9 ms·

El Salvador’s Experiment with Bitcoin as Legal Tender

54 points by Bostonian 4y ago

deleted 4y ago
[deleted]
iliekcomputers 4y ago
I never really understood what incentive a government had to recognize bitcoin as legal tender. There are no real benefits over something like UPI in terms of user UX. It takes things out of the government's hands, as it's harder to print money.
- Spellman 4y ago
  The Libertarians would argue that the government not being able to print money is the feature and can build trust in the currency
  - dragontamer 4y ago
    But you could more easily "not print money" by making the Euro or US Dollar your currency.
    - jdminhbg 4y ago
      Sure, but the ECB or Federal Reserve can print money, and you don't control them. If your goal is a mathematically guaranteed money supply (this would not be my goal, fwiw), BTC is superior.
      - avrionov 4y ago
        The supply is mathematically guaranteed, but the price fluctuates more than the dollar.
    - Spellman 4y ago
      Because then you're beholden to another country, which may be hostile to your country, and their money printer. With Bitcoin, no one has control!
      - ceejayoz 4y ago
        > With Bitcoin, no one has control! Well, until a little over 50% of the miners decide they don't like you. Ethereum's fork proved "no one has control" is an illusion.
        chrisco255 4y ago
        Bitcoin also famously forked into BTC and BCH. And Ethereum Classic is still ticking away printing blocks. Forks are a feature, not a bug.
        ForHackernews 4y ago
        Forks promise an infinite, ever-growing supply of deflationary digital scarcity.
        randomhodler84 4y ago
        No, not at all. Bcash isn’t Bitcoin. BSV isn’t Bitcoin. Eth classic is Ether. Existence of forks has zero impact on digital scarcity.
        jkepler 4y ago
        Ethereum is not Bitcoin. Ethereum just showed the world Botcoin's unique value compared to Ethereum and the thousands of crypto projects so often conflated with Bitcoin. The 2017 Bitcoin scaling wars proved that one can't simply change Bitcoin's consensus rules by majority control of the miners. I think at one point 80% of the miners were in favor of large blocks, yet they didn't have buy-in from the rest of the network participants (developers, regular users, merchants, exchanges). Bitcoin has really robust decentralization.
        deleted 4y ago
    - schemescape 4y ago
      El Salvador already uses the US dollar, but it has no control over what the US does to its money supply.
      - altarius 4y ago
        Correct, but historically the price had been stable and predictable. Imo you're just trading "beholden to the usgovt" with "beholden to miners, whales and wall street" plus wild price swings. Former or latter may be preferable for certain reasons, but for fiscal stability or day-to-day use the choice seems obvious to me.
        dragontamer 4y ago
        I'm pretty sure that if the US Government wanted to be a BTC whale to mess up El Salvador, we would be able to do so and barely break a sweat. The price of BTC, even today, seems very easy to manipulate.
    - eftychis 4y ago
      If you are using another country's currency you are tied to their monetary and indirectly fiscal policy which most likely does not align to yours. In fact trying to get a neutral or deflationary currency is a no brainer. Especially, if you have a small banking system/network. Of course there are gotchas.
      - toomuchtodo 4y ago
        You are always tied to the monetary and fiscal policy of the majority of a currency’s participants. Can you make your own currency? Of course. How will you back it? Who will trust it? Who governs those policies? These are people problems people want to solve without people (crypto folks), with expected results (speed running financial regulation). They came at the king (reserve currencies) and missed by a mile.
    - louloulou 4y ago
      The US dollar was el Salvador's currency. They are trying to diversify away from that total dependence.
    - makomk 4y ago
      As people have pointed out this means that the US or wherever can print money and controls your monetary policy, but that's actually the least of the problems. Euros and US Dollars in large quantities, and digitally transferrable versions of them, can essentially only exist as numbers in databases controlled by the US and EU government respectively. So by adopting them as your country's currency, you're effectively giving them control over your money. They get to decide whether it continues to exist, whether you get to access it, whether it gets transferred to some well-connected megacorporations in those countries that bribed your former leader into a dodgy deal... In short, it gives a whole bunch of control to powerful entities who have tended to use their powers in ways that have not been good for developing countries at all.
  - imtringued 4y ago
    I am not sure what libertarian really means but the idea that the rich of the past deserve to control the present and future strikes me as secretly authoritarian.
    - tokai 4y ago
      Might even call it crypto-fascism lol
    - chrisco255 4y ago
      What does that even mean? Is there any fiat currency system you can point to where elite insiders don't get special access to the money printer before us plebs do?
    - anonporridge 4y ago
