4 ms·

Bitcoin Is Legal Tender in El Salvador, Here’s How It’s Going

29 points by throw0101a 5y ago

alisonkisk 5y ago
> A major use case lauded by supporters is the amount of money that would stay in the hands of El Salvadorans rather than money gram companies. Remittances account for 20% of El Salvador’s GDP. What exactly is a remittance? Does it mean money that is sent, but not for a purchase? How are international remittances (in both directions) counted here?
- toomuchtodo 5y ago
  Remittances are cross border transfers from expats of the country receiving the remittances. If you (as the government of El Salvador) wanted to reduce remittance costs, the way to do that is working directly with the US Fed or with a fintech like Wise to drive down the costs of cross border payments (especially when dollars are used internally in El Salvador).
- bgun 5y ago
  Remittance is money sent back to the country by expats - like, for example, from a family member who left the country to find a better paying job sending regular checks back to their family in their country of origin.
- bitxbitxbitcoin 5y ago
  Sent but not for a purchase is also how I look at it. One thing to keep in mind is that remittance numbers are always only estimates because of the amount of remittances that happen with physical cash on bodies crossing borders.
- daniel-cussen 4y ago
  Emigrants sending money back home for their family--generally family--so they can spend it however the hell they want, on whatever they need most. And they do talk a bit about how much is needed for this and for that, and how much they saved by going out of their way out of respect for the emigrant, eg the Salvadoreño in California working his ass off and getting cheated constantly by earlier immigrants. So I had to take landlords to court, so far I've taken one and she got treated like crap by the court for her lies, she lost every part of my case against her. She owes me money, she promised the court to pay $100 a month, missed her first payment, owed it on the spot. And the next landlord too, same shit, didn't want to repay the deposit. Both were Spanish-speaking, bad English, but the thing was most of their tenants were illegal immigrants, who couldn't take their rent seekers to court.[1] Both of them systematically cheated their renters because they never got taken to court. Thought court was a gringo thing. Pajarito nuevo la lleva. The new kid in the game is "it" in the game of tag. . . [1] Rentee is a neutral term, not meant pejoratively, that's not the intent. Landlord implies nobility, the "lord" part is a no-go. And "land" too, it's a whole thing, where really they provide permission to occupy a volume, I'm not exactly going to drill for oil, and it's not like that "landlord" has mineral rights over it either, doesn't own a spherical sector all the way to the center of the earth, and it doesn't extend that far above either. That would be land, a cut of the universe such that the ownership of the entire Universe were defined by the ownership according to the law of zones of the Earth's surface. Now, formally seeking rent and providing something in exchange, so for instance if a rent seeker does a really good job with maintenance the rent is well earned. It doesn't have to be difficult, the rentee can just be really good at repairs and do them perfectly at the first attempt. There's other ways to pull one's weight as a rentee, it's just the intent--in particular with what is termed rent-seeking is in economics getting a check every month for capital--meaning having money before others, people younger than you. Pajarito nuevo la lleva. The concept of capital, tied to ownership of the Universe, called "land." Things could be different though, now that I'm in a good place I can work on making things fairer for both renter and rentee. Turns out the current arrangement regarding capital, land, and necessity is unfair to both. . . But what was unfair to me alone, was stealing the deposit. Spending it right away. Turns out an immigrant from a place near Salvador told me, with the same woman who stole my deposit, he paid a deposit too but then subtracted it from the first rent payment. The other thing you can do is write down the serial numbers of the bills, insist they have to pay back those specific bills with the same serial numbers, to prove they didn't just squander the money and make up shit instead of failing to pay it back. You can write the serial numbers on the contract they have to sign when they receive the deposit, which you ALWAYS have to do and which rentees will always accept doing. In addition demand receipts, like by text message, as they receive the rent. Both of these losers tried cheating me with the receipts, like complaining about having to make them or writing stupid shit "dll" instead of "dólares", or trying to never do them. Pablo César Miranda (said his name was Julio César, as far as I can tell both are fictional names so I'm not actually anybody a real man) saying "you make me uncomfortable" with demanding a receipt yeah asshole ding ding ding we have a winner! Because that's what means you can't fuck me over like you do to all your other tenants, like Luis Santos and presumably Osvaldo. Your discomfort tells me I'm acting perfectly. And I tried leaving on a good note, cleaned everything up great specifically for the deposit, left him a six-pack of the beer he liked, but then...didn't pay back the deposit. Turned a good relationship into a bad relationship, gratitude into debt. Means he thinks he can steal from me. Well I already started treating him like shit, told him the price went up, and it's still going up. Only going up. I'm not angry, bitter, frustrated I'm empowered. And I'm acting on behalf of all the immigrants who they robbed with impunity. . . Third time in the recent days we've talked, alisonkisk! I actually was looking through your history because you said something really smart asking if I said torture victims were liars, remember? https://news.ycombinator.com/item?id=31408927 https://news.ycombinator.com/item?id=31408927 Just seeing if you said other smart things, in this case you asked another smart question. Upvoted of course, second person after cercatrova I engage with.
