Volcanos, Bitcoin and remittances: A Tongan lord plans for financial security

A
former
member
of
the
Tongan
Parliament
is
behind
a
proposal
to
make
Bitcoin
(BTC)
legal
tender
in
the
tiny
Pacific
nation
of
Tonga,
following
in
the
footsteps
of
El
Salvador.
It’s
due
for
a
vote
in
Parliament
in
May
and
the
early
signs
are
encouraging.

Mataʻiʻulua
ʻi
Fonuamotu,
Lord
Fusitu’a
told
Cointelegraph
that
plans
are
in
motion
to
use
state-run
volcano
mining
facilities
to
create
wealth
in
Tonga. 

Tonga
has
21
volcanoes.
“That
means
one
volcano
for
every
5,000
people.”
He
owns
one
volcano
himself
through
his
family’s
hereditary
land
rights.

The
proposed
Bitcoin
mining
operations
would
use
the
geothermal
energy
of
the
volcanoes
to
generate
power. 

“It
takes
two
megawatts
of
electricity
to
service
5,000
people.
So
40,000
megawatts
will
service
the
entire
national
grid.
Each
volcano
produces
95,000
megawatts
at
all
times
leaving
much
to
spare,”
says
Lord
Fusitu’a.

“We
will
give
every
family
hash
huts.
But,
this
is
only
20,000
units,
as
there
are
only
20,000
families.” 

He
suggests
each
volcano
can
generate
$2,000
of
Bitcoin
each
day,
to
be
“gifted”
to
each
family
by
the
Tongan
government.

For
an
Island
of
120,000
people,
economies
of
scale
matter
and
the
average
person
stands
to
benefit
greatly.

Family
Bitcoin
hash
huts:.
Source:
Lord
Fusitu’a

Tonga
needs
$26
million
for
the
cabling
to
build
the
operation,
but
the
World
Bank
said
Tonga
didn’t
have
the
collateral
for
that
funding. 

Nevertheless,
Tonga
managed
to
raise
the
money
through
a
Least
Developed
Countries
grant.
Given
Lord
Fusitu’a’s
influence
in
local
politics

and
the
fact
he
claims
to
own
a
volcano
himself

he
might
just
pull
it
off. 

Lord
Fusitu’a
also
claimed
to
have
negotiated
a
gratis
offer
of
the
mining
tech,
but
he
has
not
revealed
the
terms
of
the
deal.
Chinese
companies
such
as
Bitmain
have
much
market
share
in
this
space.
It
is
also
possible
that
refugee
mining
operations
from
China’s
recent
ban
could
be
headed
to
Tonga.
For
now,
that
remains
a
mystery.

“For
a
nation-state,
the
math
doesn’t
change.
The
optimal
state
is
for
a
state
to
have
its
own
mining.”



Related: Tonga
to
copy
El
Salvador’s
bill
making
Bitcoin
legal
tender,
says
former
MP

Who
is
Lord
Fusitu’a?

Once
a
barrister
before
he
was
a
politician,
Lord
Fusitu’a
is
a
member
of
the
Tongan
nobility.

Tonga
is
the
only
country
in
the
South
Pacific
with
a
remaining
indigenous
monarchy.
While
it
is
a
member
of
the
Commonwealth,
this
was
done
so
by
choice
in
1970.
Tonga
has
never
been
colonized,
despite
pressures
from
imperial
nations
throughout
history.

Lord
Fusitu’a
decided
to
step
down
as
MP
in
November
2021
after
recovering
from
operations
for
serious
medical
conditions
and
living
in
New
Zealand
for
three
years,
especially
with
Tonga
closing
its
borders
due
to
COVID-19.
However,
his
cousin
has
taken
his
seat
in
the
Tonga
Parliament,
so
according
to
Lord
Fusitu’a,
his
domestic
legislative
agenda
remains
intact.

Two
clinical
deaths
due
to
injury
have
informed
his
ambitious
agenda
at

the
Global
Organization
of
Parliamentarians
against
Corruption,
which
includes
anti-corruption
legislation
and
gender
empowerment
and
climate
change
policies. 

When
he
spoke
to
Cointelegraph,
and
as
is
common
since
a
series
of
surgeries,
he
is
shirtless
and
covered
in
tattoos
(a
Tongan
word
corrupted
by
Captain
Cook)
that
depict
a
millennium
of
his
clan’s
tattoo
history.

Lord
Fusitu’a
has
been
a
“Bitcoin
only
guy”
since
2013,
but
“don’t
let
the
exterior
fool
you:”
He
began
coding
when
he
was
eight
years
old. 

It
was
his
time
stuck
in
hospital
when
he
couldn’t
speak
or
swallow
and
could
only
read
when
he
reaffirmed
his
passions.
Re-reading
every
printed
word
about
Bitcoin.

Lord
Fusitu’a
is
very
visible
in
Bitcoin
circles
online
where
he
waxes
lyrical
about
why
his
country,
which
relies
so
heavily
on
remittance
payments,
should
pursue
Bitcoin
adoption. 