      Except in bitcoin, having a large share from the past doesn't directly confer control in the present, since it's not a proof of stake system. If it's actually used as a currency, a person with a large stockpile will gradually lose their relative share over time as they consume, since you don't generate interest on it. It's also confusing to me that people can hold the cognitive dissonance of defending a post gold standard, infinitely inflatable currency with a negative view income inequality, which only started increasing drastically after we abandoned the gold standard. An inflationary currency benefits the wealthy asset owners more than the working class almost by design. Asset owners get to borrow against their assets and pay it back in a depreciating currency, while at the same time getting to use a psychological magic trick to make poorly educated employees think they're getting a pay raise, when in real terms they're getting a pay cut. If I was a greedy rich person who wanted to make sure I could never lose my wealth, I would build a financial system on a currency that inflates away by design.
      - daemoens 4y ago
        A small amount of inflation (1-2% per year) is required or else you'd get deflation. Deflation is an almost guarenteed death spiral for an economy as everything grindes to a halt because not spending makes you richer.
  - deleted 4y ago
    [deleted]
  - andrewmutz 4y ago
    History has repeatedly shown that being able to print money is a critical tool during financial crises. No one likes their money being debased, but they like economic depressions even less. There is a reason that nations have abandoned the gold standard.
    - jkepler 4y ago
      Gold's physical characteristics tended towards centralization. Centralizing gave the institutions controlling the gold strong incentives to allow debasement of gold-backed money, as it gave those institutions handsome profits and strong political control.
    - randomhodler84 4y ago
      History has repeated shown us that printing money in a crisis just makes it worse, eventually. Taking that away is hard, but honesty is the best policy, even if it hurts at first. The reason we ditched the gold standard was for deviance. It’s very hard to fight wars if you can’t print the money. Ww1 ww2 Vietnam, Afghanistan, Iraq … try that on gold. Bitcoin = End of all war.
      - daemoens 4y ago
        I mean most wars happened before I the World Wars. Like the overwhelming majority of wars happened on a gold standard. Bitcoin would probably make us too poor for war though.
        aaaaaaaaata 4y ago
        > Bitcoin would probably make us too poor for war though. ...?
    - aaaaaaaaata 4y ago
      Let a recession happen when we deserve one, so the depressions don't happen. Holding back the floodgates until the problem is ready to kill everyone equally is stupid, and the opposite of a meritocracy.
  - Geee 4y ago
    In addition, bitcoin limits government power. Most autocracies fund their operations with inflation. Even in liberal democracies, deficit spending funded with inflation is not really what people have voted for. People are fine with taxes to the extent they have voted for them, but that should be enough. Inflation is a way to covertly siphon wealth from citizens on top of tax revenues.
    - JumpCrisscross 4y ago
      > autocracies fund their operations with inflation There is limited evidence for connecting countries' foreign debt levels to their degree of democratization [1]. More pointedly, there is ample evidence--millenia of it!--for empires on commodity money waging war and whatnot and having a fine time of it. > deficit spending funded with inflation is not really what people have voted for Deficit spending / bond issuance is voted on at multiple levels of government practically every cycle. People have voted for this. Because the alternative is austerity, and fanatical governments that pursue that for its own sake tend to get replaced. [1] https://d1wqtxts1xzle7.cloudfront.net/68966375/bf0022468120210831-2783-1x0220y-libre.pdf?1630428316=&response-content-disposition=inline%3B+filename%3DOn_democracy_and_debt.pdf&Expires=1657148365&Signature=Z9nP6UyBaPk1bW4htWD30OLywgMNXv4PD4KOShJB2sTLACQ~OIiNd-wbHoVcGibLcmyHin1k1p2g~oinVzkoF5trXX8af9lsouYREXxkw6OjBqAVdobyfiEWCF5N3cwKAFbgm7gkyVVRalsByZ-GsyDzro~9YiwJAztfaO09CaZJHP8GNcBmo~n4ZZAYa~RiRevcpW2LqBDXcpUplp7j7Ik1rccxU6Sq9EQjoorBRShnlBaLLA3WbFkVX-KWxCJw~GorJpoobdtZtUT~CDJ5RZU~ZPI5sMQElRaGeKVp67-TMc2dmvTqsIWnA-702F2agpR2RM9ab09-HuMlOm~Slg__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA https://d1wqtxts1xzle7.cloudfront.net/68966375/bf00224681202...
      - Geee 4y ago
        Well, you are right in that people usually do vote for more government spending. The problem exists in all kinds of governments. Anyway, my point was that bitcoin can limit government spending and protect individuals against inflation due to government spending. It doesn't mean that a rich nation couldn't wage war.
        randomhodler84 4y ago
- thesausageking 4y ago
  El Salvador is a USD-based economy and does not have their own currency. This means they're at the whims of the US Federal Reserve, which they have representation with. And any USD reserves that are abroad can be seized by the US, as Afghanistan ($7B seized) and Russia ($300B seized) learned recently. Bukele is promoting BTC as a way to attract talent and capital, and also to modernize El Salvador's economy. Similar to how Africa skipped landlines and jumped right to mobile phones. It remains to be seen how effective that part is. But, either way, it gives El Salvador some more independence from the US and sovereignty in a world where alliances are shifting fast.
