IMF gave them 1.4 billion to abandon the “experiment”:
> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros).
In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.
—-
I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself
dragonwriter 38 days ago [-]
If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.
One of them being that El Salvador lost affordable access to the international bond market for a good part of the past years due to higher country investment risk, there were multiple reasons for that that are too long for one comment.
Some for the consequences have been:
The government switched to funding their bonds locally, including a good chunk of the local banks deposits which then the banks had to refinance to a longer longer term.
The government has been taking a good chunk of the pension funds with no interest paid back. Few details about this deal are available because the pension fund administrators and government supervisors have stopped publishing most of the financial reports for months.
And you thought OKRs were bad! Ha ha ha, reports suck? Let's really make reporting consequential for individuals, like in China.
The irony is just that "reporting" is not a popular human activity, and why we have things like GAAP and try to enforce the rule of law...
38 days ago [-]
napierzaza 38 days ago [-]
[dead]
refulgentis 38 days ago [-]
[flagged]
vanjajaja1 38 days ago [-]
because they started the experiment 20b in debt and have also managed to do a massive crime clean up + survive covid in that time. bitcoin is an overall benefit, but they are burdened but what has been
bogota 38 days ago [-]
[flagged]
HaZeust 38 days ago [-]
... But what's wrong with his take? That's exactly what happened.
JBSay 38 days ago [-]
[flagged]
ailun 38 days ago [-]
FYI, I assume anyone using the words "stay mad" is actually the mad one. Just a note on your rhetoric, I have no opinion on El Salvador's bitcoins.
mike_d 38 days ago [-]
> mitigate the risks associated with Bitcoin
The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.
motorest 38 days ago [-]
> The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF.
You need to be functionally illiterate to draw that take from the announcement. Read the thing, be informed.
Lenders of money want to get their money back. They try to minimize the number of factors that threaten getting their money back. Those factors are called "risks".
El Salvador wants to borrow money. The IMF is willing to lend it, but sees El Salvador's Bitcoin policies as a risk to getting their money back.
From the IMF's perspective it is a risk to El Salvador's economy and therefore the repayment of the IMF's loan.
Your reply addresses nothing in my comment. The truth of the matter is that El Salvador reached out to the IMF for funding to address a number of issues listed in the announcement, and the adoption of Bitcoin as a national currency is one of many many topics covered by the deal. Spinning this as "the IMF paid off El Salvador to shut down Bitcoin" is, again, a take born out of functional illiteracy.
bogota 38 days ago [-]
Where did you draw that conclusion? Because nothing in the article or reality would lead one to believe that.
motorest 38 days ago [-]
> If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.
In addition, the whole country ditched Bitcoin as a payment system as soon as they cached out their sign on bonus. How is a national currency depicted as a success if no one uses it at all once they cached out the free money?
Crypto bros need to stop moving the goal posts they themselves plant arbitrarily and against any reason.
golergka 38 days ago [-]
> to mitigate the risks associated with Bitcoin
Was that the goal of the loan? How did you come to this conclusion?
dragonwriter 38 days ago [-]
Its literally stated. in those words, in the upthread excerpt that describes them receiving the loan.
Lerc 38 days ago [-]
The target of the funds is not related to bitcoin.
"The program is anchored on improving the underlying primary balance by around 3½ percent of GDP over 3 years, to put the ratio of public debt to GDP on a firm downward path after peaking at 85 percent of GDP in 2024. High quality measures, worth 1½ percent of GDP in 2025, already included in the approved budget, will reduce the wage bill, spending on goods and services, and transfers to municipalities. To ensure fiscal sustainability and a further reduction in borrowing costs, reform efforts will center on strengthening the efficiency of the civil service, the viability of the pension system, and revenue mobilization. Fiscal consolidation will be conducted in a manner that strengthens support for the most vulnerable and protects priority public investment."
The assessment of their economy seems broadly positive
“The Salvadoran economy has steadily expanded since the pandemic, on the back of robust remittances and a remarkable pick-up in tourism, and amid an improved security situation, with climate shocks having only temporary negative effects. Meanwhile, the current account deficit has continued to narrow, and inflation has fallen further – supported also by lower global commodity prices. The fiscal situation continues to improve very gradually, and recent liability management operations have substantially lowered near-term financing needs, in the context of sharply lower sovereign spreads."
“Building on this progress, and recognizing El Salvador’s pending macroeconomic and structural challenges, the IMF-supported program aims to strengthen fiscal and external stability and help create the conditions for stronger and more inclusive growth."
epigramx 38 days ago [-]
[flagged]
dang 38 days ago [-]
Can you please not post in the flamewar style here, regardless of how wrong another commenter is or you feel they are?
1. That's what stated by the IMF, and so far I don't see any reason to believe it's true.
2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.
whoknowsidont 38 days ago [-]
>and so far I don't see any reason to believe it's true.
Yeah I guess bitcoin is only allowed to go UP everything negative is always false! There's no way that virtual beanie-babies couldn't overcome the evil IMF!
bogota 38 days ago [-]
[flagged]
willmadden 38 days ago [-]
What are you talking about? Their Bitcoin holdings more than doubled in value.
hagbarth 38 days ago [-]
Would that not be a bad thing when using it as legal tender? Deflation tends to be disastrous for the economy.
tankenmate 38 days ago [-]
Exactly, too many people confuse investment (store of value) part of a currency with fungibility (medium of exchange) and debt (standard of deferred payment). Being good at one or even two of these things doesn't necessarily make it good at all three, good currencies balance all three to a greater or lesser degree.
motorest 37 days ago [-]
> Exactly, too many people confuse investment (store of value) (...)
The "store of value" trait of money has nothing to do with the investment angle. It literally means value you store. It's the assurance that it retains it's value so to allow you to use it in the future to purchase something just like you could do today.
almosthere 38 days ago [-]
that doesnt hold for a deflationary currency
troupo 38 days ago [-]
If the value of your coin only goes up in value, why would you use 1 bitcoin now to buy a pizza slice if you can use it 5-10 years from now to buy a house?
oneeyedpigeon 38 days ago [-]
A house in 5-10 years is nice, but it doesn't stop me from starving to death today.
lxgr 38 days ago [-]
That's exactly the problem: People will (rationally!) limit their spending to bare necessities if they expect the currency they have on hand to strongly appreciate over time.
Ferret7446 35 days ago [-]
That implies that 1. it is a problem and 2. that people are rational. The latter is definitely not true, and the former is definitely arguable.
npoc 37 days ago [-]
Imagine that, having the option of saving your money for things you really want instead of being forced to spend it on things you don't, or risk lending it out for essentially free to compensate for the continuous fall in value.
hagbarth 38 days ago [-]
I think it was just an analogy. The incentives are to defer purchases, if possible, which lower economic activity overall.
dlubarov 38 days ago [-]
There are other ways to encourage spending though, like a wealth tax. Not that I necessarily support it, but that would be the more comprehensive solution to hoarding, since it couldn't be worked around by just exchanging fiat for other assets like gold.
oneeyedpigeon 38 days ago [-]
Sure, my point was that there are many reasons someone might spend money today that might be better off saved for the future, however much it may increase in value.
troupo 38 days ago [-]
> there are many reasons someone might spend money today
Yes, because that's the value of money. Bitcoin isn't money. It's a speculative asset precisely because people are hoping its value will only go up.
oneeyedpigeon 38 days ago [-]
I'm speaking from experience. I literally spent Bitcoin last week that I would rather have held, because I needed the money.
troupo 38 days ago [-]
And yet, en masse Bitcoin is used as speculative investment, not money.
npoc 37 days ago [-]
All investments are speculative.
38 days ago [-]
robertlagrant 38 days ago [-]
> It's a speculative asset precisely because people are hoping its value will only go up.
This is the same for any currency trading.
fastasucan 37 days ago [-]
Yes, bur you dont want to limit your populations spending to just those essential items.
freejazz 38 days ago [-]
And who doesn't want to live in an economy where your purchasing decisions are made with the hunger of starvation!
37 days ago [-]
motorest 38 days ago [-]
> that doesnt hold for a deflationary currency
I think crypto proponents in general share this inability to understand the fact that one of the most basic traits of money is stability of it's value, and anything that fails to meet this basic requirement is simply useless as a currency.
npoc 37 days ago [-]
Bitcoiners understand it well. They realise that in order to stabilise in value and become a unit of account, it has to grow close to it's ultimate potential as a store of value first. Which in the case of bitcoin is potentially well over $100T market cap.
This is why El Salvador is likely willing to back down in the currency aspect for now and focus onto accumulating and holding bitcoin reserves.
GoblinSlayer 37 days ago [-]
Useless after IMF bribed you with a huge pile of money.
floydnoel 38 days ago [-]
deflation is fine for an economy. inflation is disastrous for an economy. the people in charge of the money printers are trying to keep you confused. don’t buy it.
llamaimperative 38 days ago [-]
LOL
I have $1,000.
I believe that tomorrow, my $1,000 will be worth $2,000.
Why would I ever spend my money?
Hence, economy freezes.
This is so plainly obvious to everyone except crypto zealots I literally gasped seeing your comment.
zhoujianfu 38 days ago [-]
Not arguing too hard but people do have to spend some money to live regardless… it could be said people are less careful with their money when they feel like it’s losing value, so they spend more and save less. Yes it results in more spending but on what?
llamaimperative 38 days ago [-]
Yes, it would drive consumption toward the barest minimum to live and investment toward zero.
This is bad.
> Yet it results in more spending but on what?
Well near target inflation rates (which is a positive non-zero number) it results in a mix between consumption and investment.
This is good.
tasuki 38 days ago [-]
Are you saying low consumption is bad and high consumption is good?
High consumption has been improving the economy, and destroying the earth. I'm not saying I have the answers, but it's not so simple.
llamaimperative 38 days ago [-]
No, I'm saying that consumption at subsistence levels and investment opportunities having to overcome a deflation hurdle is bad.
It is very good that the default thing to do with excess money is invest it.
pshan 37 days ago [-]
I'm not trying to strawman the opposing side, but I always found it ironic that many of the cryptocurrency proponents I talk to think that starting a business is amazing and innovation is important, but also hate inflation, which encourages those two things.
llamaimperative 37 days ago [-]
They'd have to think at least one or two steps further than chart-go-up.
motorest 37 days ago [-]
> Not arguing too hard but people do have to spend some money to live regardless…
This isn't about a decision to buy bread and milk for your breakfast. It's about the decision on whether you invest in a grocery store vs let your money sit in a bank. If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity. This has disastrous consequences because the majority of people in a society do not have the luxury of having investments to live off their dividends.
derangedHorse 36 days ago [-]
> If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity.
You're operating off a false premise. Do you think all economic activity would be less profitable than the interest rate offered by deflation?
The whole point of investing in any business is to make a return. Giving businesses competition in the form of deflationary currencies will not eradicate businesses from being formed, and there's no evidence to suggest these businesses will be less profitable than holding a deflationary currency.
We see this in various cryptocurrencies claiming to be deflationary with the concept of 'yield', which shows investing to be a function of their wealth, interest, and expectation of return. Inflation does not need to be in the equation for this type of development.
derangedHorse 36 days ago [-]
That 'LOL' comes across as very arrogant for someone who seems to have a tentative grasp at best on what they're commenting on. We have already experienced stagflation which runs counter to a lot of Keynesian ideas about inflation. It turns out it doesn't always encourage spending and employment. Similarly there is no evidence deflation will lead to stagnation of productivity[1]. People will always want to spend more than is needed for survival and doing so in a deflationary environment makes people think harder on how money is spent.
computers have experienced rapid deflation in the previous decades. did that prevent people from buying computers? no, obviously not.
of course you are just trolling ("LOL") and you are incurious to any evidence or argument that contradicts your straight-from-cable-news talking points.
adammarples 38 days ago [-]
This isn't quite the same. Money that is deflating becomes literally more functionally useful the longer you hold it. Computers stay as functionally useful as you hold them and arguably degrade relative to the software you need to run on them. In your analogy you should be concerned with whether I want to sell my computer (analogous to spending my money). If a computer truly did become more functional with passing time then no, nobody would sell them unless they had to - illustrating the problem.
floydnoel 37 days ago [-]
you're technically correct, yes it isn't exactly the same. good job! for an example that is exactly the same, look at the general monetary deflation in the united states during the majority of the 19th century. I know most people won't, so I used a similar example that everyone is familiar with.
llamaimperative 37 days ago [-]
Their argument isn't that it's not "exactly the same" (they were being polite), it's that it's functionally the opposite. And when you imagine a variation in which it's functionally the same, your argument clearly falls apart.
As far as deflation in the 1800s, are you referring to in 1818 after a credit collapse cratered England's economy and then spread to the US and put it into a recession; or maybe the Panic of 1837 which triggered a depression until the mid 1840s?; or do you mean the Panic of 1873 which triggered the Long Depression that lasted until 1899?
Which one of those are good examples we should look to?
floydnoel 37 days ago [-]
it isn't the opposite, it is the same. many people are confused about money though, so understandable that you had trouble relating them.
how could panics be what I'm talking about? we are talking about price levels, or I'm trying to at least.
llamaimperative 37 days ago [-]
The glorious periods of deflation that you're glamorizing are referred to in the historical record as panics and depressions. Because they were very unenjoyable.
npoc 37 days ago [-]
It's of course not that bankers put this spin on it to give them an excuse to continuously print money (all the money in fact) out of thin air and charge interest on it.
Remind me, why is the target inflation rate 2-3% again? It couldn't be that it's the amount of money creation they can get away with without devaluing the currency so much that it destabilises into hyperinflation could it?
I'm just having fun - I'm sure I'm completely wrong
llamaimperative 36 days ago [-]
> Remind me, why is the target inflation rate 2-3% again?
Because empirically it seems to yield a pretty sustainable mixture of consumption, investment, and savings, while also not risking a wage-price spiral.
You tell me what the target inflation rate should be and point to some moments in history informing that target so I can go read about them.
npoc 36 days ago [-]
It should be a negative, just as the value of consumables are over time. But that's not possible in a system heavily indebted and addicted to interest rates under the free market rate (only possible because banks create money effortlessly and hold it artificially low to enable a monopoly on "debt").
Such a policy would quickly collapse the current system as the value of the debt would increase over time instead of decrease, and so instead the banks inflate the value of the currency down to 0 which takes more time for the system to collapse (which fiat currencies always do and always will).
Starting again with a hard money, we would thrive, instead of being enslaved by a system that continuously stealthily, steals the value out of the fruits of our labour (at a rate of ~7% year) and gives it to the bankers and those closest to them.
npoc 37 days ago [-]
Who cares? The "economy" is just people buying and selling things. If they choose not to and save instead, that's great. It's called freedom.
