El Salvador - Opportunities for Hive including HiveFest 2021!
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By now you've probably heard the huge news about El Salvador adopting Bitcoin as legal tender.
If not, or if you want more background, check out my posts from earlier this week:
https://peakd.com/elsalvador/@apshamilton/el-salvador-and-btc-deep-dive-on-momentous-impacts
https://peakd.com/bitcoin/@apshamilton/breaking-news-el-salvadorss-btc-bill-passes-by-supermajority
What does this mean for Hive?
I've been thinking abut the implications and opportunities for Hive of this amazing news.
I want to share my initial thoughts with the Hive community.
1. HiveFest 2021 in El Salvador!
I'd like to be the first to suggest this to @roelandp and the Hive community because it is now an obvious choice.
There has not yet been an annual festival of this community in the Americas.
After 3 Fests in Europe, 1 in Asia and 1 virtually, it is time for the Americas.
North America is the largest continental community of Hive users and South / Central America also have a large number of Hiveans.
In addition it meets the key requirements for HiveFest locations and then some.
A key requirement for HiveFest is that it is a cheap location so it is accessible to all. El Salvador certainly ticks this box.
Another key requirement is that it located close to many Hive users. El Salvador's position in Central America satisfies this requirement. It is less than 3 hours flight from Miami and Houston and 3.5 hours from Caracas.
Jack Mallard of Strike said he was onboarding 20,000 new El Salvadoran users every day which means, with the BTC as legal tender mandate of this new law, by November at least half of El Salvador will accept BTC payments.
Imagine the experience of a Hive Fest where attendees are able to pay for everything using Hive or other crypto on their phones.
It will be like living in the crypto future!
2. Opportunities for Hive
With the first nation state adopting BTC as a national currency, the question arises: how does Hive fit into this?
2.1 BTC transfers via Lightning Network
The first thing to understand, and it hasn't been discussed widely, is that El Salvador's Bitcoin financial inclusion plan is based on the BTC Lightning Network using apps like Strike and Wallet of Satoshi.
It is fast and fee-less, just like Hive, but has two key weaknesses compared to Hive.
2.1.1 Technical complexity leads to use of centralized custodial wallets
These Lightning wallets are all custodial, because it is very technically difficult to set up your own Lightning Node.
Believe me, I have tried and gave up - and I was already running a Bitcoin node and a Hive witness node.
@brianoflondon spent weeks getting his Lightning Nodes running for @podping.
Support his HPS Proposal.
He tells me that setting up a Lightning Node to enable custody of your own Bitcoin in a Lightning wallet is:
- very complicated from a software and setup perspective (terrible documentation at present)
- requires dedicated hardware (Raspberry Pi 4 with SSD as a minimum)
- requires a very reliable internet connection (if your node goes down transfers of BTC to you are lost)
- involves running a full BTC node and downloading the entire BTC blockchain which can take weeks.
Clearly no El Salvadoran shop owner is going to do this.
So it means almost everyone will use centralized, custodial Lightning wallets.
In contrast, with Hive it is easy to set up your own non-custodial wallet and control your own keys via numerous decentralized onboarding mechanisms and great plugins like Hive Keychain.
2.1.2 Lightning is only good for small amounts
Lightning only really works for transfers of small amounts. 500k Sats is close to its limit according to @brianoflondon.
Each Lightning channel has to be funded when it is set up and there is a limit to how much BTC a person or organisation will want to have locked up to facilitate larger transfers.
In contrast HIVE works for all amounts, big and small.
2.2 An amazing target market for Hive
By introducing millions of Salvadorans to cryptocurrency and getting them to use it, President Bukele Ortez will create an amazing, geographically concentrated market of cryptocurrency users. People will be using cryptocurrency every day for buying and selling goods and services - the original vision of Bitcoin as money.
Suddenly, over 4 million people who were financially excluded and had no access to banking or any financial service will leapfrog the traditional financial system, straight into the cryptocosm. The potential economic opportunity from these people's financial inclusion is immense.
This will be attractive to many crypto projects but it is a particularly good target market for Hive.
