Last week, the majority of lawmakers in El Salvador voted in favor of adopting bitcoin as legal tender alongside the US dollar. That was the most important piece of news yet small matter in the world of currency that week.

It was a small matter because El Salvador is less than eight times bigger than Hong Kong, and it has a smaller population, with six million people. Being geographically ignorant, I had to Google to know the exact location of El Salvador and its Chinese name. Nonetheless, El Salvador’s decision carries great historical significance as it marked the first time a country has recognized bitcoin as a legal tender. As a result, “one bitcoin equals one bitcoin” (1 BTC = 1 BTC) is no longer just a formula underscored only by bitcoin followers but will soon find its way into the day-to-day life of people in El Salvador.

Is “1 BTC = 1 BTC” a tautology? Not really. Let me explain by referring to a recent trivial incident.

Some readers may know that three years ago, a few friends and I created a cryptocurrency called LikeCoin, which functions as a social token designed for creators and “content jockeys” (people who help distribute creative stories and insightful commentaries). It is a kind of publishing infrastructure with no bigwig backing it. Its primary function is to transform people’s appreciation of literature into rewards - the act of “liking” an author’s works via social media is expressed in the form of a social token rewarded to the author.

Two days ago, a friend of mine, D, said he supports me, adding that “you don’t demand payment for what you write; you only take LikeCoin”. I am truly grateful for D’s support. But I am also aware that it is not enough to have the support of friends. What I want most is for people to use LikeCoin not because they support me and not even because they support the idea of the cryptocurrency, but because it is useful and user-friendly.

From a friend’s compliment, I have identified my own shortcoming. Perhaps that makes me sound a rather odd person. D said I don’t get paid for what I write, and that I only take LikeCoin. This implies he does not view LikeCoin as a useful thing with purchasing power. You don’t hear online celebrities in Hong Kong say they don’t charge any money on Patreon but take US dollars.

What D is not aware of is that the value of the LikeCoins he has earned from his writings has increased eight-fold over the past two years. He can turn them into US dollar or cryptocurrency and pay for a bowl of wonton noodles using a credit card that settles transactions in cryptocurrencies.

I have written multiple times in this column the concept of “thinking from one’s own perspective”. Applying it to Hong Kong dollar, it is about evaluating things in Hong Kong dollar term. A catty of vegetables is worth HK$12 (strictly speaking, it should be “priced” as HK$12), and US$1 is worth HK$7.78. Assets whose value cannot be converted into US dollar is simply treated as something with no monetary value. This is why D thinks earning LikeCoins means not getting paid.

If Likecoin is not weighty enough, let’s look at bitcoin. Today, very few people think bitcoin is worthless. Nevertheless, the financial world is still dominated by legal tender, with the US dollar taking the lead. People in different parts of the world consider bitcoin as something of value as they view it based on the legal tender of their own country. Bitcoin for them has value because they know it can be converted into US dollar. At the time I wrote this piece, one bitcoin was worth US$35,000. Except for Bitcoin aficionados, who amount to a minority in the world, almost no one thinks from a perspective grounded on the “1 BTC = 1 BTC” principle.

But now that El Salvador’s parliament has adopted bitcoin as legal tender, people in the Central American country may start to evaluate things based on bitcoin. You may say using bitcoin comes with many problems, such as high transaction cost. Also, the penetration rate of the internet is low in El Salvador. Bitcoin-friendly as I am, I am not ignoring those real issues, which remain to be tackled.

However, if the problem you see is that bitcoin’s value fluctuates, and you wonder what will happen when the price of a bowl of wonton noodles fluctuates because of bitcoin, then you still haven’t grasped the idea of “1 BTC = 1 BTC”. You still view things based on the greenback, which is why you are asking the wrong question. When you think from a bitcoin point of view, the price of a bowl of noodles denominated in bitcoin is actually stable.

All types of stability in the world are relative.

(Kin Ko, advocate of democracy and freedom, entrepreneur, founder of LikeCoin and #decentralizehk)

This article is translated from Chinese by Apple Daily.

Click here for Chinese version

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