11 ms·

El Salvador will adopt Bitcoin as legal tender from today

sprafa 5y ago
I’m super into crypto, but I don’t see how this will help anyone in Salvador at all. In fact it seems to me that it will likely just aid corrupt elements in the country. I just can’t think of a reason for them to do this.
- bethecloud 5y ago
  Why do you say this? How does bitcoin = corruption – it's simply PKI-based ownership of DLT data. If anything the restriction on money-printing should abet corruption, no?
  - blitzar 5y ago
    Why do you say this? How does money-printing = corruption?
    - bko 5y ago
      Yes. Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings or the ability to invest in appreciating assets. As technology advances, things should naturally become cheaper. A gallon of milk today is not comparable to a gallon of milk produced 20 years ago due to technological advances. So it should naturally get cheaper. Of course it doesn't because there is more money in circulation. Think of the extreme, electronics. These do get cheaper for the same capabilities because the technological advancement is so much faster than the technological advancements of milk production. It's fine if you want to increase taxes to fund public expenditures, but this should be done explicitly through taxes, rather than hidden through increasing the monetary base. I believe a lot of waste and corruption would be rooted out if we were honest about what we're funding and how we're funding it. If everyone saw their tax bills go up a few hundred dollars a year to fund foreign interventionists policies, I don't think it would be politically feasible. Money printing is a way to fund expenditures without being honest about how much its actually costing us.
      - frankbreetz 5y ago
        >>Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings Wouldn't inflation hurt people with a lot of cash savings, the most? Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? Isn't their a student debt crisis, that can be helped out by inflation. The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar. I haven't ever heard anyone say cash is good store of value, so when coiners present this argument it feels like a real strawman. The dollars value comes from its predictability, unless some catastrophe happen affecting food supply,I know next year food will be about the same as it is right now. I have no idea how much bitcoin it will cost could be 10x or could be 10%, this makes it hard to plan and hard to run an economy.
        Sohcahtoa82 5y ago
        > Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? This is only true if wages keep up with inflation. Many will claim they haven't.
        bko 5y ago
        > Wouldn't inflation hurt people with a lot of cash savings, the most? Almost no one with a vast amount of wealth keeps their wealth in cash. > Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? Not necessarily. The poorest households hold less than their fair share of mortgage debt, but they hold more than their share of consumer debt. The bottom half of households by wealth hold almost 54% of consumer debt. Consumer debt includes credit cards, student loans and car loans. That distribution isn’t a surprise, either [0]. If you rely on debt for every day purchases (credit card revolving debt), higher prices don't help you out. If you have inflation in the form of home valuations and you own a home (perhaps w/ a mortgage), you're better off in that regard > Isn't their a student debt crisis, that can be helped out by inflation. Inflation doesn't necessarily mean your salary goes up. Salaries for low wage workers is fairly sticky. > The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar. If you're on a fixed salary, or your salary doesn't go up by at least the inflation amount you're worse off. And if you have a large percentage of your income go to pay for every day living expenses, you're also worse off. The dollar value is predictable until it's not. There are plenty of examples of hyperinflation that turned a country on its head. [0] https://www.barrons.com/articles/rich-borrow-mortgates-consumer-debt-credit-cards-federal-reserve-fred-51573509617 https://www.barrons.com/articles/rich-borrow-mortgates-consu...
    - mgh2 5y ago
      I have read a lot of crypto articles recently, and yet the community cannot answer this: How do you account for the global population growth (and consequently GDP growth) that is constantly in need for a relatively stable exchange medium for value of goods produced? Cycle: More people > more production > more money Money is a tool to fuel production. Controlled inflation/devaluation fuels growth, as long as it is backed by actual production (tied to economic output). Contrast this with popular crypto examples: Germany (WWI), Venezuela, Greece, Argentina, Lebanon, etc. countries that dramatically devalued their currency without an increase in production = corruption of value. The problem with any limited supply is that it benefits and incentivizes hoarders and non-producers, having nonbeneficial effects for society as a whole. Is the US really that corrupt? Or is the entire crypto narrative a marketing scheme by speculators & scammers? https://m-g-h.medium.com/in-data-we-trust-2978dacc8c22 https://m-g-h.medium.com/in-data-we-trust-2978dacc8c22
