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It didn't take a crypto crash, crypto has been a failed currency since BTC hit a dollar... Extreme deflation is arguably more deadly than hyperinflation. If yo

It didn't take a crypto crash, crypto has been a failed currency since BTC hit a dollar... Extreme deflation is arguably more deadly than hyperinflation. If you know that by holding a dollar today, you can get 2 dollars worth of goods tomorrow, why are you going to spend a dollar? Likewise, once Bitcoin went from fractions of a penny to a dollar, what incentive was left to spend it? You could argue an ideological want force it as a currency... but how many people's morals hold up at 10x returns? 100x returns? 1000x returns? If BTC (or any major crypto) had become the official currency of a country, it'd be a failed state by this point.

djbusby 4y ago
BTC is official in El Salvador.
- iostream24 4y ago
  And Bukele has locked up more than 2% of the population in inhumane conditions… Hardly a promotional asset…
  - el-salvador 4y ago
    2% of the total population. It must be higher when other variables are added to the calculation. - The % of male population imprisoned. My guesstimate is 4%. - The % of male population between 18 and 29 y/o imprisoned I don’t have the raw data to calculate it at this moment. But it must be higher once gender / age / income are considered.
- grey-area 4y ago
  https://www.amnesty.org/en/latest/news/2022/06/el-salvador-president-bukele-human-rights-crisis/ https://www.amnesty.org/en/latest/news/2022/06/el-salvador-p... https://www.cato.org/commentary/el-salvadors-road-currency-chaos-economic-collapse https://www.cato.org/commentary/el-salvadors-road-currency-c... https://www.reuters.com/markets/europe/crypto-crash-leaves-el-salvador-with-no-easy-exit-worsening-crisis-2022-05-19/ https://www.reuters.com/markets/europe/crypto-crash-leaves-e... President Bukele’s government declared a state of emergency on 27 March, following a spike in homicides allegedly committed by gangs, which has since been extended twice....Despite a drop in the homicide rate in recent years, El Salvador continues to be one of the most violent countries in the world....The government's financial problems are not because of bitcoin, but they have gotten worse because of bitcoin. QED
  - rscnt 4y ago
    The president doesn't care about the issues that concern his position. There was an intiative by the treasury to try and have people use a single document to deal with taxes, where we previously used two, this is something important for most people, the guy hasn't even mentioned on his social networks. They also build a public vet that was supposedly financed with the earnings of BTC - when the price dropped the president mentioned that he hasn't sold any meaning all the money spent to promoto chivo or crypto has come from our tax dollars.
    - deleted 4y ago
      [deleted]
- rscnt 4y ago
  Most people in my circle that pay taxes and hold crypto disapprove this. People are overall indifferent or disappointed with the decision. We don't know who or whom holds the BTC that was bought with tax money. It just takes a couple day of rain to have the capital flooded and our president is busy talking about crypto. Web services build by the government are a disaster, can't handle a decent volume of requests or are simply too buggy. With our taxes we've financed "chivo", the entire thing has been a disaster they spent an awful amount of dollars to have basically nobody use it. Not even crypto bros use the chivo apps, most transactions can be attributed to people doing "scalping".
  - BoorishBears 4y ago
    It's great to see a perspective from the ground on this. I'm originally from an "emerging market" (aka 3rd world country) and I don't share the enthusiasm crypto bros do about emerging markets interacting with crypto. It's rarely from a beneficial place. Crypto is absolutely perfect to allow a corrupt government to quietly siphon the nation. No planes full of dollar bills, no heavy gold bricks. Just a movement from one digital address to another. Sure in a pinch it might be a lifeline, but it's a flimsy lifeline and these countries need a lot more than a glorified remittance system to recover. It's fun to laugh at NFT bros trying to buy overpriced restaurant food, but last few months have likely been disastrous for a lot of very poor people.
fortzi 4y ago
BTC is an official currency in San Salvador, which is arguably indeed a failed state. I’d argue, though, that it’s just another symptom of the reasons which made it a failed state in the first place (populism, corruption, etc.)
- BoorishBears 4y ago
  I largely agree, I mean the president that got it through last year also violated their constitution to get another term and was upheld by his own puppet court... But BTC hasn't helped at all. It's not even _the_ official currency, just one alongside USD, and yet it's already accelerated the country towards defaulting on their bonds. While all this goes down the president is still making noise about a "Bitcoin city". A very "meta" commentary on cryto I feel.
  - el-salvador 4y ago
    >It's not even _the_ official currency, just one alongside USD, and yet it's already accelerated the country towards defaulting on their bonds. And its day to day usage is very low. There was a spike in use after $30 sign up bonus and during the 2021 bitcoin conference and following months which attracted tourism from bitcoiners though.
- dhosek 4y ago
  San Salvador is a different country from El Salvador, just for the record.
  - kgwgk 4y ago
    San Salvador is not a country - it’s a city. The capital of El Salvador.
    - el-salvador 4y ago
      Yup! That's correct. I would say that being able to differentiate between El Salvador, Salvador and San Salvador is a shibboleth for those familiar with El Salvador. They are easy to confuse. [1] https://en.wikipedia.org/wiki/Shibboleth https://en.wikipedia.org/wiki/Shibboleth
MichaelBurge 4y ago
> If you know that by holding a dollar today, you can get 2 dollars worth of goods tomorrow, why are you going to spend a dollar? Does that mean if you can find a non-defaulting bond that pays higher interest than inflation, the US dollar will completely collapse? Because why would anyone spend $1 when they could get $2 of goods in N years...
- BoorishBears 4y ago
  First off, if the 5 year treasury rate ever approaches 1000%, I assure you the Fed will collapse. Second, problems with hyperdeflation and hyperinflation are both rooted in the hyper. If you can buy a pizza today, or have $10 million dollars in a few years, why buy a pizza? Third, the issue isn't just deflation, it's specifically deflation of a currency. If you invest $100 in a company, there's a chance it will be $1000 next year. But your $100 will circulate in the meantime and generate value. Now if instead there was just as good a chance you could put $100 under your mattress, and next year it'd magically have become $1000 despite never having left your grasp... why would anyone ever invest again? You get to keep your money and have it increase in value, there's no incentive to invest or spend any more than you absolutely have to. But then as people spend less and less, there's less and less economic activity being generated. You stop wanting to pay people so jobs disappear. Eventually you end up in a game of chicken where everyone is scared to spend money. A BTC based country (fully BTC based, not El Salvador's lip service) would be an utter hellscape devoid of any economic output other than people waiting for their currency to appreciate. Not unlike the real thing...