  - 0xB31B1B 4y ago
    Bukele is promoting BTC as a sort of crony capitalism/kleptocrat play. This is not a high minded “advancing society” play.
  - walrus01 4y ago
    > as Afghanistan ($7B seized) This is because the Taliban is a terrorist organization that captured the capitol, not a government. You don't give $7bn to al qaeda, ISIS or lashkar-e-taiba either. You can thank Trump and Pompeo and their plan to withdraw 100% of US forces by a fixed deadline for that (removing all support for the afghan government's armed forces), and Biden for going along with the foolish plan.
    - deleted 4y ago
      [deleted]
    - daemoens 4y ago
      While all this is true, his point still stands. The US still has the ability to seize your country's money at will.
      - ForHackernews 4y ago
        ...if you keep it in US banks (because you can't trust your own corrupt local financial system).
- overtonwhy 4y ago
  Presumably people in the government got bribed. Did they also make their banking system crypto friendly?
  - el-salvador 4y ago
    > Did they also make their banking system crypto friendly? El Salvador banks don't exchange or accept bitcoin as deposit. Some of them accept bitcoin for loan payments, via an external payment processor.
- JumpCrisscross 4y ago
  > never really understood what incentive a government had to recognize bitcoin as legal tender El Salvador is very corrupt, in the neighborhood of Sierra Leone and Algeria [1]. It is unclear to what degree the state has a monopoly on violence [2]. Bitcoin is a precedented dark money channel. [1] https://www.transparency.org/en/cpi/2021/index/slv https://www.transparency.org/en/cpi/2021/index/slv [2] https://www.cfr.org/in-brief/why-has-gang-violence-spiked-el-salvador-bukele https://www.cfr.org/in-brief/why-has-gang-violence-spiked-el...
- jcranmer 4y ago
  The wrong (but popular) answer is to say that this is a move to break El Salvador's reliance on the USD--the USD still remains legal tender in El Salvador, and from what I can tell, there is absolutely no movement whatsoever towards things like pricing in Bitcoin in lieu of USD or other steps that would insulate El Salvador from US monetary policy. The charitable answer I would give is that Bukele hoped to attract cryptocurrency investors with the move, perhaps to supplement existing institutional investors who haven't been happy with some of Bukele's policies. The uncharitable answer I would give is that Bukele is trying to innovate and translate core cryptocurrency strategies of extracting money from people's pockets into extracting money from El Salvador's citizens' pockets.
rmac 4y ago
according to this article, 22% of el salvadorians knew about this app and didn't download it. Considering the following incentives: 1) free conversion from btc to usd 2) large discounts for purchases of gasoline using btc 3) no bank account or a credit card needed This blows my mind. The reasons stated were: 'Among the one in five Salvadorans who knew about Chivo but did not download it, the top reason was a preference for using cash. Others said they did not trust the system or bitcoin, they did not own a phone with internet, or the technology was complicated.' I was just in El Cuco, a small town in southern El Salvador. This town has no bank and no ATM but they do have one of these Bitcoin ATMs. I asked the hotel owner about it and ZERO PEOPLE HAD USED IT. We are talking about free money here. My gut is telling me it's mostly older folks who think it's too complicated to figure out. When freshly made tortillas are less than 5 us cents, and the cost of gas is near $5/a gallon, I would have assumed everyone would run for the free $30 in btc. Color me impressed.
- dimgl 4y ago
  Maybe because cryptocurrency doesn't solve the more pressing issues in the country?
- deleted 4y ago
  [deleted]
- smoldesu 4y ago
  > 1) free conversion from btc to usd 2) large discounts for purchases of gasoline using btc 3) no bank account or a credit card needed I mean... if I'm paying for my gas, I'd rather just put my card in the chip reader instead of getting out my phone/hardware wallet, preparing a transaction with the proper amount of Bitcoin, introducing the transaction to the gas pump, waiting for the transaction to register with the ledger and then leaving. Even if we're talking about a 20% discount here, I'd probably just stick with the debit card. Playing with a crypto wallet was fun for larping as a hacker when I was in middle school, but nowadays I don't think it's worth the trouble (much less the shitshow that is L2 chains).
  - beaned 4y ago
baby 4y ago
My questions are: * why Bitcoin, versus a cryptocurrency with low latency? * why not a stablecoin?
- varajelle 4y ago
  * Using the lightning network, which the official app use, there is no latency. * Because the whole point is to be independent from foreign currency
  - kzrdude 4y ago
    We hear very little about lightning. Is it used much? Works well?
    - randomhodler84 4y ago
      Yeah, it rocks!! Love Lightning. I send sats to friends and family who can exchange them for goods and services in their local currencies. It’s almost instant and very low or zero fees. I recommend checking out BTCPay server, it is a full BTC node, LN node and payment invoicing system. Integrated into e-commerce platforms and apps.
      - baby 4y ago
        But you're using it through a service that uses lightning and custodies your funds? Or you are managing your own channel?
