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Here is today’s roadmap
Article: El Salvador Bitcoin adoption 📉
Tweet: Instagram NFTs 🖼
Podcast: Coinbase Pay 💵
P.S. If you are new here, take a look through this web3 starter guide to get caught up to speed :)
Article
Bitcoin As A Legal Tender In El Salvador
In September 2021 El Salvador became the first country to make Bitcoin a legal tender. Only 20% of their citizens have used it since its launch. Has this experiment been a failure?
El Salvador has conducted several monetary experiments in its history. For example, in 2001, the U.S. dollar became legal tender and the only official currency in the country. They made Bitcoin (BTC) a legal tender to solve three main problems:
Provide citizens with a faster and cheaper option for overseas remittance payments
Increase the % of taxes they collected from citizens
Reduce their dependency on the US dollar
To increase the adoption of BTC as a payment method, the government gave $30 to anyone that downloaded their wallet - Chivo. With a per capita GDP of $4,131, that is 0.7% of their expected annual income. As of January 2022, over two-thirds of the population had downloaded Chivo.
Although after receiving the $30…
Only 20% have used their wallet
5% have paid their taxes in Bitcoin
11% have used Bitcoin for overseas remittance payments
The reason why for minimal usage is driver by a.) preference to use cash for transactions and b.) the lack of trust in Bitcoin itself.
A few reflections:
The countries with the highest crypto adoption (e.g. Nigeria, Philippines, etc) are in developing economic regions. Despite the lack of success in El Salvador, I can see more countries making certain cryptocurrencies legal tender. It will be interesting to see if they follow suit with BTC or if they choose alternative payment methods.
Within crypto, BTC as a payment method is not considered to be industry best practice. For example, in 2021 Ethereum had $11.6T in transaction volume while BTC has $4.6T. Despite recent press against them, stablecoins may be better best suited to be a payment option.
El Salvador's President Nayib Bukele is a controversial figure. He talks about “buying the dip” often on Twitter when BTC’s price drops. He’s lost $36M to date at current prices. It appears as if he is a true “crypto degen” in leadership; that worries me.
This week Bukele is hosting representatives from 44 countries to gather learnings from El Salvador’s rollout. As I shared above, there’ll be interest from many developing countries to roll out crypto payments.
Check out the paper above for a much more detailed overview. Fascinating read. By the way, if you’re familiar with the nuances of the lightning network, would love to chat. Hit me up if you’re down to jam.
Tweet
Instagram is launching the ability for creators to share NFTs they have created or own. You'll be interacting with them in feed, stories, or messaging.
They are starting with a subset of creators and will roll out to others depending on the success of the product. A few thoughts below:
User Experience
I imagine this following a similar flow to Twitter's NFT authentication feature. If you have a Twitter premium subscription, you can choose your profile picture to be an NFT today.
You can do this by connecting your Metamask wallet. It's quite a simple flow, I have it set up myself on Twitter. I imagine that Instagram users will follow a similar flow for onboarding and will be able to either post a photo/story or share an NFT.
Scale & Size
This appears to be larger than Twitter's initial scope. Instagram will be testing this across not only your profile picture but everywhere where photos and videos exist across their platform.
Competitive Dynamic
Coinbase recently launched its own NFT platform. Their main value prop over existing platforms like OpenSea and Magic Eden is increased social functionality. For example, you can like and follow NFT creators on CoinbaseNFT.
You first have to believe that NFTs are going to continue to grow (open question). If you believe that to be true, you then need to believe that social NFTs will be important. If that's going to happen, it might be Instagram, not CoinbaseNFT suited to capture market share here.
This will continue to be an interesting space to watch.
Podcast
Buying an NFT for the first time is hard. It took me 30+ mins with smart friends to figure it out 😅.
Whether you're using Instagram, Spotify, or any other web2 application, going through this flow feels like you're going back in time.
Here's what you need to buy an NFT on Ethereum:
You have to buy Ethereum on Coinbase
You have to download up MetaMask
You have to send Ethereum from Coinbase to Metamask
You have to connect your Metamask to OpenSea
Then you can buy the NFT
The most counterintuitive step for me is to buy Ethereum from Coinbase, copy a code from my Metamask, paste it into Coinbase, then send the money over.
Amidst the backdrop of the crypto markets falling last few weeks, Coinbase launched two products that will help solve these problems.
Coinbase Pay: This will allow users to buy crypto directly in their Metamask wallets. You no longer need to buy crypto on Coinbase and then send it to your wallet.
Discover Dapps: This will also users to explore web3 apps (e.g., buying an NFT from Opensea) directly from Coinbase.
With these releases they’ve helped solve problems for different types of users:
If you’re crypto native and want to continue to use your wallet to interact with web3 you can do that better
If you are new to exploring dapps and don’t want to go through the effort of setting up a wallet, you can do that too
If you are a developer you can plug into their APIs to onboard web3 enthusiasts
The speed at which Coinbase ships products is impressive. Excited to see this bring more people into web3.