“Next week I will send a legislative proposal to congress to make bitcoin become legal tender.” This was announced in a video at the Miami “Bitcoin 2021” conference, the president of the state of El Salvador Nayib Bukele. It goes without saying that the world of cryptocurrencies (not, however, the prices of the cryptocurrency) has gone into fibrillation. On twitter the great “influencers” like Tyler Winklevoss, who together with his twin Cameron became a billionaire thanks to bitcoin, chirped: “Great news …”. Beyond the reactions of the cryptoeconomy, the announcement is important. Nayib Bukele has foreseen the creation of a partnership between El Salvador and a digital “wallet” company: Strike. The goal is to build a modern financial infrastructure using the technology of the queen cryptocurrency.
The “lighting network”
In particular, the mechanism underlying the project is to exploit the so-called “lighting network”. What is it about? Without claiming to be exhaustive, it is an “off chain” transfer network developed on top of the bitcoin blockchain itself. The system works at a “peer to peer” level and, as Michele Facchini and Giorgio Alessandro Donà Danioni (“Blockchain Masterclass”) write, its usefulness “is based on the creation of payment channels (…), through which users can carry out transactions in cryptocurrencies without solution of continuity ». In other words: it is a technology that, given the slowness of the validation system (“proof of work”) of bitcoin, bypasses the problem and allows the queen cryptocurrency to be used as a “means of transporting value”.
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«The application created by Strike – says Ferdinando Ametrano, founder and CEO of CheckSig – works more or less in the following way». Let’s imagine a subject A who wants, via a digital path, to send dollars to subject B. “Well: the App, when A sends the money, takes the place of the money changer”. Dollars are turned into bitcoins. These, thanks to the “lighting network” are transferred immediately at the end of the path. “Here the App again operates as it changes currencies and re-transforms bitcoins into dollars”. The cryptocurrency par excellence is used, precisely, as a “means of transporting value”.
At present, obviously, it is not possible to identify the details of what a project is. That said, however, the fact that El Salvador is a country that relies heavily on the remittances of its compatriots from abroad allows us to understand the reasons for this sensational move. Among the aims, obviously, there is also that of being able to disintermediate the financial system of international currency transactions. In this way the commissions paid by those who carry out the order can go down or become null and void.
The geopolitical implications
It is clear that the project in progress can have important impacts. Primarily on the front of the financial intermediaries themselves. «The program, despite the scarce information in our possession and even if it remained limited on international remittances – says Luca Fantacci, co-director of Bocconi’s Monetary Innovation Research Unit -, could give rise to a complementary system to the traditional one. A mechanism which, among other things, on the one hand “bypasses existing intermediaries; and, on the other hand, “by competing with those already in place, it would give considerable benefits to the consumer”.