17 ms·

On one hand this move makes no sense. Poor countries have every motivation to print fiat currencies to fund operations. Heck, even "stable" currencies like the

On one hand this move makes no sense. Poor countries have every motivation to print fiat currencies to fund operations. Heck, even "stable" currencies like the US dollar and euro are currently inflating to prop up spending in the issuer economies. Bitcoin can't be controlled in this way by the countries that adopt it as legal tender. On the other, it could make sense. If a country is interested in accumulating bitcoin as a reserve asset, accepting bitcoin tax payments would be a way to do that. This hasn't been discussed much in the articles on this topic, though. Also, both El Salvador and CAR effectively don't use their own currencies anyway. El Salvador uses the US dollar after a disastrous bout of inflation. CAR's currency is pegged to the euro. So adding another currency not controlled by the country doesn't exactly change the ability of the government to inflate its debts away.

eldaisfish 4y ago
if any entity - private or government - was interested in accumulating an asset, which sane and rational person would accumulate something as volatile as a cryptocurrency? As a store of value, it is pathetically bad and its vulnerabilities are very easy to exploit.
- svenpor 4y ago
  I agree. It'd be necessary to assign prices and balances as probability distributions.
- alfl 4y ago
  Volatile by what measure over what time period? If a country, for example, is looking at price-versus-USD on a rolling average over five years and measuring volatility in terms of (positive and negative) variance of price, then the trend line is up-right* and volatility is very low. [Edit: * was up-left, mistakenly.]
  - nicbou 4y ago
    Volatility of bitcoin is low relative to USD?
    - jksmith 4y ago
      You want volatile value trending up, or or value going to shit with certainty?
      - hiq 4y ago
        For a currency you're better off with more certainty, e.g. a 2% constant yearly inflation is ideal and allows people to use it as a currency. BTC is also currently down from its peak, no one knows if it's currently "trending up".
        jksmith 4y ago
        That's way off the mark with regard to purchasing power vs money supply. Check your M2 chart. And your time frame on BTC is too short. Yes, it's trending up, and also becoming less volatile over time.
        hiq 4y ago
        > That's way off the mark with regard to purchasing power vs money supply. Check your M2 chart. Not sure what you're disagreeing with. Point is, if I can't predict reasonably well what I'll be able to buy in a few months with the currency I'm using, maybe what I'm using is not meant to be a currency. > And your time frame on BTC is too short. Yes, it's trending up, and also becoming less volatile over time. I'm sure I can find a time frame over which BTC is up. Not sure that helps much. It's "trending down" since August 2021. It's "trending up" over the last 10 years. What comes next is anyone's guess. Regarding volatility, whenever I look at it, all the sources I can find point to some volatility being at least constant over the past few years (I linked a source in another comment which indicates sustained volatility over the last 7 years). I've seen 3 different ones so far. Do you have one that would indicate otherwise? I could find one[0] but it's pretty bad, it starts with the yearly chart showing that the volatility is not declining, then shows a daily one over 7 days and shows a decline over this period. [0]: https://medium.com/@silvestrimichela.s/is-btc-volatility-going-down-66153fedbfed https://medium.com/@silvestrimichela.s/is-btc-volatility-goi...
  - SantalBlush 4y ago
    Or to put it more simply, stonks go up.
    - jksmith 4y ago
      Yes, crashing up.
      - bannedbybros 4y ago
- ludamad 4y ago
  The volatility in price seems okay as far as diversification, there was some low probability of crypto prices being this high and it happened. The private key hygiene is really worrying though. You can have private key multisig but at some basic level the funds can just disappear once someone accumulates enough keys (e.g. corrupt persons sell them on black market). Or be lost if enough keys are lost etc. It requires pretty diligent process, especially during changes of power
  - jjoonathan 4y ago
    How is bitcoin diversification when it correlates so strongly with the stock market?
    - ludamad 4y ago
      Not trying to make a strong statement but obviously correlation in moves doesn't mean it's been pegged to SPY. If they could have a digital asset pegged to SPY, maybe it'd be attractive, as well
  - deleted 4y ago
    [deleted]
- rufusroflpunch 4y ago
