1.18 The Nation-State Strategy

El Salvador became the first country to adopt Bitcoin as legal tender in 2021. The government now holds Bitcoin as a reserve asset, offers Bitcoin bonds, and has built a geothermal-powered Bitcoin mining operation.

The Central African Republic briefly followed in 2022 but repealed the law in March 2023, leaving El Salvador as the sole nation with Bitcoin as legal tender. Other nations are quietly accumulating Bitcoin through sovereign wealth funds, strategic reserves, and spot Bitcoin ETFs, and are exploring regulatory frameworks that attract Bitcoin businesses.

The race is on because the first major nation to fully embrace Bitcoin gains a significant advantage. Bitcoin on a national balance sheet cannot be sanctioned, seized, or inflated away by foreign powers.

Nations with abundant renewable energy but weak export industries (like El Salvador with geothermal energy) can monetize their energy by mining Bitcoin, creating a new revenue stream independent of traditional exports.

As fiat currencies continue to debase and geopolitical tensions rise, Bitcoin offers a neutral reserve asset that no single nation controls. This makes it the ultimate hedge against currency wars and sanctions.