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Chris Coney (00:15):
Hi there, guys and welcome to this latest edition of the Weiss Crypto Sunday Special with me, your host, Chris Coney. My guest analyst this week is the lovely Marija Matic. Marija, nice to have you back.
Marija Matic (00:27):
Thank you, Chris. Nice to see you again.
Chris Coney (00:29):
Nice to see you as well. So today, hot topic, I've called it Bitcoin and Geo-Politics, but really it's coming off the back of this news about El Salvador. Do you want to start us off by giving us an overview of what exactly has happened there?
Marija Matic (00:45):
Well, the most important thing that happened is that Bitcoin got accepted as legal tender in El Salvador now even by their legislator body, which is a historic moment in the history of cryptocurrencies. This is the first time that one country has accepted Bitcoin as a legal tender, which means that it's now on par with the dollar, since dollar has been El Salvador's national currency from 2001, I think, when they replaced colon, because it was debased and inflationary and everything due to political turmoils and wars and the problems that El Salvador was going through. So yeah, it's a quite important moment in the history.
Chris Coney (01:46):
Okay. So, they were using the dollar as their national currency, right?
Marija Matic (01:47):
Yeah.
Chris Coney (01:47):
So, as far as I understand it, because it's legal tender, all the merchants in the country now have to accept Bitcoin as payment, right?
Marija Matic (01:59):
Yeah. I'm not if sure they have to, but they can. Maybe they have to, but I know that now the prices can be denominated in Bitcoin and shown in Bitcoin as well and there is no capital gain tax to be paid on Bitcoin. So, these are the things that we, at the moment, that we know.
Chris Coney (02:26):
I think it's mandatory. The-
Marija Matic (02:29):
It's mandatory. Okay.
Chris Coney (02:30):
... Yeah, it's mandatory. So, what the president was saying was that, the government's going to back the volatility though. So, even though if you're a merchant and you accept the Bitcoin, the government isn't going to force you to hold it and then the price fluctuate. You can sell it on the open market as you normally would. And if not, the government will buy off you and give you dollars.
Marija Matic (02:49):
Oh, okay. I haven't seen that pitch.
Chris Coney (02:50):
Yes, that's how the government's going to get their own reserves, is they're going to buy off their citizens if they didn't want to keep it. It's interesting.
Marija Matic (02:56):
Interesting, okay.
Chris Coney (02:59):
So, yeah. So, what was the colon, was it, that's the national currency of El Salvador?
Marija Matic (03:05):
Yeah.
Chris Coney (03:05):
Up until about 2001 and then it went on the dollar. Well, what was the biggest problem with them using the dollar as a currency? You got any thoughts on that?
Marija Matic (03:16):
Well, if you're using a dollar as your currency, you cannot influence monetary policy. You cannot influence the interest rate's, inflation, so you're basically depending on a foreign country to do as they please and it's difficult to be dependent country in monetary terms.
Chris Coney (03:50):
I don't suppose the Federal Reserve gives much thought to El Salvador when they make policy changes, do they?
Marija Matic (03:57):
No, I'm sure they don't.
Chris Coney (03:59):
I'm sure they don't. So, I don't suppose it was even the Federal Reserve's or America's decision to put El Salvador on the dollar. That was probably their decision as the best choice of currency after their own one collapsed, I suppose. And maybe that's what they feel about Bitcoin now is, it's another way of hedging their national currency in something that they perceive as stable anyway, politically.
Marija Matic (04:22):
Well, politically, yes. Bitcoin, maybe not everyone will be using it for to pay a cup of coffee, but it's a great hedge for one country to have and great option for their citizens. It's a great way to send remittances and to kind of have it as a store value, especially since it's deflationary compared to dollar, which is quite inflationary. So in the longterm, people have a reason to bet on Bitcoin that its value will grow. So, I think it's very important that the countries do have this hedge, do have this option, their citizens.
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