salvador?
President Bukele: Well, it's a Bitcoin law. It's very hard to put in place two currencies working at the same time; and like I said before, give total freedom to the seller and total freedom to the buyer at the same time, even if the seller and the buyer pick a different currency. So, it's hard. I mean, it's not really, really hard, but we had to put an infrastructure in place, a trust fund, some rules that facilitate the transactions, etc.
We're not going to ban any other cryptocurrencies or whatever, but this is just a Bitcoin law; it's just for Bitcoin for several reasons. The main reason would be that it would be impossible to have ten legal tenders. I mean, having two legal tenders is quite a challenge enough. Then to go and have three, four legal tenders, it's not going to happen; it's just going to be Bitcoin. Now, if somebody wants to invest, it's a free country. You can put your factory, your offices here; it's free; it's a free country. But a legal tender, it's only US dollar and Bitcoin and that's the way it's going to be. So, we're putting all of our bets and efforts on Bitcoin.
Peter McCormack: And, what if people do want to invest or they want to migrate here, when are you open for business?
President Bukele: Well, we're open for business now. There are going to come new laws which are going to come out shortly, like for example the law of residency when you invest 3 Bitcoins. I have to remind something, because somebody was asking me that. It's not that you're paying 3 Bitcoins for the residency, you just have to invest them.
Peter McCormack: That was me last time!
President Bukele: Well, it was you, yeah; probably! Yeah, you just have to invest them. I mean, you can buy a house.
Peter McCormack: A Tesla!
President Bukele: Yeah, of course. You can buy a house or a Tesla, or you can buy whatever you want, and you just have to buy something or invest in something. Like, if you're going to set up an office, maybe you're going to pay rent; you're not going to build an office but you're going to pay rent, so you buy some office furniture and some computers. If that amounts to 3 Bitcoins, you will have permanent residency. So, it's not that you to pay for your residency, it's just that you have to invest the amount of 3 Bitcoins in the country so you get permanent residency. And that's not the only good thing about investing here, but also the environment.
The thing that Bitcoin is a legal tender, so if the currency goes up or you transact in a different price, then you make the transaction at a different price that you did the previous transaction, that's just the value of the currency. There's no capital gains; not because we're getting capital gains away from Bitcoin, it's just a currency doesn't have capital gains, because it's not an asset that's worth more; it's just that the currency is more in parallel to another currency. So, there are no capital gains on it.
Also, you have the environment, you have a lot of bitcoiners, you have a lot of talent, a lot of developers and entrepreneurs working here, so that will be nice. And also, there's no property tax. We're probably one of the few countries in the world that doesn't have a property tax. That's not only for Bitcoin, that's for everybody; but we have no property tax.
So, you could actually buy a very nice -- we have great beaches and great surfing beaches too, so you can buy a very lovely house in the front of the sea and living in the beach and in a Bitcoin environment, you would get permanent residency, because you have already invested in a house. And you would get no capital gains tax from your transactions. You can mine here with clean energy.
Peter McCormack: Well, yeah, I can't leave without asking you about volcano --
President Bukele: Yeah, and to answer your question, you have no property tax for your beachfront house. So, you know, for me it's a great deal. I mean, of course it's not ideal for everyone, but it's a deal for a lot of people. And that will be good for the country also. It's not only good for bitcoiners, it's also good for the country, because you have talent coming, companies coming, investment coming, money flowing; so that's good for the people, it's good for the country, it's good for development, it's good for jobs, it's good for Bitcoin, it's good for the world. I mean, this is going to be huge.
Peter McCormack: Well, I'm considering it, for sure.
President Bukele: Yeah, you should.
Peter McCormack: I should.
President Bukele: At least you can buy a vacation house. I mean, you don't have to live the full year here, but you know, you can live three months here or six.
Peter McCormack: Long enough to have the better tax rates than the UK.
President Bukele: Yeah, exactly, exactly. You could be travelling to the UK!