Hive can offer Salvadorans additional benefits beyond using BTC alone
These benefits are:
- Earning potential from content and curation
- Non custodial wallets with interest earning
- Fast, fee free transfers of larger amounts
2.2.1 Earning from content creation and curation
While the amount you can earn on Hive (at present prices) is generally pocket money for people from wealthy countries, it is much more substantial for people from the developing world.
Hive is an attractive as an income earning opportunity for Salvadorans. A substantial and active Spanish speaking community already exists on Hive and more Spanish content and users will be welcomed. Content in English will obviously also be welcomed.
In particular, the first hand accounts of El Salvadorans of their experience with this transition to a cryptocurrency economy will be very interesting to everyone on Hive and beyond in the world. I love reading @nirvana3003's accounts of life using cryptocurrency in Venezuela and I'm sure personal testimonies from El Salvador about BTC adoption and practical usage will be very illuminating.
When I do an internet search for "El Salvador Bitcoin" and find less than 6 original articles in all of the world's mainstream media (with the rest being copy / paste regurgitation) and then compare this with the many original, thought provoking posts on the same topic on Hive, I realise that the Hive community may be small but it has more "proof of brain" than the entire world's mainstream media.
2.2.2 Non-custodial wallets with interest earning
One of the biggest benefits of cryptocurrency is the ability to be your own bank.
True financial inclusion requires anyone to be able to participate in the financial world without requiring the permission of anyone, even Jack Mallard!
Thus while custodial wallets like Strike are a good entry point to cryptocurrency, true financial freedom requires avoiding all centralized authority and controlling your own keys. Hive is one of the easiest ways to do this with natural language account names, the security of Hive Power staking, multiple key levels and easy to use onboarding interfaces.
On top of this HIVE and HP earn interest (now at 5%) which will be attractive for Salvadorans wishing to earn a bit on the cryptocurrency they have saved without getting into the risks and complexities of DeFi or not being able to meet KYC requirements of centralized platforms like Crypto.com BlockFi or Nexo.
2.2.3 Fast Transfers of larger amounts without fees
Lightning is fine if your want to transfer less than 500k sats ($190) but doesn't work well above that level.
On chain BTC transfers can cost up to $50 at peak times and this will likely increase.
If a Salvadoran want to transfer amounts in between $200 and $5000, Hive is a perfect solution.
2.3 Hive to BTC Lightning transfers - the missing link
Hive is fast and fee-less and so is the Lightning Network.
But what is currently missing is a way to do fast fee-less transfers between a Hive wallet and the Lightning Network wallet.
This is key if we are to integrate Hive with the El Salvadoran (and broader) BTC economy.
Currently you need to send your Hive to an exchange or DeFi platform and convert to BTC (with fees) and then send it on-chain (with resultant fees) to a Lightning Wallet.
2.3.1 A Business Opportunity that gets you El Salvadoran residence and promotes Hive
What would be ideal is a simple service where HIVE is sent to a conversion wallet address with a BTC Lightning address in the memo field and the service send the equivalent amount of BTC over the Lightning Network to that Lightning wallet.
The service would also provide the reverse transaction with a Hive account name in the Lightning transfer memo field.
Transaction sizes would be limited to 500k Sat equivalent.
This could be set up very easily as a centralized service provided by a company and making profits based on the spread on the HIVE-BTC pair, without charging any actual fees.
By focussing on very low value transactions and basing the company doing these transactions in El Salvador should minimise any tax and regulatory implications (people need to take their own advice on this). Basing servers in El Salvador or another crypto friendly country would be a good idea too.
This would qualify for El Salvadorian permanent residency by investing 3 BTC in setting this up (most of which would just be providing operating capital as the liquidity for the service).
@blocktrades is one option for doing this but many Hiveans would have the resources and skills to put such a service in place.
@someguy123 when are you going to have rented servers based in El Salvador? Belize is next door.
It potentially could also be set up as a DeFi service, maybe using a Hive-Engine smart contract and Diesel Pools.
What do you think @aggroed?
Whatever way this is achieved, and its a nice business opportunity for someone, this will provide great benefit for all Hiveans and allow Hive to market itself into the new Salvadoran market.
A Beach House like this near Bitcoin beach could be waiting for a lucky Hivean. :-)
Please vote for my Hive witness. (KeyChain or HiveSigner)
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