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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 representati

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).
    - anonporridge 4y ago
      Almost all USD now is electronic, and control of movement of those dollars is entirely controlled by the single master node of Washington D.C. Russia defaulted on their USD loans, not because they don't have dollars, but because the US won't allow them to pay.
      - giaour 4y ago
        Russia also defaulted because it can't pay (in any currency) parties that are barred by sanctions from transacting with the Russian government. It wouldn't matter if Russia were able to ship paper USD to their creditors; the creditors cannot accept that payment.
- anonporridge 4y ago
  I really don't want to defend the Taliban, but the core of any government is the group that maintains a monopoly on violence in a realm. The pre-Taliban government of Afghanistan as well as the US puppet state in 2021 failed in this core responsibility, and consequently lost the right to govern. Whether or not the Taliban will produce a stable or good government is a different question. I personally weep for those forced to live under it's rule. It would make about as much sense to say the United States in 1783 was not a government, but a terrorist organization that attacked the rightful British government of the American colonies. The British lost the right to govern when they failed to maintain their monopoly on violence in the American colonies, and a new governmental organization formed from the ashes of the war that proved it.
- guelo 4y ago
  I would also blame Trump's relentless political attacks about Obama returning Iran's assets. And Biden's political cowardice after the Afghan collapse. All of it is reducing trust in US's supposed rules-based institutions. US is speedrunning through the fall of an empire
  - daemoens 4y ago
    Calm down with the theatrics. Money continues to flow into the US during this current crisis because the US is still seen as the most stable place in the world. Rich people around the world wouldn't be rushing to park their money here if they thought the US was going to collapse.
- pessimizer 4y ago
  The Taliban is not a terrorist organization. The Taliban was the government of the country of Afghanistan before we invaded it, and it is the government of the country of Afghanistan after we've left. "Terrorism" isn't a euphemism for killing US soldiers. If they're invading your country, the proper word is "patriotism."
  - ceejayoz 4y ago
    The Taliban is both. I agree that killing invading foreign soldiers on your own soil isn't terrorism, but that's not where the Taliban stops. Plenty of attacks on their own populace over the last two decades.
paxys 4y ago
> And any USD reserves that are abroad can be seized by the US That doesn't have anything to do with USD. Any reserves (or really any asset) that is outside the country's jurisdiction can be seized by a foreign one. El Salvador could as easily lose all their Bitcoin reserves if they held them in a Coinbase wallet, for example.
- makomk 4y ago
  It absolutely does have to do with USD. Other than actual physical dollar bills, which do not scale and are not practical to use for long-distance international transactions, the only form that real redeemable USD can exist in is deposits with the Fed which can be seized by the US. This is a fundamental property of using the US dollar as your country's currency.
  - JumpCrisscross 4y ago
    > absolutely does have to do with USD Comment you're responding to is saying this is not unique to U.S. dollars. All currencies are controlled by their issuing sovereigns. Separately, the idea that Bitcoin is unsanctionable is laughable. It may require enabling legislation. But marking wallets as sanctioned, and threatening any wallets that transact with it to be either similarly sanctioned or subject to heightened scrutiny, would diminish the value of those coins relative to coins which can be freely traded with anyone. Given the public nature of the blockchain, enforcement would likely be easier than e.g. enforcing an Iranian oil embargo.
    - giaour 4y ago
      > But marking wallets as sanctioned, and threatening any wallets that transact with it to be either similarly sanctioned or subject to heightened scrutiny, would diminish the value of those coins relative to coins which can be freely traded with anyone Doesn't this already happen? Basically any bitcoin that comes out of a tumbler or any wallet address that has transacted with tumbled coins is banned on KYC exchanges: https://sethforprivacy.com/posts/fungibility-graveyard/ https://sethforprivacy.com/posts/fungibility-graveyard/
fny 4y ago
It's a patently stupid strategy over the long run though. Abandonment of ones own currency is suicide regardless of whether it's USD or Bitcoin. And clearly, Bitcoin did not help El Salvador improve it's financing situation: the Bitcoin bond they tried to push was a complete flop. Argentina has a way better model: they control their money, they've defaulted repeatedly, the currency has magically remained stable, and everyone comes back after each default. Another massive issue is that as a currency with an inelastic supply Bitcoin price volatility is guaranteed to remain unstable. This is not a desirable feature for any currency.
- randomhodler84 4y ago
  If historically your government has breached the trust of its people from careless money printing local currency, using a major world currency as your money is something to keep you honest. Bitcoin is like this for all governments and currencies. It is honest true hard money that cannot be devalued by the money printers. It’s the hard money of last resort and you bet this will be more and more important as we lose trust for each other’s currency.
- thesausageking 4y ago
  I'm not sure why you view Argentina as a "better model". They're in the middle of (another) currency crisis right now which is causing their economy to collapse and social unrest: https://www.wsj.com/articles/argentina-names-new-economy-minister-as-inflation-crisis-mounts-11656983921 https://www.wsj.com/articles/argentina-names-new-economy-min... The annual inflation rate in Argentina is ~76%. It's basically impossible to do business in Pesos when it's devaluing so quickly. Every contract programmer in Argentina is doing business in Bitcoin or stablecoins because they would lose ~40-60% if they were paid in USD from abroad. People are stashing savings dollars (and Bitcoin) to keep it out of government hands and protect it from becoming worthless.

