16 ms·

Most Salvadorans have already ditched their national Bitcoin wallets

150 points by donohoe 5y ago

jqpabc123 5y ago
Bitcoin in its current form “is not such an effective means of payment” Who knew? But thank you El Salvador for making it even more painfully obvious. A digital dollar (CBDC) could easily undermine every argument for Bitcoin except one --- paranoia/distrust of government.
- frankbreetz 5y ago
  Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument.
  - mirntyfirty 5y ago
    Bitcoin also isn’t a currency.
  - zzbzq 5y ago
    Bitcoin being deflationary is also one of the biggest arguments against BTC-as-currency
  - jameskilton 5y ago
    Deflation is the worst possible state for a currency. An economy is defined as the flow of goods and services. Currency is the medium through which goods and services flow. Deflation encourages people to not spend their money. Not spending money means goods and services don't flow, means an economy collapses. That bitcoin / crypto people keep harping that deflation is a good thing proves to me that these people know nothing about economics and should never be trusted as such.
    - deleted 5y ago
      [deleted]
    - toomuchtodo 5y ago
      > That bitcoin / crypto people keep harping that deflation is a good thing proves to me that these people know nothing about economics and should never be trusted as such. They're desperately seeking a store of value (which isn’t wealth; it’s only wealth if productive or others need it and will trade something for it) that can't be devalued by humans, with expected results (value is constantly changing and subjective). As you mention, it shows a lack of economic understanding.
    - snapcaster 5y ago
      This is repeated all the time, but nobody seems to provide evidence besides some offhanded comment about Japan. You realize this is an opinion or ideology not something like physics laws right?
      - JumpCrisscross 5y ago
        > nobody seems to provide evidence besides some offhanded comment about Japan...this is an opinion or ideology" That's because "since WWII, one country has come close to having both a depression and a deflation: Japan in the late 1990s" [1]. The source of policymakers' hesitance with deflation "seems to stem from the experience of the Great Depression, in which deflation and depression appear to have been tightly linked." We have limited data suggesting moderate deflation is any more damaging than moderate inflation. We have better-tested tools for fighting inflation. But with negative interest rates and QE (implying the existence of its inverse, i.e. the central bank selling short), deflation is less scary. The problem with Bitcoin is its fixed supply. Bitcoin would not produce steady deflation. It is inherently volatile, as the bullwhip effect of the credit system is left unmoderated. The failures of fixed-supply currencies are documented beyond the domain of "opinion or ideology," e.g. in studies around currency substitution [2]. [1] https://www.nber.org/system/files/working_papers/w10268/w10268.pdf https://www.nber.org/system/files/working_papers/w10268/w102... [2] https://en.wikipedia.org/wiki/Currency_substitution https://en.wikipedia.org/wiki/Currency_substitution
        I_DRINK_KOOLAID 5y ago
        > We have limited data suggesting moderate deflation is any more damaging than moderate inflation You don't need data to understand how people would simply stop working and wait for their cash to appreciate as they do nothing. Except you can't consume or eat cash and also life is short and tomorrow is not guaranteed so when you decide that it's time want to spend it you'd not be better off in any way even after deflationary appreciation because everybody had the same brilliant idea and the huge mass of people stopping working caused a collapse in raw output of products and services. Part of me wishes this actually happens, because those who operate countercyclically and keep working when everybody stops to sit on their couch hoping for deflation to make them rich, would eventually make a fortune when sanity comes back and people realize they can't eat the zeros and ones in their bank account.
    - berberous 5y ago
      Your privilege is showing. Many economies have collapsed or people have been severely harmed from runaway inflation. Even now in the US, the wealthy aren’t terribly affected by inflation, especially with home and stock prices rising more than enough to offset them, while the poor are increasingly struggling with currently no end in sight. Perhaps a Bitcoin w/ 2% inflation would have been better than a deflationary one, but I still question whether the average person in the average country is better off with the risk that their government mismanages target inflation than with an algorithmic deflationary Bitcoin. I also question whether Bitcoin being deflationary is really a bad thing when it’s also a store of wealth and not the only means of exchange in a country.
      - dragontamer 5y ago
        > Many economies have collapsed or people have been severely harmed from runaway inflation And the USA's economy was ruined in the 1930s by runaway deflation. The poor don't like inflation _OR_ deflation. Both suck. The rich has the ability to move money around to maximize their gains in any situation, so the rich aren't really harmed by either.
      - School-Cotton 5y ago
        > Many economies have collapsed or people have been severely harmed from runaway inflation. False dichotomy. The last 50 years of monetary policy in developed countries show that you can have moderate inflation (yes, sometimes a bit too much, like now, but moderate overall) without hyperinflation.
        berberous 5y ago
        Do you think 50 years is all that long in the historical context? America showed that you could have hundreds of years of stable democracy until a simple combination of cable news, Twitter and a narcissistic president almost led to a coup. The Roman republic was stable for hundreds of years until it collapsed. The Turkish lira has lost more than 97 per cent of its value against the US dollar since January 2021. I agree with you that the 1950-2010 world order and U.S. monetary system was better than Bitcoin. Where we disagree I think, is with our confidence in the stability of human institutions and the likelihood that the world necessarily remains stable in that world order for the next 1,000.
    - ramblerman 5y ago
      I think you misunderstand a fixed currency (like the US once had against the gold standard) and an economy that is in deflation.
      - JumpCrisscross 5y ago
        > like the US once had against the gold standard The gold standard isn't a fixed-supply currency. Gold was mined throughout the nineteenth century, coïncidentally, at about the rate of economic growth. When growth kept going while mining stalled, a series of economic crises pushed developing nations away from the standard.
