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El Salvador abandons Bitcoin as legal tender

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Re: El Salvador abandons Bitcoin as legal tender

#121

Post by jaggederest »

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.

Right, obviously HK is a bit of a special case. Land in Manhattan would, I'm 100% certain, remain incredibly expensive.

The cool thing about leases is that you can change the cost of the lease periodically, which ensures that the value of the land does not accrue purely to the person occupying it.

Re: El Salvador abandons Bitcoin as legal tender

#122

Post by LAMike »

desumeku wrote: post #48
ks2048 wrote: post #33

Do pro-bitcoin people still talk about goals of bitcoin being a currency that people use daily? I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.

For daily usage, Bitcoin is simply inferior to Ethereum and other blockchains.

You don't really believe that do you? The market disagrees as well

Re: El Salvador abandons Bitcoin as legal tender

#123

Post by 3vidence »

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.

Forgive my ignorance but with just so many people and so much money and so little area, isn't high rents inevitable?

I contrast that to places like the USA and Canada that have huge amounts of area but policies that encourage inefficient land usage.

Re: El Salvador abandons Bitcoin as legal tender

#124

Post by akoboldfrying »

blackeyeblitzar wrote: post #61
ptero wrote: post #17

That's heavy editorializing: El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it. But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status. Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.

Why does the IMF care what denomination they use domestically?

It's reasonable when you think about it from a risk assessment point of view.

The IMF wants to feel that El Salvador (a) will likely be able repay the debt, (b) in a currency that is unlikely to devalue too much. For that reason, the debt would probably be in USD or some other prominent world currency (letting the debt be in El Salvador's local currency would risk them printing money to devalue it, threatening (b)).

So the IMF would probably make the debt in USD. In theory, bitcoin can be exchanged for USD, so in theory, El Salvador could exchange some of their bitcoin into USD to pay the IMF back. But what if bitcoin's value drops precipitously? Or if it becomes illiquid?

It seems the IMF thinks bitcoin is hype, so it expects its value to drop to near zero eventually. That would make it very difficult for a country that has large bitcoin reserves (instead of large reserves of a more stable currency) to repay the loan.

Re: El Salvador abandons Bitcoin as legal tender

#125

Post by LAMike »

derriz wrote: post #82
block_dagger wrote: post #49

Earlier quoted context omitted.

Those who continue to invest in and use the Lightning (layer 2) network think it will be used as currency but most see it as a long term storage of value, at least until infrastructure supporting layers 2 and 3 mature. As for “magically,” there’s nothing magic about its increase in value as it replaces legacy technology, chiefly gold as a store of value.

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?

Re: El Salvador abandons Bitcoin as legal tender

#126

Post by bawolff »

georgeecollins wrote: post #105
ptero wrote: post #17

That's heavy editorializing: El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it. But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status. Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.

There seems to be two concepts that are getting conflated. One concept is that BTC is a good investment. Historically that is undeniable. The other concept is that it is a good medium of exchange. I think that is not so true because 1) its neither cheap nor easy to buy a lot of things with it 2) a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it…

> One concept is that BTC is a good investment. Historically that is undeniable.

I'll deny it.

Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.

Re: El Salvador abandons Bitcoin as legal tender

#128

Post by abdullahkhalids »

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.

There is no problem with property values or rent values being high because they are the result of demand for living in a high quality area. There isn't a problem either with these prices varying over time as the attractiveness of the area changes.

The problems are wholly on the supply side, where either

- there are bad laws that lead to any of the following, or - developers legally or illegally cooperate to suppress supply

- landlords cooperate to push up rents or reduce quality.

- investors use land or housing units as speculative assets

- normal people want to use their primary residence as a way to build wealth, so politically support measure that artificially inflate their property values. Individually, this is not a problem, but when everyone does it, the system breaks.

The goal is to design a system where all of the above doesn't happen. A very big task.

P.S. I don't know anything about HK.

Re: El Salvador abandons Bitcoin as legal tender

#129

Post by georgeecollins »

ks2048 wrote: post #33

Do pro-bitcoin people still talk about goals of bitcoin being a currency that people use daily? I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.

It doesn't have to be "magic" that causes it to go up forever. People need a way to put large amounts of money in places that are difficult for governments to get to and /or easy to move across jurisdictional borders. Think: money launderers, people that are worried their corrupt government will seize their assets, people hiding money from someone they owe like a spouse in a divorce. These all seem to me to be reasonable use cases for bitcoin.

All the things that make bitcoin a pain to buy a pizza are irrelevant if your goal is to hide $100m in your shoe. Nothing can do that better than bitcoin and there is a demonstrated need.

If you assume the reason to use bitcoin isn't going away and the wealth of the world goes up-- while the supply of bitcoin is pretty constant-- it can keep going up without magic.

Re: El Salvador abandons Bitcoin as legal tender

#130

Post by starspangled »

EA-3167 wrote: post #86
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…

This is... a strange and jarring thing to read. My kneejerk response was that yes, they are innovating and experimenting with oppressive and corrupt governance, but that is ultimately uncharitable. A more balanced response is that while you may personally think of Bitcoin as progressive (I can't imagine why) you certainly can't claim that Bukele's El Salvador is progressive. You may like the gang crackdown, you may a…

I don't think "bitcoin" is progressive, bitcoin is a technology. I think the idea of trying a decentralized electronic currency is progressive. Whether they implemented it well or should have seen the problems with using it as a currency is one thing, but in the idea of trying something new sure I think it was good. I don't think it caused grave harm to try.

And I certainly can claim that their policies on crime are progressive. They are prioritizing the rights of the many law abiding people who have a fundamental human right to live unmolested and unterrorized by criminals. I think that is very progressive and quite a radical departure from the status quo. I don't think I have ever heard "human rights advocates" and UN types opine and lament the human rights of people who have to endure this type of criminal society and I think it is brave and progressive to fight for them. I absolutely understand that it has required concessions and weakening of rights in other areas, and I don't say that is a good thing, but everything is a tradeoff right? If they continued conservative status quo the tradeoff would have been other peoples rights continuing to be violated.

Just because it's not "progressive" as exactly defined by an elite ruling class in the "international community" and think-tanks and academia, and the leftist intelligentsia at large, does not mean it is not progress in social reform and improvement for the greater good. To the actual people who have to live in El Salvador, approval for Bukele's reforms are staggering. I'm sure a lot of the "experts" who assured everybody they would never work are upset about it because they have a lot of egg on their face now, but fortunately the country has a bright young progressive leader who cares about the people more than the elitists say.

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