Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

El Salvador abandons Bitcoin as legal tender

ticotimes.net

Post reply on HN
Print view View original

711–720 of 930 posts

Re: El Salvador abandons Bitcoin as legal tender

#711

Post by olalonde »

jcgl wrote: post #618
olalonde wrote: post #425

Earlier quoted context omitted.

It's not convenient to use "Bitcoin the payment network" for everyday financial transactions, just as it's not convenient to use the "USD the payment network" (e.g. the Federal Reserve ledger) for everyday financial transactions (in fact, it's impossible). However, “Bitcoin the currency” and “USD the currency” work perfectly for daily use if you route them through trusted intermediaries (Strike, Cash App, PayPal, etc…

But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger. Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.

> But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger.

I know that's what hardcore Bitcoiners have typically pushed for, but I personally disagree. To me, the most interesting thing about Bitcoin is its predictable and unmanipulatable money supply. The payment network is nice though because it can let you easily and permissionlessly take your Bitcoin wherever you want. Fees are actually not that exorbitant, certainly cheaper than SWIFT transfers. The current average transaction fee is around 1 USD and the first confirmation, which is sufficient for most kind of transactions, takes 10 minutes on average.

> Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.

USD cash is (paper bills and coins), not digital USD. Bitcoin is a digital bearer token system. As a side note, it wouldn't be very hard to replicate a cash system for Bitcoin, if there was an entity responsible for emitting and redeeming cash for digital Bitcoin (a bit like the US Mint but for Bitcoin).

Re: El Salvador abandons Bitcoin as legal tender

#712

Post by graemep »

bboygravity wrote: post #562
throwaway314155 wrote: post #150

Earlier quoted context omitted.

They don't want Bitcoin in exchange. Seems entirely reasonable to me given how much the value of cryptocurrency fluctuates with low predictability. They could get paid in it one day and lose half the value the next.

Fiat currencies also can and have lost half their value plenty of times. Actually I can't think of any fiat currency that hasn't at least halved in value?

Usually over a long time. They are a lot less volatile than Bitcoin.

You can also offset the risks of sudden devaluation through matching assets and liabilities, trading derivatives and so on.

Re: El Salvador abandons Bitcoin as legal tender

#713

Post by graemep »

ball_of_lint wrote: post #625
jimkleiber wrote: post #608

Earlier quoted context omitted.

How many people in the Bitcoin community actually think a predictably deflationary asset is good to use as a currency?

https://en.wikipedia.org/wiki/Argumentum_ad_populum I'd much prefer a small amount of deflation to the massive inflation that USD is currently undergoing. And furthermore I think our economic system which encourages young people to take on debt in order to have niceties such as housing and transportation is massively exploitative and unsustainable.

High inflation discourages high debt.

High inflation effectively front loaded loans that had fixed repayments (such as mortgage repayments) and the high interest rates that went with them (they move togeter - its called the Fisher Effect - https://moneyterms.co.uk/fisher-effect/ ) meant lenders were willing to lend a much lower multiple or income.

In most places (and definitely in the UK) house prices were much lower relative to incomes when we had 10% annual inflation.

Re: El Salvador abandons Bitcoin as legal tender

#715

Post by askl »

josu wrote: post #272
CamelCaseName wrote: post #227

Earlier quoted context omitted.

El Salvador and their Bitcoin experiment are ultimately both quite small. This loan is multiple times larger than their total BTC holdings

They hold 6k BTC, around 600M USD. So just a bit over 2x.

2 is a multiple

Re: El Salvador abandons Bitcoin as legal tender

#716

Post by Palmik »

sporkydistance wrote: post #64
josu wrote: post #37

Here is the retained purchasing power of each of the coins since the law was passed in September 2021: Legal tender 1: -15% Legal tender 2: +115% Guess which one has been deemed a "Failed experiment".

If legal tender #2 went up 115% in 4 years I would feel like a jackass for spending it in 2021 because I would have doubled my money if I saved it. Do you see the absurdity?

Can you expand on the argument? You might as well have invested the 2021 "value" (regardless of in which currency it was disbursed) into some non-inflationary asset (like bitcoin, gold or some index fund) -- that should make you feel equally bad.

Re: El Salvador abandons Bitcoin as legal tender

#717

Post by kidintech »

dmichulke wrote: post #605
vichle wrote: post #588

Earlier quoted context omitted.

You don't need to be dumb to fall for a dumb idea. Also, the average person is smarter than about 4 billion people.

> You don't need to be dumb to fall for a dumb idea I get you can do something stupid in a rush but the longer you have time to reconsider, the higher the likelihood that you "didn't just fall for a dumb idea". Bitcoin is 15 years old. > Also, the average person is smarter than about 4 billion people. Bitcoiners are drawn from a normal distribution and not from the bottom part of the distribution, so that argument do…

> Bitcoiners are drawn from a normal distribution and not from the bottom part of the distribution

I think it's objective truth to note that "Bitcoiners" are predominantly comprised of:

a) people conducting illegal affairs (don't read this as "illegal" in the sense of jaywalking)

b) technically illiterate people, down on their luck and hoping to get rich quickly

With those in mind, I would argue that "Bitcoiners" are instead drawn from the left side of most distributions.

Re: El Salvador abandons Bitcoin as legal tender

#718

Post by zigman1 »

malthaus wrote: post #602
dmichulke wrote: post #581

Earlier quoted context omitted.

There are probably a billion bitcoiners (direct or indirect owners) and you basically state that you're smarter than all of them. Just wow.

and the true believers of those are maybe 0.001%, the rest are just hoping for a quick buck by riding the wave cryptocurrencies are a failure and net negative, and the longer we hold on to believing they aren't, the more damage we are doing

A lot of things are net negative and straight up dangerous

But we keep doing them because enough people can get money out of it

Re: El Salvador abandons Bitcoin as legal tender

#719

Post by dandanua »

dmichulke wrote: post #581
wordofx wrote: post #358

Earlier quoted context omitted.

It should be. It’s dumb as hell. Bitcoin and blockchain have no real use.

There are probably a billion bitcoiners (direct or indirect owners) and you basically state that you're smarter than all of them. Just wow.

There are less than 5 billion smartphone users, and you think every fifth has a bitcoin? Though, I'm not surprised hearing such estimations from a bitcoiner.

Anyway, no matter how large the unity of dumbs is or how passionate they are about their goal, it won't make them smarter. What they can achieve, though, is making other people dumber than they are, so that they can appear relatively "smarter".

Re: El Salvador abandons Bitcoin as legal tender

#720

Post by strogonoff »

cturner wrote: post #638
strogonoff wrote: post #633

Earlier quoted context omitted.

Society needs at least some inflation for things to keep moving, but an individual usually wants the opposite. The elected government serves the society of its citizens, while inventors and holders of unofficial currencies are individuals who ultimately serve only themselves.

There is a legitimate role for both things: to have some non-inflationary things that serve as a store-of-value, and then some inflationary things to serve as regular currency. It is worth emphasising here: non-inflationary currency does not grow its value, so it would be unusual for people to want to put their wealth exclusively into store-of-value. Rather, most people will want a mix of inflationary-currency, store…

An argument can be made that if there is a 100% reliable, maybe even deflationary, store of value, it would have a similar effect to currency deflation: since it is worth more tomorrow, then you are disincentivized to spend your wealth, and not spending wealth (not investing it in some value-producing enterprises, buying things and services) seems like a recipe for stagnation and wealth gap increase.
Post reply on HN