What Can We Learn from El Salvador’s Bitcoin Law? | Sarah Manski, Economist & Assistant Professor (FTC ep 23)
FinTech Chat (FTC) is a series of educational & informative interviews with world professionals in the FinTech / Crypto / Blockchain communities. We aim to provide content that is digestible in multiple mediums such as video, audio (podcast), and written (blog) form!
FTC Episode 23
In this episode, Blockchain Wayne interviews Sarah Manski, “Crypto-Political Economist” and Assistant Professor of Business and Global Affairs at George Mason University. She gives many insightful comments on the latest hot topic in crypto these days: El Salvador becomes the first country ever to make bitcoin legal tender.
Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos and grammatical errors may be present.
Intro: Interviews on crypto, blockchain with your host, Blockchain Wayne on FTC.
BLOCKCHAIN WAYNE: Hey everyone, welcome back and thanks for watching. Today we have a special guest. We have Dr. Sarah Manski. Now Dr. Sarah Manski is assistant professor of Business and Global affairs at George Mason university. And she’s also an advisor to verses.io Sarah, thanks for joining us today. (SARAH MANSKI: thank you) Awesome awesome, so let’s jump right into it. I know we’ve got an interesting topic for… for anyone watching, but first and foremost, tell us a little bit about yourself, your background and kind of what led you to working in… you know, with blockchain technology and kind of in that related space?
SARAH MANSKI: Sure. I wrote my master’s thesis on how business is transforming the global economy through technology that’s more environmentally sustainable and supply chains. And around 2009, I hear about this new technology called distributed ledger technology or blockchains, and I start to realize that not only does this impact… you know, the economy and cryptocurrency, but it could also have all these other applications and supply chains, and in governance, and education, and art. And so I get very excited about that and decide to go back to grad school, get a phd in global studies, but specifically focus on blockchain technology and all of the potential social and political and economic implications that… that will have on the future of the world, right. So it really is a rabbit hole right going down all the possibilities people think about cryptocurrency as… you know, it’s cryptocurrency and that’s what’s on blockchain, but there’s so much more.
BLOCKCHAIN WAYNE: Awesome… awesome! So you’ve spoken at quite a few events over the years, right? Can you tell… tell us a little about some of those talks and typically the topics?
SARAH MANSKI: Absolutely yeah, I spoke at a conference in Puerto Rico organized by Brock Pierce called the Blockchain Summit. And at that conference, I talked about blockchain and its future impact on sovereignty, right, so cryptocurrencies transfer sovereignty over money and value from the state and big banks to the individual. And now individuals have sovereignty over controlling… you know, their assets and that was revolutionary, right. It also gives people sovereignty over their interactions with others, and… you know, being able to organize themselves and communicate together through a medium that is non-enclosable, right, so you know, when you talk about mediums of communication, you and I are sitting in the room… you know… the air is the medium through which our communication travels and generally that’s not enclosable, right, but the internet as it’s set up, right now, you can turn it off, you can jam it, you can do whatever, right? So people have been restricted… you know, our free communication and organizing amongst ourselves as sovereign individuals has always been restricted on in digital spaces until now, right, so that’s exciting and so, I was talking about sovereignty and how specifically we have to make sure as a crypto community that we think about, making sure that we have a big tent and invite everybody in right, not just like oh we made ours, we got ours, we know how this all works. No, as technologists and people who understand the technology, we need to partner with those who are doing other kinds of good work… you know, trying to make the world a better place and teach them about it, and join together, so we can all benefit from these new technologies.
BLOCKCHAIN WAYNE: Awesome, awesome, so we’ve got a great topic we want to talk about and… you know, it’s kind of… kind of tied to… you know, what you… what you talked about here. Because I think… so far I think there’s going to be some implications of that and what’s happening, what we saw play out in the… in the news, so we saw what’s happening in El Salvador. So I’ll tell everyone a little bit about… about what’s happening there and kind of… and then, we can dig into some of the implications of that… that’s another rabbit hole in itself, right?