It's like saying - "if we have some money that keeps going up in value, we won't need to work anymore and unemployment figures will go up - that's terrible - we must not allow it to happen!"
loophole27 38 days ago [-]
Because I need to buy food, clothes, pay rent, and replace my laptop that just died.
And I need to do this today or i’ll starve on the street.
I could delay buying a new laptop, but that’s a personal preference. I still need one at some point.
That’s why I would spend my money, because there are things I need or want.
llamaimperative 38 days ago [-]
Right, you'll spend the absolute bare minimum and proactively invest approximately never.
This is bad.
In fact, you'll only ever invest in highly speculative investments because they're the only things that might possibly justify the opportunity cost of your currency just accruing value.
This is bad.
Yizahi 38 days ago [-]
By people in change of money printer, did you mean Giancarlo Devacini, who has printed hundred billion funny tokens in some non-extradition offshore with zero audit, and used those funny tokens to buy other tokens like BTC, ETH and others? Those people? Or he is fine, because you are directly benefiting from that token printer and doesn't care about others being swindled in the process?
n144q 38 days ago [-]
If the wind blew the other way, you wouldn't be talking here.
computerdork 38 days ago [-]
Yeah, i really dislike bitcoin, but have to admit, it has been a very profitable investment for a lot of people (and still hasn't completely crashed like expected)...
... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure
lern_too_spel 38 days ago [-]
The risk that IMF would be concerned about is that the value of their holdings could go to 0 overnight by a wallet hack, data loss, an unscrupulous government employee, or the world running out of greater fools.
codebolt 38 days ago [-]
Tether collapse is still the big one.
computerdork 38 days ago [-]
Yeah, that's my theory too on one reason it hasn't fully crashed (meaning "the world running out of greater fools"). Unlike tulip bulbs or the dot.com crash, bitcoin is a world-wide phenomenon so there is large supply of bitcoin buyers. Yeah, even the dot.com crash was done in the highly regulated US stock market.
Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.
ornornor 38 days ago [-]
It’s around 100k USD apiece, +875% in the last 5y, +340% over last 2y, +130% over last 1y… I’d also qualify this as “not quite crashed yet”
I dont know what the future hodls but it’s looking pretty good for bitcoin so far
nunobrito 38 days ago [-]
That is not a currency in the same manner that gold isn't a currency or barrels of oil isn't either. Or in other words, you don't use for buying a coffee or grocery.
Sure that you can always point some exotic and rare exceptions to prove differently but even yourself don't use it on normal daily financial operations, and no, Lightning isn't even bitcoin so please don't argue with that.
There are more things backing up the value rise for that old tech. Just please diversify into other areas so you don't come out empty handed in some years from now.
miningape 38 days ago [-]
As we all know, past results ARE an indicator of future performance
johnnyanmac 38 days ago [-]
>I dont know what the future hodls but it’s looking pretty good for bitcoin so far
The future always looks good right before a crash. You really don't want a currency as unstable as bitcoin as your legal ledger. we would have had 2 crashes already in this decade alone: the obvious 2020 dip and the dip in 2023.
All the DOGE/Trump shennaigans + the investigation on the Hawk Tuah coin will probably crash it again late this year.
Applejinx 38 days ago [-]
I don't think DOGE/Trump are real bitcoin advocates. I think they're using it as a financial weapon to exploit its vulnerability to crash and break things they don't want to exist.
red-iron-pine 38 days ago [-]
"the lightbulb is always brightest right before it burns out"
robertlagrant 38 days ago [-]
> I dont know what the future hodls
I see you.
stephen_g 38 days ago [-]
Despite that interference, from everything I’ve read though it’s hard to describe the bitcoin experiment as anything else than a massive failure…
tim333 38 days ago [-]
>President Nayib Bukele’s government has accumulated 5,900 BTC, achieving profits of $333.59 million from an initial $269.74 million investment, fuelled by Bitcoin’s recent surge past $100,000. (dec 2024)
If the only thing it can accomplish is being traded back and forth for "hard" currencies such as the US Dollar than it's no more useful than the Soviet Ruble.
It's not even useful as an actual anonymous currency, it's not even anonymous without a considerable amount of legwork.
desumeku 38 days ago [-]
Nobody has been advertising BTC as "anonymous" currency in over a decade. It was a public ledger since day 1. This is practically a strawman.
tim333 38 days ago [-]
The soviet ruble is not widely accepted and did not hold its value well. Bitcoin functions more like gold reserves.
roenxi 38 days ago [-]
If I could convince someone to give me 1.x billion to change my behaviour, I would consider that behaviour a massive success without much further thought. It isn't a huge amount of money at the scale of a national economy but >$1 billion for nothing is a win.
Although of course it is unknowable how much of that money was bribe and how much El Salvador would have gotten without additional leverage.
dragonwriter 38 days ago [-]
> If I could convince someone to give me 1.x billion to change my behaviour
I think you need to refresh your understanding of the difference between a loan and a gift; it wasn't an incentive to change the behavior, it was a loan to deal with the problems caused by the behavior.
roenxi 38 days ago [-]
There are loans and there are "loans". This isn't El Salvador issuing bonds on the market, it is politics that comes with political conditions. That means they negotiated it and that means they got something in exchange for any leverage they could find.
The IMF are an arm of the US "diplomatic" apparatus. The charitable interpretation of how they operate looks like this:
1) A country is doing something the US doesn't like.
2) The country is in some trouble of their own making.
3) The IMF will come and bail them out if they would be inclined to start doing the things the US likes instead of the things it doesn't like.
The uncharitable interpretation of "2)" is "the country is doing alright so the US overtly or covertly causes problems for them so they become in trouble".
Basically, the IMF money is the carrot you get for bending the knee. The stick can be the CIA or other things.
_Algernon_ 38 days ago [-]
That is also (to a rough approximation) how all foreign aid works. It's not specific to the US.
warkdarrior 38 days ago [-]
So your claim is that US administration through the IMF is forcing El Salvador to drop Bitcoin as a national currency. The same US administration that proposed creating a "national digital asset stockpile"??!? (per https://www.cnbc.com/2025/01/23/trump-signs-executive-order-... )
AnthonyMouse 38 days ago [-]
The IMF agreement requiring them to do this was from December, i.e. the prior US administration.
dragonwriter 38 days ago [-]
The IMF isn't run by the US any more than it is run by Russia or any of the other major members (those that have their own executive-director rather than being in a group that together shares one.)
AnthonyMouse 37 days ago [-]
"Large international banking things have strong ties to large governments" is kind of a weird thing to dispute.
Try starting an independent one if you think otherwise.
roenxi 38 days ago [-]
And, regardless, "you do this, we do that" in no way unusual for the US's foreign policy. Eg, the US military insists on democracy onshore and is mildly opposed to democracy in the middle east. Neutral at best. Any democracy they like in the ME as long as it never votes for any policy that inconveniences the nearest US general.
rvba 38 days ago [-]
USA's own stockpile talk is to pump Doge and help the oligarchs get richer.
El Salvador's cryptocurrency was helping other people (not sure if actual citizens), so it had to go.
dragonwriter 38 days ago [-]
> The IMF are an arm of the US "diplomatic" apparatus.
No, they aren't.
> The charitable interpretation of how they operate looks like this:
You misspelled “conspiratorial”, and it's not even the most reasonable conspiracy theory.
The_Colonel 38 days ago [-]
IMF is the lender of last resort, their loans pretty much always come with strings attached which provide some assurance that the loan will be repaid.
motorest 38 days ago [-]
> There are loans and there are "loans". This isn't El Salvador issuing bonds on the market, it is politics that comes with political conditions. That means they negotiated it and that means they got something in exchange for any leverage they could find.
I think you need to take a pause and read what you wrote because there's some serious cognitive dissonance in your claims.
The IMF is a fund put together and ran by the majority of countries in the world as a lender of last resort. It serves as the world's insurance policy on stability. So when a country like El Salvador knocks on their doors, it's a kin to stating the world they are in trouble and they desperately need a hand. The IMF then provides help, but requires as a tradeoff that the country cleans up their act and actually corrects it's course as to mitigate or eliminate the root causes of their instability. For example, countries that are hugely indebted have to comply with demands to lower their sovereign debt down to manageable levels.
Looking at El Salvador, their populist and ill-advised policy to adopt Bitcoin as a currency was a fantastic failure with a tradeoff of being a huge risk factor. Even the most firebrand crypto bro is forced to acknowledge that crypto currencies like Bitcoin have a number of traits that renders them unusable as money, among which the most popular one is the core reason driving it's popularity: volatility. It's to no surprise that one of the basic requirements for stability is to not use a highly volatile and uncontrollable asset as the nation's currency.
roenxi 38 days ago [-]
>_> Cheeky FYI, but cognitive dissonance is the "mental disturbance people feel when they realize their cognitions and actions are inconsistent or contradictory" [0]. While I'm certainly not above that, in this case I don't think I even made and defended enough claims here for them to be contradictory in principle and you don't seem to be arguing that. Consider going with the more straightforward "I disagree!" or "That isn't correct!".
It is a textbook case of cognitive dissonance. For example, you are somehow trying to hold contradictory claims on how Bitcoin's clear failure as a currency is somehow a sign of it's success.
The mental disturbance angle is also compounded by the far-fetched conspiracy theories on how El Salvador ditched Bitcoin because "the man" wants to kill it.
AnthonyMouse 38 days ago [-]
> Even the most firebrand crypto bro is forced to acknowledge that crypto currencies like Bitcoin have a number of traits that renders them unusable as money, among which the most popular one is the core reason driving it's popularity: volatility.
This is essentially the other way around. It's volatile if it's predominantly used for speculation rather than as a currency, because "widespread use as a currency" is a big value sink that absorbs volatility. In other words, if more or larger countries used it as a currency it would be less volatile.
motorest 38 days ago [-]
> This is essentially the other way around. It's volatile if it's predominantly used for speculation rather than as a currency, (...)
It's predominantly used for speculation. Back in the real world, it's the only purpose it has. There is no way around it.
AnthonyMouse 37 days ago [-]
That it's predominantly used for speculation is the reason it has had high volatility, which is the point. Increased use as a currency would cause the volatility to decline, because when the majority of the value is held by a hundred million people each holding three-digit numbers of dollars worth, they don't try to predict the market and dump their holding of pocket money. So volatility not only doesn't preclude use as a currency, wider use as a currency solves the volatility.
There is also a pretty obvious way to avoid the volatility in the interim when using it as a currency: Don't use it to specify prices and don't hoard large quantities of it. If you have a Bitcoin wallet with the equivalent of $100 in it, it doesn't matter that much if it goes down to $50 and then up to $150 and then back to $100 again over the course of a year, because +/- $50/year is not a big deal. Meanwhile we have computers now, so prices can be listed in US dollars or any other currency and then use the live exchange rate when paying in cryptocurrency, while still accepting it widely.
And "it has no other purpose" is a weird claim. It has an obvious purpose: It allows you to exchange value without permission or identity. The "it's a public ledger so there's no privacy" claim is silly; your wallet address is public but you can have arbitrarily many of them, there is nothing inherently tying them to your identity, and there are known implementations (e.g. Monero) that provide even stronger privacy. These are things the existing banking system doesn't provide, and from the perspective of countries that actually respect the privacy of their citizens (or any citizens who want their privacy protected), are features.
seviu 38 days ago [-]
Why are you guys saying adopting Bitcoin was a failure? Because the wallet used by its citizens is too complex and nobody uses it?
Or because Bircoin more than doubled in Price since El Salvador started buying?
El Salvador will not sell its bitcoins and keep on adding them,
maybe now as strategic reserve.
Meanwhile Tether is moving to El Salvador.
motorest 38 days ago [-]
> Why are you guys saying adopting Bitcoin was a failure?
Because it was a failure in each and every single thing it was claimed it would achieve, specially the fact that everyone in El Salvador ditched the system once they cached out their sign on bonus.
The thing they have in exchange is millions of citizens that the entire globe doesn’t want to see starve to death and the US in particular doesn’t want to deal with mass amounts of illegal migrants when their economy collapses.
watwut 38 days ago [-]
I don't think current US leadership thinks more then 5 days in advance or cares about people dying.
labster 38 days ago [-]
US Leadership is focused on getting us to Mars, all of that takes long-term planning. Sure, a few of us will die in the process, but come on, a flag on Mars! There is a Planet B!
derangedHorse 36 days ago [-]
> it wasn't an incentive to change the behavior, it was a loan to deal with the problems caused by the behavior.
You are both incorrect in different ways. Bitcoin as legal tender in El Salvador was not a well-adopted initiative and thus they were okay with axing it. The loan was not to deal with the problems of their behavior, but to push more important things in El Salvador's agenda.
motorest 38 days ago [-]
> If I could convince someone to give me 1.x billion to change my behaviour, (...)
I think you need to check up with reality because your scenario has nothing to do with the one reported in the article. If you read the report, you'll understand thay El Salvador reached out to the IMF, a lender of last resort, asking for funding to finance their reform agenda. Among the long list of requirements designed to improve financial health, Bitcoin ceases to be an official currency.
laserbeam 38 days ago [-]
This statement assumes all costs and losses involved in the experiment were “for nothing”. I highly doubt that’s the case.
38 days ago [-]
38 days ago [-]
dvngnt_ 38 days ago [-]
a billion for a country isn't that good though
kylebenzle 38 days ago [-]
Yeh, it failed so hard no one even uses it anymore.
karlgkk 38 days ago [-]
It’s being “used” as a speculative asset. That’s not a firm foundation to run a governmental monetary system on. Maybe there are other cryptocurrencies better suited to the task, but BTC isn’t
Gud 38 days ago [-]
Don’t forget buying drugs online! Which is mostly what I use it for…
girvo 38 days ago [-]
Well, for buying Monero to buy drugs online right?
Gud 38 days ago [-]
Yes. First I buy bitcoin from the X, then I transfer it to my bitcoin wallet.
Next I transfer it to kraken, convert it to Monero and deposit it on my drug market of choice.
It used to be simpler but this is how I do it nowadays.
4ggr0 38 days ago [-]
kraken must have some from of KYC, right?!? meaning that you're buying drugs online without trying to be anonymous. impressive...
Gud 38 days ago [-]
It’s barely illegal where I live.
passwordreset 38 days ago [-]
Don't try to reason with them. Their minds are as closed as a MAGA.
Gud 38 days ago [-]
Sorry what?
passwordreset 38 days ago [-]
I said "Don't try to reason with them. Their minds are as closed as a MAGA."