- el-salvador 5y ago
  The lightning network could make small sized cross border money transfers cheaper. (Transfers less than $100).
  - realPubkey 5y ago
    It can do the same without having bitcoin as legal tender.
    - rfd4sgmk8u 5y ago
      Not exactly. Legal tender changes the calculus. Because bitcoin is legal tender, there are no capital gains or investment tax in El Salvador. You can spend received the funds with no tax implication. This is a big deal for a country with so many folks unbanked and use international remittance services.
      - realPubkey 5y ago
        Thank you, that makes sense of course.
fallingfrog 5y ago
I’m surprised that the United States hasn’t clamped down harder on cryptocurrency. Whenever a foreign government tries to, say, sell oil for currency other than US dollars, they get invaded or a coup is staged or crippling sanctions get applied pretty quickly. I suspect that if crypto starts to undermine the dollar, the hammer will come down. Probably the United States military financial complex is just slow to understand what is happening.
- rchaud 5y ago
  Oil is required by every single country on earth. It matters what currency it's priced in, due to the sheer volumes being purchased and consumed each day. BTC is one of thousands of cryptocurrencies that are not the de facto medium of exchange for anything. Well, that's not fully accurate, I guess Tether is useful...for buying other cryptos with.
- fuzzylightbulb 5y ago
  I cannot understand why the petrodollar myth persists but here we are so I'll break it down: 1. Oil is traded in dollars because dollars are a reserve currency. 2. Dollars are not a reserve currency because of oil.
  - slim 5y ago
    You mean saudi arabia could trade oil for euro if they wanted but saudis actually prefer to not diversify their assets because they are stupid ?
    - fuzzylightbulb 5y ago
      Their currency is pegged to the USD so its not a huge surprise their central bank prefers it. This of course has not stopped them from issuing euro-denominated bonds and holding other assets. Either way it makes a ton of sense for them to trade an extremely volatile commodity (oil) for a stable currency. This is what allows them to borrow internationally and attract outside investment. If they floated their own currency it would be a disaster. But yes they absolutely could do this and it would not impact the value of the dollar in any appreciable way. The Riyad would tank and Vision 2030 would be dead in the water.
mikewarot 5y ago
I fail to see how something with an approximately US$3 transaction fee is going to be a usable currency for anything other than very large purchases.
- kordlessagain 5y ago
  See this: https://lightning.network/ https://lightning.network/
  - mikewarot 5y ago
    > Security is enforced by blockchain smart-contracts Hard pass, there've been too many smart contract failures to even think about going down that road.
    - thinkmassive 5y ago
      You’re thinking of Ethereum’s Turing-complete scripting language, a prime example of why that functionality doesn’t belong on the base layer.
bko 5y ago
I'm happy El Salvador adopted Bitcoin. Not so much that I think it will transform the economy or even be practical, but that if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general. I don't understand why so many people are bearish on this decision. We should encourage more experimentation as long as no one is forced to use Bitcoin.
- unmole 5y ago
  > if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general. This is vastly overstating the relevance of El Salvador on the world stage. It's a country of less than 7 million people and not a rich one at that.
  - bko 5y ago
    It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math)
    - unmole 5y ago
      Is this how you imagine it's going to play out? Behemoth A: We should immediately prohibit our banks from offering services to anyone dealing with Bitcoin. Behemoth B: Hold on just a second. There is this tiny Latin American country that you probably never heard of that uses Bitcoin as legal tender. Behemoth A: You're right, this needs more thought. The last thing we should do is upset a country we do virtually no trade with and has negligible diplomatic clout.
      - bko 5y ago
        See original reply > It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math) The key is the word "consideration"
    - fuzzylightbulb 5y ago