SARAH MANSKI: Yeah yeah, well, El Salvador decided that as a country, they were going to make bitcoin a currency of exchange as well, right on par with the dollar. And every business would have to accept bitcoin as a… a means of exchange for goods and services. So even like McDonald’s now in El Salvador has to accept bitcoin which is great, right? Because you know, all these mega global multinationals were kind of resisting it. But you know, once McDonald’s and El Salvador figures out how to work… work with bitcoin, then of course the one in Honduras or in Tanzania or Puerto Rico will probably be like, all right, we’ll do this too, right? So that’s really good for the people of El Salvador and good for… you know, Latin America and the Caribbean in general, and Africa and all these other countries that have really kind of been on the boot end of US foreign policy. And it’s this decentralizing trend of technology is kind of making the last first now. And in the sense that the people who are most disenfranchised by the global financial economic system are of course the ones who are going to be first to see a way out of that and adopt it immediately, right? And so that’s why you see El Salvador but… you know, you’re also gonna see Honduras, probably Nigeria, Tanzania. I mean once this starts to tip over, I think it’ll be adopted very quickly by countries all around the world that right now don’t get very much benefit being under the control of the IMF World Bank and the US dollar.
BLOCKCHAIN WAYNE: Yeah absolutely, and the IMF just released their… their statement on it kind of urging caution and… and then, yeah…
SARAH MANSKI: Don’t do… don’t do what they’re doing, don’t look… don’t look behind the curtain here, because if they… if other countries do, boy, the IMF is going to lose real control over these economies.
BLOCKCHAIN WAYNE: Yeah, yeah and… and El Salvador has actually been using… using the dollar, right? They’ve been using a dollar for a while now.
SARAH MANSKI: Yeah because I mean, they had no other choice. The dollar before bitcoin was probably the best option because it was relatively stable. And the problem is when you use the dollar, the dollar policy is not… it’s not democratic, it’s not global, it’s decided by the US government and the FED and the banks here right? And they’re gonna make policy that benefits United States and US corporations, US business, US politicians. They don’t really care about El Salvador or any other country in the world. And so also, I think they’ve seen an opportunity to… at least the President of El Salvador, he will probably become one of the richest men in the world… you know, because I’m sure he’s going to take a little bit of every bitcoin transaction and all the mining that’s going to go to El Salvador. So he was seeing this is gonna benefit him personally. So I know that had something to do with his decision for sure.
BLOCKCHAIN WAYNE: Yeah I mean as a… as an employer or an employee, you want to… you know, get paid or pay people in bitcoin and you’re big in the crypto. And so, if you… if you’re owning a country, why not make it the currency?
SARAH MANSKI: Absolutely, and you know, it’s also a way to bring a lot of foreign investment to El Salvador as China starts to restrict the mining happening in China. Then you know, the miners look around the world. And they’re like… well where can we find cheap energy to… to maintain the chain. And they… you know, he said, look you can use all our geothermal from the volcano, and come here and set up operations. So that’ll bring a lot of… it’ll bring a lot of like cash to El Salvador. And so… and also you know, he’s allowing people if you invest free bitcoins in El Salvador to get residency there. So it’s… he just is like I’m opening the door… you know, come on in and I… people will flock to El Salvador definitely. And I saw that other leaders of Caribbean and Central American countries are… you know, I see the chatter they’re down in Puerto Rico talking to people about… huh, how can we do this too? You know, because they see what’s going to happen, they can see down the road, and they want some of that… some of that action happening in their countries.