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).
  - anonporridge 4y ago
    Almost all USD now is electronic, and control of movement of those dollars is entirely controlled by the single master node of Washington D.C. Russia defaulted on their USD loans, not because they don't have dollars, but because the US won't allow them to pay.
    - giaour 4y ago
      Russia also defaulted because it can't pay (in any currency) parties that are barred by sanctions from transacting with the Russian government. It wouldn't matter if Russia were able to ship paper USD to their creditors; the creditors cannot accept that payment.
anonporridge 4y ago
I really don't want to defend the Taliban, but the core of any government is the group that maintains a monopoly on violence in a realm. The pre-Taliban government of Afghanistan as well as the US puppet state in 2021 failed in this core responsibility, and consequently lost the right to govern. Whether or not the Taliban will produce a stable or good government is a different question. I personally weep for those forced to live under it's rule. It would make about as much sense to say the United States in 1783 was not a government, but a terrorist organization that attacked the rightful British government of the American colonies. The British lost the right to govern when they failed to maintain their monopoly on violence in the American colonies, and a new governmental organization formed from the ashes of the war that proved it.
guelo 4y ago
I would also blame Trump's relentless political attacks about Obama returning Iran's assets. And Biden's political cowardice after the Afghan collapse. All of it is reducing trust in US's supposed rules-based institutions. US is speedrunning through the fall of an empire
- daemoens 4y ago
  Calm down with the theatrics. Money continues to flow into the US during this current crisis because the US is still seen as the most stable place in the world. Rich people around the world wouldn't be rushing to park their money here if they thought the US was going to collapse.
pessimizer 4y ago
The Taliban is not a terrorist organization. The Taliban was the government of the country of Afghanistan before we invaded it, and it is the government of the country of Afghanistan after we've left. "Terrorism" isn't a euphemism for killing US soldiers. If they're invading your country, the proper word is "patriotism."
- ceejayoz 4y ago
  The Taliban is both. I agree that killing invading foreign soldiers on your own soil isn't terrorism, but that's not where the Taliban stops. Plenty of attacks on their own populace over the last two decades.

paxys 4y ago

> And any USD reserves that are abroad can be seized by the US That doesn't have anything to do with USD. Any reserves (or really any asset) that is outside the country's jurisdiction can be seized by a foreign one. El Salvador could as easily lose all their Bitcoin reserves if they held them in a Coinbase wallet, for example.

makomk 4y ago
It absolutely does have to do with USD. Other than actual physical dollar bills, which do not scale and are not practical to use for long-distance international transactions, the only form that real redeemable USD can exist in is deposits with the Fed which can be seized by the US. This is a fundamental property of using the US dollar as your country's currency.
- JumpCrisscross 4y ago
  > absolutely does have to do with USD Comment you're responding to is saying this is not unique to U.S. dollars. All currencies are controlled by their issuing sovereigns. Separately, the idea that Bitcoin is unsanctionable is laughable. It may require enabling legislation. But marking wallets as sanctioned, and threatening any wallets that transact with it to be either similarly sanctioned or subject to heightened scrutiny, would diminish the value of those coins relative to coins which can be freely traded with anyone. Given the public nature of the blockchain, enforcement would likely be easier than e.g. enforcing an Iranian oil embargo.
  - giaour 4y ago
    > But marking wallets as sanctioned, and threatening any wallets that transact with it to be either similarly sanctioned or subject to heightened scrutiny, would diminish the value of those coins relative to coins which can be freely traded with anyone Doesn't this already happen? Basically any bitcoin that comes out of a tumbler or any wallet address that has transacted with tumbled coins is banned on KYC exchanges: https://sethforprivacy.com/posts/fungibility-graveyard/ https://sethforprivacy.com/posts/fungibility-graveyard/

fny 4y ago

It's a patently stupid strategy over the long run though. Abandonment of ones own currency is suicide regardless of whether it's USD or Bitcoin. And clearly, Bitcoin did not help El Salvador improve it's financing situation: the Bitcoin bond they tried to push was a complete flop. Argentina has a way better model: they control their money, they've defaulted repeatedly, the currency has magically remained stable, and everyone comes back after each default. Another massive issue is that as a currency with an inelastic supply Bitcoin price volatility is guaranteed to remain unstable. This is not a desirable feature for any currency.

randomhodler84 4y ago
If historically your government has breached the trust of its people from careless money printing local currency, using a major world currency as your money is something to keep you honest. Bitcoin is like this for all governments and currencies. It is honest true hard money that cannot be devalued by the money printers. It’s the hard money of last resort and you bet this will be more and more important as we lose trust for each other’s currency.
thesausageking 4y ago
I'm not sure why you view Argentina as a "better model". They're in the middle of (another) currency crisis right now which is causing their economy to collapse and social unrest: https://www.wsj.com/articles/argentina-names-new-economy-minister-as-inflation-crisis-mounts-11656983921 https://www.wsj.com/articles/argentina-names-new-economy-min... The annual inflation rate in Argentina is ~76%. It's basically impossible to do business in Pesos when it's devaluing so quickly. Every contract programmer in Argentina is doing business in Bitcoin or stablecoins because they would lose ~40-60% if they were paid in USD from abroad. People are stashing savings dollars (and Bitcoin) to keep it out of government hands and protect it from becoming worthless.