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El Salvador to adopt Bitcoin as legal tender

cnbc.com

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Re: El Salvador to adopt Bitcoin as legal tender

#11

Post by kragen »

emc3 wrote: post #6

Probably not unrelated: US report: Allies of El Salvador's president deemed corrupt (last month) https://apnews.com/article/latin-america-el-salvador-1d089ae...

It wouldn't be surprising if the US government were to take actions against governments that were moving away from the dollar, whether as legal tender, as foreign reserves, or for other purposes like pricing oil, but it doesn't seem likely that the USG knew about this move a month in advance. Are you suggesting that the Salvadorean president is attempting to retaliate for the report by dedollarizing?

Re: El Salvador to adopt Bitcoin as legal tender

#12

Post by smoldesu »

Geee wrote: post #4

Here's the emotional announcement by Jack Mallers (founder of Strike) who worked with the president of El Salvador to make this happen: https://www.youtube.com/watch?v=2V8y_IV7XU8&t=76s It's worth a watch to understand the story.

I only skimmed through, but it looks astronomically light on details with lots of Pathos tying it all together. If I was a journalist in that audience I'd be terrified.

Re: El Salvador to adopt Bitcoin as legal tender

#13

Post by teachingassist »

thinkmassive wrote: post #3
ncpa-cpl wrote: post #2

El Salvador is looking to introduce legislation that will make it the world’s first sovereign nation to adopt bitcoin as legal tender, alongside the U.S. dollar. In a video broadcast to Bitcoin 2021 President Nayib Bukele announced El Salvador’s partnership with digital wallet company, Strike, to build the country’s modern financial infrastructure using bitcoin technology.

This is good news, but note that Japan already declared Bitcoin as legal tender in 2017 https://www.coindesk.com/japan-bitcoin-law-effect-tomorrow

'Legal tender' means that you are [everyone is] obliged to accept bitcoin as a means of settling any debt.

(That would be a nightmare - in my opinion, it would at least require some kind of official exchange rate between Bitcoin and yen.)

Re: El Salvador to adopt Bitcoin as legal tender

#14

Post by smoldesu »

jpxw wrote: post #10

I wonder why a country would choose Bitcoin as legal tender when better, faster, more environmentally friendly cryptos exist (ones which can feasibly be used to transact money in real-time, for instance).

Mostly adoption purposes. Bitcoin, for better or worse, is now a globally recognized asset (if not official recognized). Sure they could adopt a coin like Ripple or Doge, but that would almost certainly permanently sabotage the market for both respective coins. While I agree that this is a bad idea, basing it on a larger currency does have some considerable economic benefits.

Re: El Salvador to adopt Bitcoin as legal tender

#16

Post by cperciva »

kragen wrote: post #11
emc3 wrote: post #6

Probably not unrelated: US report: Allies of El Salvador's president deemed corrupt (last month) https://apnews.com/article/latin-america-el-salvador-1d089ae...

It wouldn't be surprising if the US government were to take actions against governments that were moving away from the dollar, whether as legal tender, as foreign reserves, or for other purposes like pricing oil, but it doesn't seem likely that the USG knew about this move a month in advance. Are you suggesting that the Salvadorean president is attempting to retaliate for the report by dedollarizing?

Nothing to do with retaliation. They just want to protect their assets from being seized by the US government.

Re: El Salvador to adopt Bitcoin as legal tender

#17

Post by temp10298385 »

As someone who readily admits to not fully knowing what legal tender entails, I have a question for the optimists:

As I understand it, legal tender status forces creditors to accept bitcoin as debt repayment. Given the volatility of bitcoin, wouldn't this impact risk assessment of loans? Being obligated to accept a high volatility asset as a repayment sounds like a nightmare for creditors. Wouldn't interest rates rise in order to cover this added uncertainty?

Re: El Salvador to adopt Bitcoin as legal tender

#18

Post by rawtxapp »

jpxw wrote: post #10

I wonder why a country would choose Bitcoin as legal tender when better, faster, more environmentally friendly cryptos exist (ones which can feasibly be used to transact money in real-time, for instance).

When you consider a country-wide currency or global reserve currency status, things like security/trust are the most important properties.

You can then use other layers for much faster and cheaper transactions while keeping the base layer as is (as lightning network on BTC and zk-rollups on ETH are doing, or even centralized layers like Paypal/Visa, etc).

Re: El Salvador to adopt Bitcoin as legal tender

#19

Post by jerf »

temp10298385 wrote: post #17

As someone who readily admits to not fully knowing what legal tender entails, I have a question for the optimists: As I understand it, legal tender status forces creditors to accept bitcoin as debt repayment. Given the volatility of bitcoin, wouldn't this impact risk assessment of loans? Being obligated to accept a high volatility asset as a repayment sounds like a nightmare for creditors. Wouldn't interest rates ris…

Accepting it as legal tender doesn't mean it is what the loans are denominated in. Nobody sane would denominate loans in BitCoin. (There are loans denominated in BitCoin. The obvious syllogism applies.)

Re: El Salvador to adopt Bitcoin as legal tender

#20

Post by geofft »

jpxw wrote: post #10

I wonder why a country would choose Bitcoin as legal tender when better, faster, more environmentally friendly cryptos exist (ones which can feasibly be used to transact money in real-time, for instance).

Bitcoin's lobbyists are better paid because Bitcoin got people richer.
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