BLOCKCHAIN WAYNE: Yeah you’re right. I mean it’s kind of like you mentioned before the… those that were last will be first. I mean kind of like a… a flipping and a way to exit, because they didn’t have a way to exit before no matter how much they may not… may not have liked the policy. And I don’t know if you saw as well but there was talk of what like even Panama and Mexico both looking at it as well. (SARAH MANSKI: oh yeah) and what they could do (SARAH MANSKI: oh yeah)
SARAH MANSKI: And as this starts to happen, you will see I mean the New York times is very good for learning what US state department propaganda is, because I used to be a journalist right, and I know they’re not reporting things accurately on purpose. They’re looking to the state department to say what should we… what is your line, what do you want us to say. So that’s why every single article you read about blockchain technology or cryptocurrency, it’s all like… oh stay away and be scared. There’s price volatility or it’s unenvironmental or it’s only used by criminals and drug dealers, right? Like you know, it’s pretty like I know exactly what they’re gonna say so even if they have some news in there, some kernel of news, they’re gonna try to scare anybody away from getting involved with what’s happening. But eventually it’s gonna become so overwhelmingly interesting to the… you know, average mainstream person that they’re gonna… they’re gonna start to find out for themselves… you know, what… what’s really going on.
BLOCKCHAIN WAYNE: Yeah yeah, absolutely. And what about… I mean these same countries are also a lot of the countries that they want… you know, El Salvador and others that have that have piqued interest, piqued their interest…They also… a lot of people from that country live all over the world and send back… send back money… you know, remittance is going to be a big… a big factor. And I always heard that was going to be one of the leading… leading ways of adoption for cryptocurrency, just because… yeah the amount of fees that are… that are taken out from some of the poorest people in the world. It’s… it’s crazy.
SARAH MANSKI: Absolutely and also… you know, when you’re charging somebody 10% and there’s a lot of remittances sent from the US to Mexico… you know, people who have family in Mexico, they… you know, make some money here usually not very much. And then they’re charged another 10% on top of that just to send the money which is… it’s a crime really. And then… you know, to charge people who have basically very little anything at all to just simply send money to their families is disgusting… you know, but also it takes a long time… you know, and you gotta like… you gotta go to the office Western Union or whatever to send it, so yeah bitcoin… and you know other cryptocurrencies make this extremely easy, much less expensive. And another thing is that in El Salvador something like 70 percent of the people don’t have access to traditional banking and financial institutions. So I don’t know what’s going on there like why it’s so hard to get a bank account in El Salvador, but if you don’t have access to that, then you have to… you know, you’re in a precarious place right? Everybody does need access to banking and wallets and being able to transfer value that should be a fundamental human right. And there are companies working on making sure everybody in the world has a wallet just automatically, right? And that will happen in probably the next couple years. Yeah so it’s just very exciting time. This is going to totally transform the entire global economy.
BLOCKCHAIN WAYNE: Yeah, absolutely and yeah, I’ve seen jokes going around like meme pictures on the internet where it’s like a street full of lamborghinis and it says 2025, El Salvador. I don’t know if you’ve seen that one?
SARAH MANSKI: I have… I have. (BLOCKCHAIN WAYNE: Yeah) I mean the whole feeling in this space is that… you know, capitalism made people just a little bit wealthier, but it made a very few people super wealthy, right? And crypto and token economics, the way that tokens hold their value and the way it decentralizes value will really do the job of actually fulfilling that promise where everybody’s vote kind of rises up, right? And we all become a lot wealthier and healthier and happier, so that’s that’s the goal. I hope it happens… you know, but certainly right now the… the situation we’re in is unsustainable. You know, you can’t have two billion people in the world living on less than a dollar a day when you have people who are almost trillionaires, it’s just… it’s not we shouldn’t be living like that as a human race. So crypto may transform it may equal that out a little bit.
BLOCKCHAIN WAYNE: Yeah it’s definitely going to be a catalyst for that… I feel. What do you think are going to be… like how do you think the US is going to continue to respond to… to… you know, if more countries decide to jump in line with El Salvador and do that as well?
