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The “tonga btc legal tender” is a story about how the Tongan lord plans for financial security. It’s a good read.
A proposal to adopt El Salvador’s model of making Bitcoin (BTC) official cash in the small Pacific island of Tonga comes from a former member of the Tongan Parliament. Indicators so far are favorable ahead of a May vote in Parliament.
According to Mataiulua I Fonuamotu, Lord Fusitu’a, there are intentions to exploit the country of Tonga’s state-run volcano mining operations to generate income.
It has 21 volcanoes in Tonga. According to it, there is one volcano for every 5,000 people. Through inherited land rights from his family, he is the only owner of one volcano.
The volcanoes’ geothermal energy would be used to provide electricity for the planned Bitcoin mining plants.
“To provide 5,000 people with power, two megawatts are needed. The whole national grid will thus be served by 40,000 megawatts. According to Lord Fusitu’a, each volcano generates 95,000 megawatts at all times, leaving plenty of extra power.
Every household will get a hash hut. However, there are only 20,000 families, hence there are only 20,000 units.
He claims that every volcano can produce $2,000 in Bitcoin every day, which the Tongan government would “give” to every household.
In a population of 120,000, economies of scale are important, and the typical individual stands to gain significantly.
Family-run Bitcoin mining huts: According to Lord Fusitu’a
Tonga requires $26 million to develop the operation’s cabling, but according to the World Bank, it lacks the necessary collateral.
However, Tonga was able to obtain the funds thanks to a grant for least developed countries. Given Lord Fusitu’a’s political clout in the area and the fact that he claims to be the owner of a volcano, he could succeed.
Lord Fusitu’a also claimed to have negotiated a free supply of mining technology, but he withheld the details of the agreement. Chinese firms with significant market share in this industry include Bitmain. Additionally, mining enterprises that have fled China’s new prohibition may be traveling to Tonga. That enigma still exists at this day.
“The math remains the same for a nation-state. Having a state’s own mining industry is ideal.
Related: According to a former MP, Tonga will adopt El Salvador’s measure making bitcoin legal money.
Lord Fusitu’a, who is he?
Lord Fusitu’a, a Tongan nobleman, was once a lawyer before entering politics.
The only indigenous monarchy still in existence is in Tonga, which is located in the South Pacific. Even though it belongs to the Commonwealth, it chose to join voluntarily in 1970. Despite historical pressure from colonial powers, Tonga has never been colonized.
After recuperating from surgery for severe physical ailments and residing in New Zealand for three years, Lord Fusitu’a made the decision to resign as an MP in November 2021, particularly considering that Tonga has closed its borders owing to COVID-19. Lord Fusitu’a claims that his domestic legislative agenda is still on track despite the fact that his cousin has assumed his position in the Tonga Parliament.
His ambitious agenda at the Global Organization of Parliamentarians against Corruption, which includes anti-corruption legislation as well as women empowerment and climate change measures, has been influenced by two clinical deaths as a result of injuries.
He was naked and covered with tattoos (a Tongan term mangled by Captain Cook) when he talked with Cointelegraph, as has become customary after a number of operations. The tattoos reflect a century of his clan’s tattoo history.
Since 2013, Lord Fusitu’a has solely accepted Bitcoin, however “don’t let the outside mislead you:” When he was eight years old, he started coding.
When he reinforced his interests, it was during his time spent confined to the hospital when he was unable to talk or swallow and could only read. reading every sentence about bitcoin again in paper.
Lord Fusitu’a is well-known in the online Bitcoin community and often waxes lyrical about the benefits of Bitcoin adoption for his nation, which is highly dependent on remittances.
“It’s the safest kind of currency ever created. It combines a distributed ledger with decentralized computing and digital scarcity. The world’s most democratic and equitable currency. It’s sound money, the purest form of property ever created. It has a yearly appreciation of 200 percent. It serves as the ultimate creditor asset as a store of value.
However, if you live in a nation like El Salvador or Tonga that depends on remittances, your life will change overnight. It might be a means of life for four billion impoverished people in places like Nigeria or Venezuela, where you need a wheelbarrow of cash to purchase a piece of food, he added.
To Cointelegraph, Fusitu’a laid out his four-step strategy for altering the way Tonga runs its economy.
The strategy includes educating Tongans about the financial aspects of Bitcoin remittances, legalizing Bitcoin, establishing Bitcoin mining enterprises in Tonga, and building up Tongan National Treasuries in Bitcoin.
For Tongans, whose economy depends most heavily on remittances, financial education is a vital component of the strategy.
Lord Fusitu’a claims he is fed up with intermediaries taking so much of the much needed money from people in impoverished countries when they send remittances home.
According to Lord Fusitu’a, the over 300,000 foreign workers that make up the Tongan diaspora provide around 40% of the nation’s total income. The roughly 120,000 people who live on the island get money from them. Remittances are essential to the Tongan economy since more than half of the population resides in the diaspora.
According to him, Tonga’s “GDP in 2020 was $510 million, or slightly over $200 million, or 40% of that amount. Therefore, Western Union alone receives fees of $60 million, or 30% of that total.
Lord Fusitu’a claims that cost-free Bitcoin transfers will increase remittances by 30% for everyone as Western Union charges villages a 30% commission, even though a calculator on the Western Union website estimates a fee of about $3 AUD for sending a 100 AUD transaction.
