What if you actually knew what your government did with its money? Bitcoin may fix this...
Last Friday, El Salvador’s president, Nayib Bukele, fired out a tweet that flew under the radar of the average Joe. But there is reason to believe his message might have profound consequences for government transparency in the future.
Back in 2021, the country became the first to adopt Bitcoin as legal tender and in late 2022 announced that it would begin purchasing one Bitcoin per day to add to their balance sheet. They are even leveraging their volcanic energy to support Bitcoin mining.
El Salvador is unapologetically all-in on Bitcoin.
But Friday’s announcement on Twitter/X was not that of a further investment in the technology, but rather the country’s use of Bitcoin to promote transparency and accountability of El Salvador’s government.
You see, Bitcoin is a public ledger. I could share with you the public address of the Bitcoin that I hold and you’d be able to see how much Bitcoin is held there. If it were to move to a new address, you could see that, too. Bitcoin is private if nobody knows which public address you have access to, but is fully transparent as to how value is being moved in and out of a given address.
On Friday, President Bukele shared that El Salvador had moved a large portion of its Bitcoin holdings into cold storage and secured it in a vault within its borders.
And he shared the public address of the Bitcoin.
This means two things. First, it means that El Salvador owns the Bitcoin at that address. They’ve taken it into self-custody and have no reliance on a third party or anyone that can let them down. Their Bitcoin destiny is now in their own hands.
Second, the country has provided a means of tracking and auditing - in real time! - a portion of its treasury. If the government decides to spend or move any of that Bitcoin now, everyone will know.
Contrast that with US gold reserves at Fort Knox, whose operations can at best be described as “opaque.”
The long-story-short of Fort Knox is that it was quite literally built to store gold that was stolen by the US government from the American people back in the 1930s (see more about Executive Order 6102 here).
Better yet, Fort Knox hasn’t been “audited” (if you can call it that) since the 1970s. Here is a description of the last time this happened:
The event, Sept. 23, 1974, is often inaccurately called the last audit of Fort Knox. It was nothing more than a peek-a-boo glance at the gold in fine Hollywood style.
Fort Knox was thrown open on that Monday afternoon for about 2 hours to some 150 reporters and glad-handing politicians, crowding narrow passageways and elbowing each other for a few seconds to glance into one of four vaulted rooms. Television newscast film and magazine photographs, including The National Tattler's, showed various politicians and reporters hoisting and admiring 400 ounce bars of gleaming gold. Photos and film of that day show smiles all around.
…
Not one bar of gold was assayed for purity during that 1974 charade, not one serial number was checked against official records, and no one counted the bars of gold stacked to the ceiling in the one room that was opened for inspection. Other rooms, said to be filled with gold, were not opened.
Understandably, questions remain if the gold is really there at all today. After wars in Europe and the Pacific, Korea, Vietnam, the Middle East, and now funding to Israel and Ukraine, it is not unreasonable to believe that perhaps we’ve bled our reserves dry.
Bukele no longer has this option, at least not without the risk of political fallout. He’s put the nation’s growing Bitcoin treasury on display for all to see.
As this sort of accountability will breed economic prosperity through fiscal restraint, talent from surrounding nations will likely flock to El Salvador. Who wouldn’t want to migrate to a country where means of trust are built in to the political infrastructure?
Perhaps then another sovereign sees the strategic advantage of Bitcoin and its transparent ledger, and chooses to do something similar. At some point, other countries will have to take similar measures simply to keep up, much the way that states in US compete for human and corporate talent on taxes, culture, and other factors.
President Bukele’s announcement, of course, did not get much attention in the mainstream media. But leaders and politicians around the world will have to take notice: if not immediately, then at some point in the future.
Perhaps, slowly for now, Bitcoin will fix the distrust and skepticism that so many feel today about their government.
Michael is the Chief Revenue Officer of The Bitcoin Way and host of The Bitcoin Way Podcast.
To schedule a call with The Bitcoin Way to learn more about proper Bitcoin self-custody, you can do so here.
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