El Salvador to adopt Bitcoin as legal tender • Hacker News Board

Re: El Salvador to adopt Bitcoin as legal tender

#131

Post by PragmaticPulp » Sun, Jun 06, 2021, 1:24 AM UTC

JohnJamesRambo wrote: post #45

eloff wrote: post #40

My prediction. This won't be used hardly at all. Why use bitcoin when the USD is also legal tender and superior as a currency in nearly every way? About the only thing you can do more easily with bitcoin is buy other cryptos and send it across borders - sometimes. I would also predict that the failure here would finally get people to stop thinking it's a currency. But I doubt it.

USD has this little problem and it hasn’t even begun to manifest yet. https://fred.stlouisfed.org/series/M1SL

No, that graph only shows a discontinuity because the definition of M1 money supply was changed on that date.

They explained it fully here: https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...

Sharing the graph without the context is misleading.

Re: El Salvador to adopt Bitcoin as legal tender

#132

Post by [deleted] » Sun, Jun 06, 2021, 1:24 AM UTC

PragmaticPulp wrote: post #115

rawtxapp wrote: post #44

Earlier quoted context omitted.

To add on to that, it's been used pretty nicely in the El Zonte beach town [1]. 1: https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

According to the article, someone donated "six-figure" amounts of Bitcoin to the town each year on the condition that they learn how to use Bitcoin: > Beneficiaries of the digital currency had to learn how to use the Bitcoin itself, creating a Bitcoin economy. If you give a relatively poor town the option to take free money as long as they learn how to use Bitcoin, of course they're going to learn how to use Bitcoin.…

[deleted]

Re: El Salvador to adopt Bitcoin as legal tender

#133

Post by nemothekid » Sun, Jun 06, 2021, 1:25 AM UTC

staktrace wrote: post #119

slg wrote: post #111

Earlier quoted context omitted.

“FUD” implies it is false. Maybe you can argue against some of those, but I have no idea how anyone would argue Bitcoin has a stable value.

You argue it is stable by arguing you never need to convert it to fiat. If your economy is running 100% on Bitcoin it doesn't matter what the exchange rate to USD our any other currency is. (Note I'm not actually arguing this is the case in El Salvador, just pointing out that there is a theoretical argument that could be made.)

That is only true if the entire global economy is running 100% on bitcoin. The second you need to trade with another economy (like any nation needs to in order to import/export goods), you are bitten by the same issue.

The US is El Salvador's largest trading partner - so Bitcoin's price relative to the USD does matter.

Re: El Salvador to adopt Bitcoin as legal tender

#134

Post by PragmaticPulp » Sun, Jun 06, 2021, 1:26 AM UTC

yosito wrote: post #39

If creditors were obligated to accept Bitcoin, does that mean that to be a creditor, you must maintain a Bitcoin address/wallet? Or could you still just say, "Sorry, you still have to pay in USD because we don't have a Bitcoin wallet"?

It's concerning that the government has partnered with one particular startup company with a specific Bitcoin app for this. Depending on how the laws are written, essentially forcing people to use a specific startup's app to transact in the country could be the most egregious example of regulatory capture we've seen in recent history.

Re: El Salvador to adopt Bitcoin as legal tender

#135

Post by acdha » Sun, Jun 06, 2021, 1:30 AM UTC

ipaddr wrote: post #126

acdha wrote: post #102

Earlier quoted context omitted.

Kind of: Bitcoin doesn’t allow transactions without knowing the key but that isn’t true for exchanges and the public ledger makes it easy to block transactions using that address. If everyone subject to US jurisdiction or treaty agreements blocks transactions traceable back to tainted addresses, the value plummets.

In this situation you would use an exchange in a friendly country.

… which doesn’t do any business with any entity participating in that financial regulation system

… whose customers either don’t intend to ever do so or have lowered their price to reflect those restrictions

Again, note that I’m not saying it’s impossible to work around the edges of the system but it will have real costs which many people aren’t interested in dealing with or will want to be aggressively compensated for.