deleted 5y ago
[deleted]
mbStavola 5y ago
El Salvador is quite literally becoming a case study confirming everything we already know about cryptocurrencies: the average person understands it more than you realize and they see zero value in it. The two most frequent reasons for not using BTC/Chivo being price volatility and not wanting to be tracked by their government. Above all, one thing is clear: the most successful part of this was the fact that the state provided essentially a free bank account; most people are choosing to bank USD and not BTC in Chivo! On top of this, the majority are either not transacting in BTC or are transacting in BTC and immediately converting to USD. This is a total failure for the cryptocurrency side of things but a rousing success for the fiat side as you could easily remove the entirety of the BTC functionality and still have a working app. It might even do better this way! It's been repeated over and over again that cryptocurrencies will bank the unbanked, but it's abundantly clear now that cryptocurrencies are absolutely not a requirement for achieving this. If private industry is not going to provide a market solution to the unbanked, let El Salvador show that a government can easily accommodate in its place.
- mekster 5y ago
  Why do I feel you have emotional attachment to cryptocurrency failure?
  - Proven 5y ago
  - andirk 5y ago
    Such is HN when it comes to crypto. Every other topic is dissected objectively with little or no bias. My only guess is because bitcoin is a purely technical implementation of something powerful (money), and a lot of highly technical people watched it walk right by them again and again and again.
- datadata 5y ago
  > the average person understands it more than you realize and they see zero value in it. The two most frequent reasons for not using BTC/Chivo being price volatility and not wanting to be tracked by their government. The article literally has a graph where 62% of the people surveyed here agree with using Chivo. Of the 38% who don't, 40% of them cite not understanding bitcoin as a reason. Volatility and trust are also reasons, but it is disingenuous to assert that the average person understands bitcoin and rejects when there is literally data contradicting this, and in fact that the majority of people don't even object to Chivo/BTC at all here. https://www.howtogeek.com/wp-content/uploads/2022/04/Agree-with-Chivo-Wallet.png?trim=1,1&bg-color=000&pad=1,1 https://www.howtogeek.com/wp-content/uploads/2022/04/Agree-w... I find it amusing to expect a resolution here in less than a year for something that has never been attempted before. This is a country where 70% of people had never used a bank account before. If as a counterfactual at this point it was a raging success in terms of replacing USD, critical articles would probably cast things as a mania/bubble poised to fall apart, or cast the adoption as being coerced.
kwertyoowiyop 5y ago
They should have just switched all the way to Bored Ape NFTs.
throw0101a 5y ago
Study that the article goes over: > This paper studies the potential of a cryptocurrency to become a medium of exchange. We use evidence from a natural experiment: In September 2021, El Salvador became the first country in the world to make bitcoin legal tender, and all economic agents were required to accept bitcoin for all payments. The Salvadorean government also launched an app, “Chivo Wallet,” which allowed users to digitally trade both bitcoin and dollars, and gave major incentives to download it. We conduct a representative national face-to-face survey to obtain information on bitcoin’s usage and effects. Leveraging this data, we document how, despite the government’s “big push” and a large fraction of people downloading Chivo Wallet, usage of bitcoin for everyday transactions is low and is concentrated among the banked, educated, young, and male population. We also estimate the fixed cost of adopting the new payment technology, the importance of strategic complementarities for users, and the elasticity of substitution between mobile payments and other payment methods. * https://www.nber.org/papers/w29968 https://www.nber.org/papers/w29968
imtringued 5y ago
This remind me of how Austrian economists insist on abolishing currency monopolies while simultaneously proclaiming that gold is going to win the competition of currencies. Sure competition is good but at the end of the day people prefer keeping gold over transacting with it.
betwixthewires 5y ago
From the article, 68% of people had heard about the Chivo wallet, of those, 78% downloaded it, 40% of those people continue to use the app. That's 21.216% of Salvadorians using the app. That's failure 8 months in? A fifth of the country is to some degree or other transacting in bitcoin? What is "critical mass"? Less than one in five people in America use Twitter! It appears they're using bitcoin as a means of exchange and USD as a store of value, in other cases, the opposite; using the bitcoin wallet as a savings account. Which, IMO, is the point of all this. The goal wasn't to get people to stop using dollars, if that were the goal, dollars would be removed as a national currency. The goal is to get people to have options. This is a one time banana republic, these people are skeptical of anything the government does. I'm sure there was plenty of skepticism when the dollar was rolled out too. Of course they're going to move cautiously. Calling this a failure after 8 months, they won't even call the affordable care act a failure and it's been a decade of healthcare prices going up since then. This is PR, not reporting.