djbusby 4y ago

BTC is official in El Salvador.

iostream24 4y ago
And Bukele has locked up more than 2% of the population in inhumane conditions… Hardly a promotional asset…
- el-salvador 4y ago
  2% of the total population. It must be higher when other variables are added to the calculation. - The % of male population imprisoned. My guesstimate is 4%. - The % of male population between 18 and 29 y/o imprisoned I don’t have the raw data to calculate it at this moment. But it must be higher once gender / age / income are considered.
grey-area 4y ago
https://www.amnesty.org/en/latest/news/2022/06/el-salvador-president-bukele-human-rights-crisis/ https://www.amnesty.org/en/latest/news/2022/06/el-salvador-p... https://www.cato.org/commentary/el-salvadors-road-currency-chaos-economic-collapse https://www.cato.org/commentary/el-salvadors-road-currency-c... https://www.reuters.com/markets/europe/crypto-crash-leaves-el-salvador-with-no-easy-exit-worsening-crisis-2022-05-19/ https://www.reuters.com/markets/europe/crypto-crash-leaves-e... President Bukele’s government declared a state of emergency on 27 March, following a spike in homicides allegedly committed by gangs, which has since been extended twice....Despite a drop in the homicide rate in recent years, El Salvador continues to be one of the most violent countries in the world....The government's financial problems are not because of bitcoin, but they have gotten worse because of bitcoin. QED
- rscnt 4y ago
  The president doesn't care about the issues that concern his position. There was an intiative by the treasury to try and have people use a single document to deal with taxes, where we previously used two, this is something important for most people, the guy hasn't even mentioned on his social networks. They also build a public vet that was supposedly financed with the earnings of BTC - when the price dropped the president mentioned that he hasn't sold any meaning all the money spent to promoto chivo or crypto has come from our tax dollars.
  - deleted 4y ago
    [deleted]
rscnt 4y ago
Most people in my circle that pay taxes and hold crypto disapprove this. People are overall indifferent or disappointed with the decision. We don't know who or whom holds the BTC that was bought with tax money. It just takes a couple day of rain to have the capital flooded and our president is busy talking about crypto. Web services build by the government are a disaster, can't handle a decent volume of requests or are simply too buggy. With our taxes we've financed "chivo", the entire thing has been a disaster they spent an awful amount of dollars to have basically nobody use it. Not even crypto bros use the chivo apps, most transactions can be attributed to people doing "scalping".
- BoorishBears 4y ago
  It's great to see a perspective from the ground on this. I'm originally from an "emerging market" (aka 3rd world country) and I don't share the enthusiasm crypto bros do about emerging markets interacting with crypto. It's rarely from a beneficial place. Crypto is absolutely perfect to allow a corrupt government to quietly siphon the nation. No planes full of dollar bills, no heavy gold bricks. Just a movement from one digital address to another. Sure in a pinch it might be a lifeline, but it's a flimsy lifeline and these countries need a lot more than a glorified remittance system to recover. It's fun to laugh at NFT bros trying to buy overpriced restaurant food, but last few months have likely been disastrous for a lot of very poor people.

