El Salvador makes Bitcoin legal tender • Hacker News Board

Re: El Salvador makes Bitcoin legal tender

#711

Post by X6S1x6Okd1st » Thu, Jun 10, 2021, 5:34 PM UTC

ankurpatel wrote: post #707

X6S1x6Okd1st wrote: post #673

Earlier quoted context omitted.

I have yeah, that was a long time ago when I believed in Bitcoin as a currency and it's use in payments. I don't particularly believe in bitcoin anymore, but that's only relative to other cryptocurrencies like Ethereum.

Right which proves the point that you believed in it and once it was practically put to use you see it is not practical anymore. Why use a currency that is not practical for day to day activity.

I continue to hold a small amount of bitcoin as a speculative investment. I hold much more ethereum as a speculative investment or to get yield from DeFi.

I am happy to pay and be paid in cryptocurrency, but I wouldn't want to allow my rainy day fund or funds set aside for specific purchases (i.e. maintaining continuity of life/business) to have exposure to the extreme volitility that cryptocurrencies have.

Just because one of the many potential use cases of cryptocurrency doesn't seem to be panning out very well doesn't mean that the other use cases are invalid.

Re: El Salvador makes Bitcoin legal tender

#712

Post by tylerhou » Thu, Jun 10, 2021, 5:59 PM UTC

lowkey wrote: post #682

dragonwriter wrote: post #635

Earlier quoted context omitted.

I don’t particularly want my dollars to “hold value”. I want currency to be useful as currency; I want my investments to hold value. The two things serve different functions, and I don't want investments compromised to be useful as currency or vice versa.

> I don’t particularly want my dollars to “hold value” Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? How does that benefit you personally?

How much money do you have in dollars? I have an emergency fund — 6 months of expenses. Everything else is in other assets that store value after inflation (e.g. stocks, bonds, housing).

> How does that benefit you personally?

A little bit of inflation means more economic growth in the long run. That benefits me because services and goods will get cheaper and/or better.

Re: El Salvador makes Bitcoin legal tender

#713

Post by Saint_Genet » Thu, Jun 10, 2021, 6:09 PM UTC

manuelaljibes wrote: post #75

Saint_Genet wrote: post #20

Congratulations to Bitcoin. All it took was a fascist takeover.

Do you even know what fascist means?

I do, yes

Re: El Salvador makes Bitcoin legal tender

#714

Post by reedjosh » Thu, Jun 10, 2021, 6:28 PM UTC

tylerhou wrote: post #712

lowkey wrote: post #682

Earlier quoted context omitted.

> I don’t particularly want my dollars to “hold value” Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? How does that benefit you personally?

How much money do you have in dollars? I have an emergency fund — 6 months of expenses. Everything else is in other assets that store value after inflation (e.g. stocks, bonds, housing). > How does that benefit you personally? A little bit of inflation means more economic growth in the long run. That benefits me because services and goods will get cheaper and/or better.

> How much money do you have in dollars?

Not much, in fact I try to remain leveraged via debts to hedge against inflation.

But my salary is measured in dollars. I fought hard to get the salary I have today, but I must continue to ratchet up as my employment deal looks worse every year.

I believe the Cantillion effect is largely why the average peasant's wages have not kept up with asset prices.

https://www.adamsmith.org/blog/the-cantillion-effect

Inflation means wealthy (with assets) get wealthier.

> A little bit of inflation means more economic growth in the long run.

When you play tricks with the CPI it does look that way. It's easy to say there's growth when revenues grow beyond a poor measure of inflation.

Inflation discourages savings and thus makes money look easy. As such, it actually encourages bad investment. Further, the business cycle that Kaynsians say are just a natural part of a large economy are really caused by over leveraged banking credit bursts.

If half of the dollars in circulation are just debts owed between banks, then that bubble bursts, it's no surprise that asset prices would fall--there's literally fewer dollars in circulation.

It's no big deal for those involved in fed policy making as they are usually the first to see it coming (and or instigate it with higher interest rates) and generally move their positions back to dollars just prior to a credit bubble burst.