SARAH MANSKI: Well it’s interesting, because there are… there are some people in the Biden Administration who are pro crypto, right? So it’s they… they’re thinking about it like they’re dabbling in it. They’re thinking about maybe we should create a FED coin, like maybe we should tokenize the dollar, and so, it’s not like they’re totally ignorant to it. And I think that those voices in the room will probably win out, because Biden doesn’t seem like the type of person… he seems well certainly smarter than the last president. But I think that the US will try to slow it down until we can figure out what we’re gonna do here. And they definitely want to maintain the dollar supremacy, so if that means tokenizing the dollar and then trying to preempt these other countries from using bitcoin and instead using a tokenized dollar. That would be what I would imagine they would try to do, and in the meantime slow it down through some propaganda like Elizabeth Warren came out the other day saying… yeah it is so volatile, stay away from it, don’t you… you know. So there, yeah I would imagine they’ll try to slow it down and do something to keep the dollars be super supreme in the world. (BLOCKCHAIN WAYNE: Yeah) Like china tokenizing their currency, I mean it’s kind of forcing our hand here.
BLOCKCHAIN WAYNE: Yeah yeah absolutely, and… and that’s kind of… so two points to that I saw like a 90-minute video with it was Elizabeth Warren and… and other lawmakers. They were… they were on a video chat. I’m not… I don’t remember the premise of it. I didn’t watch the whole video, but just the way she opened it up, she was literally stating the case of why cryptocurrency, but then goes into how violence heil it is. Because you know talking about… you know what’s happening with the bank, she even called out Wells Fargo as… you know defrauding their customers, which they did. And… and I forgot who it was, there was another I think it was senator that had… had kind of an insight that do we really want so, do you want the government in charge of creating this FED coin or whatever it’s going to be called that. They’re discussing… do you want the federal reserve behind it to where now they have access to your transactional information as well. You know, so it’s… it’s definitely a… I don’t know it’s a precarious situation of what would happen and who’s gonna run it.
SARAH MANSKI: Yeah well, I think honestly that they kind of missed their opportunity to stop this movement. I mean this wave is so far along now globally that even if they did create some kind of FED coin, there’d really be no compelling reason to use it. I mean when you can use any number of other currencies that probably will work better, and yeah you don’t want the government to be able to see all your transactions. I mean of course the banks do now when they look at your charge cards and everything else. And it… I guess if they really wanted to go full authoritarian, they could say if you use anything else… else, you’re gonna go to jail… you know, everything else is illegal. You have to use this. They’re not gonna do that, but they… they could I guess.
BLOCKCHAIN WAYNE: Yeah yeah, I think they’re gonna… it’s… it’s a tightrope. They have to walk now because without people seeing them as just… you know, seeing it as a dictatorship where… you know, it’s… it’s kind of limiting freedom where… you know, we should be free so, (SARAH MANSKI: right) We’re starting to realize what’s going on and so the… the other… the other question. While we’re talking about El Salvador, we kind of talked about how they could be… you know, even the president can be one of the wealthiest men in the world in the future. When you look at historically countries that have been slow to adopt emerging technologies that have really revolutionized the world, they typically fall… you know, you kind of see a flip of… flipping happen with where… you know, the ones that were first, they’re now last… you know, flipping another way, you think the US is at risk for that?
SARAH MANSKI: Oh absolutely. I mean if we don’t get our act together, I mean we as in the state, I don’t have a saying the US will definitely fall behind, especially now with the global economy, people can incorporate anywhere… you know, they can incorporate in Gibraltar. They don’t have to be in Wyoming or Maryland or whatever. So they’re gonna go where the laws and the regulation make sense to go. So yeah, it’s a… it’s… it’s a problem and the US is definitely playing catch-up right now. The good thing is I think with… you know, the spatial web coming online that’s going to allow for the tokenization of all kinds of things, right, so we’ll be able to have community currencies. And we’ll be able to have decentralized energy systems. And with Holochain, we’ll be able to have a decentralized web hosting. So all these big corporations right now that have monopolies on web hosting, like Amazon and Google or energy companies that… or internet companies that charge you crazy amounts just to enrich themselves, they’re all gone. All capital-based corporations watch out because people are gonna be seeing that you can tokenize something, have it collective and you don’t need to deal with them anymore, right? It’s going to be super disruptive but good for us… you know, unless you’re the head of some… you know, global multinational.