    - Proven 5y ago
    - deleted 5y ago
      [deleted]
    - jwarden 5y ago
      I think there are people who understand economics who think that inflation is often a good thing. Here for example is a quote from Investopedia’s article on Inflation: “Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.” Now deflation caused by a deflationary currency is probably not unambiguously good in the same way as deflation caused by increased production. But are there not any respectable economists who would argue that a deflationary currency might not be so bad?
    - throwawaymaths 5y ago
      > Deflation encourages people to not spend their money Oh the horrors! Maybe people will not spend their money on stupid shit, they might conserve instead of destroy the environment. Maybe the middle class wont be forced into participating in the casino-for-privileged-mbas that is the stock market. Maybe we will stop having a siphon that steals the labor value from the lower class and drops it on the doorstep of the rich.
      - hackyhacky 4y ago
        In a deflationary economy, it's not just consumers who stop spending, it's everyone: companies stop investing, employers stop hiring. This leads to a vicious cycle. History shows us that deflationary economies can be more damaging that inflationary.
    - tastyfreeze 5y ago
      The argument that with deflationary currency nobody will spend is ridiculous. Everybody still needs to spend to buy whatever they need for daily life. Money will still be spent into the economy. The difference between moderate inflation and moderate deflation is what people do with their excess money. With inflation people will buy stuff just because stuff holds its value and money doesn't. With deflation people save their excess. The higher the inflation/deflation level the more pronounced the behavior of spending/saving. People having savings is a sign of a healthy economy. With savings there are more people that have an opportunity to invest. Investment provides real growth.
      - BoardsOfCanada 5y ago
        That's why no one could ever make any money selling computers or software. After all next month you'd get something better for less. /s
      - KallDrexx 5y ago
        Deflationary being bad has nothing to do with essential spending and everything to do with discretionary spending. I (and many people I know) don't buy games that we want to play right away because we know they will be on sale in a month or so, and can wait. If I expect houses to go down in price I will not put a lot of effort into buying a house, and instead rent for now. Used car prices right now are extraordinarily high, so I will not be upgrading my car until prices start coming down. I'm not buying a new graphics card because I think prices are inflated and I believe they will come down sometime in the next yea. Etc... A significant portion of our economy is reliant on discretionary spending, and when discretionary spending drops we usually end up in recessions, as companies that rely on that spending start layoffs.
      - deleted 5y ago
        [deleted]
    - thaway2839 5y ago
      Since you're clearly using "spending" in a more economic sense, but most people will read it from the perspective of household finances and therefore interpret spending as morally wrong, I'll add that the spending you're discussing includes, and primarily is, investment. Both your run of the mill, deposit money in the bank which loans it out so all sorts of businesses can be built, and people can buy houses, cars, etc., and your more exotic VC and hedge fund investments.
    - CapricornNoble 5y ago
      >>>Deflation encourages people to not spend their money. Not spending money means goods and services don't flow, means an economy collapses. How do we square that with the unending flow of junk that is produced with obsolescence baked in and disposed of? How do we square "economic growth uber alles!" with the constant warnings of man-made climate change and our impending doom due to wasting our resources on cheap shit from China? I would argue that the short-term time preference should balance the effects of inflation. I don't really care that a Lamborghini might cost half as much in 10 years. If I want to drive one TODAY bad enough, I will still buy it. If my umbrella has a hole in it and it's raining, if I want to be dry RIGHT NOW, I don't care that an umbrella is cheaper tomorrow. I would also argue that technological improvement is inherently deflationary, and that technological improvement is all about resource efficiency: accomplishing the same work with a smaller expenditure of resources. Even if rising demand were to lead to higher equilibrium prices, we should be balancing the economy in such ways that prices still fall or at worst remain static, to reflect the diminishing resource requirements for a given unit/widget produced.
    - stuckinhell 5y ago
      You've made a pretty strong statement with an appeal to authority. Economic "authority" figures have gotten the economy wrong for 20 years. Maybe you should question your first principles more.
  - jqpabc123 5y ago
    Bitcoin may not be inflationary but it is certainly depressionary. As in those who paid nearly $70k per Bitcoin after El Salvador declared it an official currency 7 months ago are probably feeling kinda depressed right now.
  - tablespoon 5y ago
    > Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument. That's not actually a pro-Bitcoin argument. It's just an artifact the peculiar ideologies that influenced Bitcoin's creator. Deflation hurts economic activity, but benefits hoarders.
  - JumpCrisscross 5y ago
    > Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument Except Bitcoin is not deflationary. It's fixed supply. Those are separate, if related, characteristics. In the last year it's been roughly flat, with the word "roughly" doing a lot of work, given its volatility that would make a Zimbabwean central banker blush.
    - lampshades 5y ago
      Fixed supply is deflationary in a world where population increases. Whether or not population will continue to increase is another question.
      - JumpCrisscross 5y ago
        > Fixed supply is deflationary in a world where population increases This assumes the whole world uses the currency, which is untrue for every currency in the history of humanity, and that per capita output per person using the currency is at least flat, which is also questionable. Demographics are an input into monetary policy. But the effect is way fuzzier than you imply [1]. [1] https://ssl.nbp.pl/publikacje/materialy_i_studia/284_en.pdf https://ssl.nbp.pl/publikacje/materialy_i_studia/284_en.pdf
    - freemint 5y ago