fortzi 4y ago

BTC is an official currency in San Salvador, which is arguably indeed a failed state. I’d argue, though, that it’s just another symptom of the reasons which made it a failed state in the first place (populism, corruption, etc.)

BoorishBears 4y ago
I largely agree, I mean the president that got it through last year also violated their constitution to get another term and was upheld by his own puppet court... But BTC hasn't helped at all. It's not even _the_ official currency, just one alongside USD, and yet it's already accelerated the country towards defaulting on their bonds. While all this goes down the president is still making noise about a "Bitcoin city". A very "meta" commentary on cryto I feel.
- el-salvador 4y ago
  >It's not even _the_ official currency, just one alongside USD, and yet it's already accelerated the country towards defaulting on their bonds. And its day to day usage is very low. There was a spike in use after $30 sign up bonus and during the 2021 bitcoin conference and following months which attracted tourism from bitcoiners though.
dhosek 4y ago
San Salvador is a different country from El Salvador, just for the record.
- kgwgk 4y ago
  San Salvador is not a country - it’s a city. The capital of El Salvador.
  - el-salvador 4y ago
    Yup! That's correct. I would say that being able to differentiate between El Salvador, Salvador and San Salvador is a shibboleth for those familiar with El Salvador. They are easy to confuse. [1] https://en.wikipedia.org/wiki/Shibboleth https://en.wikipedia.org/wiki/Shibboleth

MichaelBurge 4y ago

> If you know that by holding a dollar today, you can get 2 dollars worth of goods tomorrow, why are you going to spend a dollar? Does that mean if you can find a non-defaulting bond that pays higher interest than inflation, the US dollar will completely collapse? Because why would anyone spend $1 when they could get $2 of goods in N years...

BoorishBears 4y ago
First off, if the 5 year treasury rate ever approaches 1000%, I assure you the Fed will collapse. Second, problems with hyperdeflation and hyperinflation are both rooted in the hyper. If you can buy a pizza today, or have $10 million dollars in a few years, why buy a pizza? Third, the issue isn't just deflation, it's specifically deflation of a currency. If you invest $100 in a company, there's a chance it will be $1000 next year. But your $100 will circulate in the meantime and generate value. Now if instead there was just as good a chance you could put $100 under your mattress, and next year it'd magically have become $1000 despite never having left your grasp... why would anyone ever invest again? You get to keep your money and have it increase in value, there's no incentive to invest or spend any more than you absolutely have to. But then as people spend less and less, there's less and less economic activity being generated. You stop wanting to pay people so jobs disappear. Eventually you end up in a game of chicken where everyone is scared to spend money. A BTC based country (fully BTC based, not El Salvador's lip service) would be an utter hellscape devoid of any economic output other than people waiting for their currency to appreciate. Not unlike the real thing...