8 ms·
That's heavy editorializing: El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it. But for getting an IMF
by ptero 2y ago
That's heavy editorializing:
El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it.
But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status.
Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.
- p_j_w 2y ago>Now the businesses are free to accept it or not instead of being required to accept it. That's all. Right, so it's no longer legal tender.
- antihipocrat 2y agoLegal tender does not have to be a mandatory means of exchange.
- abduhl 2y agoThat is actually the defining characteristic of legal tender: “money that is legally valid for the payment of debts and that must be accepted for that purpose when offered” https://www.merriam-webster.com/dictionary/legal%20tender https://www.merriam-webster.com/dictionary/legal%20tender
- antihipocrat 2y agoThanks, you're right and I was totally wrong. I'd delete my comment if I could
- rsynnott 2y agoIts status in El Salvador was actually a bit more than _just_ legal tender; merchants were _required_ to accept it. For instance, the euro is legal tender in the eurozone. I can pay a tax bill or a bank loan with 10cent coins, and technically they have to accept that (though note that some countries do have special rules around whether small change is legal tender). However, a merchant is not required to take my wheelbarrow full of 10cent coins in exchange for goods and services; no debt exists before the purchase. El Salvador was forcing the merchant to take the wheelbarrow.
- bbbbq 2y ago[flagged]
- el-salvador 2y agoDay to day there won't be much change, as bitcoin acceptance wasn't really enforced.
- blackeyeblitzar 2y agoWhy does the IMF care what denomination they use domestically?
- georgeecollins 2y agoThey care about the economic stability of a country they make loans to. Their loans often come with conditions about how the government can run fiscal or trade policy. I don't know if that is good or bad but I have heard smart economists argue both sides.
- akoboldfrying 2y agoIt's reasonable when you think about it from a risk assessment point of view. The IMF wants to feel that El Salvador (a) will likely be able repay the debt, (b) in a currency that is unlikely to devalue too much. For that reason, the debt would probably be in USD or some other prominent world currency (letting the debt be in El Salvador's local currency would risk them printing money to devalue it, threatening (b)). So the IMF would probably make the debt in USD. In theory, bitcoin can be exchanged for USD, so in theory, El Salvador could exchange some of their bitcoin into USD to pay the IMF back. But what if bitcoin's value drops precipitously? Or if it becomes illiquid? It seems the IMF thinks bitcoin is hype, so it expects its value to drop to near zero eventually. That would make it very difficult for a country that has large bitcoin reserves (instead of large reserves of a more stable currency) to repay the loan.
- bbbbq 2y ago[flagged]
- yalogin 2y agoLooks like a fair take to me. They are not forcing people to accept it anymore because it didn’t work. It was never supposed to work. Bitcoin tried for 15-20 years to find a use case but now it’s just an asset class like gold and nothing else, it will never be more than that.
- paulgb 2y agoThe trouble is, it needs to be more than that if it is to survive. Since inception, mining has mostly been subsidized by new bitcoin, which is capped by design (and about 95% distributed). Satoshi’s paper assumed that transaction costs would make up for the exponentially declining subsidy, but that hasn’t really happened since it never lived up to his “digital cash” vision.
- desumeku 2y agoEthereum solves both of these issues. It is an entire platform designed for the development of distributed applications and will probably win over BTC in the long-long-term.
- nshung 2y agoNo. Ethereum is a solution searching for a problem. Have you seen any widely used successful application developed using Ethereum?
- desumeku 2y agoThere are tens of billions of dollars locked up in DeFi ecosystems with hundreds of millions of dollars worth of assets exchanging hands daily, but you would probably just say that it doesn't count for some inane reason. Tokenized stocks are coming this year.
- elevaet 2y agoI'm so curious what will happen as mining approaches the asymptote. When the mining rewards become more and more rare and if people aren't incentivizing the network with a lot of transactions, will transaction times just get slower and slower until it becomes a stranded asset?
- throw_pm23 2y agoWhy do they need an IMF loan? (that's typically a sign of the economy not doing great)
- georgeecollins 2y agoThere seems to be two concepts that are getting conflated. One concept is that BTC is a good investment. Historically that is undeniable. The other concept is that it is a good medium of exchange. I think that is not so true because 1) its neither cheap nor easy to buy a lot of things with it 2) a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it. If you accept that BTC is a reasonable investment, but not a great medium of exchange then what is happening makes sense. I am not saying that a decentralized token couldn't be a good medium of exchange -- honestly I don't know. But so far BTC is not that.
- bawolff 2y ago> One concept is that BTC is a good investment. Historically that is undeniable. I'll deny it. Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.
- deleted 2y ago[deleted]
- LudwigNagasena 2y ago> a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it. So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.
- llamaimperative 2y agoYes it is good to have currency that is distinct from an investment asset. It allows you to do currency things with one, and investment things with the other.
- georgeecollins 2y ago