BLOCKCHAIN WAYNE: Yeah yeah, so yeah it’s really… it really just gonna show the more the need for if they want to try to survive, they need to innovate and not… you know, not be closed off to it, not look at it as.. as this is the enemy to their business. I mean it can be but you’ve seen businesses… you know, evolve and adapt over time and others that just go away.
SARAH MANSKI: Yeah well, I mean look at what happened when the internet came out, right? People would look at Amazon and be like, yeah right that’s never gonna disrupt anything, and it just totally wiped out all these brick-and-mortar businesses… you know, with video streaming. You don’t go to blockbuster to rent a movie anymore. People saw that at the time and just said, well it’ll never happen, or they laughed at it or whatever you can go back and read the quotes from you know 1994. The same thing is happening and if… if you can’t deny the future like it’s already written and we’re moving towards it, so you better innovate and you better adapt, or you’re… you’re going to be… you’re going to disappear basically.
BLOCKCHAIN WAYNE: Yeah yeah, absolutely absolutely. Well, Sarah… you know, it’s been great talking with you, today as we go through the El Salvador stuff, but I’m sure you… you speak some people’s interests. And so next, I’d like to kind of talk about where… where can people find out more about your work and follow some of the things that you’re doing?
SARAH MANSKI: Sure well my website is my name… you know: www.sarahmanski.com s-a-r-a-h-m-a-n-s-k-i. And I have all of the articles I published on my website, so you can download them for free, or you can always email me and ask me if you don’t have access to them. I’ll send it to you and… you know, anybody who’s interested in this can just contact me directly. I’m easy to find and I’m… I like to talk to people, so I’m always open. And I really… this as you can see, I’m very excited about this. I love researching it. I love talking to people about it, so I want to hear from you too.
BLOCKCHAIN WAYNE: Awesome awesome, so make sure you connect, follower and… and also send any questions, and we’ve had some discussion, right, where it talks about you speaking at our Miami crypto experience in… in the fall.
SARAH MANSKI: Yeah yeah, I’m looking forward to that… that will be so fun.
BLOCKCHAIN WAYNE: Awesome awesome, so well Dr. Sarah Manski, it’s been… it’s been great having you on today, really great topics. It’s definitely a rabbit hole, and… and can’t wait to do a follow-up on this maybe in a year or two just to see where is El Salvador now. What’s going on with them as they… as they move forward and really what… what heads that led to… you know, as far as the domino tipping and… you know, what are the dominoes have fallen since…
SARAH MANSKI: Or even sooner because I get my prediction the next five or six months, you’ll see like five… six other countries do this.
BLOCKCHAIN WAYNE: Oh absolutely, I definitely agree with that. Okay Dr. Manski, it’s been… it’s been great having you on today, so appreciate you joining us and sharing your knowledge, your wisdom and insight about what’s going on in El Salvador. I know it’s been a hot topic lately. And again, everyone thanks for watching and we will see you all in the next episode.
SARAH MANSKI: Thanks.
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About Sarah Manski
Sarah Manski is a “Crypto-Political Economist” and Assistant Professor of Business and Global Affairs at George Mason University. Her research explores the future of blockchain technology and the Spatial Web’s impact on business, technology, work, and society.
About Blockchain Wayne (Host)
Wayne has been managing, teaching, and coaching high performing teams for over 20 years. He has a passion for helping and teaching people and a passion for cryptocurrency and blockchain projects. He has created various coaching programs and partnerships with select education platforms and cryptocurrency program tools.
You can learn more on his website: https://www.blockchainwayne.com/