      Fixed supply -> almost certainly inflationary. It is only not inflationary if nobody ever makes a coin burn and nobody ever leaves less money in a that is worth less than a transaction to move it will cost.
  - andrewla 5y ago
    > Bitcoin is deflationary This is a claim made repeatedly by Bitcoin proponents and opponents, based on various ideological differences. But the statement is nonsensical. The statement "Bitcoin is deflationary" is exactly equivalent to the statement "Bitcoin will always increase in value".
  - Fargoan 5y ago
    Bitcoin is inflationary. What do you think block rewards are?
- elzbardico 5y ago
  - deleted 5y ago
    [deleted]
  - MrMan 5y ago
    Rich white males are the ones spreading libertarian FUD
- rglover 5y ago
  > paranoia/distrust of government. Hmm, I wonder why.
- md2020 5y ago
  None of the rights enjoyed by citizens of liberal democracies matter without the right to transact. You can’t exercise your right to speech if you can’t buy posters or domain names for your cause. You can’t go to a protest outside of walking distance if you can’t pay for gas in your car, or a bus or train ticket. Governments gaining such control of currency would be a backslide into authoritarianism.
  - rainingmonkey 5y ago
    > You can’t exercise your right to speech if you can’t buy posters or domain names for your cause. You can’t go to a protest outside of walking distance if you can’t pay for gas in your car, or a bus or train ticket. I think this aught to make us consider the antidemocratic effects of poverty and inequality too.
  - jqpabc123 5y ago
    Your comment is based on unfounded assumptions --- that the current banking system will be subverted and cash will no longer be accepted and due process under the law will become null and void. None of these are being proposed. Implementing all of these would require changing the constitution. In other words, your comment is an example of the paranoia I referred to.
    - ellopoppit 5y ago
      The freezing of bank accounts of political dissidents has precedent in recent history
      - jqpabc123 5y ago
        Where these dissidents doing more than just protesting? Perhaps committing crimes by impeding and infringing on the rights of other citizens? Cry me a river of unfounded paranoia.
        SemanticStrengh 5y ago
- mirceal 5y ago
  a digital dollar? what? most dollars in existence today are digital. so why does bitcoin exist again?
- usrn 5y ago
  Given Canada's unbanking of people who disagree with their dictator it's a little insulting to call that paranoia.
  - jqpabc123 5y ago
    Calling what they were doing simply "disagreeing" is a little insulting to common sense. You have every right to disagree and protest --- but you don't have a right to illegally blockade bridges and prevent others from traveling to work or to the hospital if need be.
    - usrn 5y ago
      People here did much more than that and were hardly punished. idk, keep pushing. Eventually we'll solve the problem with a more complete and final solution.
thesausageking 5y ago
8 months after rolling out a brand new method of doing payments, ~70% of the country has tried it and ~11% of those are using it for remittances (3% in Bitcoin, 8% in dollars). For a government program rolling out new technology, that actually seems quite impressive.
- bparsons 5y ago
  Not if the technology is a currency. I think this finally ends the idea that bitcoin can be used for day-to-day transactions.
  - thesausageking 5y ago
    The program started less than a year ago. I think it's way too early to say that. So far, it seems like people prefer still transacting in dollars, but that may change over time. I'm just impressed that a small, developing country could roll out a new technology so fast.
    - tablespoon 5y ago
      >>> 8 months after rolling out a brand new method of doing payments, ~70% of the country has tried it and ~11% of those are using it for remittances (3% in Bitcoin, 8% in dollars). >> Not if the technology is a currency. I think this finally ends the idea that bitcoin can be used for day-to-day transactions. > The program started less than a year ago. I think it's way too early to say that. So far, it seems like people prefer still transacting in dollars, but that may change over time. Isn't that a lot like saying "give Google+ time, it may catch on eventually"? Most users tried and rejected it.
      - bpodgursky 5y ago
        Most citizens aren't giving or receiving regular remittances...
    - deleted 5y ago
      [deleted]
tupac_speedrap 5y ago
Now that bitcoin is dying are graphics cards selling at RRP yet?
- dragontamer 5y ago
  Graphics cards have come down in price severely, but are still well above MSRP / RRP. But BTC never was a big deal for graphics cards particularly. IIRC, Ethereum was the most profitable GPU coin. (Even if you were paid in BTC for mining through NiceHash or whatever, most miners would immediately sell for USD anyway to pay for electricity costs).
  - SV_BubbleTime 5y ago
    For my company I needed something with CUDA cores, got a 3070 Ti for $100 over MSRP. I could live with that. Coming down, yes. Back to normal? Not until 2024 I bet.
    - mpfundstein 5y ago
      you know how nvidia feels about using the RTX for commercial applications (e.g. deploying a server with rtx in a datacenter), right? :-)
      - SV_BubbleTime 5y ago
        Reminds me, I need to make sure my WinRAR licenses are all up-to-date.
- vidarh 5y ago
  Most BTC miners moved to ASIC based miners many years ago.
- throw_m239339 5y ago
  People today aren't mining BTC with mass market graphic cards, but ETH and other currencies.
floss_silicate 5y ago
There’s a bit of sleight of hand going on with this article, which conflates use of the Chivo wallet software with bitcoin. But then later the article says: “Meanwhile, many living in tourist hot spots on the Pacific coast, where Bitcoin usage is highest, have transitioned to other crypto wallets, such as the privately developed Bitcoin Beach.” So they’re using the currency, just not the government developed software. And a weird phrasing here “[many] are using it to hold and transfer dollars, El Salvador’s official currency”, implying dollars are the only ‘official’ currency — when by definition, Bitcoin is too.
- frankbreetz 5y ago
  I don't know how you can call this a slight of hand the title of the article is "Most Salvadorans have already ditched their national Bitcoin wallets", I don't know how you could make this more clear in an article title without making it too long.
  - floss_silicate 5y ago
    But all the comments in this thread are talking about the failure of bitcoin, when the article is about the wallet software they developed. That’s the sleight of hand.
    - Armisael16 5y ago
