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El Salvador to adopt Bitcoin as legal tender

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Re: El Salvador to adopt Bitcoin as legal tender

#141

Post by staktrace »

nemothekid wrote: post #133
staktrace wrote: post #119

Earlier quoted context omitted.

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.

I think there's probably some middle ground here. Like say the national economy is 100% on Bitcoin and then as long as they have a balanced trade with other countries (i.e. no long term trade deficit/surplus) they can deal with those obligations in fiat currency. But I'm just guessing here.

Re: El Salvador to adopt Bitcoin as legal tender

#142

Post by rawtxapp »

pochamago wrote: post #75
rawtxapp wrote: post #28

Even though the market hasn't really reacted to this news (which I suspect is due to the fact that it's proposed/didn't happen yet), this is one of the most bullish news in a very long time in my opinion (even more bullish than companies buying into it). I suspect this will start the domino effect of countries slowly, but surely adopting BTC. It'll probably be the smaller countries first where they don't have great c…

The smaller countries who don't want to be beholden to either the US or China's fiscal policy. We seem to be building up a second cold war, and I imagine for many countries being able to back your economy with a currency that isn't controlled by either of the two major players is tempting. China may well end up regretting discouraging its miners from holding the majority stake, given the Sino power that could project…

I think if Bitcoin price turns around and keeps increasing (big if), we are going to see a large scale game theory at play. The countries that have opted in will be in a much better place so that would create a race to get in.

The next 5-10 years will be very interesting times to live through, especially after record USD printing.

Re: El Salvador to adopt Bitcoin as legal tender

#143

Post by [deleted] »

PragmaticPulp wrote: post #131
JohnJamesRambo wrote: post #45

Earlier quoted context omitted.

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.

[deleted]

Re: El Salvador to adopt Bitcoin as legal tender

#144

Post by gbear605 »

revnode wrote: post #129
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.

Why does it matter how many dollars the beer is worth? It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.

That’s fine as long as my job is willing to pay me in a constant amount of bitcoin and everything else I need to buy can be bought with bitcoin. If my salary is still in dollars, then what I can purchase for a day’s wages will vary hugely.

Re: El Salvador to adopt Bitcoin as legal tender

#145

Post by ineedasername »

rawtxapp wrote: post #31
ineedasername wrote: post #30

I'm sure the people of El Salvador won't mind having 20% of their wealth wiped out every time Elon Musk tweets something that changes his mind in some way. Certainly if I was selling something I'd denominate it in something relative stable and then change Bitcoin asking price to match the exchange rate to that stable currency. Since the currency there is the USD... Yeah, I'd still be pricing my goods and services in…

Historically, Bitcoin appreciated 300% YoY whereas the dollar is in a constantly depreciating cycle, I know which one I'd prefer.

And if you need to spend it from day to day it's both inconvenient and often worth a fair bit less than the day before. It's increased float price vs. USD over the years may make it a reasonable investment for those with a tolerance for high risk. Not so much for a population where the median annual income is about $4,000 and the average person is probably living close enough to the bottom of Maslow's hierarchy that they can't just sit back and HODL when BTC prices go into hibernation for a year.

If there's a place in the world that would currently be a good test bed for a country to make BTC legal tender, it's not El Salvador. Its population simply isn't in a position take much of a risk moving from hard currency like the USD to a volatile asset class.

Re: El Salvador to adopt Bitcoin as legal tender

#146

Post by derefr »

gbear605 wrote: post #144
revnode wrote: post #129

Earlier quoted context omitted.

Why does it matter how many dollars the beer is worth? It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.

That’s fine as long as my job is willing to pay me in a constant amount of bitcoin and everything else I need to buy can be bought with bitcoin. If my salary is still in dollars, then what I can purchase for a day’s wages will vary hugely.

Presumably, in El Salvador, salaries would be denominated in BTC. That's the only thing that'd make any sense. (And, barring external regulatory force, it's very likely to be what a free job market where employees mostly spend BTC would move to doing.)

Re: El Salvador to adopt Bitcoin as legal tender

#147

Post by bubersson »

CyberDildonics wrote: post #123
bubersson wrote: post #72

Earlier quoted context omitted.

Transaction fees are 5 cents in the last couple days. The mempool is empty (see https://mempool.space/ ). If you are paying more, then that's an issue with the exchange or wallet that you are using.

No they aren't, you are misunderstanding that link. It gives an 'estimate' of 1 satoshi per byte. The actual current block is 12 satoshis per byte. Transactions are not a single byte of course. This is why the average transaction fee is $7 right now and was $60 a few weeks ago. https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Maybe you should actually check the blocks. If your transaction pays fee 5 cents it would easily get included in the mined blocks. Often immediately.

As I mentioned, if people are using wallets or exchanges that set the fee higher, that's their fault. They are stupidly overpaying and that's why average is high.

Since mempool is currently empty, the blocks include transactions with 1 sat/vB. For average transaction with 140vB that would be 140 sats, which is currently ~0.05 USD.

Re: El Salvador to adopt Bitcoin as legal tender

#148

Post by staktrace »

dariusj18 wrote: post #120
rawtxapp wrote: post #67

Earlier quoted context omitted.

Strike is using lightning where the fees are barely a few satoshis (much smaller than cents) most of the time. This isn't the Bitcoin of 2015, there has been lots of new development, lightning is here and is being used with growing adoption (1ml.com), there are other changes coming to improve the base layer itself (taproot, eltoo, etc).

I still don't understand how the lightning network works and maintains the important blockchain feature of bitcoin.

https://github.com/lnbook/lnbook/blob/develop/03_how_ln_work... is a reasonable explanation of you're interested in the technical aspects.

Re: El Salvador to adopt Bitcoin as legal tender

#149

Post by Geee »

acdha wrote: post #140
Geee wrote: post #136

Earlier quoted context omitted.

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 ho…

There isn't monetary deflation in bitcoin (expect for lost coins).

As a global reserve currency, bitcoin would act as an "index fund of everything". Economy is expected to grow, but it's not guaranteed. Which means that there's always a non-zero risk associated to it. There's more risk on short time scales, and less risk on long time scales.

Re: El Salvador to adopt Bitcoin as legal tender

#150

Post by reader_mode »

revnode wrote: post #129
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.

Why does it matter how many dollars the beer is worth? It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.

> Why does it matter how many dollars the beer is worth?

Because you can buy beer for dollars, so if your local beer costs 50$ in BTC it makes sense to sell BTC for USD and order beer. And if your beer suddenly costs 0.001$ in BTC it makes sense to sell it off to someone in USD and refuse selling in BTC.

> It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.

This is the most idiotic argument ever, if this was true it would be irrelevant if a currency depreciates/appreciates.

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