I’m super into crypto, but I don’t see how this will help anyone in Salvador at all. In fact it seems to me that it will likely just aid corrupt elements in the country. I just can’t think of a reason for them to do this.

bethecloud 5y ago
Why do you say this? How does bitcoin = corruption – it's simply PKI-based ownership of DLT data. If anything the restriction on money-printing should abet corruption, no?
- blitzar 5y ago
  Why do you say this? How does money-printing = corruption?
  - bko 5y ago
    Yes. Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings or the ability to invest in appreciating assets. As technology advances, things should naturally become cheaper. A gallon of milk today is not comparable to a gallon of milk produced 20 years ago due to technological advances. So it should naturally get cheaper. Of course it doesn't because there is more money in circulation. Think of the extreme, electronics. These do get cheaper for the same capabilities because the technological advancement is so much faster than the technological advancements of milk production. It's fine if you want to increase taxes to fund public expenditures, but this should be done explicitly through taxes, rather than hidden through increasing the monetary base. I believe a lot of waste and corruption would be rooted out if we were honest about what we're funding and how we're funding it. If everyone saw their tax bills go up a few hundred dollars a year to fund foreign interventionists policies, I don't think it would be politically feasible. Money printing is a way to fund expenditures without being honest about how much its actually costing us.
    - frankbreetz 5y ago
      >>Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings Wouldn't inflation hurt people with a lot of cash savings, the most? Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? Isn't their a student debt crisis, that can be helped out by inflation. The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar. I haven't ever heard anyone say cash is good store of value, so when coiners present this argument it feels like a real strawman. The dollars value comes from its predictability, unless some catastrophe happen affecting food supply,I know next year food will be about the same as it is right now. I have no idea how much bitcoin it will cost could be 10x or could be 10%, this makes it hard to plan and hard to run an economy.
      - Sohcahtoa82 5y ago
        > Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? This is only true if wages keep up with inflation. Many will claim they haven't.
      - bko 5y ago
        > Wouldn't inflation hurt people with a lot of cash savings, the most? Almost no one with a vast amount of wealth keeps their wealth in cash. > Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth? Not necessarily. The poorest households hold less than their fair share of mortgage debt, but they hold more than their share of consumer debt. The bottom half of households by wealth hold almost 54% of consumer debt. Consumer debt includes credit cards, student loans and car loans. That distribution isn’t a surprise, either [0]. If you rely on debt for every day purchases (credit card revolving debt), higher prices don't help you out. If you have inflation in the form of home valuations and you own a home (perhaps w/ a mortgage), you're better off in that regard > Isn't their a student debt crisis, that can be helped out by inflation. Inflation doesn't necessarily mean your salary goes up. Salaries for low wage workers is fairly sticky. > The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar. If you're on a fixed salary, or your salary doesn't go up by at least the inflation amount you're worse off. And if you have a large percentage of your income go to pay for every day living expenses, you're also worse off. The dollar value is predictable until it's not. There are plenty of examples of hyperinflation that turned a country on its head. [0] https://www.barrons.com/articles/rich-borrow-mortgates-consumer-debt-credit-cards-federal-reserve-fred-51573509617 https://www.barrons.com/articles/rich-borrow-mortgates-consu...
  - mgh2 5y ago
    I have read a lot of crypto articles recently, and yet the community cannot answer this: How do you account for the global population growth (and consequently GDP growth) that is constantly in need for a relatively stable exchange medium for value of goods produced? Cycle: More people > more production > more money Money is a tool to fuel production. Controlled inflation/devaluation fuels growth, as long as it is backed by actual production (tied to economic output). Contrast this with popular crypto examples: Germany (WWI), Venezuela, Greece, Argentina, Lebanon, etc. countries that dramatically devalued their currency without an increase in production = corruption of value. The problem with any limited supply is that it benefits and incentivizes hoarders and non-producers, having nonbeneficial effects for society as a whole. Is the US really that corrupt? Or is the entire crypto narrative a marketing scheme by speculators & scammers? https://m-g-h.medium.com/in-data-we-trust-2978dacc8c22 https://m-g-h.medium.com/in-data-we-trust-2978dacc8c22
el-salvador 5y ago
The lightning network could make small sized cross border money transfers cheaper. (Transfers less than $100).
- realPubkey 5y ago
  It can do the same without having bitcoin as legal tender.
  - rfd4sgmk8u 5y ago
    Not exactly. Legal tender changes the calculus. Because bitcoin is legal tender, there are no capital gains or investment tax in El Salvador. You can spend received the funds with no tax implication. This is a big deal for a country with so many folks unbanked and use international remittance services.
    - realPubkey 5y ago
      Thank you, that makes sense of course.