  Store of value depends on the time frame. Bitcoin has a four year halving cycle (the supply issuance halves every four years). If you look at the 200WMA (weekly moving average), which is roughly 4 years, it's a steady march upward. So as long as your time horizon is 4+ years, it's the best savings technology you could ask for. In terms of the USD, the price of Bitcoin is volatile in the short term. But that volatility is due to its relatively small size compared to its total addressable market. The total addressable market of Bitcoin is all monetary value on earth, so in the hundreds of trillions, probably. Bitcoin's network effects have already likely reached "runaway" status, so Bitcoin will continue to grow as the network effect speeds up exponentially. Its volatility will continue decreasing as it grows to address more of the T.A.M. of global monetary value.
  - midislack 4y ago
    >So as long as your time horizon is 4+ years, it's the best savings technology you could ask for. My US Hay, Confederated Slaveholdings, and buggy whip stocks were shooting up for a long time, they must still be great investments.
    - rufusroflpunch 4y ago
      Bitcoin isn't a stock. It has no counter party risk and doesn't offer returns. It is a monetary good. It's akin to holding a commodity metal like gold or silver, but it has comparative advantage in that it has no competing utility, it is only useful as a money.
      - midislack 4y ago
        It's not a monetary good. It's a virtual scrip with mathematical basis.
  - hiq 4y ago
    > Bitcoin has a four year halving cycle This misses the whole picture which is about both supply and demand, and mining is only one side of the equation. You do mention demand afterwards, but > Bitcoin's network effects have already likely reached "runaway" status, so Bitcoin will continue to grow as the network effect speeds up exponentially. is debatable to say the least. Is there any legal niche group that would use it for at least 50% of their transactions? News articles about the experiment in El Salvador seem to indicate that people still prefer to use cash (USD). > The total addressable market of Bitcoin is all monetary value on earth, so in the hundreds of trillions, probably. Not sure how this is relevant, in practice 99% of the world can use the USD one way or another, but that doesn't mean it'll ever reach this point. > Its volatility will continue decreasing as it grows to address more of the T.A.M. of global monetary value. Has it even begun? I haven't computed anything myself, but whenever I look for sources I end up with figures that contradict this claim, e.g.: https://www.buybitcoinworldwide.com/volatility-index/ https://www.buybitcoinworldwide.com/volatility-index/ If you look at the past 7 years, it doesn't look like it has gone down. I had seen tables with yearly volatility averages (or whatever the measure was) claiming the same. Do you have a better source than this?
weberer 4y ago
>Poor countries have every motivation to print fiat currencies to fund operations. Like Zimbabwe?
- nkuttler 4y ago
  OP probably meant governments, not countries, inflation is hardly good for individuals.
yuvadam 4y ago
Poorer countries have every motivation to move away from colonial currencies that are inherently inflationary and out of their control, into a deflationary currency like bitcoin that has a well-known limited supply and is controlled by no one. They have everything to gain and nothing to lose from such an asymmetric bet.
- hiq 4y ago
  > controlled by no one What about market manipulations? > They have everything to gain and nothing to lose from such an asymmetric bet. Not sure how you pass the volatility under the rug to conclude that they have everything to gain and nothing to lose.
- kspacewalk2 4y ago
  Why on earth would any country, rich or poor, want a deflationary currency outside its control? "Controlled by no one" is not a feature for governments (or mature financial systems), it's a bug. This being CAR (and this being bitcoin), it's more likely a story of using a high tech tool to hide proceeds of low-tech plundering of a poor African nation's abundant natural resources.
  - bitcoin_anon 4y ago
    “Controlled by another country” is a worse bug than “Controlled by no one”.
    - kspacewalk2 4y ago
      It is in fact not a bug but a critical, show-stopping feature. I will never denominate a contract in units of a speculative virtual scheme with no one at the (very technologically deficient) wheel.
    - reedjosh 4y ago
      I'd say it's a feature. Particularly if you think the government of CAR to be corrupt. I personally think governments are all based on the fallacy that a group of people can have rights that individuals can't. So, for me it's 100% feature.
el-salvador 4y ago
> El Salvador uses the US dollar after a disastrous bout of inflation. I don't recall El Salvador having a disastrous inflation. I believe Ecuador was the country that dollarized after a currency collapse, but not El Salvador. The USD/Salvadoran Colón exchange rate was 2.50 from 1934 up to 1980. There was some devaluation during the civil war. And then it stabilized at around 8.75 since the mid 1990s. Then we got dollarized in 2001. ' The exchange rate is still pegged at 8.75 since then. As the Colón is still used in some older laws and banks still exchange old Colón banknotes in some branches.
nisegami 4y ago
https://en.wikipedia.org/wiki/Impossible_trinity https://en.wikipedia.org/wiki/Impossible_trinity According to this framework, giving up that ability to have an independent monetary policy affords some other opportunities.