Peter McCormack: Exactly! So, tell me about the volcano mining. I made a show that went out on Wednesday with my friend, Harry, who's a miner, and we discuss all different energy sources, but it was prior to your announcement; so, geothermal didn't even come up. Tell me about the volcano mining.
President Bukele: Well, geothermal, it's a very, very clean source of energy and it's probably one of the -- I would say the best, because there's a lot of other green energy projects that are good, but it has almost no downsides. I mean, for example, solar is very good actually, we're building some solar projects because we have a lot of sun and it's very good and it's clean. But you need batteries if you want it to work at night, or you need a different source of power to power things up at night. And the peak in energy consumption is at night-time. So, you don't have any sun at peak consumption.
Wind, it works at night, but it doesn't work when it's not windy. And we have a lot of hydroelectric. That's great, because you have the battery, which the battery is the dam. So, you fill the dam with water; that's your battery, right. So, it works very well, but still it depends on how much it rains and you're probably cutting some rivers, streams, down the road, so you're probably affecting some people, you're affecting fisherman; so, there are downsides.
But with geothermal energy, that's the energy of the Earth. I mean, it's right there. You can make the well, you can not make the well, the energy will be there; I mean, it's just the Earth's energy. And it works 24/7, 365 days a year. It will probably work for the next 500 million years, or whatever, just before the Sun absorbs it or something. So, it's going to be there; it's there 24/7. The amount of energy you get from it, it's totally stable, because the shifts in the Earth's power are measured in millions of years, not measured like any other thing, like seasons or months; it's measured in the millions of years.
So, it's there and we have discovered new wells that will give us 95 megawatts, which is not huge, but still it's quite considerable. So, we want to use that for Bitcoin mining, and we are already receiving a lot of interest from a lot of people.
Peter McCormack: I'm not surprised.
President Bukele: Yeah. And if you add up, of course, you know that to make things materialise, it takes time and negotiations and those types of things, and you have to pick up the good guys; but still, we have probably had interest in 2 gigawatts, which is 2,000 megawatts, and we only have 95. So, they're going to go like this and it's going to provide a lot of income to the country. And the plans to build a plant, it's going to cost $480 million, so that's going to be a legacy for the country because we are building infrastructure paid by Bitcoin.
We're looking into something we're going to announce later, but I think this whole project is going to pay for other things as well. So, in the future, you will see schools being built with a sign that says, "This school is being built with the Bitcoin Law", or suddenly you will see health clinics that say, "This health clinic is being built by resources from the Bitcoin Law", or sports complexes, or roads, bridges.
So, it's not only going to be good for the monetary system or for the currency or for remittances or for economic inclusion or banking services like lending; it's not only going to be good for the bitcoiners and tourism and investing and jobs; but also, for energy and income to do social projects like schools or roads and bridges that without this law, they wouldn't have that thing that would pay for them. So, it's going to be a full circle.
Peter McCormack: It's a big project.
President Bukele: A big project.
Peter McCormack: Well, listen, I want to say thank you. You've seen me twice, I know you're busy; I believe this is going to be your first interview on it, so I appreciate you giving it to me. I know you covered a bit on Twitter Spaces. I've been coming to El Salvador for nearly two years now; I love the country, I love the people, they've always treated me really well. I told you I love the pupusas.
President Bukele: Everybody loves the pupusas!
Peter McCormack: Everyone loves the pupusas! But I think it's a fabulous country and I intend to keep coming back and support the project to help the locals. I'm here to help the locals and I wish you the best and I think you're pretty brave doing this and, you know, it's the first step on something I didn't actually think would ever happen. When people talked about hyperbitcoinisation, I was like, "Really?"
But you could start this, one country. Somebody said to me, "One country's a target, two's a movement, ten's a gang". Even Adrian earlier, we had the G7 meeting; he said, "It could be the B10; the Bitcoin10". But, I just wish you the best of luck with it and if you reach out, I'm sure bitcoiners will be here to help you and, yeah, salut!
President Bukele: Thank you.