Gud 38 days ago [-]
And what was your point?
passwordreset 37 days ago [-]
My point is: Don't try to reason with them. Their minds are as closed as a MAGA.
chgs 38 days ago [-]
I suspect Ransomware is a key part of its value
38 days ago [-]
dodoisdodo 38 days ago [-]
Governmental monetary systems are usually founded on hopes and prayers (and military might).
ethbr1 38 days ago [-]
Government monetary systems are all inflationary, for a lot of very good reasons.
oblio 38 days ago [-]
Governmental monetary systems have been used by every government for what now? 3000 years?
hshshshshsh 38 days ago [-]
Humans didn't have the technology to build a decentralized currency for 3000 years. That tech was invented only 17 years back
3000 years from now what would be the store of value would be the question to ask.
oblio 38 days ago [-]
I'm fine with letting decentralized currency maturing for say, 300 years, in some small corner of the world, before letting it loose on the rest of us.
38 days ago [-]
lxgr 38 days ago [-]
They're founded on the shared illusion that the money they create is worth something, and the fact that this works pretty well is arguably one of the most important achievements of human civilization.
whoiscroberts 38 days ago [-]
Military Might ( and hopes and prayers)
notpushkin 38 days ago [-]
Depends on the particular government. The ones that are heavy on hopes and prayers usually don’t do well though.
hshshshshsh 38 days ago [-]
Everything is a speculative asset.
Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.
S&P is a speculative asset that it will perform like it has been performing in last 30 years.
USD is a speculative asset on US not going bankrupt.
Your career is speculative asset that you don't get fired tomorrow and you can find another job if you do get fired.
Bitcoin is a speculative asset that a decentralized cryptocurrency is better than relying on coins issued by bankruptable nations.
You are a speculative asset of your ego.
kdmtctl 37 days ago [-]
Risks vary based on the mitigation strategy and the time available for preparation. Only S&P can distantly resemble the volatility of a pure speculative asset which depends on psychology and the amount of extra money in the markets. But even S&P depends on a lot of factors which don't trigger overnight for a knowledgeable investor. It's a snowball but not an avalanche.
BTC has shown itself magically profitable indeed, but its value could only be kept by the ability of holders to keep the asset. Most marriages and some jobs will endure even in the toughest times.
another2another 38 days ago [-]
>Everything is a speculative asset.
>Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.
Spouses are not very fungible though, not that I've ever tried ! ...
hshshshshsh 38 days ago [-]
Spouse is an idea in your head though. Very hard to measure. Because she used not to be a spouse before getting married right. One day she became spouse. So it's an idea. Not tangible.
lxgr 38 days ago [-]
Nothing in this world is certain/forever, but that doesn't mean you should completely disregard probability distributions of possible futures.
freejazz 38 days ago [-]
>Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.
Because you wouldn't do either?
karlgkk 37 days ago [-]
> Your marriage is a speculative asset
I’m guessing that you had a divorce /and/ that I know the reason why she left you
hshshshshsh 37 days ago [-]
You are a smart man.
37 days ago [-]
tel 38 days ago [-]
Yeah, that’s true. We invest in a lot of things, hoping for future value. But I guess I still treat those differently. I only hold enough USD for upcoming purchases. And I struggle to understand how investing in my marriage is speculative. For a variety of reasons I can’t (or wouldn’t want to) manage that risk like I would in normal speculative investment. I can’t hedge, size up, size down.
So I think I’m missing something. I feel like you’re suggesting that we should be more comfortable speculating because we do it all the time, but I’m not seeing how those are all the same.
hshshshshsh 38 days ago [-]
In my POV it's all the same since all of them are essentially beliefs with various probabilities.
You don't know what will happen in any of the cases. You just choose to believe one more over the other based on what has happened in the past.
tel 38 days ago [-]
I think that's right. At some level, any anticipation of a future state has to be measurable in some kind of confidence level.
I suppose where I get lost is that, at least subjectively, I end up treating different anticipated return distributions differently. I want a mixture of risks, both in terms of their covariance and the absolute properties.
When I think of "speculation", I am intentionally shaping only a small portion of my personal portfolio toward high risk, high reward activities. And I only really feel comfortable doing that because a larger fraction of my personal risk is in safer vehicles.
Atop that, I also think a lot about liquidity time bounds. I want access to a reasonable amount of highly-liquid, low-risk investments. I need that flexibility to be safe in the event that I need to buy something.
To my eye at least, I qualitatively differentiate between speculative investments and these liquid/low risk ones. If I felt I only had one kind of risk, I would seek out the other in some proportion.
Kindra 38 days ago [-]
Are you able to point to a single case where Bitcoin was used as legal tender in an every day business transaction? By this I mean, can you give an example where someone ordered a cup of coffee with Bitcoin directly and not through a proxy?
1970-01-01 38 days ago [-]
100% this.
Food, medicine, transportation, education, and everything else at or near the bottom of Maslow's pyramid of needs still cannot be directly purchased with bitcoin.
The other punchline to the Bitcoin joke is that it's finite. In 120 years it will begin to evaporate from existence as more and more wallets are simply lost to time.
wruza 38 days ago [-]
It is highly divisible though, there’s 2.1e15 satoshi and 2.3e14 cents in the world (re google). It can lose 90% of itself before being unable to replace cents. Also, the network can just agree to change the protocol to fix this issue, should it arise. Countries do redenominations all the time.
the_sleaze_ 38 days ago [-]
I think the fundamental appeal of Bitcoin is the lack of ability to change the protocol based on any external factors at all.
Otherwise it's just fiat all over again
geysersam 38 days ago [-]
Of course the protocol can change if a large majority of miners agree to the change.
It's just a question about updating the source code.
The fundamental appeal of bitcoin is the lack of ability to change the protocol without buy-in from a sufficient fraction of the community.
notpushkin 38 days ago [-]
But you can change the protocol – you just need to convince people to use your version, i.e. make a softfork. https://en.bitcoin.it/wiki/Softfork
(Or a hardfork, if your changes have to apply to all transactions, though this would be extremely tricky.)
j16sdiz 38 days ago [-]
and update the hardware wallets if needed
wruza 38 days ago [-]
What it really is is basically a consensus between participants. Once the consensus about a change gains critical mass, that change just happens, by someone coding it into the software and people updating to it. The change (fork) becomes mainstream and the old version becomes fringe. And vice versa, if consensus never achieved. There will be people who stay on old version anyway. It’s up to who believes in what, based on available software based on ideas that are worth new code.
eagerpace 38 days ago [-]
How can anything ever be changed once 51% is abandoned?
I also think there will be a gold rush of hacking old wallets one day when the encryption is broken. Not sure if that will happen before or after btc failure though. You can’t upgrade security on lost wallets.
speakfreely 38 days ago [-]
I think you're confusing proof of work with proof of stake. The integrity of the Bitcoin network is enforced by the miners agreeing on the rules, not by anyone staking their ownership for governance.
pineaux 38 days ago [-]
What about if you hack a lost wallet and then you transfer the coins to yourself. No proof of work needed then. It is just there, in your wallet.
jeffhuys 38 days ago [-]
Just… really suggest you take a deep dive into blockchain technologies. You’re confusing a few things.
bavell 38 days ago [-]
Sure, all you have to do is compute until the heat-death of the universe. No proof of work needed!
wqaatwt 38 days ago [-]
Why would the people who are getting richer and richer by hoarding btc and not engaging in anything productive ever agree to that?
> Countries do redenominations all the time
That’s not really the same, in several fundamental ways.
jazzyjackson 38 days ago [-]
They don't need to increase the supply of bitcoin, the nodes can simply be updated to recognize that a satoshi is also divisible by a billion.
wqaatwt 38 days ago [-]
That would be terrible for the economy and everyone not sitting on piles of bitcoin.
It’s hard to imagine a financial instrument that’s less suited to be used as an actual currency than bitcoin. Even going back to the gold standard would be a better idea.
wruza 38 days ago [-]
I mean, what I'm about is really the same, just the other way round. Countries usually erase zeroes after hyperinflation adds them, cryptocoins can just add extra zeroes due to deflation. No change in value, just higher granularity.
The rest left me puzzled, can you elaborate? Why should the money holder do anything productive? Why getting richer and richer becomes something bad when we go crypto?
notahacker 38 days ago [-]
> Why should the money holder do anything productive? Why getting richer and richer becomes something bad when we go crypto?
This question works better the other way round. Why should people that do all the work and take all the investment risks to make the riches get continually decreasing returns on their efforts whilst the people that sit and HODL get continually increasing returns on doing nothing?
robertlagrant 38 days ago [-]
Because people are willing to pay more. Why should I make money because my house is worth more than it was? Because people are willing to pay more. There's no more "should" required than that.
notahacker 38 days ago [-]
Um... if the only legal tender around was an asset with fixed supply, people holding it wouldn't be willing to pay more, (or invest it in making more stuff) that's the whole point.
robertlagrant 37 days ago [-]
But you see my point, right? I'm challenging the question of "why should someone buy that thing for more than the seller paid for it?" The answer is: because the new buyer is willing to pay that for it.
wqaatwt 38 days ago [-]
> Why getting richer and richer becomes something bad when we go crypto?
Is that sarcasm? It discourages any type of economic activity.
Why would someone invest into or try to start a business when you can become richer by just sitting on your money pile with no risk.
Artificially constricting the supply of money in a non static economy is a bad idea. Like the gold standard just much worse.
loophole27 38 days ago [-]
Because starting a business might still lead to higher returns for you than hoping that your money will be worth more.
One thing i’ve always wondered: If something like Bitcoin was the only currency, then it would be like a direct mapping of 21 Million Bitcoin <-> all global economic activity and goods and services. In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes? Like in big natural disasters increasing the cost of certain goods?
I’m not a crypto zealot, but I’m not a big believer in the idea that the economy needs to be stimulated and I need to be forced to spend my money before it loses its value. I just want to buy what I need or really want.
And in the hypothetical case of having a mapping of “all economic activity” <-> “21M payment units”, then the relative stability of this money might still make investments more lucrative than just hoping for my money to be worth slightly more tomorrow. In this hypothetical scenario it would be more like “my money is worth 1000 eggs today, next month it might be 1001 (if others grow the economy) or 999 (if something unforeseen happens halfway across the globe). So if an investment looks like it might yield the value of 1100 eggs there would still be people to take the risk of investing, no?
wqaatwt 37 days ago [-]
> might still
It might. It would be significantly less likely. Basic economics. Unless you don’t think that most people are at least marginally rational..
> In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes
That’s true only if there is no economic growth. Gold standard had a similar problem.
wruza 37 days ago [-]
Any type of economic activity in USD involves paying rent or huge surplus to those who hoarded real estate (which doesn’t go away any soon). I don’t see the big difference here. Doesn’t mean it’s a good thing, but let’s at least apply the arguments symmetrically.
Why would someone invest into or try to start a business when you can become richer by just sitting on your _property_ pile with no risk.
Yeah, I guess.
wqaatwt 35 days ago [-]
> I don’t see the big difference here
Well that implies that you are more or less economically illiterate. I’m not talking about property and even renting residential/commercial property (as relatively safe as it is) does provide an actual service.
Anyway.. a very basic example, imagine you have $1000000, you can:
- keep it under your bed and lose 2% every year
- invest it into real estate etc. and make e.g. 4% every year.
- invest into the stock market and make 6%.
Now with a deflationary currency like bitcoin (or gold back in the mid to late 1800s) you can just hoard it and conservatively make 2-3% every year* invest into safe bonds and gain another 3-4%. Business would need to grow at an extremely fast pace to be able to attract much capital in such an environment.
* of course it’s only hypothetical. You’d need the economy to grow and productivity to increase YoY for this. That would be unlikely in any economy that used Bitcoin as its primary currency.
wruza 31 days ago [-]
And I was talking about property. Replying about something else made no sense here.
genem9 38 days ago [-]
What? People buy food with bitcoin all the time …
kylebenzle 38 days ago [-]
Your being silly. Its an INTERNET currency for use on the INTERNET. I use it to pay for cloud storage, VPN and web hosting on the INTERNET.
GamerUncle 38 days ago [-]
>The other punchline to the Gold joke is that it's finite. In 120 years it will begin to evaporate from existence as more and more gold chests are simply lost to time.
This is how insane that sounds
shash 38 days ago [-]
That's because it's actually quite sane; relying on commodity backed currencies - especially those which are _finite_ leads to deflation. You see that with BTC, where the value keeps rising and you need more and more fractional denominations to make sense. With gold (and historically, more so silver), it was _very rarely_ used for actual trade because it ended up being like five gold coins == someone's entire life savings. It was always silver, copper and unit of account.
Debased currency - a problem every large state eventually faced - is a consequence of deflation.
int_19h 38 days ago [-]
A bit more detail on the subject of historical coinage and the place of gold in it:
>Debased currency - a problem every large state eventually faced - is a consequence of deflation
Inflation in the monetary supply, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.
Edit: I'd remembered wrong. It was silver, not gold, that Spain experienced an influx of.
lmm 38 days ago [-]
> Inflation, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.
No, that's not debasement - in fact it was the opposite, the huge supply of silver (not so much gold) meant those Spanish coins were good-quality bullion. Inflation happened, and while that can commonly be caused by debasement, that wasn't the cause in this instance.
38 days ago [-]
Aloisius 38 days ago [-]
Em. Spain, famously, didn't debase its currency.
The gold escudo was 22-karat for basically it's entire existence,.
TeaBrain 38 days ago [-]
I was more thinking in terms of the modern conception of currency debasement resulting from the increase in the monetary supply, though I think I must have just been thinking of the real, not the escudo. Several years ago, I read a couple of books on the conquistadors, where the details of the devaluation of silver was discussed, but it's been a while since the information was fresh in my mind.
jpcom 38 days ago [-]
Interesting take. Therefore they needed a bridge between the deflationary BTC and a low-inflationary day-to-day note. Is there an obvious fix, my liege?
freedomben 38 days ago [-]
I used to pay my dish network bill with it before they stopped accepting it. I've also used it to send money to friends and family, and to donate to open source projects and other things.
If the fees were lower I'd use it for plenty of other things too.
38 days ago [-]
listenallyall 38 days ago [-]
> If the fees were lower
Aye, there's the rub.
With all due respect, why not Bitcoin Cash or some other coin? Bitcoin Cash is the exact same thing as Bitcoin - same protocol, same 21 million coin limit, same Satoshi whitepaper, same everything, except bigger blocks and thus, much lower fees. If you are using a coin as an actual currency, and not as a speculator, why stick with high-fee Bitcoin?
loophole27 38 days ago [-]
Took a lot of scrolling to find a mention of Bitcoin Cash.