      How would you re-write the headline? This feels more like a case where people just won’t read it regardless of what’s written.
      - notch656a 5y ago
        A bitcoin wallet is generally meant to denote a wallet that contains bitcoin. Chivo is not a wallet for bitcoin. It is a 'wallet' that gives you proper authentication to trade on a lightning network. The actual bitcoin, and as is my understanding even the lightning wallet, is in custody of a more centralized location. Calling Chivo app a 'bitcoin wallet' is an intentionally misrepresentation, if not by the confused writer of the article then of the government that confused the person writing it. These people didn't 'ditch' a bitcoin wallet, or at least not the one mentioned, because Chivo never was one.
abetusk 5y ago
I can't help but feel the article is biased. The first line is "The launch of ... Chivo, has been a flop ...". Has it? It seems like there's more nuance than this broad stroke. Here's a snippet from section 4, "Concluding Remarks" of the original paper [0]: """ Despite these efforts and the incentive to use contactless payments caused by the COVID-19 pandemic, bitcoin is not widely used as a medium of exchange. While most citizens in El Salvador have a cell phone with internet, less than 60% of them downloaded Chivo Wallet, and 20% continued to use the app after spending their $30 sign-up bonus. Further, 5% of citizens have paid taxes with bitcoin, and despite its legal tender status, only 20% of firms—mostly large ones—accept bitcoin and 11.4% report having positive sales in bitcoin. In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch. Our results highlight the challenges that cryptocurrencies face to become widely accepted, even after a governmental big push and under favourable circumstances, and are relevant for countries studying their viability as currencies """ So, 60% adoption of Chivo, 20% (total, not of the 60%) still in current use. 20% of firms accept Bitcoin and, as far as I can tell presumably over half, 11.4%, of total firms report positive sales in Bitcoin (figure 8, page 24), with 2% (total) seeing losses and the rest, 87%, reporting no change. It's not the large scale adoption that proponents had hoped for but 20% adoption by people and businesses still seems pretty large. [0] https://bfi.uchicago.edu/wp-content/uploads/2022/04/BFI_WP_2022-54.pdf https://bfi.uchicago.edu/wp-content/uploads/2022/04/BFI_WP_2...
- RC_ITR 5y ago
  Maybe this man-on-the street account of using Bitcoin in El Salvador will help you understand why people are so bearish [0] [0]https://www.bloomberg.com/features/2022-bitcoin-travel-problems/ https://www.bloomberg.com/features/2022-bitcoin-travel-probl...
- belval 5y ago
  > In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch. This is why it's a failure. A healthy system would be growing, its users would be singing its praise. As far as we can tell, that's absolutely not what's happening.
throw7 5y ago
Imagine a $500 credit for opening a checking account from the local bank. And then having it debited/stolen with the bank saying "sorry, we don't know what happened, where or who it went to... there's nothing we can do about it, but don't worry, you now have a checking account you can use from us".
standardUser 5y ago
I program a computer for a living and I'm still baffled by my own array of wallets/accounts/whathaveyous that I use for crypto. It's the very definition of a technology that is not ready for prime time. Maybe their app made it accessible in ways every other crypto-related technology I have used has not?
- babypuncher 5y ago
  It's a technology that is still looking for a problem to solve. I have yet to see why I would want to use Bitcoin over a credit/debit card or something like PayPal.
  - SemanticStrengh 5y ago
    you can't buy monkeys pictures otherwise.
  - standardUser 5y ago
    Good point. Part of my "struggle" is the fact that my crypto holdings are essentially just for fun, and I never need to figure things out.
  - kupfer 5y ago
    I agree with bitcoin specifically. When it started it was useful to me for cheap cross border value transfer and timestamping. Now we have alternatives. I still would prefer if a more efficient payment mechanism was widespread, that hides my transaction details from the payment processor.
    - rchaud 5y ago
      When it started, you could mine Bitcoin on a laptop for fun. Now you need a faceless cartel of datacenter owners running rigs 24/7 and selling options on mined BTC to keep the lights on.
  - smokey_circles 5y ago
    > still looking for a problem to solve The Satoshi protocol is about creating a mechanism to achieve distributed, trustless consensus. Plenty of applications for such a platform. Whether it's achieving that goal is a separate debate (so far it has managed to establish itself as a crazy high risk forex medium that's only slightly less unwieldy than FIX) and I'm not convinced anyone in the builder space has even a vague understanding of the problems crypto has to overcome to be _practical_, let alone replace _the entire global financial system_. Call me a pessimist but it's not gonna happen without violent revolution (and let's not please). But we can stop saying vacuous things like "cryptography doesn't have a problem to solve", it's clearly always been about replacing trust with verification. Que KGB expression.
elif 5y ago
A 70% take rate on a cellphone app in a country where 73.8% of the population lives in cities... And this is being characterized negatively?
seaourfreed 5y ago
What wallets do they use instead?
uncomputation 5y ago
Hard to think of a more opposite intended use case than the one Satoshi imagined than this: a custodial, government-subsidized, completely identified (not pseudonymous) payment app which does not allow you to run verification of the network dangled by the government with a $30 carrot in front of a largely unbanked, cash-based society which trusts the dollar. Every single metric here is an extreme far cry from the tech-literate, globally privileged, privacy conscious libertarian group that cryptocurrency came from. Crypto as a whole has many interesting use cases and potential, some of which excite me personally, but this is probably the largest example of the “solution looking for a problem” criticism here. The greatest irony here being many Salvadorans don’t trust bitcoin, but do trust the dollar!
dpedu 5y ago
> Only 1.6% of all remittances were received in bitcoins via digital wallets in February 2022, according to El Salvador’s Central Bank. I seem to recall that remittances has been touted as crypto's #1 use case for a long time.
t_mann 5y ago
The irony of the ultimate cypherpunk dream, a stateless global currency, being forced onto largely unwilling citizens by a national government is hard to measure in words.

