6 ms·

El Salvador’s Historic Digital Asset Securities Law Passes

36 points by kevinak 4y ago

WheelsAtLarge 4y ago
This is a big deal for crypto. Once there's a legal framework around crypto people will be more likely to trust the infrastructure around it. The big test is whether El Salvador will be able to enforce the laws they pass. Right now it's a hard no. Corruption is rampant in El Salvador so it's hard to trust anything they do but maybe the President there can do something about it and turn things around. But any way you look at it it's a plus for crypto since once one country does it other countries will follow just so they don't get left behind. I expect other small countries to move forward with legal crypto frameworks.
- konha 4y ago
  > Once there's a legal framework around crypto people will be more likely to trust the infrastructure around it. I thought part of the value proposition of “crypto” was that it doesn’t require such legislation? The ecosystem seems to (slowly, painfully) re-discover everything that is useful about fiat currencies.
  - tiku 4y ago
    It is for investors.
  - mvid 4y ago
    As someone working in the ecosystem, I agree, but would correct it to "seems to (quickly, painfully) rediscover everything"
  - Quindecillion 4y ago
    > I thought part of the value proposition of “crypto” was that it doesn’t require such legislation? In the case of Bitcoin and its Lightning Network, that remains true. It doesn't need legislation to continue operating. Has done so for 14 years without any interference or intervention from law makers, and will continue to operate just fine without their influence. However, legislation can help with trust and adoption though (depending on the legislation of course), because for better or worse, many people trust their governments and look to them for guidance on what's "safe". And no, that's not the value proposition of Bitcoin. The value proposition of Bitcoin was stated clearly by Satoshi Nakamoto. "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." That's the core value proposition. The issuance policy of Bitcoin has been rock solid for the last 14 years and all indications say that should continue to happen indefinitely. There's not a single fiat currency on Earth that can claim the same. > The ecosystem seems to (slowly, painfully) re-discover everything that is useful about fiat currencies. There's nothing "useful" about fiat currencies, at least not useful enough to counterbalance the tradeoffs. Perhaps you're confusing "fiat" currency with the more general idea of state-issued money, which hasn't always been "fiat" in its implementation e.g. commodity monies like those minted from valued metals, or certificates backed by gold reserves. Legislation, institutions, processes, and businesses were built up around state-issued monies to help the financial plumbing and grease the wheels of the economy, but that has nothing to do with whether the nature of the money is "fiat" or not. Fiat just means "by decree" i.e. this money has value because we says it does. Commodity money has value because of its scarcity. The source of Bitcoin's value is similar to commodity money i.e. it's provably scarce. Fiat is a relatively new phenomenon in the technology of money and probably a small blip in its ~5000 year history (so far). The question is how long will that blip be?
    - vaidhy 4y ago
      Fiat is not anything new.. neither is the concept of money. Earliest writings are for accounting and bookkeeping. People were representing commodities with tokens which can be exchanged. The idea that money was minted only from precious metals, notably gold and silver is false. Clay and bronze coins were common as IOUs.
      - Quindecillion 4y ago
        >Fiat is not anything new You're right. Fiat has been tried many times before, and ultimately fails. I should've said it was relatively new in its current iteration. > neither is the concept of money. Earliest writings are for accounting and bookkeeping. I did say there was a ~5000 year history, alluding to the Sumerian clay tablets/ledgers, like the famous "Kushim" tablet. > The idea that money was minted only from precious metals, notably gold and silver is false. Correct, but that's not what I was saying. I was simply providing the most well-known examples of commodity money.
  - WheelsAtLarge 4y ago
    It's rediscovering human nature. People can't be trusted if things are done in darkness. There will always be someone to negatively take advantage of the situation. Without some regulation we will see a never ending cycle of fraud. FTX over and over again. The real shame is that Crypto was gaining a bit of respectability only to be brought down again. Also, how easily it was for a 30 yr old business neophyte had so many people fooled since there was no clarity on his dealings. Blind trust has not worked and will never work as long as humans are involved.
