This is quite dumb of them.
El Salvador to adopt Bitcoin as legal tender
191–200 of 421 posts
Re: El Salvador to adopt Bitcoin as legal tender
#192Earlier 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…
Does making governments less stable really not make economies less stable?
Governments that overspend or misallocate capital are a burden to the economy. With sound money, a badly managed country can go bankrupt because they can't print more money. It isn't the fault of the money, while this is the usual argument. It's just the nature of honest money.
So, it results in destabilizing governments that are overspending, but stabilizing those that are not.
Re: El Salvador to adopt Bitcoin as legal tender
#193Earlier quoted context omitted.
This kind of fiat stability is very challenging for small and poor countries. In fact, El Salvador doesn't _have_ its own currency for this reason -- they switched to the US dollar decades ago! Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? (and sure as hell will not modify their fiscal…
> Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? A currency needs stability. Speculation needs volatility. Speculation only works when there's a stable currency to dump your value into when the the security your trading is going in the wrong direction.
"... only works when there's a stable currency to dump your value into ..."
Hence the rise of algorithmic stable coins.Re: El Salvador to adopt Bitcoin as legal tender
#194Earlier 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-...
When that article was written the transaction fees were around $1.50-$2.00 USD which is already a lot for meals and snacks. Now that the average transaction fees are anywhere from $7 - $60 I doubt people are buying much with bitcoin's dialup throughput. https://bitinfocharts.com/comparison/bitcoin-transactionfees...
The fees do fluctuate, thus layer 2 solutions. A few days ago I moved some bitcoin and two transaction fees were equivalent of USD 0.78 and 0.72. For finality in a few minutes, I thought it was reasonable.
Re: El Salvador to adopt Bitcoin as legal tender
#195Even 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 market did react. BTC was down and then turned around on the hourly that this was announced? Or am I missing something?
That's typical volatility, imo, a reaction would have been 10+% in either direction and it was well known throughout the day well before the actual announcement itself.
Re: El Salvador to adopt Bitcoin as legal tender
#196Earlier 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.)
No currency ever has been 100% stable. The exchange rate is how we perceive it in the modern economy, but fluctuation in commodity prices was the indicator of an stable, or not, currency when the gold standard was in place. That will be the indicator if bitcoin, or any other currency, achieve 100% use, which in itself is impossible.
But there is no guarantee to stability, bitcoin doesn’t provide it any more than the usd backed by millions of soldiers does. Stability begins on the production side, not the monetary one; after a huge drought you’ll see prices skyrocket irrespective of the currency.
Re: El Salvador to adopt Bitcoin as legal tender
#197That will be exciting when someone sells some vegetables in the market and then 45 minutes later discovers the transaction was backed out.
That already happens every single day (credit card chargebacks), and is not very easy to do in BTC. I'd have to look into how it works in the lightning network.
people in ecuador don’t use credit cards. they use cash
Re: El Salvador to adopt Bitcoin as legal tender
#198Earlier 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.
How would that come about? Serious question. I do not see how price controls like that could possible work, unless El Salvador closes its borders to all trade.
Re: El Salvador to adopt Bitcoin as legal tender
#199Earlier quoted context omitted.
Historically, Bitcoin appreciated 300% YoY whereas the dollar is in a constantly depreciating cycle, I know which one I'd prefer.
Deflation is not something desireable in macroeconomics. It incentivizes hoarding cash instead of spending it on productive things (hiring people, capital investments to improve productivity, etc). Slow and steady inflation is a stated goal for most governments and central banks.
Deflation means I can buy more stuff for less money. This allows me to work less and have more leisure time. Therefore, deflation is desirable.
Re: El Salvador to adopt Bitcoin as legal tender
#200> Bukele said the country is partnering with digital wallet company, Strike, to build modern financial infrastructure using bitcoin technology. Wow, this seems like an incredibly shitty situation for the people of El Salvador. It looks like some lobbyists got hired by a wallet company stacked with angel investors willing to pour money into the idea of being integrated into the government at such a low level. I wouldn…
> Wow, this seems like an incredibly shitty situation for the people of El Salvador. Indeed it is. The government just mandated that everyone in the country is obligated to use a startup's app, more or less. This has to be one of the most egregious examples of regulatory capture I've seen in a long time. "Legal tender" means that people are legally obligated to accept this as payment. Maybe the law will be broad enou…
Lightning isn’t an app - it’s an open protocol supported by dozens of programs. This one app you’re talking about also supports it.