        randomhodler84 4y ago
        Uh, it’s me. Of course I’m running my own node and managing my own channels!! BTCPay is sweet man, check it out. Ride the Lightning is a nice webui for LN
  - rmac 4y ago
    i just decompiled the most recent android chivo app. It does not have a lnd client on it. It looks like the government ARE running a lightning node as part of the service, however: https://davidgerard.co.uk/blockchain/2021/08/24/el-salvador-chivo-network-back-end-leaked-200-atms-bitcoin-trust-fund-law/ https://davidgerard.co.uk/blockchain/2021/08/24/el-salvador-...
pastor_bob 4y ago
Wouldn't be surprised if El Salvador's bitcoin holdings move to some unknown wallets when Nayib Bukele's time as president is up.
- el-salvador 4y ago
  El Salvador's current bitcoin wallets are unknown.
unicornmama 4y ago
May as well be entitled their attempt at insanity. Although that statement is not fair to El Salvandorians - many of whom were forced to watch their government collaborate with foreign entities to rob their country blind. Bitcion is not a stable store of value, therefore it is useless as a currency. Something that can move 10-20% daily cannot be used in commerce, especially for goods on and services sold on at razor tight margins. And let's not even get into the amount of borrowed money that went into propping up Bitcoin, whose unwinding we've witnessed [and it's not over yet].
Barrera 4y ago
> In theory, developing nations like El Salvador are ideal candidates for cryptocurrency adoption. More than half its citizens rely exclusively on cash, rather than credit or debit cards. Some 70 percent of households have no bank account and nearly 90 percent do not use mobile banking. A digital payment platform could be a way to make the economy more inclusive and accessible. I have a really hard time understanding what lasting effect El Salvador hopes to accomplish. > More than half its citizens rely exclusively on cash rather than credit or debit cards That's not in itself a problem. > Some 70 percent of households have no bank account That's may be a problem, but is it something that Bitcoin itself can solve? For example, people who have no savings and survive hand-to-mouth really don't need a bank account. Maybe that's what the 70% statistic is telling us. > and nearly 90 percent do not use mobile banking. The experience of using bitcoin for most people is not unlike the experience of using a mobile banking app. What is it about Bitcoin in particular that makes it a better fit? > A digital payment platform could be a way to make the economy more inclusive and accessible. Possibly, but only if the reasons for lack of inclusivity and accessibility are understood, and Bitcoin is compatible with resolving them. If the reasons are social/political, Bitcoin is not going to help at all. Monetary policy is effectively set elsewhere, either Washington or the Internet through the Bitcoin protocol. Being the hardest form of money ever created, bitcoin is especially bad at funding public works projects like the kind El Salvador is going to need to elevate its standard of living. Then there's the elephant in the room: money printing. El Salvador has no currency of its own. It uses the US dollar, and now Bitcoin. This means that the government has voluntarily foregone the ability to print the money to cover the debts incurred for domestic spending. Adding Bitcoin just doubles down on the status quo: no domestic currency and no possibility of money printing.
- wmf 4y ago
  The real feature they want is the ability to receive remittances without the high fees caused by retail labor. This requires some kind of app whether it's online banking or crypto.
  - el-salvador 4y ago
    We've had this for about three years in El Salvador. 1. Download banking app 2. Open an account by taking a selfie and a picture of the national ID card. 3. Go to " Receive Remmitance Option", type the remmitance code/MTCN. 4. Remmittance in your acount.
ALittleLight 4y ago
One experiment I've wanted to try, and would if I were more confident in my Spanish, is to just call 20 random businesses in El Salvador and ask them if I could pay in bitcoin. I've wondered how much of this is a publicity stunt versus real "Bitcoin is their currency" thing. "Although the law requires all firms to accept bitcoin, in reality only 20 percent do so. Roughly 5 percent of all sales have been paid in bitcoin through Chivo Wallet, and just as most households using Chivo prefer to keep their money in cash rather than in bitcoin, 88 percent of firms convert their bitcoin into dollars." 20 percent of firms actually accepting bitcoin and 5 percent of all sales is actually much higher than I expected. If these numbers continue to grow that would be the first bit of evidence I've seen that makes me feel positive about crypto's future. I'd also be curious to know where the bitcoin transactions are concentrated. I assume it's not a random 20% of firms and 5% of transactions. Is it crypto-tourists and resorts? Poor people who would see the most relative-incentive to adopt because of the 30 dollar bonus? Families with members working in other countries?
- duxup 4y ago
  There have been a couple videos of folks walking around doing just that. The participation rate was not very high. It was hard to find anyone who said yes. People seemed to know what they’re asking but they just say no and move on… not even any effort to say something like “I do take cash” … just a hard no.

