Tonga Follows El Salvador's Footsteps, Adopts Bitcoin As A Legal Payment Tool
JAKARTA – A domino effect on the adoption of Bitcoin by a government is now happening. After Bitcoinization appeared in El Salvador, last September, it is now spreading to other countries. On Wednesday, a former lawmaker from the Pacific island nation of Tonga shared a play-by-play approach to adopting Bitcoin (BTC) as legal tender in the country.
In a series of tweets, Lord Fusitu'a, former MP for Tonga, released an ETA for Bitcoin which is legal tender in Tonga. Copying the El Salvador playbook, the move could put more than 100,000 Tongans into the Bitcoin network.
In his five-point plan, the chairman of the Global Organization of MPs Against Corruption explained the path of adoption in a tweet.
In follow-up comments, Fusitu'a said the bill "is modeled after and is almost identical to the El Salvador bill."
The announcement sowed the seeds for questions, predictions and immediate excitement from Bitcoin's Twitter before Tonga set the record straight. He enthusiastically replied that the timeline for BTC to become legal tender could be as early as November or December this year. "Boom! That's us, brothers!" in a tweet.
1. Sept/Oct Bill goes to Parliament. Passed.2. Sent to Palace Office for submission to His Majesty for Royal Assent.3. — Lord Fusitu'a (@LordFusitua) January 12, 2022
In 2021, it is widely speculated that Tonga will be one of the next countries to adopt BTC as legal tender. Speculation reached its peak after a podcast Lord Fusitu'a conducted with Bedford-based Bitcoiner Peter McCormack.
During the conversation, the then lawmaker shared the case of remittances to adopt BTC as legal tender. He said adoption would provoke:
“Disposable income increased by 30%. With that extra 30%, some (people) will keep it instead of putting it into the economy and piling it up."
Tonga is a remote island nation that relies on remittances from countries, including Australia, New Zealand and the United States.
The International Finance Corporation estimates that Tonga receives more income from remittances than any other country in the world, and contributes up to 30% of household income.
While the population of Tonga is only six figures or less than one million people, the Tongan diaspora is very broad. The International Organization for Migration estimates the Tongan population living overseas at 126,000, of whom 18,000 Tongans live in Australia.
The remittance use case was one of the main drivers of El Salvador adopting BTC as a legal tender. According to the World Bank, Tonga's remittances as a percentage of gross domestic product are much higher than El Salvador's, at 39% vs. 24%.
In addition to remittances, Lord raised the domestic advantages of adopting open-source protocols. He agreed that Tonga could create a circular BTC economy and that it was “one of the few examples where being an archipelago of small, sparsely populated island kingdoms is an advantage.”
When the island's internet infrastructure is questioned, Tonga claims internet and mobile penetration rates already exceed 90%. The latest World Bank figures, though from five years ago in 2017, show Tonga's internet penetration is at 50%.
Bringing the islands online may take some time, but Fusitu'a was adamant about his country's BTC future in a tweet.
1. Sept/Oct Bill goes to Parliament. Passed.2. Sent to Palace Office for submission to His Majesty for Royal Assent.3. — Lord Fusitu'a (@LordFusitua) January 12, 2022