El Salvador abandons Bitcoin as legal tender • Hacker News Board

Re: El Salvador abandons Bitcoin as legal tender

#151

Post by mattnewton » Tue, Feb 04, 2025, 1:38 AM UTC

Mengkudulangsat wrote: post #96

hackernudes wrote: post #78

Earlier quoted context omitted.

El Salvador doesn't have a fiat currency. They are dollarized since 2001.

Hmm.. I didn't know that. Which makes the demand purely political then. I recall IMF making the same demand from an island country a few years ago too. https://www.imf.org/en/Blogs/Articles/2021/07/26/blog-crypto...

The IMF feels bitcoin is a risky asset and doesn’t want to be a part of that gamble when making its loan. The IMF has a history of making lots of conditions they feel minimize risk.

To me it looks more like my bank mandating I carry certain kinds of insurance in the terms of my mortgage than a political bias, but I am not an expert.

Re: El Salvador abandons Bitcoin as legal tender

#152

Post by codethief » Tue, Feb 04, 2025, 1:39 AM UTC

ggm wrote: post #4

Speculative asset class fails as non-speculative legal tender class. If king for the day with a sovereign wealth fund I wouldn't forbid investment choices like this on risk grounds, I mean you need risk assets as well as boring ones, right? But I have problems with the moral quality: it's like state investing in the casino business. Monaco? works fine. Anywhere else? It's got problems. Like a lot of people, I probabl…

> Speculative asset class fails as non-speculative legal tender class.

This. Bitcoin proponents often claim that eventually everyone will use Bitcoin for payments ("Finally no more governments or central banks!") and that's why it will increase in value, so everyone should invest in BTC.

But this argument is fundamentally flawed: A currency, in order for it to work (in order for people to be able to trust it), needs to be stable in value. Which contradicts it being an investment vehicle and drastically varying in value over time.

Re: El Salvador abandons Bitcoin as legal tender

#153

Post by nadermx » Tue, Feb 04, 2025, 1:40 AM UTC

LAMike wrote: post #125

derriz wrote: post #82

Earlier quoted context omitted.

Except it has none of the properties of gold as an asset. The value of bitcoin is highly correlated with equities and anti-correlated with gold. It’s the opposite of what you want to be holding as a hedge against a stock market crash.

It is more rare than gold and getting more rare every 4 years. What is the current supply of gold and what will it be in 2050?

Gold has a utility, used in a large swath of electronics. Can always be sold to make something. Bitcoin can only be sold if there is a fiat currency trading in it

Re: El Salvador abandons Bitcoin as legal tender

#154

Post by cg5280 » Tue, Feb 04, 2025, 1:41 AM UTC

hackernudes wrote: post #83

sporkydistance wrote: post #58

Earlier quoted context omitted.

Why would anyone spend a single BTC/sat. if they know it could be worth 10x more in a few weeks/years?

Because they need toilet paper today.

While people will always need to buy the essentials, I do buy that a deflationary currency could discourage discretionary spending. Maybe people are slightly less likely to splurge on a big purchase or a nice dinner. I don't know what the delta would be in GDP growth compared to now; it certainly could be negligible.

Re: El Salvador abandons Bitcoin as legal tender

#155

Post by FollowingTheDao » Tue, Feb 04, 2025, 1:41 AM UTC

a1371 wrote: post #22

Mengkudulangsat wrote: post #2

> The government, she assured, will continue buying bitcoin and having reserves in this cryptocurrency Sounds like the term "Failed Experiment" is the writer's assertion and not the government official position.

Imagine you have 6,050 bitcoins but they didn't work out for you the way that you hoped. The most reasonable thing to do is to still advertise a bullish position because otherwise you are devaluing your own asset. There is a strong sentiment around bitcoin in El Salvador and it can make them money; but the experiment around it being a legal tender, well, failed.

That’s called a rug pull IRL.