misja111 4y ago
Is it really the case that mining Bitcoins is still the most lucrative way to exploit El Salvador's volcanic energy? Instead of mining Bitcoins, they could also simply have exported their electric energy, but apparently this is less profitable. But then I wonder, why don't we see more power plants all over the world doing the same thing with their generated electricity?
- verdenti 4y ago
  Exporting electricity takes a bunch of infrastructure.
- MandieD 4y ago
  Iceland exports their excess electricity mostly in the form of aluminum smelting.
  - mr_woozy 4y ago
    [dead]
  - hef19898 4y ago
    Which is much more relevant than Bitcoin so.
    - MandieD 4y ago
      Now, if a real entrepreneur figured out how to capture excess electricity in El Salvador as green hydrogen and ship it, that would be a net positive for everyone involved.
- ekns 4y ago
  It is happening increasingly: https://www.nasdaq.com/articles/japans-largest-power-company-tepco-to-mine-bitcoin-with-excess-energy https://www.nasdaq.com/articles/japans-largest-power-company...
- Quindecillion 4y ago
  I imagine the costs to build out the transmission infrastructure is too great, and simply mining Bitcoin with that "stranded" energy is much easier.
mathieuh 4y ago
Isn't the Salvadoran president a cryptobro who lost a huge amount of public money betting on Bitcoin? That's the last I heard of it, have they turned it around at all?
- tigrezno 4y ago
  How did he lose the money? Did he sell the bitcoin? Stop the bs.
  - nicbou 4y ago
    He bought when it was worth far more. At the current value of Bitcoin, his investment has not paid off. Unless you expect Bitcoin to return to this valuation, the money is as good as lost.
  - graeme 4y ago
    He certainly bought substantially less bitcoin than he could have bought, had he waited to do so. So you could say his investing skills measured in either bitcoin or dollars are poor to date.
  - satvikpendem 4y ago
    Why are you implying that unrealized losses are not still losses?
    - 0xy 4y ago
      Have you profited money if the price of one of your assets doubles and you do not sell?
      - satvikpendem 4y ago
        I have.
      - kman82 4y ago
        Yes. Absolutely. Paper losses/gains are real
seu 4y ago
Might be relevant to read another perspective on El Salvador and Bitcoin (Nov. 2022) https://www.theguardian.com/technology/2022/nov/15/china-el-salvador-economy-cryptocurrency-fall https://www.theguardian.com/technology/2022/nov/15/china-el-...
- Quindecillion 4y ago
  Obviously take this with a grain of salt given the author, but here's another perspective too. https://bitcoinmagazine.com/print/stop-drinking-the-elites-kool-aid https://bitcoinmagazine.com/print/stop-drinking-the-elites-k...
spaceman_2020 4y ago
You have to admire El Salvador for at least trying something different to get out of its financial hole. Too many countries struggling with issues similar to it (crime, poverty, debt) end up using the same playbook (IMF/Worldbank loans) and dig themselves deeper and deeper into the poverty trap. There are no easy paths for countries like El Salvador. This might be bad too, but at least its a different attempt.
- recuter 4y ago
  [flagged]
- boeingUH60 4y ago
  A silly different attempt is still a silly one…the Bitcoins the country bought are now worth over 60% less than their purchase price [1]. A poor country has successfully thrown away tens of millions of dollars…such incompetence on display. 1- https://www.cnbc.com/amp/2022/10/13/el-salvadors-bitcoin-holdings-down-60percent-to-60-million-one-year-later.html https://www.cnbc.com/amp/2022/10/13/el-salvadors-bitcoin-hol...
  - earnesti 4y ago
    Whether they have thrown the money away depends how they deal with the bitcoins long term. As far as I know they are still adding to the position. There is grassroots adoption also happening in the nearby countries, maybe the story hasn't ended just yet.
    - osullip 4y ago
      'Maybe' is too unpredictable for most sophisticated systems. Certainty, or at least a level of high confidence, is when businesses invest and consumers spend.
    - xur17 4y ago
      And it's not just about the value of the Bitcoin they purchased. They also have presumably increased tourism and interest in their country at least some (their name is in the news more, and I know for a fact that Bitcoin fanatics have visited specifically because of this).

