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Every time I see the "Bitcoin for remittance" logic, the first question I ask is: what is the use case or demand for Bitcoin at the third world where you are se

Every time I see the "Bitcoin for remittance" logic, the first question I ask is: what is the use case or demand for Bitcoin at the third world where you are sending your money? Why should anyone want that except for speculation? Clearly, Bitcoin is not being accepted at the mom-and-pop shop in Bangladesh (they don't even take credit card), so what are the people supposed to do with the Bitcoin once they receive it? The answer that I have experienced is that it is being sold to the poorly informed local speculator, who have banked their hopes and dreams of getting rich someday to buying Bitcoin. In that way, Bitcoin is actually stripping wealth from the global poor and draining it back to the wealthy ones.

kragen 4y ago
Well, as I explained, savings is a demand for Bitcoin that isn't the same thing as "hopes and dreams of getting rich someday". Just having an asset that doesn't reliably evaporate like the peso or the bolivar is a pretty big win already, even if you aren't going to get rich. Another important use case that I didn't mention is leaving the country to live somewhere better. Suppose you've saved up money in, to use examples I know something about, Argentina or Venezuela, and you've managed to do it in a form that doesn't evaporate due to inflation: US$100 bills, emeralds, gold, real estate. Now you want to move to Spain, Uruguay, or Mexico. Getting those savings safely out of the country with you is going to be very challenging indeed; Argentine customs has dogs that are trained to sniff out dollar bills, for example. (And of course in the case of real estate it's impossible.) Again, maybe this is an example of "buying illegal shit": you aren't supposed to be able to escape these places with your life savings, because otherwise how can kleptocracy keep klepting? But obviously (at least to me) being able to take your savings with you makes the world a better place, even if it's illegal. But it's definitely not "stripping wealth from the global poor and draining it back to the wealthy ones". The "heavily regulated", "government insured", "government managed" world banking system is what does that. Maybe fleeing the country like this sounds like an extremely marginal, unimportant use case to you, but if so, that's probably because you don't know anybody from Cuba, Ecuador, or Venezuela. Not only are significant percentages of those countries' populations already living abroad, but even larger percentages of the people living there today depend on family members living abroad. I don't know anything about Bangladesh. I've never been there and I don't know anyone from there very well. Maybe the situation is different there and Bangladeshi people only invest in Bitcoin because they think they'll get rich. What are your experiences there?
- mattbrewsbytes 4y ago
  Are you concerned about the falling ratio of Bitcoin to USD? Or is the hope that this storm removes a lot of the scam artists/ponzi schemes and the ratio stabilizes in a way? Edit to add: it seems like the relative ratio doesn't matter much for the scenarios you describe because it is much better than the swings in local currency compared to USD.
  - kragen 4y ago
    Bitcoin has in fact lost more value than the Argentine peso (or any other fiat currency) over the last year, and this is its largest fall ever (it has fallen over 70% twice before, but I think this is the first time it's ever fallen 73%), and this is a big concern for its use as a savings vehicle, though only a minor inconvenience for its use for international remittances. Also, because the US$ has itself lost about 10% of its value over that last year, the fall is even worse in real terms than in nominal terms, closer to 75%. Over other periods of time, like the last two years or the last six months, this is not the case (that is, the peso has done worse than Bitcoin over those periods), and certainly anyone with savings in Bitcoin is hoping that a year from now it is at or near its current value, or even above it, rather than having fallen another 70% to US$4500. But it could. There is no guarantee, and my observation of periods of past Bitcoin volatility does not make me optimistic that scam artists will go away as a result. There is no prospect that the peso will have equal or higher value a year from now; both the general dynamics of central-bank-controlled fiat currencies and the specific pathologies of Argentina militate strongly against it. The long-run expected value of the peso is zero — it's not a question of whether it will inflate over time, just how fast. Plausibly ruining the peso's usefulness as a unit of long-term account or a vehicle for savings is a worthwhile tradeoff for improving its usefulness as a medium of exchange; that opinion certainly has widespread acceptance among economists. So clearly anyone who invests their savings in pesos will inherit the wind; it's possible that whoever invests their savings in Bitcoin will as well. But maybe not.
    - imtringued 4y ago
      If these people followed the savings logic they would have bought and sold RAI. Why would anyone want to put their savings in an extremely volatile cryptocurrency?