But for those of us that leverage ourselves to hedge against inflation (buying a house), we get caught with a heavy loan on an asset that's no longer worth as much as the loan on it.

One should be open to viewpoints external to those provided by the people in charge of and profiting from the system.

Re: El Salvador makes Bitcoin legal tender

#715

Post by reedjosh » Thu, Jun 10, 2021, 6:35 PM UTC

dragonwriter wrote: post #709

lowkey wrote: post #682

Earlier quoted context omitted.

> I don’t particularly want my dollars to “hold value” Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? How does that benefit you personally?

> Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? Yes. Mostly, because of systemic effects on the broader economy I need to have functioning to earn a living, but also because of more direct personal benefits. > How does that benefit you personally? Because other than a small share in cash and the bank for liquidity, my assets aren’t doll…

I agree that it's nice if you have assets, but I believe for most people we can't have nearly as many assets and or connections as the wealthy.

And for young people, they're basically priced out of assets by this system. _This_ literally is the reason owning a home is next to impossible for millennials and gen-zs.

Further, this encourages a debt based society that may encourage growth in the short run (debt giveth first), but then when the debts are due it holds the economy back. Typically this looks like the 2008 crash and is coined the `business cycle` by modern economists.

Re: El Salvador makes Bitcoin legal tender

#716

Post by reedjosh » Thu, Jun 10, 2021, 6:39 PM UTC

tylerhou wrote: post #710

lowkey wrote: post #677

Earlier quoted context omitted.

Where does the Fed get the money to be a lender of last resort - by printing the money and generating inflation? If so, then how does this inflation impact the purchasing power of these last resort dollars? I often like to take things to a logical extreme. Since the Fed can simply print all this money into existence, is there a limit to their ability to print? I mean couldn't they simply print their way out of any ec…

Printing money does not always cause inflation. The purpose of the Fed is to keep the dollar's value stable. If demand for the dollar rises, the Fed has to print money to avoid deflation.

The fed itself says we've already had 4.2% CPI the last year, and that's trusting the fed not to manipulate it's own metric.

https://www.bls.gov/cpi/latest-numbers.htm

The common mantra "When a measure becomes a target, it ceases to be a measure." applies here too, but many HN peeps seem to think it doesn't for some reason.

If you remove the constant adjustments to the CPI you get a _much_ higher rate of inflation than governments will admit.

http://www.shadowstats.com/alternate_data/inflation-charts

Re: El Salvador makes Bitcoin legal tender

#717

Post by crazypython » Thu, Jun 10, 2021, 8:36 PM UTC

acdha wrote: post #627

crazypython wrote: post #614

Earlier quoted context omitted.

> Except for those third-parties, you mean? The third-party can't steal your Bitcoins. Assuming your node is online 24/7, you can verifiably cash out your Bitcoin on the blockchain at any time. The third-party doesn't hold your Bitcoin– both parties can close the channel and cash out, again without any trust. Your Bitcoins can't be stolen by a third-party, unless you and your watchtower fail to broadcast a transactio…

That sounds like a lot of infrastructure which you need to operate to avoid trusting your back. Do we have any reason to think the average Salvadoran wants to do that? If not, it’s not exactly realizing the sales pitch.

Watchtowers are third-parties that allow your node to go offline.

Bitcoin has lax liveness requirements unlike other networks. cough cough Ethereum 2.0 PoS

Re: El Salvador makes Bitcoin legal tender

#718

Post by bun_at_work » Thu, Jun 10, 2021, 10:03 PM UTC

lowkey wrote: post #675

bun_at_work wrote: post #632

Earlier quoted context omitted.

This comment betrays your misunderstanding of the financial institutions and systems at play here. The Fed's goal is to maintain inflation at 2% for reasons more complicated than I'll discuss here. If you're interested here is a source you might like: > https://www.goodreads.com/book/show/30231791-the-end-of-alch...

> The Fed's goal is to maintain inflation at 2% for reasons more complicated than I'll discuss here. It would be amazing if you could make the effort to explain the complicated reasons why the Fed's inflationary policy is a good thing. I have yet to hear a sound argument why sound money is worse for the people, than an inflationary currency. I can see how it would benefit the government to hide the true cost of taxat…

I can't do this topic justice from memory, but you seem to be genuinely interested, so I'll say what I can.

