A Tongan lord plans for financial security

A former member of Tonga’s 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. Parliament is due to vote in May and early signs are encouraging.

Lord Fusitwa, Matisulwa e Funwamoto, told Cointelegraph that plans are underway to use state-run volcanic mining facilities to create a fortune in Tonga.

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

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

It takes megawatts of electricity to serve 5,000 people. So 40 thousand megawatts will serve the entire national grid. Each volcano produces 95,000 megawatts at all times, which leaves plenty to save,” says Lord Fusitwa.

“We will give each family huts. But these are only 20,000 units, since there are only 20,000 families.”

He suggests that each volcano could generate $2,000 worth of bitcoin every day, to be “gifted” to each family by the government of Tonga.

For an island of 120,000 inhabitants, economies of scale are significant and the average person benefits greatly.

Bitcoin Family Cottages:. Source: Lord Fossetwa

Tonga needs $26 million to build cables to build the operation, but the World Bank said Tonga had no guarantees for this funding.

However, Tonga was able to raise funds through a grant for the least developed countries. Given Lord Fossetwa’s influence in local politics – and the fact that he claims to own a volcano – he might pull it off.

Lord Fusitwa also claimed that he negotiated a free offer of mining technology, but did not reveal the terms of the deal. Chinese companies such as Bitmain enjoy a large market share in this field. It’s also possible that refugee mining operations from China’s recent embargo are heading to Tonga. For now, this remains a mystery.

“For a nation-state, mathematics does not change. The ideal case is for the state to have its own mining.”

Related: Tonga copies El Salvador’s bill to make bitcoin legal, says ex-MP

Who is Lord Faustus?

Lord Fossetwa was formerly a lawyer before he became a politician, and a member of the Tongan nobility.

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

Lord Fusitwa 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 Parliament of Tonga, so according to Lord Fositwa, his domestic legislative agenda remains the same.

Two clinical deaths from injury benefited his ambitious agenda at the Global Organization of Parliamentarians Against Corruption, which includes anti-corruption legislation, gender empowerment and climate change policies.

When he spoke to Cointelegraph, as is common since a series of surgeries, he was shirtless and covered in tattoos (the word Tonga has been spoiled by Captain Cook) which depicts a thousand years of his clan’s tattoo history.

Lord Fusitwa has been a “only bitcoin guy” since 2013, but “don’t let appearance fool you:” he started programming when he was eight.

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

Lord Fusitwa is very visible in online bitcoin circles as he talks about why his country, which relies heavily on remittance payments, is pursuing bitcoin adoption.

It’s the most accurate money ever created. It is a combination of digital scarcity and a decentralized distributed ledger. The most equal democratic money on the planet. It is sound money, the purest asset of all. It has an estimate of 200% on an annual basis. As a store of value, it is the principal creditor’s asset.”

“But, if you are a remittance-reliant country like El Salvador or Tonga, your life changes instantly. For countries ravaged by hyperinflation 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

Fossetwa explained his four-part plan to change the way Tonga runs its economy to Cointelegraph.

The plan consists of financial education of Tongans about Bitcoin remittance payments, the filing of Bitcoin legal tender, the establishment of Bitcoin mining operations in Tonga and the creation of Tonga Bitcoin National Treasuries.

A major part of the plan revolves around financial education for Tongans, whose economy is highly dependent on remittances.

Lord Fossetwa says Families in the developing world are tired of losing much-needed income from intermediaries when sending remittances home.

About 40% of Tonga’s national economy is built on remittances sent into the country from the diaspora of nearly 300,000 workers abroad, according to Lord Fausitwa. They send money to the island’s population of about 120,000. Since more than twice the population lives in the Tongan diaspora, remittances are essential to the national economy.

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

Lord Fausitwa argues that physical Bitcoin transactions will provide a 30% increase in remittances for everyone, as Western Union charges villagers 30% commission, even though a calculator on Western Union points to a fee of nearly three Australian dollars for a 100 Australian transfer transaction. in dollars.

However, Lord Fossetwa says this does not take into account the fact that:

“The $2.90 on $100 shown on the website doesn’t show that there is a minimum fee of around 10-25% on all transfers, depending on where you’re sending from that doesn’t show up on the website. When your average conversion is from El Salvador or Tonga between $50 and $100, that’s a lot of your remittance. It also doesn’t show that FX slippage will be charged for buying AUD and converting to Tongan paanga and TOP buying.”