54 points by Bostonian 4y ago

deleted 4y ago

[deleted]

I never really understood what incentive a government had to recognize bitcoin as legal tender. There are no real benefits over something like UPI in terms of user UX. It takes things out of the government's hands, as it's harder to print money.

Spellman 4y ago
The Libertarians would argue that the government not being able to print money is the feature and can build trust in the currency
- dragontamer 4y ago
  But you could more easily "not print money" by making the Euro or US Dollar your currency.
  - jdminhbg 4y ago
    Sure, but the ECB or Federal Reserve can print money, and you don't control them. If your goal is a mathematically guaranteed money supply (this would not be my goal, fwiw), BTC is superior.
    - avrionov 4y ago
      The supply is mathematically guaranteed, but the price fluctuates more than the dollar.
  - Spellman 4y ago
    Because then you're beholden to another country, which may be hostile to your country, and their money printer. With Bitcoin, no one has control!
    - ceejayoz 4y ago
      > With Bitcoin, no one has control! Well, until a little over 50% of the miners decide they don't like you. Ethereum's fork proved "no one has control" is an illusion.
      - chrisco255 4y ago
        Bitcoin also famously forked into BTC and BCH. And Ethereum Classic is still ticking away printing blocks. Forks are a feature, not a bug.
        ForHackernews 4y ago
        Forks promise an infinite, ever-growing supply of deflationary digital scarcity.
        randomhodler84 4y ago
        No, not at all. Bcash isn’t Bitcoin. BSV isn’t Bitcoin. Eth classic is Ether. Existence of forks has zero impact on digital scarcity.
      - jkepler 4y ago
        Ethereum is not Bitcoin. Ethereum just showed the world Botcoin's unique value compared to Ethereum and the thousands of crypto projects so often conflated with Bitcoin. The 2017 Bitcoin scaling wars proved that one can't simply change Bitcoin's consensus rules by majority control of the miners. I think at one point 80% of the miners were in favor of large blocks, yet they didn't have buy-in from the rest of the network participants (developers, regular users, merchants, exchanges). Bitcoin has really robust decentralization.
      - deleted 4y ago
  - schemescape 4y ago
    El Salvador already uses the US dollar, but it has no control over what the US does to its money supply.
    - altarius 4y ago
      Correct, but historically the price had been stable and predictable. Imo you're just trading "beholden to the usgovt" with "beholden to miners, whales and wall street" plus wild price swings. Former or latter may be preferable for certain reasons, but for fiscal stability or day-to-day use the choice seems obvious to me.
      - dragontamer 4y ago
        I'm pretty sure that if the US Government wanted to be a BTC whale to mess up El Salvador, we would be able to do so and barely break a sweat. The price of BTC, even today, seems very easy to manipulate.
  - eftychis 4y ago
    If you are using another country's currency you are tied to their monetary and indirectly fiscal policy which most likely does not align to yours. In fact trying to get a neutral or deflationary currency is a no brainer. Especially, if you have a small banking system/network. Of course there are gotchas.
    - toomuchtodo 4y ago
      You are always tied to the monetary and fiscal policy of the majority of a currency’s participants. Can you make your own currency? Of course. How will you back it? Who will trust it? Who governs those policies? These are people problems people want to solve without people (crypto folks), with expected results (speed running financial regulation). They came at the king (reserve currencies) and missed by a mile.
  - louloulou 4y ago
    The US dollar was el Salvador's currency. They are trying to diversify away from that total dependence.
  - makomk 4y ago
    As people have pointed out this means that the US or wherever can print money and controls your monetary policy, but that's actually the least of the problems. Euros and US Dollars in large quantities, and digitally transferrable versions of them, can essentially only exist as numbers in databases controlled by the US and EU government respectively. So by adopting them as your country's currency, you're effectively giving them control over your money. They get to decide whether it continues to exist, whether you get to access it, whether it gets transferred to some well-connected megacorporations in those countries that bribed your former leader into a dodgy deal... In short, it gives a whole bunch of control to powerful entities who have tended to use their powers in ways that have not been good for developing countries at all.
- imtringued 4y ago
  I am not sure what libertarian really means but the idea that the rich of the past deserve to control the present and future strikes me as secretly authoritarian.
  - tokai 4y ago
    Might even call it crypto-fascism lol
  - chrisco255 4y ago
    What does that even mean? Is there any fiat currency system you can point to where elite insiders don't get special access to the money printer before us plebs do?
  - anonporridge 4y ago
    Except in bitcoin, having a large share from the past doesn't directly confer control in the present, since it's not a proof of stake system. If it's actually used as a currency, a person with a large stockpile will gradually lose their relative share over time as they consume, since you don't generate interest on it. It's also confusing to me that people can hold the cognitive dissonance of defending a post gold standard, infinitely inflatable currency with a negative view income inequality, which only started increasing drastically after we abandoned the gold standard. An inflationary currency benefits the wealthy asset owners more than the working class almost by design. Asset owners get to borrow against their assets and pay it back in a depreciating currency, while at the same time getting to use a psychological magic trick to make poorly educated employees think they're getting a pay raise, when in real terms they're getting a pay cut. If I was a greedy rich person who wanted to make sure I could never lose my wealth, I would build a financial system on a currency that inflates away by design.
    - daemoens 4y ago
      A small amount of inflation (1-2% per year) is required or else you'd get deflation. Deflation is an almost guarenteed death spiral for an economy as everything grindes to a halt because not spending makes you richer.
- deleted 4y ago
  [deleted]
- andrewmutz 4y ago