29 points by throw0101a 5y ago

> A major use case lauded by supporters is the amount of money that would stay in the hands of El Salvadorans rather than money gram companies. Remittances account for 20% of El Salvador’s GDP. What exactly is a remittance? Does it mean money that is sent, but not for a purchase? How are international remittances (in both directions) counted here?

toomuchtodo 5y ago
Remittances are cross border transfers from expats of the country receiving the remittances. If you (as the government of El Salvador) wanted to reduce remittance costs, the way to do that is working directly with the US Fed or with a fintech like Wise to drive down the costs of cross border payments (especially when dollars are used internally in El Salvador).
bgun 5y ago
Remittance is money sent back to the country by expats - like, for example, from a family member who left the country to find a better paying job sending regular checks back to their family in their country of origin.
bitxbitxbitcoin 5y ago
Sent but not for a purchase is also how I look at it. One thing to keep in mind is that remittance numbers are always only estimates because of the amount of remittances that happen with physical cash on bodies crossing borders.
daniel-cussen 4y ago
Emigrants sending money back home for their family--generally family--so they can spend it however the hell they want, on whatever they need most. And they do talk a bit about how much is needed for this and for that, and how much they saved by going out of their way out of respect for the emigrant, eg the Salvadoreño in California working his ass off and getting cheated constantly by earlier immigrants. So I had to take landlords to court, so far I've taken one and she got treated like crap by the court for her lies, she lost every part of my case against her. She owes me money, she promised the court to pay $100 a month, missed her first payment, owed it on the spot. And the next landlord too, same shit, didn't want to repay the deposit. Both were Spanish-speaking, bad English, but the thing was most of their tenants were illegal immigrants, who couldn't take their rent seekers to court.[1] Both of them systematically cheated their renters because they never got taken to court. Thought court was a gringo thing. Pajarito nuevo la lleva. The new kid in the game is "it" in the game of tag. . . [1] Rentee is a neutral term, not meant pejoratively, that's not the intent. Landlord implies nobility, the "lord" part is a no-go. And "land" too, it's a whole thing, where really they provide permission to occupy a volume, I'm not exactly going to drill for oil, and it's not like that "landlord" has mineral rights over it either, doesn't own a spherical sector all the way to the center of the earth, and it doesn't extend that far above either. That would be land, a cut of the universe such that the ownership of the entire Universe were defined by the ownership according to the law of zones of the Earth's surface. Now, formally seeking rent and providing something in exchange, so for instance if a rent seeker does a really good job with maintenance the rent is well earned. It doesn't have to be difficult, the rentee can just be really good at repairs and do them perfectly at the first attempt. There's other ways to pull one's weight as a rentee, it's just the intent--in particular with what is termed rent-seeking is in economics getting a check every month for capital--meaning having money before others, people younger than you. Pajarito nuevo la lleva. The concept of capital, tied to ownership of the Universe, called "land." Things could be different though, now that I'm in a good place I can work on making things fairer for both renter and rentee. Turns out the current arrangement regarding capital, land, and necessity is unfair to both. . . But what was unfair to me alone, was stealing the deposit. Spending it right away. Turns out an immigrant from a place near Salvador told me, with the same woman who stole my deposit, he paid a deposit too but then subtracted it from the first rent payment. The other thing you can do is write down the serial numbers of the bills, insist they have to pay back those specific bills with the same serial numbers, to prove they didn't just squander the money and make up shit instead of failing to pay it back. You can write the serial numbers on the contract they have to sign when they receive the deposit, which you ALWAYS have to do and which rentees will always accept doing. In addition demand receipts, like by text message, as they receive the rent. Both of these losers tried cheating me with the receipts, like complaining about having to make them or writing stupid shit "dll" instead of "dólares", or trying to never do them. Pablo César Miranda (said his name was Julio César, as far as I can tell both are fictional names so I'm not actually anybody a real man) saying "you make me uncomfortable" with demanding a receipt yeah asshole ding ding ding we have a winner! Because that's what means you can't fuck me over like you do to all your other tenants, like Luis Santos and presumably Osvaldo. Your discomfort tells me I'm acting perfectly. And I tried leaving on a good note, cleaned everything up great specifically for the deposit, left him a six-pack of the beer he liked, but then...didn't pay back the deposit. Turned a good relationship into a bad relationship, gratitude into debt. Means he thinks he can steal from me. Well I already started treating him like shit, told him the price went up, and it's still going up. Only going up. I'm not angry, bitter, frustrated I'm empowered. And I'm acting on behalf of all the immigrants who they robbed with impunity. . . Third time in the recent days we've talked, alisonkisk! I actually was looking through your history because you said something really smart asking if I said torture victims were liars, remember? https://news.ycombinator.com/item?id=31408927 https://news.ycombinator.com/item?id=31408927 Just seeing if you said other smart things, in this case you asked another smart question. Upvoted of course, second person after cercatrova I engage with.