I used to believe in Bitcoin in the beginning, but the high fees make it impractical to use as everyday currency.
Bitcoin Cash is much closer to what I had hoped Bitcoin would become. It’s the same as Bitcoin, except that it ideologically split exactly for the reason that some people wanted it to behave more like an actual currency, while others invented the “digital gold” narrative.
cturner 38 days ago [-]
Gresham's law says that "bad money drives out good". Due to the dynamic this describes, it is unlikely bitcoin would commonly be used to buy and sell things even if it did not suffer practical obstacles.
Bitcoin experiences less inflation than regular currencies. Some coins get created now, but over time we know its character will become deflationary: no new coins will be created, and some will be lost at times due to poor wallet management.
As a result, people will chose to spend other currency in preference to spending bitcoin. This is self-reinforcing. The infrastructure will not be in place to use it on the odd occasion that someone wanted to.
You could create a blockchain currency which had a natural and continuous rate of inflation, to encourage people to spend it. You could bootstrap this by mutualising it across an industry. e.g. imagine if the largest datacentre groups got together to create ModestlyInflationaryCoin, and then said they would offer discounts to customers who paid in ModestlyInflationaryCoin, as a means of bootstrapping it. Other groups might start to use it, and it would stay in circulation because people would want to be rid of it once they had it.
Even if such a currency existed, it would probably be short-lived. /Once it was bootstrapped/, its stakeholders would have strong incentive to change its contract to be non-inflationary. Making that change would convert their holdings from Bad Money to Good Money, and as a result the character it would significantly increase its value.
But the datacentre groups could then mutualise a new currency in place of the old one. It is possible that there is a virtuous loop here, and that there will be a race to quality in currencies in our future, grown from how easy it is to create new currencies. We might start to see the identity of currencies a bit more like the way we see futures contracts in our current era.
strogonoff 38 days ago [-]
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.
cturner 38 days ago [-]
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-of-value, and investment in growth-generating businesses.
When people talk about wanting to use bitcoin as a day-to-day currency, I feel like they are missing the best benefit if could offer us.
We already have effective day-to-day currencies. But we have not had a reliable store of value. The US, UK and Australia each have a history of denying ownership of gold when it suits them, which is when people need it most.
The lack of reliable store-of-wealth has made it too-easy for governments to fleece wealth-generating people in order to buy votes. This is not the long-term strategic path, but it creates a race-to-the-bottom due to short-term incentives. Perhaps blockchain will change that, by allowing the creation of an easily accessed utility that sits beyond the easy influence of the nation state.
To be effective it does not need to be perfect, just better than the options we have now. It has been encouraging to me to see the CCP struggling with blockchain, and then outlawing it because they cannot control it.
strogonoff 38 days ago [-]
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.
qingcharles 38 days ago [-]
Is it even possible with BTC? I mean, how long does the transaction take to completely confirm? 30 mins? I guess if you paid way in advance; or loaded up a prepaid wallet.
genem9 38 days ago [-]
Lightning transactions are instant
gloosx 38 days ago [-]
If bitcoin utility is storing value outside of tax jurisdiction and moving it without obstruction, globally – then the question is Why should that even matter? Former is every rich person's dream, and latter enables a lot of things, good or bad.
A counter-example: can you come up to a coffee shop with a gold collectible coin, chew a piece out, and use it to pay for your coffee directly? You need a proxy in form of a pawn shop for that.
Instruments are instruments, if it is not used for every day business transactions doesn't mean it is not heavily ab-used inside it's niche
mhast 38 days ago [-]
There have been stores which accepted bitcoin as payment. Webhallen.com is an electronics store in Sweden which at least used to accept bitcoin (not sure if they still do).
As a general rule it's not very convenient to do so though since the value can fluctuate. (Which naturally all currencies do, but it would be kind of like paying with USD in the EU. You could do that, but most stores are not interested in the extra hassle of keeping track of multiple currencies.)
It is also not uncommon for services like VPN or IPTV streaming ("pirate streaming") providers to accept crypto.
notatoad 38 days ago [-]
does buying drugs count?
markasoftware 38 days ago [-]
The post you're replying to is about Bitcoin being "used", not specifically "used for everyday transactions". Bitcoin has so far been a decent asset to hold as a store of value if you don't want to or can't store your money in the traditional financial system. Lots of everyday people in countries with high inflation or strict controls or how people can store money hold Bitcoin (or perhaps more commonly, stablecoins) for a very practical purpose other than speculation.
Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.
TeaBrain 38 days ago [-]
>Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.
It not being "used" in this context is referring to it not being used as legal tender. The law that was walked back was one which had made bitcoin legal tender throughout the country. As others have mentioned, it seems to have largely failed in being adopted as such, as surveys seem to indicate that less than 10% of people
in the country had used it as legal tender in the previous year.
distortionfield 38 days ago [-]
Trying to use bitcoin like this is like trying to use certificates of deposit to buy coffee. Bitcoin is a store of value, it’s nonsense to try and use it like this. Look at Ethereum if you want a medium of exchange fit for the digital age.
genem9 38 days ago [-]
Lightning transactions are instant and near zero cost …
jeffhuys 38 days ago [-]
More like Solana… Eth fees are also way too high.
ekianjo 38 days ago [-]
BTC cash has lower fees I believe, I wonder if it could actually work as a currency for day to day payments.
markasoftware 38 days ago [-]
It can work as a day-to-day currency, but it compromises the decentralization that is key to Bitcoin's usefulness as a store of value:
+ By allowing 8x larger blocks (unless it's even larger now?), if in widespread use with full blocks, the blockchain would be 8x larger. Bitcoin's blockchain is already the better part of 1TB, though you can still fit that on a cheap SSD. Imagine if it were 8 and growing fast.
+ Because BCH uses the same hash algo as Bitcoin, but is much less popular, it's at risk of 51% attack.
+ Because there is no pressure on block sizes, fees are very low, which means that as halvings continue the block rewards for BCH will get extremely small. This will result in hashrate continuing to decrease, putting it at even greater risk of 51% attacks. Bitcoin's high fees allow it to remain profitable for miners even without inflation. Miners have to be paid to keep the network secure, and that's either going to come from tx fees or from inflation. BCH aims to have neither and that puts it at risk.
And anyway, there are much better solutions for day to day payments, such as Monero and Ethereum.
lmm 38 days ago [-]
> By allowing 8x larger blocks (unless it's even larger now?), if in widespread use with full blocks, the blockchain would be 8x larger. Bitcoin's blockchain is already the better part of 1TB, though you can still fit that on a cheap SSD. Imagine if it were 8 and growing fast.
This has always felt like a completely weaksauce argument to me. Even with Bitcoin, very few people other than dedicated miners download a full blockchain (like it or not). 1TB is already too large to keep on your phone or laptop, but 8TB is at most a minor inconvenience on a server or dedicated mining rig. What's the demographic where a measly factor of 8 makes a difference?
markasoftware 38 days ago [-]
> very few people other than dedicated miners download a full blockchain
I'm gonna have to ask for evidence on this one, I strongly believe most full nodes are not mining pools. http://bitdash.io/ says there are ~10,000 running full nodes, yet there are only ~100 mining pools that have produced a block in recent history: https://miningpoolstats.stream/bitcoin
> 1TB is already too large to keep on your phone or laptop
On your phone, sure. But my desktop already has a few TB of storage. But not 8. And Bitcoin Cash supporters usually seem to indicate that they'd increase it beyond 8 if the 8mb blocks filled up.
listenallyall 38 days ago [-]
Every Bitcoin Cash transaction is on the chain itself. Bitcoin is increasingly reliant on off-chain "Lightning" transactions. An extra few TB of data or majority of transactions not on the chain at all? I'll go with more data & transparency, thank you.
loophole27 38 days ago [-]
I used to run nodes to “contribute”, but it’s cumbersome and does not really contribute to decentralization .
The only ones who need to have full blockchain nodes are the miners, and for them it’s just another disk in their data center.
adgjlsfhk1 38 days ago [-]
30 minute transaction times are kind of a deal-breaker. 3 seconds is the edge of reasonable.
38 days ago [-]
EVa5I7bHFq9mnYK 38 days ago [-]
The article says "92% of Salvadorans did not use bitcoin in their transactions in 2024". Which means that 8% did use it in their transactions.
chii 38 days ago [-]
it is probably the same with gold - in fact, i say gold is used even less in transactions. Yet, nobody would deny that gold cannot form a good monetary foundation . Of course, it's not the best - fiat is still, imho, better - but it doesn't mean it can't work.
So why is the IMF so against bitcoins that they'd rather pay to eliminate it? Or are the IMF scared that bitcoin can actually succeed, in a way which prevents IMF members from asserting monetary pressure in ways that benefits them?
dragonwriter 38 days ago [-]
> Yet, nobody would deny that gold cannot form a good monetary foundation
I wouldn’t say nobody (fools exist), but, sure, only a fool would deny the statement “gold cannot form a good monetary system”.
But... Isn't that the opposite of your Bitcoin claim?
38 days ago [-]
freen 38 days ago [-]
Ahh yes, the age old “let’s use a precious metal to denominate our currency” idea.
Cryptocurrency bros are literally speedrunning the entirety of monetary system failures. All of them. You’d think, maybe after the first couple they’d read a book or something?
Heck no! YOLO!
robertlagrant 38 days ago [-]
Just to be clear, people who have downvoted you are likely doing so because of tone and attitude, not because they're pro-bitcoin.
34 days ago [-]
nicbou 38 days ago [-]
I wonder what volume of all transactions it represents. I've used Swiss Franc this year but it's a fraction of a percent of all my transactions.
cloudbonsai 38 days ago [-]
In 2021, the percentage of Salvadorans who were using Bitcoin was 26%. After three years of mandatory acceptance requirement, it's now 8%.
It says a lot about the popularity of Bitcoin, no?
j16sdiz 38 days ago [-]
...had used at least once, not "using"
The government were giving out btc
j16sdiz 38 days ago [-]
8% use at least one.
The government literally give (almost) everybody $30 in btc to promote this, 8% is too low
pasquinelli 38 days ago [-]
this is the funniest way to reply
genem9 38 days ago [-]
8% is huge
DonHopkins 38 days ago [-]
[flagged]
cb33 38 days ago [-]
This really feels like it doesn't belong here.
jazzyjackson 38 days ago [-]
Fine but what does this have to do with the price of bitcoin in El Salvador?
wrongun 38 days ago [-]
You should report him to the police for misogyny.
mlcrypto 38 days ago [-]
Massive success actually for anyone holding. Did you forget the price is $100k?
acdha 38 days ago [-]
And it was $92k just less than 24 hours ago. That’s why it’s bad for currencies because people can’t make meaningful plans more than a few hours out, and it’s terrible for the economy if you incentivize everyone to reduce spending in the hopes that speculators will make you rich later.
Real currencies circulate so the same dollar is spent by many people, benefiting each of them while you’re still holding onto your Bitcoin hoping it’ll reach $110k next. You do not want to live in a country where people are staying out of the local economy.
the_sleaze_ 38 days ago [-]
But gold fluctuates rapidly at times at well. Not the same volatility but it does fall
geysersam 38 days ago [-]
Did you notice most countries don't use gold as their currency?
kalaksi 38 days ago [-]
So, same as with bitcoin
rsynnott 38 days ago [-]
Yes; gold would also be a bad thing to use as a currency.
Hamuko 38 days ago [-]
Which is why I prefer to buy my milk with euros instead.
genem9 38 days ago [-]
Debased euros
tapoxi 38 days ago [-]
But you're not supposed to hold legal tender, by design you're supposed to spend it.
redundantly 38 days ago [-]
gestures at all of the billionaires
coliveira 38 days ago [-]
People don't get rich holding currency. They spend it to invest in businesses, stocks, real estate, bonds, etc.
Filligree 38 days ago [-]
A currency that encourages people to hold on to it instead of spending it is a disaster for the economy.
brokenmachine 38 days ago [-]
Have you seen the economy lately?
oblio 38 days ago [-]
And how would Bitcoin make the economy better?
brokenmachine 36 days ago [-]
The government couldn't constantly print more to hand to their mates, thus diluting the value of held dollars.
chungy 38 days ago [-]
I dare you to come up with a single example of someone that has a billion dollars in liquid assets. They probably don't exist: "billionaries" are worth billions on paper, thanks to stocks, investments, real estate holdings, etc.
All in all, billionaires are a bad example of holding legal tender, because that just doesn't happen.
tonyhart7 38 days ago [-]
"I dare you to come up with a single example of someone that has a billion dollars in liquid assets."
royal family kingdom of saudi arabia
38 days ago [-]
ethbr1 38 days ago [-]
Yeah, but they accumulate dollars for a lot of very specific reasons.
ralusek 38 days ago [-]
I think they were making a joke about "liquid" assets, i.e. oil is liquid.
thinkski 38 days ago [-]
Warren Buffett. Berkshire Hathaway has over $300B in cash reserves, Buffett owns 15% of Berkshire and directs investments — he chose to park all that value in cash reserves, roughly $50B of that is his share.
nosefurhairdo 38 days ago [-]
> While Buffett has stated that Berkshire Hathaway will maintain a permanent cash reserve of about $30 billion to fund potential insurance payouts, Bloomstran takes a more conservative approach and adds about $50 billion to that reserve level to account for a full year's worth of potential insurance losses.
There is additional context there explaining why Berkshire holding cash reserves is unique to their needs, and historically has only represented 17.5% of their total assets.
Billionaires and large firms are not sitting on piles of cash Scrooge McDuck style, because holding cash is costly.
nicbou 38 days ago [-]
That's still shares of a company, isn't it?
37 days ago [-]
brokenmachine 38 days ago [-]
The way I understand it, billionaires would hold it if they could, but then they'd actually have to pay tax when they spent it.
This way, they get to control unlimited assets without paying any tax.
Personally, I don't think that's so great "for the economy", because I actually don't care about the economy...
I care about people, and having 500 billionaires owning everything and charging everyone to use it is not the economy I want for people.
I'd rather that everyone pays tax, especially the super-rich.
XorNot 38 days ago [-]
No it's that billionaires mostly aren't worth their estimated net worth in actual cash.
If Elon Musk wanted to turn his Tesla holdings into cash, then his estimated net worth of $436 billion dollars would very rapidly not be worth anywhere near that much (i.e. probably by at least an order of magnitude).
positr0n 37 days ago [-]
Are you claiming TSLA is fundamentally worth less than $43.6B, and the mere fact that Elon owns 23% of TSLA shares is worth four hundred billion dollars?