kragen 4y ago

Well, as I explained, savings is a demand for Bitcoin that isn't the same thing as "hopes and dreams of getting rich someday". Just having an asset that doesn't reliably evaporate like the peso or the bolivar is a pretty big win already, even if you aren't going to get rich. Another important use case that I didn't mention is leaving the country to live somewhere better. Suppose you've saved up money in, to use examples I know something about, Argentina or Venezuela, and you've managed to do it in a form that doesn't evaporate due to inflation: US$100 bills, emeralds, gold, real estate. Now you want to move to Spain, Uruguay, or Mexico. Getting those savings safely out of the country with you is going to be very challenging indeed; Argentine customs has dogs that are trained to sniff out dollar bills, for example. (And of course in the case of real estate it's impossible.) Again, maybe this is an example of "buying illegal shit": you aren't supposed to be able to escape these places with your life savings, because otherwise how can kleptocracy keep klepting? But obviously (at least to me) being able to take your savings with you makes the world a better place, even if it's illegal. But it's definitely not "stripping wealth from the global poor and draining it back to the wealthy ones". The "heavily regulated", "government insured", "government managed" world banking system is what does that. Maybe fleeing the country like this sounds like an extremely marginal, unimportant use case to you, but if so, that's probably because you don't know anybody from Cuba, Ecuador, or Venezuela. Not only are significant percentages of those countries' populations already living abroad, but even larger percentages of the people living there today depend on family members living abroad. I don't know anything about Bangladesh. I've never been there and I don't know anyone from there very well. Maybe the situation is different there and Bangladeshi people only invest in Bitcoin because they think they'll get rich. What are your experiences there?

mattbrewsbytes 4y ago
Are you concerned about the falling ratio of Bitcoin to USD? Or is the hope that this storm removes a lot of the scam artists/ponzi schemes and the ratio stabilizes in a way? Edit to add: it seems like the relative ratio doesn't matter much for the scenarios you describe because it is much better than the swings in local currency compared to USD.
- kragen 4y ago
  Bitcoin has in fact lost more value than the Argentine peso (or any other fiat currency) over the last year, and this is its largest fall ever (it has fallen over 70% twice before, but I think this is the first time it's ever fallen 73%), and this is a big concern for its use as a savings vehicle, though only a minor inconvenience for its use for international remittances. Also, because the US$ has itself lost about 10% of its value over that last year, the fall is even worse in real terms than in nominal terms, closer to 75%. Over other periods of time, like the last two years or the last six months, this is not the case (that is, the peso has done worse than Bitcoin over those periods), and certainly anyone with savings in Bitcoin is hoping that a year from now it is at or near its current value, or even above it, rather than having fallen another 70% to US$4500. But it could. There is no guarantee, and my observation of periods of past Bitcoin volatility does not make me optimistic that scam artists will go away as a result. There is no prospect that the peso will have equal or higher value a year from now; both the general dynamics of central-bank-controlled fiat currencies and the specific pathologies of Argentina militate strongly against it. The long-run expected value of the peso is zero — it's not a question of whether it will inflate over time, just how fast. Plausibly ruining the peso's usefulness as a unit of long-term account or a vehicle for savings is a worthwhile tradeoff for improving its usefulness as a medium of exchange; that opinion certainly has widespread acceptance among economists. So clearly anyone who invests their savings in pesos will inherit the wind; it's possible that whoever invests their savings in Bitcoin will as well. But maybe not.
  - imtringued 4y ago
    If these people followed the savings logic they would have bought and sold RAI. Why would anyone want to put their savings in an extremely volatile cryptocurrency?