Tonga has already started its financial literacy and “how money works” education programs in 2021, and teams have been sent out for community outreach. What does a discussion of “how money works” look like? basic:

“People understand three hours of travel and a $20 return bus ticket. Waiting in line at Western Union to pay the high transfer fee. The $70 on the counter instead of the $100 they thought they would get. Then there’s the beggar tax, where the beggars sit outside. Three hours each way back to the village, nine hours a day, and you come home tired and hungry and lost transfer fees and bus fare just to get $40-50 off your original $100 bank transfer.”

Related: Cryptocurrency Transfers Are Seeing Adoption, But Volatility Can Be A Barrier

Most importantly, there is a high rate of mobile internet adoption in Tonga.

“A cell phone connected to the internet can instantly change people’s lives,” says Lord Fusitwa. For the unbanked, “a mobile phone and a warm wallet are their first ever involvement in any financial system.”

Non-Know Your Customer wallets like Moonwallet can help those without IDs. “It’s not about Bitcoin Bros. This is a viable mechanism for the billions of the world’s unbanked poor. $200 billion of the $700 billion lost in annual transfer fees globally hurts the average family.”

Also, in 2005 Tonga introduced a consumption tax (GST) of 15%, rather than income tax, further penalizing the poor. If Bitcoin is adopted, more money in the pockets of the Tongans – and less for Western Union – will also benefit government coffers through the excise tax.

Lord Fusitwa also provides talks on Bitcoin basics weekly in Tongan.

Legal Tender Invoice

Lord Fustowa has viewed El Salvador’s bill for bitcoin as legal tender before it was issued and is seeking to pass a “largely carbon copy”.

The Tonga Bill has been ready to draw since July 2021 and will be legal tender for Bitcoin along with Tonga’s currency, the panga.

Like Section 7 of El Salvador’s controversial Bitcoin law, the bill will make Bitcoin mandatory for acceptance if it is introduced.

The bill will be introduced in Parliament’s next session in May 2022. For its passage, it will require the approval of a parliamentary majority of at least 14 out of 26 members.

Nine Members of Parliament are hereditary lords who “vote in mass” and are supposed to “always” follow Fossetwa’s lead as the only solicitor and solicitor in Parliament. Three other elected members were exposed to Bitcoin. The need for only two additional votes out of fourteen appears to make a successful majority vote acceptable.

Lord Fossetwa expects there will be a natural rise in remittances from the Tongan diaspora when and if the bill is passed into law. He noted that bitcoin remittances to Tonga had already seen an increase in 2021.

It is pegged to five currencies, putting it artificially low to essentially protect its product exports, but this makes imports expensive.

Related Topics: El Salvador: How It Started vs How It Goes With Bitcoin Law in 2021

Bitcoin National Bonds

The final part of Lord Fausitwa’s four-point Bitcoin plan is to build Bitcoin National Treasuries as a hedge against inflation. The Lord’s thoughts on the usefulness of Bitcoin informed this controversial decision in traditional economic policy.

“Emerging markets are traditionally all stuck in the “melting at 5% per annum” US dollar, depreciating 2-6% per annum” gold and “negative yield since 2008” US bonds. We do this too. Had we converted $700 million of our National Treasuries into BTC in March 2020, it would have been worth $22.5 billion by February 2021.”

“With a 2020 GDP of $510 million, $22.5 billion equates to 45 years of economic productivity in Tonga achieved in 11 months,” he says, adding, “when Nip Bukele teases on Twitter that he is ‘buying the dip,’ the What he means is that he transfers his national coffers of the assets of these three dead people to BTC with every purchase.”

Bukele has been criticized for his decisions, but part of that criticism stems from the nature of his judgment. Lord Fossetwa’s record of participating in multinational groups indicates that he is more willing to work with international organizations to secure his country’s economic future.

What awaits us?

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

Another Pacific island, Palau, is launching a stablecoin XRP. “Are they crazy? Their approach is more plausible because XRP’s partnerships with Ripple include outdated funding bars.”

International monetary policy risks remain for Tonga. In October 2021, the Internal Monetary Fund released a report acknowledging that crypto ecosystems could replace fiat currencies in “non-bank” emerging economies unless regulators ensure financial stability. But it may have shown that the IMF was interested in Tonga.

Regarding the legal tender and bitcoin mining plans, Lord Fossetwa is bullish. “The Bitcoin community loves to see the underdog victor.”

Like many in crypto countries, Lord Fossetua is either a genius or a brilliant showman. or both.