  History has repeatedly shown that being able to print money is a critical tool during financial crises. No one likes their money being debased, but they like economic depressions even less. There is a reason that nations have abandoned the gold standard.
  - jkepler 4y ago
    Gold's physical characteristics tended towards centralization. Centralizing gave the institutions controlling the gold strong incentives to allow debasement of gold-backed money, as it gave those institutions handsome profits and strong political control.
  - randomhodler84 4y ago
    History has repeated shown us that printing money in a crisis just makes it worse, eventually. Taking that away is hard, but honesty is the best policy, even if it hurts at first. The reason we ditched the gold standard was for deviance. It’s very hard to fight wars if you can’t print the money. Ww1 ww2 Vietnam, Afghanistan, Iraq … try that on gold. Bitcoin = End of all war.
    - daemoens 4y ago
      I mean most wars happened before I the World Wars. Like the overwhelming majority of wars happened on a gold standard. Bitcoin would probably make us too poor for war though.
      - aaaaaaaaata 4y ago
        > Bitcoin would probably make us too poor for war though. ...?
  - aaaaaaaaata 4y ago
    Let a recession happen when we deserve one, so the depressions don't happen. Holding back the floodgates until the problem is ready to kill everyone equally is stupid, and the opposite of a meritocracy.
- Geee 4y ago
  In addition, bitcoin limits government power. Most autocracies fund their operations with inflation. Even in liberal democracies, deficit spending funded with inflation is not really what people have voted for. People are fine with taxes to the extent they have voted for them, but that should be enough. Inflation is a way to covertly siphon wealth from citizens on top of tax revenues.
  - JumpCrisscross 4y ago
    > autocracies fund their operations with inflation There is limited evidence for connecting countries' foreign debt levels to their degree of democratization [1]. More pointedly, there is ample evidence--millenia of it!--for empires on commodity money waging war and whatnot and having a fine time of it. > deficit spending funded with inflation is not really what people have voted for Deficit spending / bond issuance is voted on at multiple levels of government practically every cycle. People have voted for this. Because the alternative is austerity, and fanatical governments that pursue that for its own sake tend to get replaced. [1] https://d1wqtxts1xzle7.cloudfront.net/68966375/bf0022468120210831-2783-1x0220y-libre.pdf?1630428316=&response-content-disposition=inline%3B+filename%3DOn_democracy_and_debt.pdf&Expires=1657148365&Signature=Z9nP6UyBaPk1bW4htWD30OLywgMNXv4PD4KOShJB2sTLACQ~OIiNd-wbHoVcGibLcmyHin1k1p2g~oinVzkoF5trXX8af9lsouYREXxkw6OjBqAVdobyfiEWCF5N3cwKAFbgm7gkyVVRalsByZ-GsyDzro~9YiwJAztfaO09CaZJHP8GNcBmo~n4ZZAYa~RiRevcpW2LqBDXcpUplp7j7Ik1rccxU6Sq9EQjoorBRShnlBaLLA3WbFkVX-KWxCJw~GorJpoobdtZtUT~CDJ5RZU~ZPI5sMQElRaGeKVp67-TMc2dmvTqsIWnA-702F2agpR2RM9ab09-HuMlOm~Slg__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA https://d1wqtxts1xzle7.cloudfront.net/68966375/bf00224681202...
    - Geee 4y ago
      Well, you are right in that people usually do vote for more government spending. The problem exists in all kinds of governments. Anyway, my point was that bitcoin can limit government spending and protect individuals against inflation due to government spending. It doesn't mean that a rich nation couldn't wage war.
      - randomhodler84 4y ago
thesausageking 4y ago
El Salvador is a USD-based economy and does not have their own currency. This means they're at the whims of the US Federal Reserve, which they have representation with. And any USD reserves that are abroad can be seized by the US, as Afghanistan ($7B seized) and Russia ($300B seized) learned recently. Bukele is promoting BTC as a way to attract talent and capital, and also to modernize El Salvador's economy. Similar to how Africa skipped landlines and jumped right to mobile phones. It remains to be seen how effective that part is. But, either way, it gives El Salvador some more independence from the US and sovereignty in a world where alliances are shifting fast.
- 0xB31B1B 4y ago
  Bukele is promoting BTC as a sort of crony capitalism/kleptocrat play. This is not a high minded “advancing society” play.
- walrus01 4y ago
  > as Afghanistan ($7B seized) This is because the Taliban is a terrorist organization that captured the capitol, not a government. You don't give $7bn to al qaeda, ISIS or lashkar-e-taiba either. You can thank Trump and Pompeo and their plan to withdraw 100% of US forces by a fixed deadline for that (removing all support for the afghan government's armed forces), and Biden for going along with the foolish plan.
  - deleted 4y ago
    [deleted]
  - daemoens 4y ago
    While all this is true, his point still stands. The US still has the ability to seize your country's money at will.
    - ForHackernews 4y ago
      ...if you keep it in US banks (because you can't trust your own corrupt local financial system).
overtonwhy 4y ago
Presumably people in the government got bribed. Did they also make their banking system crypto friendly?
- el-salvador 4y ago
  > Did they also make their banking system crypto friendly? El Salvador banks don't exchange or accept bitcoin as deposit. Some of them accept bitcoin for loan payments, via an external payment processor.
JumpCrisscross 4y ago
> never really understood what incentive a government had to recognize bitcoin as legal tender El Salvador is very corrupt, in the neighborhood of Sierra Leone and Algeria [1]. It is unclear to what degree the state has a monopoly on violence [2]. Bitcoin is a precedented dark money channel. [1] https://www.transparency.org/en/cpi/2021/index/slv https://www.transparency.org/en/cpi/2021/index/slv [2] https://www.cfr.org/in-brief/why-has-gang-violence-spiked-el-salvador-bukele https://www.cfr.org/in-brief/why-has-gang-violence-spiked-el...
jcranmer 4y ago
The wrong (but popular) answer is to say that this is a move to break El Salvador's reliance on the USD--the USD still remains legal tender in El Salvador, and from what I can tell, there is absolutely no movement whatsoever towards things like pricing in Bitcoin in lieu of USD or other steps that would insulate El Salvador from US monetary policy. The charitable answer I would give is that Bukele hoped to attract cryptocurrency investors with the move, perhaps to supplement existing institutional investors who haven't been happy with some of Bukele's policies. The uncharitable answer I would give is that Bukele is trying to innovate and translate core cryptocurrency strategies of extracting money from people's pockets into extracting money from El Salvador's citizens' pockets.