Re: El Salvador abandons Bitcoin as legal tender

#156

Post by starspangled » Tue, Feb 04, 2025, 1:42 AM UTC

threeseed wrote: post #102

starspangled wrote: post #73

It's interesting and nice to see how progressive and creative El Salvador has been. Some failures are perfectly understandable when one is willing to try new things. Their approach to crime is another thing that comes to mind that was lambasted and ridiculed by the "international community" and "experts". Yet in the space of a single decade they went from murder capital of the world to safer than New Zealand (in term…

> nice to see how progressive and creative El Salvador has been Alright so let's have a look at these progressive/creative approaches: https://en.wikipedia.org/wiki/Crime_in_El_Salvador (a) Mass arrests of anyone who merely had a gang tattoo, (b) Jailing of children, (c) Security cameras everywhere, (d) Inhumane treatment of prisoners. Trashing human rights is always effective but hardly creative nor progressive.

Human rights of victims of these criminals were being routinely trashed and ignored before Bukele's reforms, so that's just not a trump card. His progressive reforms have significantly improved society for the greater good and has stood up for human rights that were being trampled, it is also against the conservative status quo thinking of how to deal with crime, so it very much fits the dictionary definition of progressive. Just not the elitist status quo definition of the word (ironically, they are conservative by at least some definitions).

Re: El Salvador abandons Bitcoin as legal tender

#157

Post by kiba » Tue, Feb 04, 2025, 1:43 AM UTC

ty6853 wrote: post #120

ggm wrote: post #91

Earlier quoted context omitted.

It hasn't entirely stopped rents in HK being untenably high, for many people. It has rent controls, but the system permits some very untenable outcomes which if left unchecked would re-create Kowloon Walled City. So whilst politically I agree, practically I am unsure there is no land speculation: A waterfront view remains valuable in and of itself, no matter what.

Kowloon Walled City ended because it was attacked by the state, rather than through market forces. Many of those people are now likely in worse shape effectively renting a cage sized bed, but now paying the governments cut on top of whatever black market shenanigans goes on in both the slum housing and kowloon.

Kowloon Walled City was neither a dystopia nor a utopia. It works and was able to maintain itself, but it could have been done better if it was actually supported by the government.

Re: El Salvador abandons Bitcoin as legal tender

#158

Post by do_not_redeem » Tue, Feb 04, 2025, 1:45 AM UTC

LAMike wrote: post #127

dgfitz wrote: post #74

I hope this is the domino that tips crypto over the edge.

Yes I think this is going to be the end of Bitcoin, we'll never hear about it again after this year

Good riddance, we can finally put this bitcoin nonsense behind us. Let's add this article to the bitcoin is dead site, I'm sure it's finally the end this time! https://bitcoindeaths.com/

Re: El Salvador abandons Bitcoin as legal tender

#159

Post by andreareina » Tue, Feb 04, 2025, 1:45 AM UTC

ggm wrote: post #91

jaggederest wrote: post #87

Earlier quoted context omitted.

> you don't really own land, you just rent it for a very long term from the government. This is probably economically a good idea, absent something like georgist land taxes. It eliminates some or all of the incentive to speculate in land, which is of course the whole problem El Salvador ran into with bitcoin as currency.

It hasn't entirely stopped rents in HK being untenably high, for many people. It has rent controls, but the system permits some very untenable outcomes which if left unchecked would re-create Kowloon Walled City. So whilst politically I agree, practically I am unsure there is no land speculation: A waterfront view remains valuable in and of itself, no matter what.

Or in Singapore

Re: El Salvador abandons Bitcoin as legal tender

#160

Post by Terr_ » Tue, Feb 04, 2025, 1:45 AM UTC

bawolff wrote: post #108

Terr_ wrote: post #75

Earlier quoted context omitted.

> sovereign wealth fund That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar. While various US think tanks ranked it well on their checklists of "economic freedom", they tended to gloss over the rest of the recipe that made it work. Not just the huge sovereign wealth fund, but also how half the housing is government-run…

> That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar. That doesn't sound like a soverign wealth fund. Foreign currency reserves are not the same thing as a soverign weath fund.

I'm not sure what you're reacting to here, I never said it was just US currency reserves. (Those are a component, sure, but that's hardly abnormal.)

> The Exchange Fund of Hong Kong is the primary investment arm and de facto sovereign wealth fund of the Hong Kong Monetary Authority.

https://en.wikipedia.org/wiki/Exchange_Fund_(Hong_Kong)

It's also 10th-largest on:

https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...