36 points by kevinak 4y ago

This is a big deal for crypto. Once there's a legal framework around crypto people will be more likely to trust the infrastructure around it. The big test is whether El Salvador will be able to enforce the laws they pass. Right now it's a hard no. Corruption is rampant in El Salvador so it's hard to trust anything they do but maybe the President there can do something about it and turn things around. But any way you look at it it's a plus for crypto since once one country does it other countries will follow just so they don't get left behind. I expect other small countries to move forward with legal crypto frameworks.

konha 4y ago
> Once there's a legal framework around crypto people will be more likely to trust the infrastructure around it. I thought part of the value proposition of “crypto” was that it doesn’t require such legislation? The ecosystem seems to (slowly, painfully) re-discover everything that is useful about fiat currencies.
- tiku 4y ago
  It is for investors.
- mvid 4y ago
  As someone working in the ecosystem, I agree, but would correct it to "seems to (quickly, painfully) rediscover everything"
- Quindecillion 4y ago
  > I thought part of the value proposition of “crypto” was that it doesn’t require such legislation? In the case of Bitcoin and its Lightning Network, that remains true. It doesn't need legislation to continue operating. Has done so for 14 years without any interference or intervention from law makers, and will continue to operate just fine without their influence. However, legislation can help with trust and adoption though (depending on the legislation of course), because for better or worse, many people trust their governments and look to them for guidance on what's "safe". And no, that's not the value proposition of Bitcoin. The value proposition of Bitcoin was stated clearly by Satoshi Nakamoto. "The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." That's the core value proposition. The issuance policy of Bitcoin has been rock solid for the last 14 years and all indications say that should continue to happen indefinitely. There's not a single fiat currency on Earth that can claim the same. > The ecosystem seems to (slowly, painfully) re-discover everything that is useful about fiat currencies. There's nothing "useful" about fiat currencies, at least not useful enough to counterbalance the tradeoffs. Perhaps you're confusing "fiat" currency with the more general idea of state-issued money, which hasn't always been "fiat" in its implementation e.g. commodity monies like those minted from valued metals, or certificates backed by gold reserves. Legislation, institutions, processes, and businesses were built up around state-issued monies to help the financial plumbing and grease the wheels of the economy, but that has nothing to do with whether the nature of the money is "fiat" or not. Fiat just means "by decree" i.e. this money has value because we says it does. Commodity money has value because of its scarcity. The source of Bitcoin's value is similar to commodity money i.e. it's provably scarce. Fiat is a relatively new phenomenon in the technology of money and probably a small blip in its ~5000 year history (so far). The question is how long will that blip be?
  - vaidhy 4y ago
    Fiat is not anything new.. neither is the concept of money. Earliest writings are for accounting and bookkeeping. People were representing commodities with tokens which can be exchanged. The idea that money was minted only from precious metals, notably gold and silver is false. Clay and bronze coins were common as IOUs.
    - Quindecillion 4y ago
      >Fiat is not anything new You're right. Fiat has been tried many times before, and ultimately fails. I should've said it was relatively new in its current iteration. > neither is the concept of money. Earliest writings are for accounting and bookkeeping. I did say there was a ~5000 year history, alluding to the Sumerian clay tablets/ledgers, like the famous "Kushim" tablet. > The idea that money was minted only from precious metals, notably gold and silver is false. Correct, but that's not what I was saying. I was simply providing the most well-known examples of commodity money.
- WheelsAtLarge 4y ago
  It's rediscovering human nature. People can't be trusted if things are done in darkness. There will always be someone to negatively take advantage of the situation. Without some regulation we will see a never ending cycle of fraud. FTX over and over again. The real shame is that Crypto was gaining a bit of respectability only to be brought down again. Also, how easily it was for a 30 yr old business neophyte had so many people fooled since there was no clarity on his dealings. Blind trust has not worked and will never work as long as humans are involved.