I know that selling 23% of a company in one go would move the market, but a 90% haircut would be bonkers.
Or are you claiming TSLA is special, and the haircut would be 90% just for Elon and just for TSLA because that particular stock is super overvalued due to his celebrity and reality distortion field? That seems a little more believable, but this was a discussion on net worth of generic billionaires to start.
thinkski 38 days ago [-]
Why not work to become a billionaire, then donate your wealth? Or begin donating your earnings today? I would guess most people on Hacker News are in the upper decile of wealth globally — there are still billions of people living poverty. Feels like a fairer way to help people than trying to do it with other people’s wealth — the latter feels like hypocrisy.
38 days ago [-]
brokenmachine 38 days ago [-]
>fairer way to help people than trying to do it with other people’s wealth
That "other people's wealth" you're talking about is everyone's wealth.
Billionaires stole the profits of our work from us, and they didn't do it fairly.
I feel you underestimate how much a billion dollars is.
Nobody in history has ever worked hard enough to earn a billion dollars fairly.
It's crazy to me that you'd defend these people who have corrupted and degraded the entire system - the government, the finance sector, the media - to only favor holding everyone else to ransom. Not producing but holding. Societal wealth stolen without paying tax to benefit society. People didn't choose this.
I'm not starving, sure. And I'd be absolutely fine paying significantly more tax than I am now.
But I'm not about to voluntarily donate while I am still forced to work towards retirement, and there are people controlling literally 10,000 times more assets than I am that pay zero tax.
Do you not see the inevitable outcome of that?
You and your children, and their children, will own nothing because the super-rich will outbid you and everyone else for everything.
You will be poor. The rich is a tiny club and you're not in it.
Everyone, even the wealthy ones here on hn will eventually succumb. You will be outbid for everything.
You will have to sell your house to afford necessities while all your work goes towards luxuries for oligarchs.
There must be some mechanism to limit wealth or that is the inevitable outcome.
Here's a little thought experiment...
It's a hot day and everyone's thirsty. You have $9. There's a bottle of water on the table that you want to buy and the price on it is $10.
I give you $1. You can almost feel your thirst satiated.
Then I give the person next to you $1,000. How do you feel now?
Well our current system is like that, but multiplied by 100.
I do not agree that society should exist solely for the benefit of a handful of super-rich freeloaders.
On the desert island, they would starve and/or be eaten. That's not my definition of a useful member of society.
robertlagrant 38 days ago [-]
> Billionaires stole the profits of our work from us
This seems like a very skewed perspective. You work for a salary, I imagine, and you freely agreed to take that job and in return get a salary, even if the company was losing money or its share price was plummeting. I.e. taking a salary because of the security of payments.
Lots of people who invest in businesses lose all their money. You can't point at the very very peak performers who a) didn't lose their money and b) made a really valuable company instead, and decide that they owe you something other than what you agreed you would work for. That's just not how agreements work, and it's also the apex fallacy[0].
But there still needs to be some mechanism to limit wealth inequality or we still get the inevitable conclusion.
The US minimum wage hasn't changed in 16 years!
Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.
It's just not fair at all. Governments are funneling money to the rich hand over fist. It's obvious who they represent and who they don't.
You have to agree that trickle down is not trickling down.
robertlagrant 37 days ago [-]
> The US minimum wage hasn't changed in 16 years!
I don't mind this, because minimum wage is a national minimum. States (and even more fine-grained than that) need to have contextualised minimum wage, or it's just silly. That's why it hasn't changed. Minimum wage increases wages at the expense of reducing employment, for any job that isn't worth that wage. You can't increase the national US minimum wage to what would get you an apartment in California and expect jobs to exist in Appalachia.
Honestly, the national minimum wage seems almost pointless. States should handle it, as they can contextualise at least a bit better.
And it not changing isn't evidence of anything when state-level minimum wages exist.
> Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.
Thus I don't think it means that. And also - your false dichotomy of you're either a wealthy business owner or you're on national minimum wage is not helpful either. People are paid what they can negotiate. Companies pay what they can negotiate. Companies exist if they charge a low enough price for their level of service or product. It's a tri-party system. The existence of other companies in in-demand businesses is what drives up wages, as if you don't like your job you can move, and people do. That's why I would say where possible, things that stop new companies springing up should be removed. Thinking it's all about national minimum wage is honestly the wrong approach, in my opinion.
> You have to agree that trickle down is not trickling down.
I don't know what this means. I didn't mention anything trickling down.
brokenmachine 36 days ago [-]
re: the minimum wage. I'm in Australia, not the US, but is there any place in the US where a fulltime worker on minimum wage is paid enough to have a reasonable life, let's say a 2 bedroom home with two children, without struggling?
I was not implying that "you're either a wealthy business owner or you're on national minimum wage". You can safely substitute a "middle class" person, or even a "rich, but not super-rich" person, for "on national minimum wage", because in a few years I believe the middle class will completely cease to exist.
This is already happening and is actually the inevitable conclusion of all the funneling of money towards the super-rich and the subsequent increase in wealth inequality.
I wasn't even actually talking about business owners, but the super-rich that those business owners borrow money and pay interest to.
That's the trickling down I'm talking about, which you didn't mention because it appears you don't think that som trickling down is even necessary.
Some trickle down or other mechanism to limit the rich from owning everything is necessary if that inevitable outcome of a tiny group of people owning absolutely everything is to be avoided.
Do you disagree with that?
I believe you're alluding to some kind of nearly perfect system where large businesses have not created artificial regulatory and other moats to protect their business and hamstring competitors.
eg, imagine a large factory that employs most of the people in an area. Potential workers for that factory do not have the ability to negotiate a fair wage, and also don't have the mobility to uproot their entire life to move somewhere else. Also another company cannot reasonably expect to move in and out-compete for the workers in that area. Thus the fictional factory is in a massively favorable position to "negotiate" wages for its workers.
I think we have largely differing views on the fundamental fairness of a system where low-paid workers are expected to negotiate with multinational corporations that already have all the advantages in any negotiation.
Those corporations are also able to monetize the profits from those workers productivity to actively lobby governments for even more favorable conditions in those "negotiations".
I believe it is a very unfair system.
I doubt we will end up finding a middle ground here if you do not think a system where the super-rich are not limited in some way from accumulating wealth is unfair.
38 days ago [-]
heurist 38 days ago [-]
There are early bitcoin holders who are now billionaires continuing to hold their highly liquid bitcoin.
JumpCrisscross 38 days ago [-]
> a single example of someone that has a billion dollars in liquid assets
Lots of billionaires manage their portfolios conservatively. Your equating currency with liquid assets is unnecessary and tanks your argument. Almost nobody holds billions of dollars in legal tender other than those who have to, e.g. sanctioned countries and criminals.
38 days ago [-]
bruce511 38 days ago [-]
Billionaires hold very little legal tender.
The term "Billionaire" refers to a person who has total assets over a billion. In most cases those assets are shares in some company (or companies). It's not like they have a billion in their sock drawer.
By contrast, when at rest in my wallet, bitcoin is "dormant". It's not earning any interest and other not circulating in the economy. The only "growth" is capital growth.
That growth is predicted on demand outstripping supply. Or on "bigger fools". When the fools run out you're left with tulips.
robertlagrant 38 days ago [-]
> gestures at all of the billionaires
They're billionaires because they own valuable companies, not because they have actual billions in the bank.
rsynnott 38 days ago [-]
Billionaires do not literally have big rooms full of money, like a common Disney duck-plutocrat. In general, no-one much is holding large amounts of _cash_/cash-equivalent, except to some extent for the likes of insurance companies, who are obliged to do it for risk management reasons.
kdmtctl 37 days ago [-]
... and banks, of course.
38 days ago [-]
armada651 38 days ago [-]
I sleep better at night knowing my savings aren't part of a massive Ponzi scheme that's going to one day leave lots of working class people holding the bag as the savings they invested in bitcoin are transferred to the wealthy insiders.
robocat 38 days ago [-]
If you own a house you are part of a Ponzi scheme in most developed nations.
Japan already has houses worth $0 because Japan has run out of population growth to keep the demand for houses growing.
The same issue will occur in other countries that have low population growth. In New Zealand we have been importing people so house prices have been appreciating. However my impression is that other countries are competing for immigrants (NZ seems to be slowly relaxing our filters).
Also if you ever had a mortgage then you had a leveraged investment (often dangerously leveraged).
armada651 31 days ago [-]
Yes and that is absolutely a problem, houses should go down in value as they are used just like your car does. The fact that we've learned nothing from all the previous real estate bubbles and continue to use houses as investment opportunities is pure insanity.
agapon 38 days ago [-]
> If you own a house you are part of a Ponzi scheme in most developed nations.
Not unless you explicitly choose to.
If you own a house to have a roof above you, to have a comfortable and safe place for you and your family, if you love and care about that place, then that's what you are getting out of the house.
Its monetary value changes are "just" a side story.
But if you buy a house purely as an investment, then yeah.
robocat 38 days ago [-]
It's part of a Ponzi scheme either way. Even if not an investment, you have to buy it, and it will eventually be sold.
kalnins 38 days ago [-]
People don't own the house just to sell it for more later on. Some live in them.
genem9 38 days ago [-]
Wait until you learn about social security.
armada651 31 days ago [-]
Social Security is a Ponzi scheme by design, that's not a bug it's a feature. All participants are aware that they are paying into social security to redistribute that wealth to vulnerable individuals.
People are not paying into bitcoin expecting to redistribute their wealth to the insiders.
aksss 38 days ago [-]
What does that mean? USD value decreased that much and bitcoin proved itself as an asset with tangible value (like gold?), or did value of bitcoin itself rise? I’m not a currency guy, so I don’t pretend to know crap, it’s a real question, not rhetorical.
skulk 38 days ago [-]
It means that if you bought under $100k, you are no longer the biggest fool. Bitcoin is completely unworkable as an everyday currency and this this is due to multiple factors. Any attempt to address these shortcomings ends up slowly[0] re-inventing the modern financial system and its various systems of trust. People who try to convince you otherwise are simply in search of a bigger fool, since they bring up the USD value of bitcoin.
[0]: but also too quickly, hence all the breaches and 8-figure heists
mindcandy 38 days ago [-]
Compared to the dollar over the past five years…
The dollar down vs itself by 20ish percent.
The median home price is up 30ish percent.
Oil is up 45ish percent.
Gold and the SP500 are each up 80ish percent.
Bitcoin is up 1000ish percent.
If you snooze through the day-by-day, season-by-season noise, the volatility of Bitcoin is a fun and relaxing rocket to ride. You just have to ignore all discussion focused on time frames of less than four years.
wnc3141 38 days ago [-]
Thats deflation, which makes for a poor tender, albeit attractive asset (less of volatility)
lr4444lr 38 days ago [-]
Yeah, but what about when the country has to make good on bond payments to a cryptocurrency becoming stronger, entirely out of their control?
It was a terribly dangerous move for a sovereign country, worse than surrender to the Euro.
kristjansson 38 days ago [-]
Conversely if that’s all it takes to induce them to give up it tells you something about the benefits they felt were accruing from BTC.
olalonde 38 days ago [-]
They're not giving up on Bitcoin. In fact, it's likely that they'll use the loan to buy more Bitcoin.
Who are they possible gonna offload that bitcoin on to? Their neighbor? That doesn't strike me as a socially acceptable thing to do.
olalonde 38 days ago [-]
There's a deep and liquid market for Bitcoin - El Salvador isn't even a major holder in the grand scheme of things. I don't see what's socially unacceptable about selling Bitcoin to a willing buyer; it's simply a transaction between two parties, no different from trading foreign currency like USD. There's also no indication that they plan to spend or trade their Bitcoin anytime soon.
taurknaut 37 days ago [-]
> i don't see what's socially unacceptable about selling Bitcoin to a willing buyer
Well you're accepting payment for something people are expecting to hold value. Bitcoin only has value to a small subset of people with money. I'd definitely judge you for selling it if you have options for financial transactions via SWIFT.
wongarsu 38 days ago [-]
Keep in mind that El Salvador is tiny. This is like 14 days of El Salvador's entire GDP. Or scaled to GDP, it's like giving a $1.2 Trillion loan to the USA.
hammock 38 days ago [-]
El Salvador has been in the IMF debt trap since 1949. It’s not just a billion dollar loan we’re talking about. Although scaled to GDP it’s quite a lot
syndicatedjelly 38 days ago [-]
Is that really the message?
npalli 38 days ago [-]
What do you mean "gave" them 1.4 Billion? It's a loan so it has to be repaid. Usually, this is unsaid but with crypto people you sometimes have to explain basic financial conditions. Also, the loan was to bail them from risks of Bitcoin.
cmcaleer 38 days ago [-]
Being granted a loan of $1.4B with favourable terms under the extended fund facility is an enormous privilege. El Salvador is certainly getting far more favourable terms than would for their USD-denominated bonds. Putting it another way, El Salvador being given a line of credit that would have cost them hundreds of millions of dollars had they sold bonds to raise this cash through traditional means.
It's funny to have to explain basic government loan mechanics to this comment, given the derisive comment about "crypto people" needing basic financial concepts explained.
awnird 38 days ago [-]
If bitcoin was such a success then why did they need an enormous loan?
CamelCaseName 38 days ago [-]
El Salvador and their Bitcoin experiment are ultimately both quite small. This loan is multiple times larger than their total BTC holdings
josu 38 days ago [-]
They hold 6k BTC, around 600M USD. So just a bit over 2x.
askl 38 days ago [-]
2 is a multiple
kylebenzle 38 days ago [-]
[flagged]
DonHopkins 38 days ago [-]
[flagged]
ToValueFunfetti 38 days ago [-]
If the USD was such a good currency, why does the US operate at a deficit?
Arainach 38 days ago [-]
A deficit is not a loan. The USD and the historical strength and faith on the US allowed the US to offer its own securities, not ones pwned by and with terms dictated by external entities.
whimsicalism 38 days ago [-]
the US borrows money. sure it can monetize its own debt at any time but that would have its own set of very high costs
2030ai 38 days ago [-]
It smells, looks and quacks like a loan.
__MatrixMan__ 38 days ago [-]
Smells more like a tokenomics scheme than a loan to me.
fsckboy 38 days ago [-]
>why does the US operate at a deficit?
are you talking about a trade deficit (the US operated at a trade deficit virtually the entire time it grew from 13 former colonies to the post WWII economic colossus. Lending money to a growing economy so it can turn around and purchase the equipment you are selling which it will use to be more productive is the secret sauce of a growing economy)
or are you talking about a budget deficit? many countries around the world operate with budget deficits; "socialist" governments generally have higher deficits as they spend to maintain living standards whether the economy justifies it or not. The size of the deficit (they will grow all the time) does not matter, what matters is "as a %age of GDP".
none of this, btw, has much to do with monetary policy, the maintenance of the currency.