150 points by donohoe 5y ago

Bitcoin in its current form “is not such an effective means of payment” Who knew? But thank you El Salvador for making it even more painfully obvious. A digital dollar (CBDC) could easily undermine every argument for Bitcoin except one --- paranoia/distrust of government.

frankbreetz 5y ago
Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument.
- mirntyfirty 5y ago
  Bitcoin also isn’t a currency.
- zzbzq 5y ago
  Bitcoin being deflationary is also one of the biggest arguments against BTC-as-currency
- jameskilton 5y ago
  Deflation is the worst possible state for a currency. An economy is defined as the flow of goods and services. Currency is the medium through which goods and services flow. Deflation encourages people to not spend their money. Not spending money means goods and services don't flow, means an economy collapses. That bitcoin / crypto people keep harping that deflation is a good thing proves to me that these people know nothing about economics and should never be trusted as such.
  - deleted 5y ago
    [deleted]
  - toomuchtodo 5y ago
    > That bitcoin / crypto people keep harping that deflation is a good thing proves to me that these people know nothing about economics and should never be trusted as such. They're desperately seeking a store of value (which isn’t wealth; it’s only wealth if productive or others need it and will trade something for it) that can't be devalued by humans, with expected results (value is constantly changing and subjective). As you mention, it shows a lack of economic understanding.
  - snapcaster 5y ago
    This is repeated all the time, but nobody seems to provide evidence besides some offhanded comment about Japan. You realize this is an opinion or ideology not something like physics laws right?
    - JumpCrisscross 5y ago
      > nobody seems to provide evidence besides some offhanded comment about Japan...this is an opinion or ideology" That's because "since WWII, one country has come close to having both a depression and a deflation: Japan in the late 1990s" [1]. The source of policymakers' hesitance with deflation "seems to stem from the experience of the Great Depression, in which deflation and depression appear to have been tightly linked." We have limited data suggesting moderate deflation is any more damaging than moderate inflation. We have better-tested tools for fighting inflation. But with negative interest rates and QE (implying the existence of its inverse, i.e. the central bank selling short), deflation is less scary. The problem with Bitcoin is its fixed supply. Bitcoin would not produce steady deflation. It is inherently volatile, as the bullwhip effect of the credit system is left unmoderated. The failures of fixed-supply currencies are documented beyond the domain of "opinion or ideology," e.g. in studies around currency substitution [2]. [1] https://www.nber.org/system/files/working_papers/w10268/w10268.pdf https://www.nber.org/system/files/working_papers/w10268/w102... [2] https://en.wikipedia.org/wiki/Currency_substitution https://en.wikipedia.org/wiki/Currency_substitution
      - I_DRINK_KOOLAID 5y ago
        > We have limited data suggesting moderate deflation is any more damaging than moderate inflation You don't need data to understand how people would simply stop working and wait for their cash to appreciate as they do nothing. Except you can't consume or eat cash and also life is short and tomorrow is not guaranteed so when you decide that it's time want to spend it you'd not be better off in any way even after deflationary appreciation because everybody had the same brilliant idea and the huge mass of people stopping working caused a collapse in raw output of products and services. Part of me wishes this actually happens, because those who operate countercyclically and keep working when everybody stops to sit on their couch hoping for deflation to make them rich, would eventually make a fortune when sanity comes back and people realize they can't eat the zeros and ones in their bank account.
  - berberous 5y ago
    Your privilege is showing. Many economies have collapsed or people have been severely harmed from runaway inflation. Even now in the US, the wealthy aren’t terribly affected by inflation, especially with home and stock prices rising more than enough to offset them, while the poor are increasingly struggling with currently no end in sight. Perhaps a Bitcoin w/ 2% inflation would have been better than a deflationary one, but I still question whether the average person in the average country is better off with the risk that their government mismanages target inflation than with an algorithmic deflationary Bitcoin. I also question whether Bitcoin being deflationary is really a bad thing when it’s also a store of wealth and not the only means of exchange in a country.
    - dragontamer 5y ago
      > Many economies have collapsed or people have been severely harmed from runaway inflation And the USA's economy was ruined in the 1930s by runaway deflation. The poor don't like inflation _OR_ deflation. Both suck. The rich has the ability to move money around to maximize their gains in any situation, so the rich aren't really harmed by either.
    - School-Cotton 5y ago
      > Many economies have collapsed or people have been severely harmed from runaway inflation. False dichotomy. The last 50 years of monetary policy in developed countries show that you can have moderate inflation (yes, sometimes a bit too much, like now, but moderate overall) without hyperinflation.
      - berberous 5y ago
        Do you think 50 years is all that long in the historical context? America showed that you could have hundreds of years of stable democracy until a simple combination of cable news, Twitter and a narcissistic president almost led to a coup. The Roman republic was stable for hundreds of years until it collapsed. The Turkish lira has lost more than 97 per cent of its value against the US dollar since January 2021. I agree with you that the 1950-2010 world order and U.S. monetary system was better than Bitcoin. Where we disagree I think, is with our confidence in the stability of human institutions and the likelihood that the world necessarily remains stable in that world order for the next 1,000.
  - ramblerman 5y ago
    I think you misunderstand a fixed currency (like the US once had against the gold standard) and an economy that is in deflation.
    - JumpCrisscross 5y ago
      > like the US once had against the gold standard The gold standard isn't a fixed-supply currency. Gold was mined throughout the nineteenth century, coïncidentally, at about the rate of economic growth. When growth kept going while mining stalled, a series of economic crises pushed developing nations away from the standard.
  - Proven 5y ago
  - deleted 5y ago
    [deleted]
  - jwarden 5y ago
    I think there are people who understand economics who think that inflation is often a good thing. Here for example is a quote from Investopedia’s article on Inflation: “Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.” Now deflation caused by a deflationary currency is probably not unambiguously good in the same way as deflation caused by increased production. But are there not any respectable economists who would argue that a deflationary currency might not be so bad?
  - throwawaymaths 5y ago
    > Deflation encourages people to not spend their money Oh the horrors! Maybe people will not spend their money on stupid shit, they might conserve instead of destroy the environment. Maybe the middle class wont be forced into participating in the casino-for-privileged-mbas that is the stock market. Maybe we will stop having a siphon that steals the labor value from the lower class and drops it on the doorstep of the rich.
    - hackyhacky 4y ago
      In a deflationary economy, it's not just consumers who stop spending, it's everyone: companies stop investing, employers stop hiring. This leads to a vicious cycle. History shows us that deflationary economies can be more damaging that inflationary.
  - tastyfreeze 5y ago
