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El Salvador adopts Bitcoin as official currency, first country to do so

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Re: El Salvador adopts Bitcoin as official currency, first country to do so

#261

Post by Ancapistani »

stickfigure wrote: post #148
alberth wrote: post #99

Monetary Policy. Can someone explain how a country plans to implement a monetary policy (e.g. inject new currency during a recession to fund expansion) when they don’t control their national currency (Bitcoin).

El Salvador already does not control its own currency; it has been using USD since 2001. Adding BTC doesn't change anything in that regard. BTW Panama has been on USD since 1903.

> Adding BTC doesn't change anything in that regard.

I’d argue that while it remains outside their control, it does change things substantially. USD has effective tools to impact monetary policy; using USD puts El Salvador at the mercy of the US. Bitcoin does NOT have effective tools to impact monetary policy - that’s part of the reason for its existence. That puts El Salvador at the mercy of the Bitcoin network as a whole.

Moving from USD to BTC would be equivalent to saying “it’s better to have no monetary policy than to have a monetary policy controlled by the US”. That’s not what they’re doing here - they’re adding BTC as an option. Doing that means that they have the ability to react (relatively) quickly if they ever reach the point where they no longer trust the US to perform that function.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#262

Post by Ancapistani »

TenJack wrote: post #211

Why not use a stablecoin? Or are they dealing with Bitcoin volatility in another way?

What advantage would a stablecoin have over using the underlying currency directly?

It has the significant disadvantage of adding an additional trust entity (the backing bank) which could prove untrustworthy.

Over a long enough timescale, I would argue that all backing banks have proven to be untrustworthy.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#263

Post by only_as_i_fall »

bethecloud wrote: post #19
hsavit1 wrote: post #16

Earlier quoted context omitted.

what an awful waste of energy. Each bitcoin transaction uses the energy equivalent the entire lifespan of a tree. Effectively, each bitcoin transaction is cutting down of tree... in this case, for a hamburger

Nope. Bitcoin use and mining power are completely uncorrelated. By mining bitcoins, your earn as much as the computational fraction you are representing. So, indeed, there was a race to more and more mining power in the recent years but it can completely be reversed. For example if electricity prices rises. Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything…

Isn't the security of the blockchain fundamentally tied to the mining difficultly?

I don't see how you could significantly reduce the energy usage without sacrificing security (unless you make structural changes such as moving to POS)

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#264

Post by Ancapistani »

99_00 wrote: post #162

El Salvador's currency is pegged to the US dollar. They have a low degree of monetary sovereignty. I don't know the pros and cons of a country like that adopting bitcoin. But their willingness to take the high risk road to do the experiment will benefit all of us. A country the like US who has a high degree of monetary sovereignty has a lot to loose and very little go gain by adopting bitcoin. If you believe in Moder…

> A country the like US who has a high degree of monetary sovereignty has a lot to loose and very little go gain by adopting bitcoin. If you believe in Modern Monetary Theory. Given the way things have gone since 2008 financial crisis i believe MMT is the best model available.

I’m a huge proponent of the free market, and opponent of Keynesian economics - but even I freely admit that the US moving to a fully free market system would have disastrous consequences. That doesn’t mean a “fully floating” currency is better; it means that there is a barrier to exit.

There are lots of things in life that are easier to adopt than to abandon :)

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#265

Post by rory »

dmichulke wrote: post #133
mimikatz wrote: post #26

Down 1.6 million the first day. Good luck 400 coins BTC-USD Bitcoin USD 47,256.78 -4,285.39 -8.31%

In Jan 2020, the USD monetary base (= the other legal tender in El Salvador) was 15.3 trillions, in Jan 2021 it was 19. That's a drop of 24% in purchasing power. https://fred.stlouisfed.org/series/M2

> That's a drop of 24% in purchasing power.

No, it's not, because purchasing power doesn't scale linearly with M2 money supply.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#266

Post by Ancapistani »

X6S1x6Okd1st wrote: post #245
Ancapistani wrote: post #233

Earlier quoted context omitted.