deleted 5y ago

[deleted]

mbStavola 5y ago

El Salvador is quite literally becoming a case study confirming everything we already know about cryptocurrencies: the average person understands it more than you realize and they see zero value in it. The two most frequent reasons for not using BTC/Chivo being price volatility and not wanting to be tracked by their government. Above all, one thing is clear: the most successful part of this was the fact that the state provided essentially a free bank account; most people are choosing to bank USD and not BTC in Chivo! On top of this, the majority are either not transacting in BTC or are transacting in BTC and immediately converting to USD. This is a total failure for the cryptocurrency side of things but a rousing success for the fiat side as you could easily remove the entirety of the BTC functionality and still have a working app. It might even do better this way! It's been repeated over and over again that cryptocurrencies will bank the unbanked, but it's abundantly clear now that cryptocurrencies are absolutely not a requirement for achieving this. If private industry is not going to provide a market solution to the unbanked, let El Salvador show that a government can easily accommodate in its place.

mekster 5y ago
Why do I feel you have emotional attachment to cryptocurrency failure?
- Proven 5y ago
- andirk 5y ago
  Such is HN when it comes to crypto. Every other topic is dissected objectively with little or no bias. My only guess is because bitcoin is a purely technical implementation of something powerful (money), and a lot of highly technical people watched it walk right by them again and again and again.
datadata 5y ago
> the average person understands it more than you realize and they see zero value in it. The two most frequent reasons for not using BTC/Chivo being price volatility and not wanting to be tracked by their government. The article literally has a graph where 62% of the people surveyed here agree with using Chivo. Of the 38% who don't, 40% of them cite not understanding bitcoin as a reason. Volatility and trust are also reasons, but it is disingenuous to assert that the average person understands bitcoin and rejects when there is literally data contradicting this, and in fact that the majority of people don't even object to Chivo/BTC at all here. https://www.howtogeek.com/wp-content/uploads/2022/04/Agree-with-Chivo-Wallet.png?trim=1,1&bg-color=000&pad=1,1 https://www.howtogeek.com/wp-content/uploads/2022/04/Agree-w... I find it amusing to expect a resolution here in less than a year for something that has never been attempted before. This is a country where 70% of people had never used a bank account before. If as a counterfactual at this point it was a raging success in terms of replacing USD, critical articles would probably cast things as a mania/bubble poised to fall apart, or cast the adoption as being coerced.

kwertyoowiyop 5y ago

They should have just switched all the way to Bored Ape NFTs.

throw0101a 5y ago

Study that the article goes over: > This paper studies the potential of a cryptocurrency to become a medium of exchange. We use evidence from a natural experiment: In September 2021, El Salvador became the first country in the world to make bitcoin legal tender, and all economic agents were required to accept bitcoin for all payments. The Salvadorean government also launched an app, “Chivo Wallet,” which allowed users to digitally trade both bitcoin and dollars, and gave major incentives to download it. We conduct a representative national face-to-face survey to obtain information on bitcoin’s usage and effects. Leveraging this data, we document how, despite the government’s “big push” and a large fraction of people downloading Chivo Wallet, usage of bitcoin for everyday transactions is low and is concentrated among the banked, educated, young, and male population. We also estimate the fixed cost of adopting the new payment technology, the importance of strategic complementarities for users, and the elasticity of substitution between mobile payments and other payment methods. * https://www.nber.org/papers/w29968 https://www.nber.org/papers/w29968

imtringued 5y ago

This remind me of how Austrian economists insist on abolishing currency monopolies while simultaneously proclaiming that gold is going to win the competition of currencies. Sure competition is good but at the end of the day people prefer keeping gold over transacting with it.

betwixthewires 5y ago

From the article, 68% of people had heard about the Chivo wallet, of those, 78% downloaded it, 40% of those people continue to use the app. That's 21.216% of Salvadorians using the app. That's failure 8 months in? A fifth of the country is to some degree or other transacting in bitcoin? What is "critical mass"? Less than one in five people in America use Twitter! It appears they're using bitcoin as a means of exchange and USD as a store of value, in other cases, the opposite; using the bitcoin wallet as a savings account. Which, IMO, is the point of all this. The goal wasn't to get people to stop using dollars, if that were the goal, dollars would be removed as a national currency. The goal is to get people to have options. This is a one time banana republic, these people are skeptical of anything the government does. I'm sure there was plenty of skepticism when the dollar was rolled out too. Of course they're going to move cautiously. Calling this a failure after 8 months, they won't even call the affordable care act a failure and it's been a decade of healthcare prices going up since then. This is PR, not reporting.