    The argument that with deflationary currency nobody will spend is ridiculous. Everybody still needs to spend to buy whatever they need for daily life. Money will still be spent into the economy. The difference between moderate inflation and moderate deflation is what people do with their excess money. With inflation people will buy stuff just because stuff holds its value and money doesn't. With deflation people save their excess. The higher the inflation/deflation level the more pronounced the behavior of spending/saving. People having savings is a sign of a healthy economy. With savings there are more people that have an opportunity to invest. Investment provides real growth.
    - BoardsOfCanada 5y ago
      That's why no one could ever make any money selling computers or software. After all next month you'd get something better for less. /s
    - KallDrexx 5y ago
      Deflationary being bad has nothing to do with essential spending and everything to do with discretionary spending. I (and many people I know) don't buy games that we want to play right away because we know they will be on sale in a month or so, and can wait. If I expect houses to go down in price I will not put a lot of effort into buying a house, and instead rent for now. Used car prices right now are extraordinarily high, so I will not be upgrading my car until prices start coming down. I'm not buying a new graphics card because I think prices are inflated and I believe they will come down sometime in the next yea. Etc... A significant portion of our economy is reliant on discretionary spending, and when discretionary spending drops we usually end up in recessions, as companies that rely on that spending start layoffs.
    - deleted 5y ago
      [deleted]
  - thaway2839 5y ago
    Since you're clearly using "spending" in a more economic sense, but most people will read it from the perspective of household finances and therefore interpret spending as morally wrong, I'll add that the spending you're discussing includes, and primarily is, investment. Both your run of the mill, deposit money in the bank which loans it out so all sorts of businesses can be built, and people can buy houses, cars, etc., and your more exotic VC and hedge fund investments.
  - CapricornNoble 5y ago
    >>>Deflation encourages people to not spend their money. Not spending money means goods and services don't flow, means an economy collapses. How do we square that with the unending flow of junk that is produced with obsolescence baked in and disposed of? How do we square "economic growth uber alles!" with the constant warnings of man-made climate change and our impending doom due to wasting our resources on cheap shit from China? I would argue that the short-term time preference should balance the effects of inflation. I don't really care that a Lamborghini might cost half as much in 10 years. If I want to drive one TODAY bad enough, I will still buy it. If my umbrella has a hole in it and it's raining, if I want to be dry RIGHT NOW, I don't care that an umbrella is cheaper tomorrow. I would also argue that technological improvement is inherently deflationary, and that technological improvement is all about resource efficiency: accomplishing the same work with a smaller expenditure of resources. Even if rising demand were to lead to higher equilibrium prices, we should be balancing the economy in such ways that prices still fall or at worst remain static, to reflect the diminishing resource requirements for a given unit/widget produced.
  - stuckinhell 5y ago
    You've made a pretty strong statement with an appeal to authority. Economic "authority" figures have gotten the economy wrong for 20 years. Maybe you should question your first principles more.
- jqpabc123 5y ago
  Bitcoin may not be inflationary but it is certainly depressionary. As in those who paid nearly $70k per Bitcoin after El Salvador declared it an official currency 7 months ago are probably feeling kinda depressed right now.
- tablespoon 5y ago
  > Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument. That's not actually a pro-Bitcoin argument. It's just an artifact the peculiar ideologies that influenced Bitcoin's creator. Deflation hurts economic activity, but benefits hoarders.
- JumpCrisscross 5y ago
  > Bitcoin is deflationary, a CBDC would not be. This is the biggest pro-Bitcoin argument Except Bitcoin is not deflationary. It's fixed supply. Those are separate, if related, characteristics. In the last year it's been roughly flat, with the word "roughly" doing a lot of work, given its volatility that would make a Zimbabwean central banker blush.
  - lampshades 5y ago
    Fixed supply is deflationary in a world where population increases. Whether or not population will continue to increase is another question.
    - JumpCrisscross 5y ago
      > Fixed supply is deflationary in a world where population increases This assumes the whole world uses the currency, which is untrue for every currency in the history of humanity, and that per capita output per person using the currency is at least flat, which is also questionable. Demographics are an input into monetary policy. But the effect is way fuzzier than you imply [1]. [1] https://ssl.nbp.pl/publikacje/materialy_i_studia/284_en.pdf https://ssl.nbp.pl/publikacje/materialy_i_studia/284_en.pdf
  - freemint 5y ago
    Fixed supply -> almost certainly inflationary. It is only not inflationary if nobody ever makes a coin burn and nobody ever leaves less money in a that is worth less than a transaction to move it will cost.
- andrewla 5y ago
  > Bitcoin is deflationary This is a claim made repeatedly by Bitcoin proponents and opponents, based on various ideological differences. But the statement is nonsensical. The statement "Bitcoin is deflationary" is exactly equivalent to the statement "Bitcoin will always increase in value".
- Fargoan 5y ago
  Bitcoin is inflationary. What do you think block rewards are?
elzbardico 5y ago
- deleted 5y ago
  [deleted]
- MrMan 5y ago
  Rich white males are the ones spreading libertarian FUD
rglover 5y ago
> paranoia/distrust of government. Hmm, I wonder why.
md2020 5y ago
None of the rights enjoyed by citizens of liberal democracies matter without the right to transact. You can’t exercise your right to speech if you can’t buy posters or domain names for your cause. You can’t go to a protest outside of walking distance if you can’t pay for gas in your car, or a bus or train ticket. Governments gaining such control of currency would be a backslide into authoritarianism.
- rainingmonkey 5y ago
  > You can’t exercise your right to speech if you can’t buy posters or domain names for your cause. You can’t go to a protest outside of walking distance if you can’t pay for gas in your car, or a bus or train ticket. I think this aught to make us consider the antidemocratic effects of poverty and inequality too.
- jqpabc123 5y ago
  Your comment is based on unfounded assumptions --- that the current banking system will be subverted and cash will no longer be accepted and due process under the law will become null and void. None of these are being proposed. Implementing all of these would require changing the constitution. In other words, your comment is an example of the paranoia I referred to.
  - ellopoppit 5y ago
    The freezing of bank accounts of political dissidents has precedent in recent history
    - jqpabc123 5y ago
      Where these dissidents doing more than just protesting? Perhaps committing crimes by impeding and infringing on the rights of other citizens? Cry me a river of unfounded paranoia.
      - SemanticStrengh 5y ago
mirceal 5y ago
a digital dollar? what? most dollars in existence today are digital. so why does bitcoin exist again?
usrn 5y ago
Given Canada's unbanking of people who disagree with their dictator it's a little insulting to call that paranoia.
- jqpabc123 5y ago
  Calling what they were doing simply "disagreeing" is a little insulting to common sense. You have every right to disagree and protest --- but you don't have a right to illegally blockade bridges and prevent others from traveling to work or to the hospital if need be.
  - usrn 5y ago
    People here did much more than that and were hardly punished. idk, keep pushing. Eventually we'll solve the problem with a more complete and final solution.