> Energy use is not energy source I’ll go a step further - Bitcoin’s energy use is centralized around the cheapest sources due to economic forces. If renewables are cheaper at scale than fossil fuels, Bitcoin’s energy use could in fact become a net positive for the world. To put it another way, the profitability of mining is directly proportional to the cost of electricity compared to the global average. This should…

Using renewables to do something that doesn't need to be done is not a win. I divested from all PoW coins except ETH in expectation that PoS will be completed soon.

> Using renewables to do something that doesn't need to be done is not a win.

It is if it spurs development of the underlying tech.

Pornography isn’t necessary, but because it was consumed in volume we ended up with ubiquitous household VCRs in the 80s and 90s.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#267

Post by lottin »

solveit wrote: post #68
simiones wrote: post #42

Earlier quoted context omitted.

> Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users. No, that is completely inaccurate. First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions. And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become v…

So, you're correct, but the previous poster did that thing we so often do where we go too far to make a correct point. In this case, the correct point is that the waste of energy is to ensure the security of the blockchain (as you correctly pointed out), and not to process transactions. The marginal cost of processing another transaction is completely negligible compared to the cost of securing the blockchain, and so…

What? Securing the blockchain and processing transactions is the same thing. What do you think "securing the blockchain" entails other than processing transactions?

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#268

Post by BTCOG »

okl wrote: post #234
BTCOG wrote: post #220

Earlier quoted context omitted.

100% BULLSHIT. The fees on Bitcoin, on chain, have been less than 75 cents the entire year of 2021. The average tx on chain the past 9 months has been about 10-15 cents. Unless you stand here trying to tell everyone that 10 cents is a crazy transaction fee. Quit lying, or better yet quit spreading FUD purposely.

https://bitinfocharts.com/comparison/bitcoin-transactionfees... https://ycharts.com/indicators/bitcoin_average_transaction_f... https://www.blockchain.com/charts/fees-usd-per-transaction

https://mempool.space/ https://bitinfocharts.com/comparison/bitcoin-median_transact...

And considering I use Bitcoin frequently, and I'm constantly, on a weekly basis sending on chain for 5 cents, 10 cents max. I'm in within a couple blocks, every single time. You are straight up spreading FUD.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#269

Post by tuxman »

loo wrote: post #185
simiones wrote: post #132

Earlier quoted context omitted.

So the way to scale the blockchain is to avoid putting transactions on it. If I promise you that if you give me your burger you'll have 5SAT from me, and later you ask for my water and offer to reduce my debt to 4SAT in exchange, did we use the bitcoin blockchain in our transaction? With ligthning, you're not using the bitcoin network to process transactions. If we opened a lightning channel for our 2 personal bitcoi…

Jo sends $100 from Bank A to Alice at Bank B, then Bob sends $100 from Bank B to Jo. The banks will have no USD to settle at clearing as a result. Did Jo and Alice participate in a USD transaction?

I think that is a great analogy. If you view Bitcoin on the main blockchain as M0 money supply, then side channels like the Lightning Network and other centralized payment processors that have been popping up can be viewed as M1 and more commonly M2.

If Bitcoin's original thesis of truly decentralized P2P cash still holds, then it should be viewed as an M0 money supply. Financial services and products build on top of and separately from the main chain make sense as analogues to reserve banks and payment processors that do not handle the majority of transfers in physical cash.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#270

Post by quantumBerry »

rory wrote: post #265
dmichulke wrote: post #133

Earlier quoted context omitted.

In Jan 2020, the USD monetary base (= the other legal tender in El Salvador) was 15.3 trillions, in Jan 2021 it was 19. That's a drop of 24% in purchasing power. https://fred.stlouisfed.org/series/M2

> That's a drop of 24% in purchasing power. No, it's not, because purchasing power doesn't scale linearly with M2 money supply.

It's a drop relative to what it would be if the money supply had not increased accordingly, not versus what the purchasing power was at that point in time.
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