fallingfrog 5y ago

I’m surprised that the United States hasn’t clamped down harder on cryptocurrency. Whenever a foreign government tries to, say, sell oil for currency other than US dollars, they get invaded or a coup is staged or crippling sanctions get applied pretty quickly. I suspect that if crypto starts to undermine the dollar, the hammer will come down. Probably the United States military financial complex is just slow to understand what is happening.

rchaud 5y ago
Oil is required by every single country on earth. It matters what currency it's priced in, due to the sheer volumes being purchased and consumed each day. BTC is one of thousands of cryptocurrencies that are not the de facto medium of exchange for anything. Well, that's not fully accurate, I guess Tether is useful...for buying other cryptos with.
fuzzylightbulb 5y ago
I cannot understand why the petrodollar myth persists but here we are so I'll break it down: 1. Oil is traded in dollars because dollars are a reserve currency. 2. Dollars are not a reserve currency because of oil.
- slim 5y ago
  You mean saudi arabia could trade oil for euro if they wanted but saudis actually prefer to not diversify their assets because they are stupid ?
  - fuzzylightbulb 5y ago
    Their currency is pegged to the USD so its not a huge surprise their central bank prefers it. This of course has not stopped them from issuing euro-denominated bonds and holding other assets. Either way it makes a ton of sense for them to trade an extremely volatile commodity (oil) for a stable currency. This is what allows them to borrow internationally and attract outside investment. If they floated their own currency it would be a disaster. But yes they absolutely could do this and it would not impact the value of the dollar in any appreciable way. The Riyad would tank and Vision 2030 would be dead in the water.

mikewarot 5y ago

I fail to see how something with an approximately US$3 transaction fee is going to be a usable currency for anything other than very large purchases.

kordlessagain 5y ago
See this: https://lightning.network/ https://lightning.network/
- mikewarot 5y ago
  > Security is enforced by blockchain smart-contracts Hard pass, there've been too many smart contract failures to even think about going down that road.
  - thinkmassive 5y ago
    You’re thinking of Ethereum’s Turing-complete scripting language, a prime example of why that functionality doesn’t belong on the base layer.

bko 5y ago

I'm happy El Salvador adopted Bitcoin. Not so much that I think it will transform the economy or even be practical, but that if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general. I don't understand why so many people are bearish on this decision. We should encourage more experimentation as long as no one is forced to use Bitcoin.

unmole 5y ago
> if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general. This is vastly overstating the relevance of El Salvador on the world stage. It's a country of less than 7 million people and not a rich one at that.
- bko 5y ago
  It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math)
  - unmole 5y ago
    Is this how you imagine it's going to play out? Behemoth A: We should immediately prohibit our banks from offering services to anyone dealing with Bitcoin. Behemoth B: Hold on just a second. There is this tiny Latin American country that you probably never heard of that uses Bitcoin as legal tender. Behemoth A: You're right, this needs more thought. The last thing we should do is upset a country we do virtually no trade with and has negligible diplomatic clout.
    - bko 5y ago
      See original reply > It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math) The key is the word "consideration"
  - fuzzylightbulb 5y ago