However, according to Lord Fusitu’a, this does not explain the following:
According on where you’re sending from, a minimum charge of between 10 and 25 percent applies to ALL transfers in addition to the $2.90 on $100 that is shown on the page. That much of your remittance, which ranges between $50 and $100 on average, comes from Tonga or El Salvador. Additionally, it doesn’t indicate that you would be charged forex slippage for buying Australian dollars, converting them into Tongan pa’anga, and buying TOP.
The financial literacy and “how money works” teaching initiatives in Tonga have already started in 2021, and teams have been sent for community engagement. What does the conversation on “how money works” look like? Simple:
“People are aware of the three-hour drive and the $20 return bus fee. lining up to pay the steep remittance fees at a Western Union. Instead of the $100 they expected, they were given the $70 that is on the counter. Then there is the beggar’s tax since there are beggars outside. You spend nine hours traveling back to the hamlet, returning exhausted, hungry, and having lost bus fare and remittance fees in order to get only $40 to $50 of your $100 wire transfer.
Adoption of cryptocurrency remittances is increasing, but its volatility might be a deal-breaker.
Importantly, Tonga has a high acceptance rate for mobile-first internet.
According to Lord Fusitu’a, a mobile phone with an internet connection has the power to drastically alter lives. “A telephone and warm wallet is their first engagement in any financial system ever,” according to the unbanked.
Moonwallet and other non-Know Your Customer wallets might be useful for those without IDs. “This is a workable system for the billions of impoverished, unbanked people worldwide; it’s not about Bitcoin Bros. The ordinary household suffers as $200 billion of the $700 billion in yearly remittances loses to fees.
Additionally, Tongan introduced a consumption tax (GST) of 15% in 2005, which further oppresses the underprivileged. If Bitcoin is embraced, the ordinary Tongan will have more money in their wallets and Western Union will have less, which will also help the government’s finances via the consumption tax.
Weekly seminars on the basics of bitcoin are also given in Tongan by Lord Fusitua.
the accepted currency note
Before it was published, Lord Fusitu’a looked into El Salvador’s measure establishing Bitcoin as legal cash and is attempting to enact “very much an exact replica.”
The Tonga law, which has been prepared since July 2021, would make Bitcoin and the paanga, the national money of Tonga, both legal tender.
Similar to the contentious Article 7 of El Salvador’s Bitcoin Law, the proposed legislation would make accepting Bitcoin when provided a requirement.
In May 2022, at the next session of parliament, the measure will be introduced. It will need the consent of a parliamentary majority of at least 14 of the 26 members in order to pass.
Hereditary lords, who make up nine members of parliament, are said to “vote as a block” and “always” follow Fusitu’a, the sole attorney and barrister in the chamber. Three other elected members are familiar with bitcoin. It would appear likely that a majority vote would pass with just two votes remaining out of the required fourteen.
If the measure is put into law, Lord Fusitu’a anticipates a natural increase in remittances from the Tongan diaspora. He notes that in 2021 there has already been a rise in bitcoin transfers back to Tonga.
It is artificially kept low by being tied to five currencies to safeguard its exports, which are mostly agricultural products, but this raises the cost of imports.
Related: El Salvador’s 2021 Bitcoin Law: The beginning and the end
National Treasuries in Bitcoin
Building national treasuries for Bitcoin as an inflation hedge is the last step in Lord Fusitu’a’s four-point Bitcoin strategy. This difficult choice in conventional economic policy has been influenced by the lord’s opinions on the usefulness of Bitcoin.
“Emerging markets often invest in US dollars that are “melting at 5% per year,” gold that is “devaluing at 2% to 6% per year,” and US bonds that have “negative yields since 2008.” And we do this. Our $700 million national treasuries would have been worth $22.5 billion by February 2021 if we had transferred it to BTC in March 2020.
“When Nayib Bukele teases on Twitter that he’s ‘buying the dip,’ what he means is he’s moving his national treasuries from those three dead men’s assets into BTC with each purchase,” he says. “With a 2020 GDP of $510 million, $22.5 billion is equivalent to 45 years of Tongan economic productivity earned in 11 months.”
Bukele has received criticism for his choices, however some of this criticism is due to the style of government he used. Due to his prior involvement in multinational organizations, Lord Fusitu’a may be more open to collaborating with foreign organizations in order to safeguard his nation’s economic future.
What awaits us?
But why don’t other nations adopt his approach if it’s so obvious? However, it uses funds from legacy financing, according to Lord Fusitu’a.
Palau, a different Pacific Island, is launching a stable currency based on Ripple’s XRP. Are they insane? Because of their usage of legacy finance rails in their XRP and Ripple relationships, their strategy is more appealing.
For Tonga, the dangers associated with international monetary policy still exist. The Internal Monetary Fund acknowledged in a study published in October 2021 that unless financial stability is ensured by policymakers, crypto ecosystems might displace established currencies in developing nations that are “unbanked.” But maybe that indicated that the IMF was keeping an eye on Tonga.
Lord Fusitua is upbeat about both the ambitions for Bitcoin mining and legal tender. “The Bitcoin community enjoys seeing the underdog triumph,”
Lord Fusitu’a is either a genius or a fantastic showman, like many others in crypto realm. or either.
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