rmac 4y ago

according to this article, 22% of el salvadorians knew about this app and didn't download it. Considering the following incentives: 1) free conversion from btc to usd 2) large discounts for purchases of gasoline using btc 3) no bank account or a credit card needed This blows my mind. The reasons stated were: 'Among the one in five Salvadorans who knew about Chivo but did not download it, the top reason was a preference for using cash. Others said they did not trust the system or bitcoin, they did not own a phone with internet, or the technology was complicated.' I was just in El Cuco, a small town in southern El Salvador. This town has no bank and no ATM but they do have one of these Bitcoin ATMs. I asked the hotel owner about it and ZERO PEOPLE HAD USED IT. We are talking about free money here. My gut is telling me it's mostly older folks who think it's too complicated to figure out. When freshly made tortillas are less than 5 us cents, and the cost of gas is near $5/a gallon, I would have assumed everyone would run for the free $30 in btc. Color me impressed.

dimgl 4y ago
Maybe because cryptocurrency doesn't solve the more pressing issues in the country?
deleted 4y ago
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smoldesu 4y ago
> 1) free conversion from btc to usd 2) large discounts for purchases of gasoline using btc 3) no bank account or a credit card needed I mean... if I'm paying for my gas, I'd rather just put my card in the chip reader instead of getting out my phone/hardware wallet, preparing a transaction with the proper amount of Bitcoin, introducing the transaction to the gas pump, waiting for the transaction to register with the ledger and then leaving. Even if we're talking about a 20% discount here, I'd probably just stick with the debit card. Playing with a crypto wallet was fun for larping as a hacker when I was in middle school, but nowadays I don't think it's worth the trouble (much less the shitshow that is L2 chains).
- beaned 4y ago

baby 4y ago

My questions are: * why Bitcoin, versus a cryptocurrency with low latency? * why not a stablecoin?