eldaisfish 4y ago

if any entity - private or government - was interested in accumulating an asset, which sane and rational person would accumulate something as volatile as a cryptocurrency? As a store of value, it is pathetically bad and its vulnerabilities are very easy to exploit.

svenpor 4y ago
I agree. It'd be necessary to assign prices and balances as probability distributions.
alfl 4y ago
Volatile by what measure over what time period? If a country, for example, is looking at price-versus-USD on a rolling average over five years and measuring volatility in terms of (positive and negative) variance of price, then the trend line is up-right* and volatility is very low. [Edit: * was up-left, mistakenly.]
- nicbou 4y ago
  Volatility of bitcoin is low relative to USD?
  - jksmith 4y ago
    You want volatile value trending up, or or value going to shit with certainty?
    - hiq 4y ago
      For a currency you're better off with more certainty, e.g. a 2% constant yearly inflation is ideal and allows people to use it as a currency. BTC is also currently down from its peak, no one knows if it's currently "trending up".
      - jksmith 4y ago
        That's way off the mark with regard to purchasing power vs money supply. Check your M2 chart. And your time frame on BTC is too short. Yes, it's trending up, and also becoming less volatile over time.
        hiq 4y ago
        > That's way off the mark with regard to purchasing power vs money supply. Check your M2 chart. Not sure what you're disagreeing with. Point is, if I can't predict reasonably well what I'll be able to buy in a few months with the currency I'm using, maybe what I'm using is not meant to be a currency. > And your time frame on BTC is too short. Yes, it's trending up, and also becoming less volatile over time. I'm sure I can find a time frame over which BTC is up. Not sure that helps much. It's "trending down" since August 2021. It's "trending up" over the last 10 years. What comes next is anyone's guess. Regarding volatility, whenever I look at it, all the sources I can find point to some volatility being at least constant over the past few years (I linked a source in another comment which indicates sustained volatility over the last 7 years). I've seen 3 different ones so far. Do you have one that would indicate otherwise? I could find one[0] but it's pretty bad, it starts with the yearly chart showing that the volatility is not declining, then shows a daily one over 7 days and shows a decline over this period. [0]: https://medium.com/@silvestrimichela.s/is-btc-volatility-going-down-66153fedbfed https://medium.com/@silvestrimichela.s/is-btc-volatility-goi...
- SantalBlush 4y ago
  Or to put it more simply, stonks go up.
  - jksmith 4y ago
    Yes, crashing up.
    - bannedbybros 4y ago
ludamad 4y ago
The volatility in price seems okay as far as diversification, there was some low probability of crypto prices being this high and it happened. The private key hygiene is really worrying though. You can have private key multisig but at some basic level the funds can just disappear once someone accumulates enough keys (e.g. corrupt persons sell them on black market). Or be lost if enough keys are lost etc. It requires pretty diligent process, especially during changes of power
- jjoonathan 4y ago
  How is bitcoin diversification when it correlates so strongly with the stock market?
  - ludamad 4y ago
    Not trying to make a strong statement but obviously correlation in moves doesn't mean it's been pegged to SPY. If they could have a digital asset pegged to SPY, maybe it'd be attractive, as well
- deleted 4y ago
  [deleted]
rufusroflpunch 4y ago
Store of value depends on the time frame. Bitcoin has a four year halving cycle (the supply issuance halves every four years). If you look at the 200WMA (weekly moving average), which is roughly 4 years, it's a steady march upward. So as long as your time horizon is 4+ years, it's the best savings technology you could ask for. In terms of the USD, the price of Bitcoin is volatile in the short term. But that volatility is due to its relatively small size compared to its total addressable market. The total addressable market of Bitcoin is all monetary value on earth, so in the hundreds of trillions, probably. Bitcoin's network effects have already likely reached "runaway" status, so Bitcoin will continue to grow as the network effect speeds up exponentially. Its volatility will continue decreasing as it grows to address more of the T.A.M. of global monetary value.
- midislack 4y ago
  >So as long as your time horizon is 4+ years, it's the best savings technology you could ask for. My US Hay, Confederated Slaveholdings, and buggy whip stocks were shooting up for a long time, they must still be great investments.
  - rufusroflpunch 4y ago
    Bitcoin isn't a stock. It has no counter party risk and doesn't offer returns. It is a monetary good. It's akin to holding a commodity metal like gold or silver, but it has comparative advantage in that it has no competing utility, it is only useful as a money.
    - midislack 4y ago
      It's not a monetary good. It's a virtual scrip with mathematical basis.
- hiq 4y ago
  > Bitcoin has a four year halving cycle This misses the whole picture which is about both supply and demand, and mining is only one side of the equation. You do mention demand afterwards, but > Bitcoin's network effects have already likely reached "runaway" status, so Bitcoin will continue to grow as the network effect speeds up exponentially. is debatable to say the least. Is there any legal niche group that would use it for at least 50% of their transactions? News articles about the experiment in El Salvador seem to indicate that people still prefer to use cash (USD). > The total addressable market of Bitcoin is all monetary value on earth, so in the hundreds of trillions, probably. Not sure how this is relevant, in practice 99% of the world can use the USD one way or another, but that doesn't mean it'll ever reach this point. > Its volatility will continue decreasing as it grows to address more of the T.A.M. of global monetary value. Has it even begun? I haven't computed anything myself, but whenever I look for sources I end up with figures that contradict this claim, e.g.: https://www.buybitcoinworldwide.com/volatility-index/ https://www.buybitcoinworldwide.com/volatility-index/ If you look at the past 7 years, it doesn't look like it has gone down. I had seen tables with yearly volatility averages (or whatever the measure was) claiming the same. Do you have a better source than this?