thesausageking 5y ago

8 months after rolling out a brand new method of doing payments, ~70% of the country has tried it and ~11% of those are using it for remittances (3% in Bitcoin, 8% in dollars). For a government program rolling out new technology, that actually seems quite impressive.

bparsons 5y ago
Not if the technology is a currency. I think this finally ends the idea that bitcoin can be used for day-to-day transactions.
- thesausageking 5y ago
  The program started less than a year ago. I think it's way too early to say that. So far, it seems like people prefer still transacting in dollars, but that may change over time. I'm just impressed that a small, developing country could roll out a new technology so fast.
  - tablespoon 5y ago
    >>> 8 months after rolling out a brand new method of doing payments, ~70% of the country has tried it and ~11% of those are using it for remittances (3% in Bitcoin, 8% in dollars). >> Not if the technology is a currency. I think this finally ends the idea that bitcoin can be used for day-to-day transactions. > The program started less than a year ago. I think it's way too early to say that. So far, it seems like people prefer still transacting in dollars, but that may change over time. Isn't that a lot like saying "give Google+ time, it may catch on eventually"? Most users tried and rejected it.
    - bpodgursky 5y ago
      Most citizens aren't giving or receiving regular remittances...
  - deleted 5y ago
    [deleted]

tupac_speedrap 5y ago

Now that bitcoin is dying are graphics cards selling at RRP yet?

dragontamer 5y ago
Graphics cards have come down in price severely, but are still well above MSRP / RRP. But BTC never was a big deal for graphics cards particularly. IIRC, Ethereum was the most profitable GPU coin. (Even if you were paid in BTC for mining through NiceHash or whatever, most miners would immediately sell for USD anyway to pay for electricity costs).
- SV_BubbleTime 5y ago
  For my company I needed something with CUDA cores, got a 3070 Ti for $100 over MSRP. I could live with that. Coming down, yes. Back to normal? Not until 2024 I bet.
  - mpfundstein 5y ago
    you know how nvidia feels about using the RTX for commercial applications (e.g. deploying a server with rtx in a datacenter), right? :-)
    - SV_BubbleTime 5y ago
      Reminds me, I need to make sure my WinRAR licenses are all up-to-date.
vidarh 5y ago
Most BTC miners moved to ASIC based miners many years ago.
throw_m239339 5y ago
People today aren't mining BTC with mass market graphic cards, but ETH and other currencies.

floss_silicate 5y ago

There’s a bit of sleight of hand going on with this article, which conflates use of the Chivo wallet software with bitcoin. But then later the article says: “Meanwhile, many living in tourist hot spots on the Pacific coast, where Bitcoin usage is highest, have transitioned to other crypto wallets, such as the privately developed Bitcoin Beach.” So they’re using the currency, just not the government developed software. And a weird phrasing here “[many] are using it to hold and transfer dollars, El Salvador’s official currency”, implying dollars are the only ‘official’ currency — when by definition, Bitcoin is too.

frankbreetz 5y ago
I don't know how you can call this a slight of hand the title of the article is "Most Salvadorans have already ditched their national Bitcoin wallets", I don't know how you could make this more clear in an article title without making it too long.
- floss_silicate 5y ago
  But all the comments in this thread are talking about the failure of bitcoin, when the article is about the wallet software they developed. That’s the sleight of hand.
  - Armisael16 5y ago
    How would you re-write the headline? This feels more like a case where people just won’t read it regardless of what’s written.
    - notch656a 5y ago
      A bitcoin wallet is generally meant to denote a wallet that contains bitcoin. Chivo is not a wallet for bitcoin. It is a 'wallet' that gives you proper authentication to trade on a lightning network. The actual bitcoin, and as is my understanding even the lightning wallet, is in custody of a more centralized location. Calling Chivo app a 'bitcoin wallet' is an intentionally misrepresentation, if not by the confused writer of the article then of the government that confused the person writing it. These people didn't 'ditch' a bitcoin wallet, or at least not the one mentioned, because Chivo never was one.