It’s
the
soundest
money
ever
devised.
It’s
the
combination
of
digital
scarcity
and
decentralized
distributed
ledger.
The
most
democratic
egalitarian
money
on
the
planet.
It’s
sound
money,
the
most
pristine
asset
ever
devised.
It
has
a
200%
appreciation
year-on-year.
As
a
store
of
value,
it’s
the
apex
creditor
asset.”

“But,
if
you’re
a
remittance-dependent
country
like
El
Salvador
or
Tonga,
it’s
life
changing
immediately.
For
hyperinflation
ravaged
countries
like
Nigeria
or
Venezuela,
where
you
need
a
wheelbarrow
of
currency
to
buy
a
loaf
of
bread
[…]
it
could
be
a
survival
mechanism
for
four
billion
poor
people,”
he
said.

The
plan

Fusitu’a
explained
his
four-part
plan
for
changing
the
way
Tonga
operates
its
economy
to
Cointelegraph. 

The
plan
consists
of
financial
education
for
Tongans
about
Bitcoin
remittance
payments,
making
Bitcoin
legal
tender,
setting
up
Bitcoin
mining
operations
in
Tonga
and
creating
Tongan
Bitcoin
national
treasuries.

A
key
part
of
the
plan
revolves
around
fiscal
education
for
Tongans
whose
economy
is
most
heavily
dependent
on
remittances.

Lord
Fusitu’a
says
he
is
tired
of
families
in
the
developing
world
losing
so
much
of
the
badly
needed
income
from
middlemen
when
sending
remittances
home.

About
40%
of
the
Tongan
national
economy
is
built
upon
remittances
sent
back
to
the
country
from
its
diaspora
of
almost
300,000
overseas
workers,
according
to
Lord
Fusitu’a.
They
send
money
back
to
the
island
population
of
about
120,000.
As
more
than
double
the
population
lives
in
the
Tongan
diaspora,
remittances
are
crucial
to
the
national
economy.

He
claimed
that
Tonga’s
“GDP
in
2020
was
$510
million,
40%
of
that
is
just
over
$200
million.
So,
30%
of
that,
or
$60
million,
is
fees
alone
to
Western
Union.” 

Lord
Fusitu’a
argues
that
feeless
Bitcoin
transactions
would
provide
a
30%
uptick
for
everyone
on
remittances,
as
the
Western
Union
charges
villagers
30%
commissions,
though
a
calculator
on
Western
Union’s
site
suggests
a
fee
of
nearly
three
Australian
dollars
for

transferring

a
100
Australian
dollar
transaction.

However,
Lord
Fusitu’a
says
that
this
does
not
account
for
the
fact
that:

“The
$2.90
on
$100
shown
on
the
website
does
not
show
that
there’s
a
minimum
fee
of
around
10–25%
on
ALL
remittances,
depending
on
where
you’re
sending
from
that’s
not
shown
on
the
website.
When
your
average
remittance
from
El
Salvador
or
Tonga
is
$50–$100,
that’s
a
lot
of
your
remittance.
It
also
doesn’t
show
that
you’ll
be
charged
the
forex
slippage
for
the
purchase
of
Australian
dollars,
its
conversion
into
Tongan
pa’anga
and
purchase
of
the
TOP.” 

Tonga
has
already
begun
the
financial
literacy
and
“how
money
works”
education
programs
in
2021,
and
teams
were
sent
out
for
community
outreach.
What
does
the
“how
money
works”
discussion
look
like?
Simple:

“People
understand
the
three
hours
of
travel
and
the
$20
return
fare
bus
ticket.
Waiting
in
line
at
a
Western
Union
to
pay
the
high
remittance
fees.
The
$70
dollars
that
is
at
the
counter
instead
of
the
$100
they
thought
they
would
get.
And
then
there’s
the
beggar’s
tax,
as
beggars
sit
outside.
Three
hours
each
way
back
to
the
village,
makes
a
nine-hour
day,
you
come
home
tired,
hungry
and
having
lost
remittance
fees
and
bus
fares
just
to
get
$40-50
of
your
original
$100
wire
transfer.”



Related: Crypto
remittances
see
adoption,
but
volatility
may
be
a
deal
breaker

Importantly,
there’s
a
high
rate
of
mobile-first
internet
adoption
in
Tonga.

“A
cell
phone
with
an
internet
connection
can
change
lives
immediately,”
Lord
Fusitu’a
says.
For
the
unbanked,
“a
cellphone
and
warm
wallet
is
their
first
participation
in
any
financial
system
ever.”

Non-Know
Your
Customer
wallets
like
Moonwallet
can

help

those
that
don’t
have
IDs.
“It’s
not
about
Bitcoin
Bros,
this
is
a
viable
mechanism
for
the
billions
of
unbanked
poor
people
globally.
$200
billion
of
$700
billion
lost
in
fees
in
annual
remittances
globally
hurts
the
average
family.”

