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Bitcoin’s first day as El Salvador’s legal tender

bbc.com

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Re: Bitcoin’s first day as El Salvador’s legal tender

#21

Post by Whirl »

j_barbossa wrote: post #4

One 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 you want to import anything at all you need foreign currency. One of the ways you can do this is by exporting goods, of course, but you could also sell some of your local currency in exchange for dollars or whatever. Bitcoin volatility makes this harder. Also I’m guessing that volatility makes it hard to get foreign currency loans collateralized by BTC

Re: Bitcoin’s first day as El Salvador’s legal tender

#22

Post by nuclearnice1 »

j_barbossa wrote: post #4

One 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.

I think it has to do with the connections to other currencies. If you sell something priced in Bitcoin, that you acquire in dollars, you’re exposed to that volatility.

Say you sell gold retail. You collect Bitcoin. Then turn around and need dollars for buying more gold.

Same situation for any import really.

It also applies to debt. If your debt is denominated in dollars and you’ve been collecting and saving Bitcoin when Bitcoin surges vs the dollar debt is less of a burden. And vise versa. Similar to the sort of problems emerging markets dollar denominated debts have faced many times.

Re: Bitcoin’s first day as El Salvador’s legal tender

#24

Post by oleganza »

wolframhempel wrote: post #7

I appreciate this has been debated extensively already - but while crypto currency (especially stable coins) can be a worthwhile alternative to fiat money, bitcoin really isn't. A significant crash or surge happens every couple of weeks.

Stable coins are not "crypto" currencies. They have black lists (similar to your bank's fraud department) and they are backed by deposited money (so there is trusted issuer who promises to redeem them for actual cash).

So 2 key features of a crypto-currency are lacking in stablecoins: censorship-resistance and absence of centralized trusted parties.

That you can move them on a blockchain (as long as permitted) with your private key is not much different from signing TLS connection in your Venmo. But with higher fees and latencies.

Re: Bitcoin’s first day as El Salvador’s legal tender

#25

Post by ninetenfour »

bufferoverflow wrote: post #8

It's normal BTC behavior, BTC spikes up and goes down all the time. 10-15% per day moves happen regularly. Open the price chart and look at it.

Which is why BTC is an asset and not a currency.

Currencies need stability of value so that everyone doesn't have to update their prices ever few hours: https://simplicable.com/new/money

But maybe in the new world, all prices can be in digital and thus ever changing?

Re: Bitcoin’s first day as El Salvador’s legal tender

#26

Post by grey-area »

bufferoverflow wrote: post #8

It's normal BTC behavior, BTC spikes up and goes down all the time. 10-15% per day moves happen regularly. Open the price chart and look at it.

That’s just another reason (along with all the others) it should never be imposed as a currency, particularly in a country with lots of people living near the poverty line. Imagine leaving home not sure if you can afford the bus ride to work or food to eat because of volatility.

Re: Bitcoin’s first day as El Salvador’s legal tender

#27

Post by dtech »

j_barbossa wrote: post #4

One 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.

Because for import/export currency volatility matters a lot. 99% of goods depend on import in some way.

Re: Bitcoin’s first day as El Salvador’s legal tender

#28

Post by ninetenfour »

patchtopic wrote: post #11

"crash" not very accurate choice of words... exchange rate dip maybe better?

"Crash" of an asset/currency is always against other assets/currency -- you need to define what its comparable otherwise you can not measure it.

Was it a "crash" though in scope?

Black Friday in 1987 was a 22% drop in the stock market. Yesterday was a 14% to 18% drop depending on how you calculate it. Close to what was considered a prototypical "crash": https://en.wikipedia.org/wiki/Black_Monday_(1987)

Basically BTC is highly volatile, thus it probably crashes all the time based on standard definitions.

Re: Bitcoin’s first day as El Salvador’s legal tender

#29

Post by ethbr0 »

jdhn wrote: post #15

Pretty 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.

It loses (or gains) 10%+ every few weeks.

No conspiracy needed.

Other than, you know, regular and systemic market manipulation by large holders of trading capital... the sort of thing the SEC prevents.

Re: Bitcoin’s first day as El Salvador’s legal tender

#30

Post by mettamage »

j_barbossa wrote: post #4

One 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.

Let's say you buy a house for 1 BTC. I sell that house for $250K. Two things can happen:

* I made a profit if acquiring that 1 BTC cost me a lot less than $250K

* 1 BTC = $250K

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