abetusk 5y ago

I can't help but feel the article is biased. The first line is "The launch of ... Chivo, has been a flop ...". Has it? It seems like there's more nuance than this broad stroke. Here's a snippet from section 4, "Concluding Remarks" of the original paper [0]: """ Despite these efforts and the incentive to use contactless payments caused by the COVID-19 pandemic, bitcoin is not widely used as a medium of exchange. While most citizens in El Salvador have a cell phone with internet, less than 60% of them downloaded Chivo Wallet, and 20% continued to use the app after spending their $30 sign-up bonus. Further, 5% of citizens have paid taxes with bitcoin, and despite its legal tender status, only 20% of firms—mostly large ones—accept bitcoin and 11.4% report having positive sales in bitcoin. In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch. Our results highlight the challenges that cryptocurrencies face to become widely accepted, even after a governmental big push and under favourable circumstances, and are relevant for countries studying their viability as currencies """ So, 60% adoption of Chivo, 20% (total, not of the 60%) still in current use. 20% of firms accept Bitcoin and, as far as I can tell presumably over half, 11.4%, of total firms report positive sales in Bitcoin (figure 8, page 24), with 2% (total) seeing losses and the rest, 87%, reporting no change. It's not the large scale adoption that proponents had hoped for but 20% adoption by people and businesses still seems pretty large. [0] https://bfi.uchicago.edu/wp-content/uploads/2022/04/BFI_WP_2022-54.pdf https://bfi.uchicago.edu/wp-content/uploads/2022/04/BFI_WP_2...

RC_ITR 5y ago
Maybe this man-on-the street account of using Bitcoin in El Salvador will help you understand why people are so bearish [0] [0]https://www.bloomberg.com/features/2022-bitcoin-travel-problems/ https://www.bloomberg.com/features/2022-bitcoin-travel-probl...
belval 5y ago
> In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch. This is why it's a failure. A healthy system would be growing, its users would be singing its praise. As far as we can tell, that's absolutely not what's happening.

throw7 5y ago

Imagine a $500 credit for opening a checking account from the local bank. And then having it debited/stolen with the bank saying "sorry, we don't know what happened, where or who it went to... there's nothing we can do about it, but don't worry, you now have a checking account you can use from us".

standardUser 5y ago

I program a computer for a living and I'm still baffled by my own array of wallets/accounts/whathaveyous that I use for crypto. It's the very definition of a technology that is not ready for prime time. Maybe their app made it accessible in ways every other crypto-related technology I have used has not?

babypuncher 5y ago
It's a technology that is still looking for a problem to solve. I have yet to see why I would want to use Bitcoin over a credit/debit card or something like PayPal.
- SemanticStrengh 5y ago
  you can't buy monkeys pictures otherwise.
- standardUser 5y ago
  Good point. Part of my "struggle" is the fact that my crypto holdings are essentially just for fun, and I never need to figure things out.
- kupfer 5y ago
  I agree with bitcoin specifically. When it started it was useful to me for cheap cross border value transfer and timestamping. Now we have alternatives. I still would prefer if a more efficient payment mechanism was widespread, that hides my transaction details from the payment processor.
  - rchaud 5y ago
    When it started, you could mine Bitcoin on a laptop for fun. Now you need a faceless cartel of datacenter owners running rigs 24/7 and selling options on mined BTC to keep the lights on.
- smokey_circles 5y ago
  > still looking for a problem to solve The Satoshi protocol is about creating a mechanism to achieve distributed, trustless consensus. Plenty of applications for such a platform. Whether it's achieving that goal is a separate debate (so far it has managed to establish itself as a crazy high risk forex medium that's only slightly less unwieldy than FIX) and I'm not convinced anyone in the builder space has even a vague understanding of the problems crypto has to overcome to be _practical_, let alone replace _the entire global financial system_. Call me a pessimist but it's not gonna happen without violent revolution (and let's not please). But we can stop saying vacuous things like "cryptography doesn't have a problem to solve", it's clearly always been about replacing trust with verification. Que KGB expression.

elif 5y ago

A 70% take rate on a cellphone app in a country where 73.8% of the population lives in cities... And this is being characterized negatively?

seaourfreed 5y ago

What wallets do they use instead?

uncomputation 5y ago

Hard to think of a more opposite intended use case than the one Satoshi imagined than this: a custodial, government-subsidized, completely identified (not pseudonymous) payment app which does not allow you to run verification of the network dangled by the government with a $30 carrot in front of a largely unbanked, cash-based society which trusts the dollar. Every single metric here is an extreme far cry from the tech-literate, globally privileged, privacy conscious libertarian group that cryptocurrency came from. Crypto as a whole has many interesting use cases and potential, some of which excite me personally, but this is probably the largest example of the “solution looking for a problem” criticism here. The greatest irony here being many Salvadorans don’t trust bitcoin, but do trust the dollar!

dpedu 5y ago

> Only 1.6% of all remittances were received in bitcoins via digital wallets in February 2022, according to El Salvador’s Central Bank. I seem to recall that remittances has been touted as crypto's #1 use case for a long time.

t_mann 5y ago

The irony of the ultimate cypherpunk dream, a stateless global currency, being forced onto largely unwilling citizens by a national government is hard to measure in words.