"strong" or "weak" currency really makes no difference. The strength/weakness of the currency how the books are balanced after the fact of what has happened in the actual economy. A country with a strong currency will find imports inexpensive, and will have trouble selling its goods, and citizens will be incented to buy imports. A country with a weak currency will have difficulty importing goods, but will have less trouble exporting. It's the currency that balances these books.
ToValueFunfetti 38 days ago [-]
This is essentially my point, I guess too briefly put- a country getting a loan is not an indictment of that country's currency; that is a huge leap to conclusions as evidenced by the world's best currency being maintained by a country that is borrowing 5% of its GDP each year.
sudosysgen 38 days ago [-]
The USD, being the world reserve currency and currency of trade, must operate at a deficit. It's only through a USD deficit that other countries can grow their reserves commensurately with economic growth, which is how the USD stays the reserve currency. The USD operates at a deficit because it's such a good currency.
adgjlsfhk1 38 days ago [-]
If you can get a 10 year loan at 2% interest rates (below inflation), you would be an idiot not to take it.
JumpCrisscross 38 days ago [-]
> If the USD was such a good currency, why does the US operate at a deficit?
If the U.S. needed a bailout, the dollar would become a trash currency.
patrickaljord 38 days ago [-]
> I dislike cryptocurrencies as much as the next guy
Is this really the general sentiment on HN?
wordofx 38 days ago [-]
It should be. It’s dumb as hell. Bitcoin and blockchain have no real use.
yard2010 38 days ago [-]
That sounds equally wrong as "crypto is everything, blockchain is the solution" sentiment
int_19h 38 days ago [-]
The real use is black market transactions.
Whether you find that a feature or a bug depends a lot on where you live.
genem9 38 days ago [-]
We have USD for that …
int_19h 37 days ago [-]
Now try sending some to, say, Iran.
dcreater 38 days ago [-]
I used to be close minded as well before actually studying Bitcoin.
There are plenty of bad actors in crypto but Bitcoin is at worst a very interesting experiment that can profoundly change the world for the better. Most is not all of the rest of crypto is basically hawk tuah coin with less obvious illegitimacy. In fact bitcoiners don't consider Bitcoin as "crypto"
toenail 38 days ago [-]
Bitcoin has lots of uses, you just haven't found one you need.
LoganDark 38 days ago [-]
TBF Monero is pretty decent for buying drugs.
dmichulke 38 days ago [-]
There are probably a billion bitcoiners (direct or indirect owners) and you basically state that you're smarter than all of them.
Just wow.
vichle 38 days ago [-]
You don't need to be dumb to fall for a dumb idea. Also, the average person is smarter than about 4 billion people.
dmichulke 38 days ago [-]
> 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 doesn't really work here.
kidintech 38 days ago [-]
> 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.
dmichulke 37 days ago [-]
Do you have any facts to support your assumptions a) or b)?
dandanua 38 days ago [-]
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".
malthaus 38 days ago [-]
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
zigman1 38 days ago [-]
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
EFreethought 38 days ago [-]
A lot (if not most) bitcoiners think they are smarter than all the non-bitcoiners.
Do you object to that?
dmichulke 37 days ago [-]
Let's say they're taking a financial risk which incentivizes (some of) them to study the matter more closely than someone else that is not taking that risk.
Does that mean they're smarter? I don't think so. It's a bet they're willing to take and time will tell who was right.
tim333 38 days ago [-]
It probably is the general sentiment. Though I quite like them - it's like a new art form almost.
portaouflop 38 days ago [-]
It’s definitely interesting to follow! Like in this ancient Chinese curse: “may you live in interesting times”
latexr 38 days ago [-]
> IMF gave them 1.4 billion to abandon the “experiment”
No, that is not what the quote says. It says it was a condition on a loan.
There is a huge difference between unsolicitedly saying “hey, I’ll give you money for you to stop betting on horses” or being asked for money and replying “OK, but if I do lend you the money you have to promise me you won’t spend it on horse betting; I want it back”.
purist33 38 days ago [-]
There is a book called "Talking to your daughter about Economics", where the author explains one of the problems with bitcoin is, you cant print more of it in a crisis. Maybe thats what happened here.
isubkhankulov 38 days ago [-]
That may be one of the problems with bitcoin as legal tender and official state currency but not a problem with Bitcoin itself, quite the opposite: as evidenced by the genesis block’s embedded message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
cle 38 days ago [-]
Ironically part of the long-term problem was El Salvador's dollarization, also preventing them from printing in a crisis (that crisis being the COVID pandemic).
el-salvador 38 days ago [-]
Dollarization was unpopular at first in El Salvador but after 24 years of dollarization, and both right and left wing governments, there are are no official plans of rolling it back. It's way too convenient to use the world's most used currency as our everyday currency.
OhMeadhbh 38 days ago [-]
Or maybe the IMF doesn't want the money they "give" to El Salvador to be dissipated into a synthetic commodity masquerading as a deflationary currency.
I'm not going to defend the IMF here... they're sort of like sharks swimming in the national currency markets (look up "Our Brand is Crisis" and "Life and Debt" for more info, and then read Summers' "The Payment System" for the IMF's take on things.)
But... I think my point is... I don't think there's any more conspiracy going on here than normal IMF conspiracy. But the IMF is sort of open about it, so is it still a conspiracy? I don't think the IMF or WB care one whit about cryptocurrencies, they just don't even register.
EDIT: Oh, and "Confessions of an Economic Hit-Man" is also nice and conspiratorial. If half of the author's assertions are truthful, there's WAY more happening in Latin America vis a vis international banking cabals.
culi 38 days ago [-]
The very first IMF loan ever given was to France for reconstruction. One of the terms for the condition was to remove the only elected communist in their government from their position.
IMF loans have ALWAYS been political
derektank 38 days ago [-]
Arguably, both preconditions could have been simply intended to secure an eventual return on the loan. Having a communist in political leadership and allowing citizens to pay their taxes in Bitcoin both increase fiscal risk. I can understand the IMF wanting to reduce that risk as much as possible before providing a loan.
wordofx 38 days ago [-]
^ unsure why downvoting this as it’s 100% correct. IMF doesn’t hand out loans it doesn’t think will be paid back.
(This is where China swoops in and gives a loan at lower interest rates with shadow contracts to get the resources or assets)
neilwilson 38 days ago [-]
No country with its own money ever needs to get the IMF involved.
Largely because the only place the IMF can get your money is from you.
Currencies are public monopolies.
The problems always arise when a state starts issuing state backed liabilities in other denominations - as there is no way for a state to absolve itself of that debt without paying it back. It becomes a debtors prison.
riffraff 38 days ago [-]
Even if you have your own money you need stable foreign currency to operate.
It's not like you just choose to issue debt in foreign denomination cause it's fun.
neilwilson 38 days ago [-]
You don't. There is no requirement for the state to get involved in other people's money.
That's for the private sector to sort out - largely because they can go bankrupt and wipe out the debt when things inevitably go wrong.
marinmania 38 days ago [-]
If the IMF was loaning them 1.4B to do economic development then its reasonable that the country not keep a massive liability on its balance sheets.
Imagine I wanted to loan your car company 100M to build out a factory because I believe in the product. I'm told that your company keeps all its reserves in bitcoin and its possible that even if the factory is successful that the loan wont be repaid if bitcoin falls.
I think if you are obsessed with bitcoin its easy to see this as conspiratorial, but the reality is no bank is going to loan a (company, person, country) money in cash if they are told the loan may default if bitcoin falls.
throwaway519 38 days ago [-]
They're actually paying to give it up then. That's a hard fail.
liontwist 38 days ago [-]
Did the value of their holdings drop over the past few years?
ulfw 38 days ago [-]
Of course it was an utter failure. Why else would they need 1.4 B USD from the IMF when BTC has run up what... 6x or so since they started with this "experiment"?
38 days ago [-]
tootie 38 days ago [-]
This wasn't a vendetta or a political maneuver. The IMF is intending to enforce stability on loan recipients but insisting on sensible policy. Per the article, the program was already unsuccessful and they wanted it removed as a risk factor.
baq 38 days ago [-]
If your country depends on Michael Saylor not blowing up, it’s probably worth mitigating
JumpCrisscross 38 days ago [-]
> this was clearly something else than a failure of the currency itself
They needed the loan. The original thesis was taxes on crypto bros’ business and tourism would increase revenues while crypto-based lending would provide an alternative to the IMF. Neither panned out. This was a failure of Bitcoin to provide any of the international benefits of the dollar financial system.
fsckboy 38 days ago [-]
>a failure of the currency itself
this is a really ambiguous phrasing. Is bitcoin a "currency"? is el Salvador adopting bitcoin as a ___?____ a currency?
warkdarrior 38 days ago [-]
El Salvador adopted Bitcoin as one of its national currencies.
fsckboy 37 days ago [-]
like, "not your keys, not your bitcoin", if it's bitcoin, it's not your currency
topranks 38 days ago [-]
It failed independently of this, nobody over there was using it for transactions, many businesses already didn’t accept it.
nprateem 38 days ago [-]
They probably also have a condition not to spunk it on crypto.
The bank would be pretty reckless not to stipulate these things.
NicoJuicy 38 days ago [-]
Did they use it daily? If the answer is no, then it's a failure of the currency itself.
aprilthird2021 38 days ago [-]
They gave it to them, with a contingency that they need to stop reckless financially dangerous policies, like allowing a wildly volatile cryptocurrency to be legal tender backed by the government at various levels of society.
IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies
travisgriggs 38 days ago [-]
I'm not seeing the obvious I guess. Care to share what the else was? And what the evidence is that the currency was "doing just fine" otherwise?
taurknaut 38 days ago [-]
1.35 billion dollars is an awfully small amount to purchase the promise of not developing a sovereign currency. By a couple orders of magnitude.
zombiwoof 38 days ago [-]
Facts help bolster an argument
enaaem 38 days ago [-]
Why do they need a loan if BTC makes them an economic powerhouse?
taurknaut 38 days ago [-]
This seems to speak more to the general incompetency of the IMF than to any anti-crypto conspiracy
1vuio0pswjnm7 38 days ago [-]
"I dislike crypto as much as the next guy but this was clearly something else than a failure of the currency itself."
Zeke Faux who wrote the book "Number Go Up", a George Plimpton-styled account which was released last year, went to El Salvador and tried to use crypto as currency.
BECKER: ... But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year's Bitcoin conference with a lot of cheers from crypto enthusiasts about his government's use of Bitcoin.
Let's listen.
NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).
BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you
find out there?
FAUX: ... And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it's the future, it's going to help the poor, they're all using Bitcoin. And the listeners are probably asking themselves, "What does this even mean, how does this make sense?" And it doesn't make sense. I got there, and one of the first places I went to was this little roadside store.
And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country's main currency is the dollar, and they didn't abandon that. But they're supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.
And the clerk gave it to me, so I'm holding the water. And then in my terrible gringo Spanish, I said, "Puedo pagar con Bitcoin, por favor?" And the clerk just said, "Basura!" Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don't want to use your Bitcoin.
And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.
They're very slow on there and people complained. "Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?" So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I
became one of."
napierzaza 38 days ago [-]
[dead]
ptero 38 days ago [-]
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.
georgeecollins 38 days ago [-]
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.
If you accept that BTC is a reasonable investment, but not a great medium of exchange then what is happening makes sense.
I am not saying that a decentralized token couldn't be a good medium of exchange -- honestly I don't know. But so far BTC is not that.
olalonde 38 days ago [-]
You're also conflating two distinct concepts: "Bitcoin the currency" and "Bitcoin the payment network."
The currency itself can be used independently of its base-layer network, which is intentionally slow and costly (functioning primarily as a settlement layer). This separation is enabled by off-chain or layer 2 systems, such as the Lightning Network or custodial platforms. These solutions retain Bitcoin's monetary benefits - like a predictable money supply, off/on ramping through the base layer - while enabling fast, cheap transactions. The tradeoff is that you must trust an intermediary, but this mirrors the same compromise inherent to digital USD payment systems (Venmo, credit cards, PayPal, etc.).
In fact, USD lacks a true "base layer" altogether. The closest equivalent would be the Federal Reserve Bank’s ledger, but accounts there are restricted to large financial institutions, not individuals.
next_xibalba 38 days ago [-]
That’s a lot of words for “it cannot be used in everyday financial transactions”.
olalonde 38 days ago [-]
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.). These third parties abstract away the base layer and offer fast, cheap, and reversible transactions.
jcgl 38 days ago [-]
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.
olalonde 38 days ago [-]
> 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).
toenail 38 days ago [-]
What do you mean, I use bitcoin and the lightning network all the time for small payments.
yieldcrv 38 days ago [-]
I wish there was usdc over lightning
if there is, it’s poorly advertised
does seem like a huge swing and a miss for lightning to only have unstable value units of account going over it
the market clearly wants something else, and has that, on other networks at large volumes
thanks! yes I mean to check on bitcoin after major network upgrades like Taproot. okay that article was last updated 10 months, how is that panning out with standardized protocols and wallet integration and issuance?
I’m curious where the communities about this are, or are nowadays
toenail 38 days ago [-]
I personally have no need for "stable" assets, so I don't know more than that they exist.
npoc 37 days ago [-]
Same here. I'd rather hold and use an asset that unstably increases in value greatly over time, than one which continuously goes down in value to 0 (all fiat currencies go to zero eventually)
georgeecollins 38 days ago [-]
That's a good point. The payment layer can be different then the ones I have and encountered, and it could evolve. Going forward I will keep that in mind because I think in the back of my head I just assume BTC is a pain to use and that may not always be the case.
LudwigNagasena 38 days ago [-]
> 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.
So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.
llamaimperative 38 days ago [-]
Yes it is good to have currency that is distinct from an investment asset. It allows you to do currency things with one, and investment things with the other.
georgeecollins 38 days ago [-]
Yes, exactly. It forces the poor (and the rich) to spend it.
When you take out a mortgage on a house its partly because someone took cash they received and deposited it in the bank. If they kept the cash the bank would not have reserves to loan.