Also,
in
2005,
Tongan
instituted
a
consumption
tax
(GST)
of
15%,
rather
than
an
income
tax,
which
further
penalizes
the
poor.
If
Bitcoin
is
adopted
then
more
money
in
the
pockets
of
average
Tongans

and
less
for
Western
Union

will
also
benefit
government
coffers
through
the
consumption
tax.

Lord
Fusitu’a
also
provides
Bitcoin
fundamentals
talks
weekly
in
the
Tongan
language.

The
legal
tender
bill

Lord
Fusitu’a
looked
to
El
Salvador’s
bill
for
Bitcoin
as
legal
tender
before
its
release
and
seeks
to
pass
“pretty
much
a
carbon
copy.”

Tonga’s
bill
has
been
ready
to
go
since
July
2021
and
would
make
Bitcoin
legal
tender
alongside
Tonga’s
currency,
the
paʻanga. 

Like
article
7
of
El
Salvador’s
controversial
Bitcoin
Law,
the
bill
would
make
Bitcoin
mandatory
to
accept
if
proffered.

The
bill
will
be
tabled
at
the
next
session
of
parliament
in
May
2022.
To
pass,
it
will
require
the
approval
of
a
parliamentary
majority
of
at
least
14
of
the
26
members. 

Nine
members
of
parliament
are
hereditary
lords
who
“vote
in
a
block”
and
supposedly
“always”
follow
Fusitu’a’s
lead
as
the
only
lawyer
and
barrister
in
parliament.
Three
other
elected
members
have
exposure
to
Bitcoin.
Needing
only
two
more
of
fourteen
votes
would
seem
to
make
a
successful
majority
vote
plausible.

Lord
Fusitu’a
expects
there
to
be
a
natural
uptick
in
remittances
from
the
Tongan
diaspora
when
and
if
the
bill
is
passed
into
law.
Bitcoin
remittances
back
to
Tonga
have
already
seen
an
increase
in
2021,
he
mentions.

It
is
pegged
to
five
currencies
keeping
it
artificially
low
to
protect
its
exports
of
mainly
produce,
but
this
makes
imports
expensive. 



Related: El
Salvador:
How
it
started
vs.
how
it
went
with
the
Bitcoin
Law
in
2021

Bitcoin
National
Treasuries

The
final
part
of
Lord
Fusitu’a’s
four-point
Bitcoin
plan
is
building
Bitcoin’s
national
treasuries
as
a
hedge
against
inflation.
The
lord’s
thoughts
on
Bitcoin’s
utility
have
informed
this
decision
that
is
controversial
in
traditional
economic
policy.

“Emerging
markets
traditionally
hold
theirs
in
‘melting
at
5%
per
annum’
USD,
‘devaluing
at
2-6%
per
annum’
gold
and
’negative
yielding
since
2008’
U.S.
bonds.
We
do
this
also.
Had
we
moved
our
$700
million
national
treasuries
into
BTC
in
March
2020
they
would
have
been
worth
$22.5
billion
by
February
2021.”

“With
a
2020
GDP
of
$510
million,
$22.5
billion
is
equivalent
to
45
years
of
Tongan
economic
productivity
earned
in
11
months,”
he
says,
adding,
“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
man’s
assets
into
BTC
with
each
purchase.”

Bukele
has
been
criticized
for
his
decisions,
but
part
of
this
criticism
stems
from
the
nature
of
his
governance.
Lord
Fusitu’a’s
track
record
of
participation
in
multinational
groups
suggests
he
is
more
amenable
to
working
with
international
organizations
to
secure
his
country’s
economic
future.

What’s
ahead?

But,
if
it’s
so
obvious,
why
don’t
other
countries
follow
his
logic?
“They
see
the
logic
but
it
takes
the
money
from
legacy
finance,”
Lord
Fusitu’a
says.

Another
Pacific
Island,
Palau,
is
rolling
out
a
stable
coin
on
Ripple’s

XRP
.
“Are
they
crazy?
Their
approach
is
more
palatable
because
partnerships
with
XRP
with
Ripple
include
legacy
finance
rails.”

The
international
monetary
policy
risks
are
still
there
for
Tonga.
In
October
2021,
the
Internal
Monetary
Fund
released
a
report
acknowledging
that
crypto
ecosystems
could
replace
official
currencies
in
“unbanked”
emerging
economies
unless
regulators
ensure
financial
stability.
But,
perhaps
that
showed
that
the
IMF
was
paying
attention
to
Tonga.

On
both
the
legal
tender
and
the
Bitcoin
mining
plans,
Lord
Fusitu’a
is
optimistic.
The
“Bitcoin
community
likes
seeing
the
underdog
win.”

Like
many
in
crypto
land,
Lord
Fusitu’a
is
either
a
genius
or
a
great
showman.
Or
both.

read original article here