weberer 4y ago

>Poor countries have every motivation to print fiat currencies to fund operations. Like Zimbabwe?

nkuttler 4y ago
OP probably meant governments, not countries, inflation is hardly good for individuals.

yuvadam 4y ago

Poorer countries have every motivation to move away from colonial currencies that are inherently inflationary and out of their control, into a deflationary currency like bitcoin that has a well-known limited supply and is controlled by no one. They have everything to gain and nothing to lose from such an asymmetric bet.

hiq 4y ago
> controlled by no one What about market manipulations? > They have everything to gain and nothing to lose from such an asymmetric bet. Not sure how you pass the volatility under the rug to conclude that they have everything to gain and nothing to lose.
kspacewalk2 4y ago
Why on earth would any country, rich or poor, want a deflationary currency outside its control? "Controlled by no one" is not a feature for governments (or mature financial systems), it's a bug. This being CAR (and this being bitcoin), it's more likely a story of using a high tech tool to hide proceeds of low-tech plundering of a poor African nation's abundant natural resources.
- bitcoin_anon 4y ago
  “Controlled by another country” is a worse bug than “Controlled by no one”.
  - kspacewalk2 4y ago
    It is in fact not a bug but a critical, show-stopping feature. I will never denominate a contract in units of a speculative virtual scheme with no one at the (very technologically deficient) wheel.
  - reedjosh 4y ago
    I'd say it's a feature. Particularly if you think the government of CAR to be corrupt. I personally think governments are all based on the fallacy that a group of people can have rights that individuals can't. So, for me it's 100% feature.

el-salvador 4y ago

> El Salvador uses the US dollar after a disastrous bout of inflation. I don't recall El Salvador having a disastrous inflation. I believe Ecuador was the country that dollarized after a currency collapse, but not El Salvador. The USD/Salvadoran Colón exchange rate was 2.50 from 1934 up to 1980. There was some devaluation during the civil war. And then it stabilized at around 8.75 since the mid 1990s. Then we got dollarized in 2001. ' The exchange rate is still pegged at 8.75 since then. As the Colón is still used in some older laws and banks still exchange old Colón banknotes in some branches.

nisegami 4y ago

https://en.wikipedia.org/wiki/Impossible_trinity https://en.wikipedia.org/wiki/Impossible_trinity According to this framework, giving up that ability to have an independent monetary policy affords some other opportunities.