LudwigNagasena 37 days ago [-]
You don't even need to do anything to deposit money in the bank anymore. Most people automatically receive their salary in the form of direct bank deposits. And if the value of your money grows, why would you want to do anything with it? You would just let it sit there in the bank.
ptero 38 days ago [-]
Let me add a third concept which, to me, is a much more useful feature (as I wrote in a sister thread): a store of value for people whose governments like to control the money flow, dilute savings in the single available local fiat currency and confiscate savings calling it a money reform. Which, sadly, is a large part of the world.
Value oscillating against some golden reference by a factor of 4? Many will likely take that if it means avoiding their own government shenanigans. I saw a currency reform which turned savings to zero. My parents lived through two such devaluations. As did my grandparents. Buying dollars or another hard currency, if found, meant prison. In this setup a permissionless, anonymous store of value, warts and all, is very valuable.
KetoManx64 37 days ago [-]
Beautifully explained.
This applies to just about every single country in the world. There are no countries in the modern world that operate on the gold standard, which means they all print just about as much money as they want and deflate the savings of their citizens.
bawolff 38 days ago [-]
> 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.
38 days ago [-]
agumonkey 38 days ago [-]
Makes me wonder why the BTC original design tilted toward deflationary, since allegedly, 'satoshi' was trying to create currency, not speculation. Was it a two phase idea ? Attract people for 80 years as investment then when it's stable, use them as stupid coins ?
toenail 38 days ago [-]
Deflation is the natural state of the economy because progress makes everything cheaper. We only have an inflationary system because central banks print money. Putting a central bank into code and micro-managing the money supply was not possible, so bitcoin is more like a commodity, like gold for example. Gold has worked just fine as a money for thousands of years.
int_19h 38 days ago [-]
A lot of people on libertarian right genuinely believe that deflationary money is desirable. BTC is often referred to as "digital gold" for a reason.
agumonkey 38 days ago [-]
can you explain their reasoning ? just curious (i'm a newb)
ptero 38 days ago [-]
We need to be clear about the features of money we are talking about (and there are many):
For money to work as a convenient way for people or companies to settle transactions, long-term inflation or deflation does not matter. If A wants cement and has mangoes, B wants pants and has mangoes and C wants mangoes and can do tooth fillings they just need something universally accepted to convert what they have into. And, a bit later, buy what they want. Most money satisfy this, but usually people want more features.
For money to also be a store of value it should maintain its purchasing power. This allows an individual to, say, pay for an education of a child when the child grows up: I can save in today's money and be fairly confident that when the time comes to pay it will cover the (future) cost. This feature is what people tend to refer to as "digital gold" as gold generally maintains its purchasing power over very long times.
For money to enable governments to stimulate society in different ways, money should be deflationary. Easy long term store of value makes people less responsive to short-term government stimuli. Without deflationary money a government cannot print extra money when it overspends or if not enough players want to lend to that government.
The last two tend to cause eternal strife between individualists (who want small government that does not do things people did not explicitly ask for) and progressivists (who want to push the society along the path they see as the best one).
There are more features of money (highly recommend reading "Broken Money" by Lyn Alden)
llamaimperative 38 days ago [-]
Sure: if I buy today, I’ll be richer tomorrow.
Ergo, the exact reason it’s a horrible currency for the system.
It’s really just the infamous libertarian inability to consider the needs of the system as separate but still important and sometimes in tension with the desires of the individual.
It’s just a particularly goofy one because a deflationary currency very obviously cannot support an economy.
intalentive 34 days ago [-]
The US economy grew rapidly in the 19th century through long periods of deflation, particularly 1870-1896.
KetoManx64 37 days ago [-]
You're right, It is a horrible currency for the system. How would we prop up the military industrial complex and wars with foreign third world countries if we could no longer print money out of thin air? Just dreadful to think about.
llamaimperative 37 days ago [-]
Lol
stiltzkin 38 days ago [-]
[dead]
yalogin 38 days ago [-]
Looks like a fair take to me. They are not forcing people to accept it anymore because it didn’t work. It was never supposed to work.
Bitcoin tried for 15-20 years to find a use case but now it’s just an asset class like gold and nothing else, it will never be more than that.
paulgb 38 days ago [-]
The trouble is, it needs to be more than that if it is to survive. Since inception, mining has mostly been subsidized by new bitcoin, which is capped by design (and about 95% distributed).
Satoshi’s paper assumed that transaction costs would make up for the exponentially declining subsidy, but that hasn’t really happened since it never lived up to his “digital cash” vision.
desumeku 38 days ago [-]
Ethereum solves both of these issues. It is an entire platform designed for the development of distributed applications and will probably win over BTC in the long-long-term.
nshung 38 days ago [-]
No. Ethereum is a solution searching for a problem. Have you seen any widely used successful application developed using Ethereum?
desumeku 38 days ago [-]
There are tens of billions of dollars locked up in DeFi ecosystems with hundreds of millions of dollars worth of assets exchanging hands daily, but you would probably just say that it doesn't count for some inane reason.
Tokenized stocks are coming this year.
KetoManx64 37 days ago [-]
Why does it need to be more than a store of value? If every single country In the world is off the gold standard and inflates their citizen's savings away at a whim, why does Bitcoin need to be more than a way to keep your savings safe, especially if it's the best way to do so with the least amount of government meddling.
paulgb 37 days ago [-]
Running the Bitcoin network securely is expensive. Currently, about 95% of the cost is covered by issuance of new Bitcoin, but the amount of remaining Bitcoin decays exponentially (currently it’s down to the last 5%).
The incentive design of Bitcoin assumed that it would be used as cash, so that transaction fees could take over as the main source of revenue for the miners that secure the network. As a “store of value”, it doesn’t generate enough transaction fees to secure the network.
rsynnott 38 days ago [-]
> The trouble is, it needs to be more than that if it is to survive.
But why is it necessary for it to survive? Like, I think even cryptocurrency true believers would acknowledge that there are better cryptocurrencies out there if you want a currency; bitcoin seems at this point of largely symbolic value.
paulgb 38 days ago [-]
I’m not talking about losing mindshare, I mean in the literal sense that transaction volume is necessary for Bitcoin to avoid an attack on the network. The incentive system that secures it is designed to increasingly rely on transaction fees increasing over time to make up for the diminishing pool of unmined Bitcoin that currently subsidize network security.
That largely hasn’t happened; transaction fees have dropped as it became a store of value and moved less frequently (and increasingly moved off-chain in tradfi rails).
rsynnott 38 days ago [-]
Yeah, but what I mean is, if bitcoin went away tomorrow, why would anyone care? Advocates of cryptocurrency as currency, I think, have largely already gone beyond bitcoin in any case at this point, and the speculators could just move on to the next speculative asset.
elevaet 38 days ago [-]
I'm so curious what will happen as mining approaches the asymptote. When the mining rewards become more and more rare and if people aren't incentivizing the network with a lot of transactions, will transaction times just get slower and slower until it becomes a stranded asset?
AyyEye 38 days ago [-]
Transaction times are independent of mining power. One block every ~10 minutes.
elevaet 38 days ago [-]
But as the block rewards diminish from halving it will approach 0, so that will leave the only incentive for "miners" to secure the network to be transaction fees. At that point transaction fees will have to be extemely high to justify all that hash power right? So I can imagine it could get to the point where transaction fees exceed the value held in some wallets and you get stranded assets.
Alternatively, if transaction fees stay low, there might be very little incentive to secure the network with hash power and you could end up with fewer and fewer miners controlling the network and a 51% attack becomes quite feasible.
I'm really curious how this will play out over the next 100 years.
bbbbq 38 days ago [-]
[flagged]
toenail 38 days ago [-]
> asset class like gold and nothing else, it will never be more than that
Lol, gold that can be teleported around the globe for fractions of a cent, yeah.. it sucks that bitcoin will never be more than that.
mminer237 38 days ago [-]
The transaction fee is currently $1.64 and frequently spikes to tens of dollars. (Yes, sometimes LN can reduce that.) You can buy gold via something like $GLD for free.
toenail 38 days ago [-]
It's funny how people keep pretending like there's only on chain bitcoin or that lightning is broken in 2025.
nurumaik 38 days ago [-]
For 100000/1 fraction of a cent?
p_j_w 38 days ago [-]
>Now the businesses are free to accept it or not instead of being required to accept it. That's all.
Right, so it's no longer legal tender.
el-salvador 38 days ago [-]
Day to day there won't be much change, as bitcoin acceptance wasn't really enforced.
antihipocrat 38 days ago [-]
Legal tender does not have to be a mandatory means of exchange.
abduhl 38 days ago [-]
That is actually the defining characteristic of legal tender: “money that is legally valid for the payment of debts and that must be accepted for that purpose when offered”
Its status in El Salvador was actually a bit more than _just_ legal tender; merchants were _required_ to accept it.
For instance, the euro is legal tender in the eurozone. I can pay a tax bill or a bank loan with 10cent coins, and technically they have to accept that (though note that some countries do have special rules around whether small change is legal tender). However, a merchant is not required to take my wheelbarrow full of 10cent coins in exchange for goods and services; no debt exists before the purchase.
El Salvador was forcing the merchant to take the wheelbarrow.
antihipocrat 38 days ago [-]
Thanks, you're right and I was totally wrong. I'd delete my comment if I could
bbbbq 38 days ago [-]
[flagged]
throw_pm23 38 days ago [-]
Why do they need an IMF loan? (that's typically a sign of the economy not doing great)
Why does the IMF care what denomination they use domestically?
akoboldfrying 38 days ago [-]
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.
georgeecollins 38 days ago [-]
They care about the economic stability of a country they make loans to. Their loans often come with conditions about how the government can run fiscal or trade policy.
I don't know if that is good or bad but I have heard smart economists argue both sides.
hammock 38 days ago [-]
Sounds reasonable. Which countries got better after the IMF got involved?
bbbbq 38 days ago [-]
There's a lot of information about the IMF online.
bbbbq 38 days ago [-]
[flagged]
Mengkudulangsat 38 days ago [-]
> 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.
cwillu 38 days ago [-]
“Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts.”
They did this to receive a loan from the IMF. The IMF was withholding the loan because of BTC and would not disburse it until they got rid of its status as legal tender.
Mengkudulangsat 38 days ago [-]
Fair demand by the IMF.
Presumably they require their loan to be repaid in fiat because of their internal charter. If Bitcoin adoption eventually removes El Salvador's ability to issue fiat, their loan can't be repaid.
bawolff 38 days ago [-]
That's not really how that works. IMF can demand their loan be repaid in whatever currency they want. Its totally normal for international loans to be denominated in a currency other than the recipient's legal tender, particularly for high risk countries (although that is usually bad for the recipient)
chrisco255 38 days ago [-]
In particular El Salvador doesn't even have its own legal tender and haven't for a long time. They use the US dollar.
throwaway314155 38 days ago [-]
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.
bboygravity 38 days ago [-]
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?
graemep 38 days ago [-]
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.
ty6853 38 days ago [-]
This is why otc tradfi crypto futures are needed. You can buy a train car full of corn a year out trivially on a liquid futures market, regardless if corn prices fluctuate wildly you will pay what was agreed. Listing BTC derivatives would solve the predictability for fixed loan terms.
do_not_redeem 38 days ago [-]
El Salvador can't issue fiat. They use US dollars. Only the US Federal Reserve can issue USD.
kragen 38 days ago [-]
They could. Ecuador does in fact mint its own US-dollar coins, and El Salvador could dedollarize.
favorited 38 days ago [-]
Ecuador mints their own centavo coins, but they are not legal tender outside of Ecuador. They've never released their own $1 coin into general circulation – their ubiquitous Sacagawea dollars are minted in the US.
kragen 38 days ago [-]
Sorry, I didn't mean to say they minted US$1 coins, just coins whose value is denominated in dollars. I think the biggest one is US$0.25?
US dollars are also not legal tender outside the US, with a few exceptions (I think including both El Salvador and Ecuador.)
hackernudes 38 days ago [-]
El Salvador doesn't have a fiat currency. They are dollarized since 2001.
Mengkudulangsat 38 days ago [-]
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.
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.
iforgot22 38 days ago [-]
"urged officials to limit its exposure" is what the Reuters article said, so yeah. They think El Salvador's ability to repay the loan is tied too much to BTC.
xenihn 38 days ago [-]
El Salvador hasn't issued fiat since 2001. Any other presumptions as to why its a fair demand?
kragen 38 days ago [-]
The IMF will definitely not accept repayment in El Salvador's own fiat currency! That would be obviously stupid of them.
Paradigma11 38 days ago [-]
Especially since it doesn't have one.
kragen 38 days ago [-]
It could certainly create one. It has in the past.
jimkleiber 38 days ago [-]
How many people in the Bitcoin community actually think a predictably deflationary asset is good to use as a currency?
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.
graemep 38 days ago [-]
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.
consp 38 days ago [-]
> 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.
Deflation will kill that. Your loan will cost more over time instead of less. The assumption with inflation is loans will follow it. With deflation and loans not following then people who bought into the system might be well off but those who are not yet in are worse. Same thing with inflation and loans not following as is happening now.
jimkleiber 38 days ago [-]
From my (maybe naive) understanding of current economic theory, it's that a small amount of inflation is what grows an economy. And an important part of that is unpredictable levels of inflation/deflation.
So I'd assume a small amount of predictable deflation would shrink an economy.
Anyone know more about this?
kjs3 38 days ago [-]
'Withholding'...well how dare they.
So how many IMF bailout loans must be dispersed, without condition of course, before this BTC economy will magically work?
daedrdev 38 days ago [-]
The IMF probably rightfully sees a structurally deflationary currency (bitcoin) as a massive risk should it gain widespread adoption
throw101010 38 days ago [-]
It is structurally disinflationary, not just deflationary. Bitcoin is still emitted every ~10 minutes with currently an average inflation rate just under 1% of its supply per year.
The "massive risk" the IMF sees is that without central banks or even less influential central banks the IMF existence would be threatened.
daedrdev 38 days ago [-]
If an economy grows at 2% and the supply grows by 1% it is in permanent deflation. For a country like el salvador with much higher growth, the deflation can easily be much higher
throw101010 38 days ago [-]
You were discussing "structural" inflation, referring to Bitcoin as a system, not relative to inflation of goods and services in a specific economy. These are two distinct economic phenomena that can influence each other but should not be conflated.
Bitcoin's supply doesn't become inflationary or deflationary "structurally" based on the growth of x or y economies. The word inflation is used for both concepts but, structurally, Bitcoin will remain an inflationary system until around year 2140... then block subsidies are going to to stop, no new bitcoins are going to be emitted and then you (or more likely our descendants) can call Bitcoin a structurally deflationary money. Hence the use of the word disinflationary, it currently is in the process of becoming a deflationary system by progressively reducing the inflation of its own money supply (through "halvings" approx. every 4 years).