varajelle 4y ago
* Using the lightning network, which the official app use, there is no latency. * Because the whole point is to be independent from foreign currency
- kzrdude 4y ago
  We hear very little about lightning. Is it used much? Works well?
  - randomhodler84 4y ago
    Yeah, it rocks!! Love Lightning. I send sats to friends and family who can exchange them for goods and services in their local currencies. It’s almost instant and very low or zero fees. I recommend checking out BTCPay server, it is a full BTC node, LN node and payment invoicing system. Integrated into e-commerce platforms and apps.
    - baby 4y ago
      But you're using it through a service that uses lightning and custodies your funds? Or you are managing your own channel?
      - randomhodler84 4y ago
        Uh, it’s me. Of course I’m running my own node and managing my own channels!! BTCPay is sweet man, check it out. Ride the Lightning is a nice webui for LN
- rmac 4y ago
  i just decompiled the most recent android chivo app. It does not have a lnd client on it. It looks like the government ARE running a lightning node as part of the service, however: https://davidgerard.co.uk/blockchain/2021/08/24/el-salvador-chivo-network-back-end-leaked-200-atms-bitcoin-trust-fund-law/ https://davidgerard.co.uk/blockchain/2021/08/24/el-salvador-...

pastor_bob 4y ago

Wouldn't be surprised if El Salvador's bitcoin holdings move to some unknown wallets when Nayib Bukele's time as president is up.

el-salvador 4y ago
El Salvador's current bitcoin wallets are unknown.

unicornmama 4y ago

May as well be entitled their attempt at insanity. Although that statement is not fair to El Salvandorians - many of whom were forced to watch their government collaborate with foreign entities to rob their country blind. Bitcion is not a stable store of value, therefore it is useless as a currency. Something that can move 10-20% daily cannot be used in commerce, especially for goods on and services sold on at razor tight margins. And let's not even get into the amount of borrowed money that went into propping up Bitcoin, whose unwinding we've witnessed [and it's not over yet].

Barrera 4y ago

> In theory, developing nations like El Salvador are ideal candidates for cryptocurrency adoption. More than half its citizens rely exclusively on cash, rather than credit or debit cards. Some 70 percent of households have no bank account and nearly 90 percent do not use mobile banking. A digital payment platform could be a way to make the economy more inclusive and accessible. I have a really hard time understanding what lasting effect El Salvador hopes to accomplish. > More than half its citizens rely exclusively on cash rather than credit or debit cards That's not in itself a problem. > Some 70 percent of households have no bank account That's may be a problem, but is it something that Bitcoin itself can solve? For example, people who have no savings and survive hand-to-mouth really don't need a bank account. Maybe that's what the 70% statistic is telling us. > and nearly 90 percent do not use mobile banking. The experience of using bitcoin for most people is not unlike the experience of using a mobile banking app. What is it about Bitcoin in particular that makes it a better fit? > A digital payment platform could be a way to make the economy more inclusive and accessible. Possibly, but only if the reasons for lack of inclusivity and accessibility are understood, and Bitcoin is compatible with resolving them. If the reasons are social/political, Bitcoin is not going to help at all. Monetary policy is effectively set elsewhere, either Washington or the Internet through the Bitcoin protocol. Being the hardest form of money ever created, bitcoin is especially bad at funding public works projects like the kind El Salvador is going to need to elevate its standard of living. Then there's the elephant in the room: money printing. El Salvador has no currency of its own. It uses the US dollar, and now Bitcoin. This means that the government has voluntarily foregone the ability to print the money to cover the debts incurred for domestic spending. Adding Bitcoin just doubles down on the status quo: no domestic currency and no possibility of money printing.

wmf 4y ago
The real feature they want is the ability to receive remittances without the high fees caused by retail labor. This requires some kind of app whether it's online banking or crypto.
- el-salvador 4y ago
  We've had this for about three years in El Salvador. 1. Download banking app 2. Open an account by taking a selfie and a picture of the national ID card. 3. Go to " Receive Remmitance Option", type the remmitance code/MTCN. 4. Remmittance in your acount.

ALittleLight 4y ago

One experiment I've wanted to try, and would if I were more confident in my Spanish, is to just call 20 random businesses in El Salvador and ask them if I could pay in bitcoin. I've wondered how much of this is a publicity stunt versus real "Bitcoin is their currency" thing. "Although the law requires all firms to accept bitcoin, in reality only 20 percent do so. Roughly 5 percent of all sales have been paid in bitcoin through Chivo Wallet, and just as most households using Chivo prefer to keep their money in cash rather than in bitcoin, 88 percent of firms convert their bitcoin into dollars." 20 percent of firms actually accepting bitcoin and 5 percent of all sales is actually much higher than I expected. If these numbers continue to grow that would be the first bit of evidence I've seen that makes me feel positive about crypto's future. I'd also be curious to know where the bitcoin transactions are concentrated. I assume it's not a random 20% of firms and 5% of transactions. Is it crypto-tourists and resorts? Poor people who would see the most relative-incentive to adopt because of the 30 dollar bonus? Families with members working in other countries?

duxup 4y ago
There have been a couple videos of folks walking around doing just that. The participation rate was not very high. It was hard to find anyone who said yes. People seemed to know what they’re asking but they just say no and move on… not even any effort to say something like “I do take cash” … just a hard no.