"crash" not very accurate choice of words... exchange rate dip maybe better?
Bitcoin’s first day as El Salvador’s legal tender
11–20 of 103 posts
Re: Bitcoin’s first day as El Salvador’s legal tender
#12One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
They don’t solely accept btc. They accept it in addition.
Re: Bitcoin’s first day as El Salvador’s legal tender
#13One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
That never holds. Arbitrage will cause prices for goods to be equal in USD and BTC. https://www.investopedia.com/terms/a/arbitrage.asp
Unless you control the whole market via price controls but those eventually break as well. https://www.investopedia.com/terms/p/price-controls.asp
Re: Bitcoin’s first day as El Salvador’s legal tender
#14One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
Products from outside that market will have a fixed cost in a different currency, someone has to assume a risk and lose/profit from it.
This happens a lot currently but usual currencies dont fluctuate this much.
As example, I dont expect El Salvador to build iPhones anytime soon and the price for that is usually fixed in USD
Re: Bitcoin’s first day as El Salvador’s legal tender
#15Pretty interesting how the day that it become legal tender in a country, the price goes down by 10%. The more conspiracy minded would say that this was done on purpose to convince people not to use it.
Re: Bitcoin’s first day as El Salvador’s legal tender
#16One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
That's a mighty big if though, since to a first approximation nothing except maybe ransoms is priced in Bitcoin. Most shops notionally accepting it actually set prices in USD and simply convert as needed.
That. What is actually denominated in BTC?? For that, you’d need a substantial economy in which most factors of production (including wages) are denominated in BTC.
Re: Bitcoin’s first day as El Salvador’s legal tender
#17One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
This is only true if its zoned market in the sense that the country is self sufficient and relies on no foreign imports, which is rarely the case.
Re: Bitcoin’s first day as El Salvador’s legal tender
#18One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
> If a zoned market solely accept Bitcoin and a good costs say 1 BTC
The problem is that nobody selling regular goods WANTS to sell his goods with a fixed bitcoin price; the volatility of bitcoin would make it easy for buyers to buy the goods only when their prices where especially low in non-crazy-volatile currency and resell the goods at a favorable price immediately. There's arbitrage there
Re: Bitcoin’s first day as El Salvador’s legal tender
#19One argument critics bring in I don't understand is that Bitcoin is too volatile to be a currency. If a zoned market solely accept Bitcoin and a good costs say 1 BTC, why does it matter if the BTC-to-USD price is increasing or decreasing? For the zoned market it's still 1 BTC for said good.
What about import/export prices? The matter is especially important for a small country, which relies heavily on the international trade.
Re: Bitcoin’s first day as El Salvador’s legal tender
#20This is the finest example of propaganda. Just look at the photo of a dude with a fire in the backdrop. 1. For most people in El Salvador Bitcoin does not matter and will not matter for quite some time. 2. "Bitcoin crashes" to a value a week or so ago. This is usually called a "correction". Even when it was crashing 80%, it was from some very short-living speculative highs and it's now trading close to all-time-high…
Correction relative to what fundamental value? And what’s the difference between a speculative high and the normal price?