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Last week, the Paris Blockchain Week Summit (PBWS) ran for two days from April 13 to 14. It had more than 3,000 attendees and 250 speakers, including some of the most well-known people in the field.
CryptoSlate spoke with Bitfinex and Tether CTO Paolo Ardoino at PBWS. He talked to us about a lot of different things. There was also the Volcano Tokens issue, which may be the most important thing to happen in El Salvador since Bitcoin was made legal.
Bitcoin is becoming more and more popular in El Salvador.
El Salvador made history last September when it became the first country in the world to accept Bitcoin as money. There were a lot of people who didn't like it. The International Monetary Fund (IMF) was one of the groups that didn't like it.
President Bukele, on the other hand, is still very much in favor of the "experiment," and he shows this by buying the dip when it comes up.
An important question is how Bitcoin will grow up to be both a store of value and a way to make money. At the moment, when you think about how new cryptocurrency is, there aren't any hard answers.
However, because of what's going on in El Salvador, such as the widespread use of Bitcoin through the Lightning Network and the rise of Volcano Bonds, we can see how this will work out in real time.
There is more information about the Volcano Token here.
Bitcoin-backed Volcano Bond: This is the first time a sovereign bond has been made into a digital form. Because the Volcano Bond will not go through TradFi, it will be able to issue debt through cryptocurrency rails.
There are a lot of things that are stopping things from moving forward right now. As a side note about the Bitfinex/Tether ban in the US, the processes in place to stay on the right side of US regulators are also important.
It's not surprising that we want to know more about this. You can learn more about Bitfinex's CTO by hearing from him.
Q&A with Paolo Ardoino
Q: Can you give an introduction to Volcano Tokens (VT) and explain how they would work with Bitcoin and the Lightning Network?
Paolo Ardoino: The VT and LN are not really linked. So the LN is an efficient payment system built on top of Bitcoin, that will make payments on Bitcoin extremely cheap and make them extremely scalable. So that is probably the best technology among all the other blockchain-based technologies to scale the blockchain use of payments.
So LN, if you think about it, is the solution to enable micropayments at the national level, local level, it’s a peer-to-peer solution… And eventually, there is a settlement that happens on layer 1, that is Bitcoin.
But the VT is just their capital raise for their sovereign debt. This VT is, in a way, similar to a bond but will have a different structure likely… But you can imagine that this token is a simplified version of a debt instrument that will give access to a component to the users.
On the other side, with the money, the $1 billion that the El Salvador government will raise, this money will be used in halves. Half a billion dollars will be used to buy Bitcoin, hold Bitcoin for five years, and after five years they will sell these Bitcoin for fiat and distribute half of the profit back to the [Volcano] token holders.
Half of the profit will be kept for infrastructure development. [This] will be used to expand the geothermal electricity production system they have around the volcano, to extract the heat from the ground of the volcano and they transform it into energy and electricity.
They will grow that part, and that will be used to power, first of all, to improve the electricity grid in the region, as well as for mining and a few other operations. They are using this initial raise of debt, in part, to create a Bitcoin treasury, and in part to improve the electricity grid.
And if you think about it, it’s the perfect moment, we have discovered the hard way, even in Europe, how electricity now is a new gold, right? Electricity is rare. And we have to invest wealth into having sources of electricity.
Q: The VT, what chain will that be on?
Paolo Ardoino: One of the important parts of the VT is that it’s a security, right? It will be traded by Bitfinex Securities. The President of El Salvador also confirmed on Twitter that they will use Bitfinex Securities as their technology company provider for their issuance of the VT.
The underlying blockchain on which this token will be issued will be Liquid, for the specific reason that Liquid has a whitelisting feature. Since this is going to be a security, you really don’t want this token to be traded on DEXs because there is a strong KYC and AML requirement from regulators. Of course, we have to exclude certain jurisdictions.
Q: You mentioned that there are still some laws to be passed, within El Salvador, in order to get the VT to go through, given that El Salvador is quite crypto-friendly, do you see this as being a potential difficulty?
Paolo Ardoino: I don’t think it’s a difficulty. I think that the government has announced in the past weeks that they have 52 new laws that they want to pass. So one after the other. My understanding is that they are going to [inaudible] Congress and discuss these laws.
To my understanding, in the next two to three weeks it’s likely that this law will be evaluated by Congress and potentially pass. So, it’s a matter of weeks potentially, I don’t think it will be several months, it’s in a way around the corner.
After the law is passed then Bitfinex Securities can apply for a license in El Salvador. After we get the license, if we get the license, of course, we can offer our platform as the technology company for the El Salvador government to issue this token so that then, all Bitfinex users can apply for Bitfinex securities, and once they get through with securities they can participate.
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Source: Cryptoslate