Re: El Salvador to adopt Bitcoin as legal tender

#136

Post by Geee » Sun, Jun 06, 2021, 1:33 AM UTC

BenoitEssiambre wrote: post #97

Geee wrote: post #87

Earlier quoted context omitted.

Bitcoin will stabilize in time, when it's big enough to absorb short time supply and demand shocks. It will eventually follow the value of all economic activity through its network. The more economic activity, the less volatility in aggregate. There's a huge cost in "stabilizing" a fiat currency, in terms of debt and inflation.

A deflationary coin cannot stabilize without destabilizing the economy that trades in it. https://benoitessiambre.com/specter.html

That argument isn't true. Deflationary currency can destabilize governments, not the economy. Econonomies fail because they're run by incompetent governments, who spend more than they can afford.

Bitcoin is not guaranteed to be deflationary. It's deflationary when the economy is growing. It's inflationary when the economy is shrinking. Deflation will slow down economy, and inflation will accelerate economy. It's a stable self-correcting system, which would correct itself to match the average economic growth globally.

Re: El Salvador to adopt Bitcoin as legal tender

#137

Post by staktrace » Sun, Jun 06, 2021, 1:34 AM UTC

young_unixer wrote: post #93

Many other cryptocurrencies are so much better than Bitcoin. Off the top of my head: Monero, Litecoin and maybe Ada (Cardano) sound like better alternatives. A good heuristic is "if someone extols the virtues of Bitcoin (instead of crypto in general), then they don't understand much about the virtues of Bitcoin or any other cryptocurrency."

Network size is a virtue too. Specially for things that benefit from network effects!

Re: El Salvador to adopt Bitcoin as legal tender

#138

Post by acdha » Sun, Jun 06, 2021, 1:36 AM UTC

myrryr wrote: post #113

acdha wrote: post #95

Earlier quoted context omitted.

Bitcoin can’t scale to handle anywhere close to that much volume, and the deflationary model makes stability harder to maintain since it discourages routine usage.

They are using lightning, which is designed to do so. It if was just bitcoin then yes, they would have serious issues, but it isn't.

Maybe Lightning will scale that well but it hasn’t been demonstrated yet. More importantly, that’ll push a lot of the properties people believe to be true to the banks in all but name most people would actually use.

Re: El Salvador to adopt Bitcoin as legal tender

#139

Post by syops » Sun, Jun 06, 2021, 1:36 AM UTC

plankers wrote: post #127

antihero wrote: post #60

Earlier quoted context omitted.

Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.

The beer will always be worth what you paid for it. The money you still have may, however, fluctuate in value.

It isn't true that something is necessarily worth what one pays for it. This assumption provides for a nice way to model economic transactions but it isn't always true. For instance, life saving heart surgery has a definite cost and it is worth far more to the recipient in some cases than what they pay for it. In the other direction I don't think that the cost of government services is worth what I pay for them since I think the U.S. government squanders far too much money on national defense.

Re: El Salvador to adopt Bitcoin as legal tender

#140

Post by acdha » Sun, Jun 06, 2021, 1:39 AM UTC

Geee wrote: post #136

BenoitEssiambre wrote: post #97

Earlier quoted context omitted.

A deflationary coin cannot stabilize without destabilizing the economy that trades in it. https://benoitessiambre.com/specter.html

That argument isn't true. Deflationary currency can destabilize governments, not the economy. Econonomies fail because they're run by incompetent governments, who spend more than they can afford. Bitcoin is not guaranteed to be deflationary. It's deflationary when the economy is growing. It's inflationary when the economy is shrinking. Deflation will slow down economy, and inflation will accelerate economy. It's a st…

Bitcoin is guaranteed to be deflationary as long as there’s a finite limit – if nothing else, lost keys would reduce the total over time.

More importantly, the people hawking it _really_ want it to be deflationary because that effectively makes them landed gentry getting richer without any effort on their part. After a decade of that being integral to the sales pitch I would be extremely surprised to see any major holder support breaking the deflationary model.