It seems related to the petrodollar system. This is where the world uses USD for energy (OPEC only sells oil for dollars). This forces countries who need oil to acquire dollars. However, there's a problem with that: a limited supply of dollars. How do we fix that problem? Use a fiat currency (not backed by something tangible) that allows us to print more money as necessary. How much more should we print? The target is 2% inflation, so that much is what the experts in this topic think.

This petrodollar system does a lot more than just force us to have inflation. The subject from here becomes more and more complicated, because monetary systems are highly complicated. There's a lot going on in the US fiscal policy, and the impacts vary from very good to very bad, depending on your perspective. It's in fact so complicated that I can imagine for every perspective there are good parts and bad parts of our monetary system.

This is an excellent write-up from Lyn Alden (very good financial writer) on the petrodollar system and it's impacts: https://www.lynalden.com/fraying-petrodollar-system/

There's a lot of talk in this thread and on the internet in general, especially around cryptocurrencies, that is massively oversimplified and doesn't pay any mind to the fact that, like any other field, there are many very intelligent people working to solve very difficult problems. If a monetary policy can be summed up in one sentence, it's probably not a good policy.

Re: El Salvador makes Bitcoin legal tender

#719

Post by bun_at_work » Thu, Jun 10, 2021, 10:11 PM UTC

reedjosh wrote: post #715

dragonwriter wrote: post #709

Earlier quoted context omitted.

> Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? Yes. Mostly, because of systemic effects on the broader economy I need to have functioning to earn a living, but also because of more direct personal benefits. > How does that benefit you personally? Because other than a small share in cash and the bank for liquidity, my assets aren’t doll…

I agree that it's nice if you have assets, but I believe for most people we can't have nearly as many assets and or connections as the wealthy. And for young people, they're basically priced out of assets by this system. _This_ literally is the reason owning a home is next to impossible for millennials and gen-zs. Further, this encourages a debt based society that may encourage growth in the short run (debt giveth fi…

> when the debts are due it holds the economy back.

This is just wrong. The only debt that holds the economy back is debt that didn't actually generate growth. If you borrow to start a business, you are stimulating the economy with growth, through debt. If you rack up credit debt at the bar every weekend, you're going to cause yourself problems.

The topic is just more nuanced than you're implying. Debt is very good for the economy overall, as long as you're not overdoing it or taking on frivolous debts that don't let you grow.

Student loans seem relevant here. I take out 50k of student loans. The degree I earn empowers me to make 50k/year. After 2 years that debt has been turned into profit, and that's only for me personally, ignoring the value my education will bring to my employer, the community, and the economy at large.

Another example of good debt can be a car. I purchase a 20k car, with credit, which allows me to make 70k instead of 50k, in the next town over. After a year, that debt has paid itself off and is now earning for me, despite the fact that the value of the car instantly dropped 20+% as soon as I purchased it.

The idea that debt holds the economy back is terribly misinformed and over simplified. It's literally how we grow, and how the US has become the economic powerhouse it is. The most wealthy nation in the history of the world (what we do with the money is a different topic).

Re: El Salvador makes Bitcoin legal tender

#720

Post by young_unixer » Fri, Jun 11, 2021, 12:40 AM UTC

kragen wrote: post #355

xapata wrote: post #318

Earlier quoted context omitted.

> The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what’s happened in the US over the last 50 years, in fact, only more so. Why does it make most…

Maybe it won't! It's a potential disaster, not a guaranteed one. You can read Tim May's Crypto-Anarchist Manifesto for a slightly more detailed argument, and there are decades of cypherpunk stuff to read on the subject, mostly from the perspective that destroying the welfare state would be really super great . I don't agree, but the immediate and pressing problem for most people (especially in El Salvador) is not the…

Destroying the welfare state doesn't imply the end of governments.

In my opinion, it would be good if we could focus on taxing the things that actually should be taxed: land property and pollution, and stop taxing transactions.

And it would still be egalitarian, since people who own tons of land are not poor.