misja111 4y ago

Is it really the case that mining Bitcoins is still the most lucrative way to exploit El Salvador's volcanic energy? Instead of mining Bitcoins, they could also simply have exported their electric energy, but apparently this is less profitable. But then I wonder, why don't we see more power plants all over the world doing the same thing with their generated electricity?

verdenti 4y ago
Exporting electricity takes a bunch of infrastructure.
MandieD 4y ago
Iceland exports their excess electricity mostly in the form of aluminum smelting.
- mr_woozy 4y ago
  [dead]
- hef19898 4y ago
  Which is much more relevant than Bitcoin so.
  - MandieD 4y ago
    Now, if a real entrepreneur figured out how to capture excess electricity in El Salvador as green hydrogen and ship it, that would be a net positive for everyone involved.
ekns 4y ago
It is happening increasingly: https://www.nasdaq.com/articles/japans-largest-power-company-tepco-to-mine-bitcoin-with-excess-energy https://www.nasdaq.com/articles/japans-largest-power-company...
Quindecillion 4y ago
I imagine the costs to build out the transmission infrastructure is too great, and simply mining Bitcoin with that "stranded" energy is much easier.

mathieuh 4y ago

Isn't the Salvadoran president a cryptobro who lost a huge amount of public money betting on Bitcoin? That's the last I heard of it, have they turned it around at all?

tigrezno 4y ago
How did he lose the money? Did he sell the bitcoin? Stop the bs.
- nicbou 4y ago
  He bought when it was worth far more. At the current value of Bitcoin, his investment has not paid off. Unless you expect Bitcoin to return to this valuation, the money is as good as lost.
- graeme 4y ago
  He certainly bought substantially less bitcoin than he could have bought, had he waited to do so. So you could say his investing skills measured in either bitcoin or dollars are poor to date.
- satvikpendem 4y ago
  Why are you implying that unrealized losses are not still losses?
  - 0xy 4y ago
    Have you profited money if the price of one of your assets doubles and you do not sell?
    - satvikpendem 4y ago
      I have.
    - kman82 4y ago
      Yes. Absolutely. Paper losses/gains are real

seu 4y ago

Might be relevant to read another perspective on El Salvador and Bitcoin (Nov. 2022) https://www.theguardian.com/technology/2022/nov/15/china-el-salvador-economy-cryptocurrency-fall https://www.theguardian.com/technology/2022/nov/15/china-el-...

Quindecillion 4y ago
Obviously take this with a grain of salt given the author, but here's another perspective too. https://bitcoinmagazine.com/print/stop-drinking-the-elites-kool-aid https://bitcoinmagazine.com/print/stop-drinking-the-elites-k...

spaceman_2020 4y ago

You have to admire El Salvador for at least trying something different to get out of its financial hole. Too many countries struggling with issues similar to it (crime, poverty, debt) end up using the same playbook (IMF/Worldbank loans) and dig themselves deeper and deeper into the poverty trap. There are no easy paths for countries like El Salvador. This might be bad too, but at least its a different attempt.

recuter 4y ago
[flagged]
boeingUH60 4y ago
A silly different attempt is still a silly one…the Bitcoins the country bought are now worth over 60% less than their purchase price [1]. A poor country has successfully thrown away tens of millions of dollars…such incompetence on display. 1- https://www.cnbc.com/amp/2022/10/13/el-salvadors-bitcoin-holdings-down-60percent-to-60-million-one-year-later.html https://www.cnbc.com/amp/2022/10/13/el-salvadors-bitcoin-hol...
- earnesti 4y ago
  Whether they have thrown the money away depends how they deal with the bitcoins long term. As far as I know they are still adding to the position. There is grassroots adoption also happening in the nearby countries, maybe the story hasn't ended just yet.
  - osullip 4y ago
    'Maybe' is too unpredictable for most sophisticated systems. Certainty, or at least a level of high confidence, is when businesses invest and consumers spend.
  - xur17 4y ago
    And it's not just about the value of the Bitcoin they purchased. They also have presumably increased tourism and interest in their country at least some (their name is in the news more, and I know for a fact that Bitcoin fanatics have visited specifically because of this).