Analemma_ 38 days ago [-]
If the Bitcoin experiment had been a success, they wouldn't be needing an IMF loan.
olalonde 38 days ago [-]
They also use USD as legal tender. Is their USD experiment a failure too?
kjs3 38 days ago [-]
It's a failed economy with both BTC and USD, so...yes? I'm sure they would accept a BTC denominated bailout. Problem solved, right?
sitkack 38 days ago [-]
[flagged]
addicted 38 days ago [-]
Yeah, the all so powerful IMF that can be thwarted by the incredibly difficult task of…checks notes….
not taking loans from them…
The IMF (or its donor nations) aren’t forcing anyone to take loans from them. Countries do that because the IMF offers much cheaper rates they can get anywhere else and is willing to forgive those loans far more easily than any other entity.
In return it expects certain good governance changes that are stated upfront as conditions to receive the loans you could very well get from anywhere else in the world.
Don’t like what they consider good governance? Don’t take a loan from them. Go get in the private market or the variety of nations willing to lend at far more onerous terms.
hammock 38 days ago [-]
When a country takes an IMF loan, it’s often the political elites—not the general population—who make the decision. And in many cases, these elites personally benefit from the deal, even if it devastates their nation in the long run
For example, in Argentina (2001), President Fernando de la Rúa followed the IMF’s austerity policies despite mass protests. The economy collapsed, and he fled the country via helicopter. But the elites who benefited from privatization kept their wealth while everyday citizens suffered
sitkack 38 days ago [-]
Read a book!
sitkack 38 days ago [-]
Seriously this is the most BS flag I have ever gotten. I am ashamed of you hacker news points having people.
The IMF is the pinnacle of western imperialism.
RabbiNoseberg 38 days ago [-]
[dead]
127 38 days ago [-]
Not mandating businesses to accept Bitcoin is a more free market solution.
a1371 38 days ago [-]
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.
readthenotes1 38 days ago [-]
They only doubled and tripled in value. Gotta wonder what you think they expected
Torn 38 days ago [-]
It to be a viable currency? Not a speculative asset?
FollowingTheDao 38 days ago [-]
That’s called a rug pull IRL.
ggm 38 days ago [-]
Investment is not legal tender, its moved from a functional role to a high risk investment strategy, would be my take. They're different buckets of money/value and expectations.
the_af 38 days ago [-]
From the article:
> Salvadorans, with the exception of a few, never embraced Bukele’s initiative, who enjoys enormous popularity for his war against gangs, which dropped homicides to historic lows in El Salvador. A recent survey by the Central American University (UCA) revealed that 92% of Salvadorans did not use bitcoin in their transactions in 2024.
I would say this points to an actual failed experiment, if true.
kragen 38 days ago [-]
Homicides are at historic lows because they stopped counting bodies found in mass graves and murders in prison.
yreg 38 days ago [-]
8% is quite a lot though.
mvdtnz 38 days ago [-]
8% of people used it at least one time in an entire year.
In a place where people (who have on average very low incomes) were given $30 worth of bitcoin by their government just for signing up to a wallet app, so a very, very large proportion of the populous (compared to any other country on Earth) already had an app and wallet set up and ready to go. That's not a lot. That's a clear indication that the experiment simply didn't work.
the_af 38 days ago [-]
Depends for what. What were Bukele's stated goals? Only with this in mind can we decide whether 8% is high or low.
throwaway4aday 38 days ago [-]
Doing better than Firefox
throwaway314155 38 days ago [-]
This "everything's going great as long as you squint hard enough" stuff is why people don't give cryptocurrency proponents the time of day. At some point admitting you've lost actually better preserves your ability to be heard at the next debate.
yreg 36 days ago [-]
When I consider 8% to be high and you don't, that makes me more skeptical of mainstream adoption as a currency than you are.
iforgot22 38 days ago [-]
I'd be surprised if anyone really used it there, for technical reasons alone, and not even considering the risk part. BTC is still not easy to use.
rsynnott 38 days ago [-]
It's no longer legal tender; merchants will no longer be forced to accept it. That's the key point; if the state wants to indulge in speculation, that's its business (though you'd question whether a state which needs to take IMF loans, which are kind of a last resort, should really be engaging in this...)
The recurring theme is people will keep explaining why bitcoin has failed and will fail. And bitcoin will keep hitting all time high.
38 days ago [-]
sealeck 38 days ago [-]
[flagged]
do_not_redeem 38 days ago [-]
That's probably why OP chose a highly editorialized "Tico Times" article as the source for this. What's even funnier is it's a Costa Rican newspaper. So one Central American country publishes an article smearing another Central American country, and then HN sees the bias-confirming headline and tries to glean some economic lesson from it. Classic.
wontondisregard 38 days ago [-]
[flagged]
starspangled 38 days ago [-]
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 terms of homicide rate), which is just staggering.
I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.
BryantD 38 days ago [-]
Note that their official homicide numbers no longer include bodies found in unmarked graves (as of 2021), people killed in conflicts between police and gangs (as of 2022), and people killed in prison. These are arguably reasonable decisions but unless you backfit the old numbers, you don't have the real trend.
I suspect that the trend would be impressive either way, you'd just lose the "safer than New Zealand" line.
starspangled 38 days ago [-]
Well there's no need to suspect, homicide rates were dropping like a rock before 2021. Perhaps faster than has been achieved by any other social reform on record.
stevenwoo 38 days ago [-]
They just offered to accept any criminal of any nationality (including American citizens) from the USA for a fee. https://www.nytimes.com/2025/02/04/us/politics/el-salvador-p... It's creative but hard to see as progressive, importing the idea of a for profit prison system from the USA.
starspangled 38 days ago [-]
Yes I am certain that not everything El Salvador does is progressive, even before reading this link.
Some people called Obama progressive and he definitely helped destroy Libya and Syria, ordered the extrajudicial execution of a US citizen under presidential immunity, droned poor brown people living on the other side of the planet, let Citi group pick his cabinet, etc. Nevertheless, the progressive things that Obama did do were still progressive.
rat87 38 days ago [-]
Let's be 100% clear on this
Assad and Ghadaffi destroyed Syria and Lybia respectively being asshole dictators that caused revolutions and that attempted to stay in power by claiming over mountains of dead Syrians and Lybians. The west didn't interfere much in Syria so Assad was able to stay in power a while longer and kill many more of his own citizens. The west messed up the post revolution period but letting Gaddafi do what he wanted would have lead to a worse situation
starspangled 37 days ago [-]
Let me be clear, folks. Lots of people contributed to their destruction, and Obama was one of them. One of the major players involved in those messes.
notthemessiah 38 days ago [-]
El Salvador is a gang-infested shithole because US interventionists backed those who would later lead gangs to stop a left-wing revolution. The Salvadoran government often targeted civilians, and massacred peaceful protestors. Then after the civil war, the same US-backed mercenaries and soldiers who had engaged in massacres and violence came back home, they employed the same terror techniques to build up the gangs and gain power for themselves, exploiting all the displaced peoples, especially the Lost Children of Central America who were kidnapped and raised in the gangs.
starspangled 38 days ago [-]
> El Salvador is a gang-infested shithole
Far less so now, because they refused to listen to the dogma preached from these experts and institutions (significantly coming from those associated with or funded by the US), about how they should run their country.
aucisson_masque 38 days ago [-]
What's your point?
That's what the usa did to the entire south and middle America.
EA-3167 38 days ago [-]
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 appreciate the suspension of habeus corpus, but you can't claim that's a progressive position.
starspangled 38 days ago [-]
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.
archagon 38 days ago [-]
That’s all well and good until innocent people get caught in the net. How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society at large? Would you throw your own child into the pit if it meant that the happiness and safety of your town was ensured? In the extreme, why not just make every crime carry a death penalty? Would that society be perfect by your measure?
(And that’s before we start dissecting the bribery and corruption of those who wield this power.)
starspangled 38 days ago [-]
> That’s all well and good until innocent people get caught in the net.
Is your position that no innocent people were convicted of crimes before the reforms, or that innocent people do not get caught in the crimes that have been reduced so dramatically?
> How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society?
And how many young people are not killed or maimed or dragged into a life of crime indefinitely and without recourse in the alternative?
As I said, I acknowledge the issues with it, but no social policy is perfect and all social policy is a balance. You can't pull out "human rights" as a trump card to say Bukele's policies are bad or worse than before. Because you are confining and defining human rights in a very narrow specific way, and that does not account for many other rights of many other classes of people.
csomar 38 days ago [-]
> How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society at large?
You can actually do the math for that. If the number of innocent people harmed by the gangs is more than the number of innocent people caught in the legal cross-fire then it is worth it.
EA-3167 38 days ago [-]
That assumes a lot, most importantly that the harm is limited to "innocent person in prison" rather than, "Government has the power to throw anyone it wants into prison, effectively disappearing them." The history of these sort of measures is a history of a slide into something worse than whatever was being solved in the first place.
heartbreak 38 days ago [-]
CNN says Secretary Rubio just struck a deal with Bukele to accept deportees from the United States regardless of nationality, including US citizens, as long as we pay to house them in his prison.
bloopbloopscoop 38 days ago [-]
Isn’t this what caused the gang problem in the first place in El Salvador? I’m no expert but that was my understanding.
ImJamal 38 days ago [-]
El Salvador is going to keep them in prisons, not just let them loose.
NewJazz 38 days ago [-]
They're deporting US citizens? How is that even legal?
ImJamal 38 days ago [-]
That is not what is happening. The agreement is to use El Salvadorian prisons instead of US prisons for prisoners. El Salvador said they would be willing to accept any prisoner, regardless of nationality. The US citizens would not be deported, but imprisoned in another country. However, it is not clear if the US will use El Salvadoran prisons for US citizens, only foreigners or not at all.
NewJazz 38 days ago [-]
That's deportation.
ImJamal 37 days ago [-]
The definition according to Google is
> the action of deporting a foreigner from a country.
A citizen would obviously not be deported.
NewJazz 37 days ago [-]
Forcing someone out of a country is deportation. Maybe not in your dictionary, but in reality.
Tell me, when in history has the US sent its citizens to overseas prisons?
ImJamal 37 days ago [-]
I literally just pulled the first definition. It is not my dictionary, but Google's. If you don't like the first definition that comes up, that is on you, not me.
Second, it is not even clear that any US citizens will be shipped off. Bukele is just offering it and Trump said he isn't sure if it will happen.
Third, US citizens are able to serve their sentence in a foreign country if they so choose since 1977 [1]. Obviously this situation is not the same, but the US does send its citizens to foreign prisons sometimes.
The word progressive has a real meaning besides the popular figure-of-speech of calling leftist policies "progressive". Progress in anything, including politics, can move in a direction you like or in a direction you don't like. It's still progress.
esafak 38 days ago [-]
No, it does not. Progress is positive. The word you are thinking of is change. Change can take you in any direction, even though the left also likes that word.
carlosjobim 38 days ago [-]
Progress is positive as in forward, which is not exclusive for any political leaning.
threeseed 38 days ago [-]
> nice to see how progressive and creative El Salvador has been
(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.
PoignardAzur 38 days ago [-]
> Trashing human rights is always effective
Hardly. What made Bukele's presidency impressive is that many other governments had tried the "mano dura" approach before, but he was the first one to make it work, and nobody is sure why. There's evidence even he didn't expect it to work that well.
starspangled 38 days ago [-]
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).
pcthrowaway 38 days ago [-]
> it is also against the conservative status quo thinking of how to deal with crime
How are tough on crime policies "against the conservative status quo"?
starspangled 38 days ago [-]
The people who are seen to be the experts and authorities in social theory and practice in their ivory towers in the UN and academia cling to their outdated and falsified ideas of what works and what doesn't and refuse to change or accept new things.
Firstly, they are adamant that "tough on crime" policies do not work, they were adamant that Buekele's reforms would not work. Now sure there are probably ways they may fail and situations where they don't apply, it has now been proven by counter-example that they are wrong. They still refuse to accept it.
They now address their little El Salvador embarrassment by claiming it has caused calamitous violations of "human rights". This is a sneaky tool they use to win a debate and end the conversation, but when you look behind the curtain, really they are the ones who defined what human rights are and what is important for society, and they make no attempt to really weigh any of the multitide of very complicated issues as a whole. They just pick some human rights and some classes of people and say they were violated and that's the end of it. They would have the poor people of El Salvador live with gangs running rampant and murder rates hundreds of times higher than the rich areas of the wealthy countries they live in, and it would be worth it if only it could prevent one accused criminal having their human rights violated. It's just absolutely ludicrous, especially when you see the outcomes of these policies and they're still raging against Bukele for them and refusing to admit they don't have all the answers.
That is why they are conservative. Again, not conservative in their definitions, but conservative according to the dictionary. They hold to their views and work to maintain the status quo in terms of social and governance theories and practices.
Again I don't disagree with having strong individual rights against the justice system, and "tough on crime" policies sure can be pushed where they are not effective for political gain. But it's not black and white, it is many shades and countless inter-related moving parts. Very limited powers of police and very strong rights for accused in a justice system is a wonderful thing to have. In a society stricken by violence and crime and ruled by gangs and on the brink of collapse, it is not always possible to have without violating more rights of more people.
And if El Salvador continues long enough and keeps making progress reducing crime and breaking gangs and lifting people out of generational crime, they will actually eventually would likely to be in a much better position to implement stronger individual rights against the justice system.
What is actually important in a society is how they choose to be governed, their right to self-determination, including what rights they decide should be important and how those should be weighed and traded off among one another. Not some fixed, rigid decrees by an elitist ruling class of mostly foreigners with their lists of rights developed decades ago by and for different countries, missing many rights, and no real framework to make adjustments or make value judgements between conflicting rights, they are just used as a hammer to shut down debate that is awkward for their conservative and outdated views.
pcthrowaway 38 days ago [-]
OK so you didn't need to say all that.
Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.
Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.
I'm glad El Salvadore is safer. I don't love how Bukele handled things. And I don't know that I'd necessarily say he made the wrong call either; the net effect may be overwhelmingly positive for the vast majority of El Salvadorians.
Still, I don't think leaving people to rot in incredibly inhumane jails, without proper course for appeal, or the possibility of rehabilitation is humane. His handling of the situation has certainly made it more difficult if not impossible to determine innocence, or just sentencing for those who may have had very little criminal involvement prior to the emergency mobilization of El Salvador's police and military forces.
And it's certainly created more corruption in the "official" system with regards to respect for El Salvadorian and/or international laws, as is common with dictatorships. Corruption which cements his dictatorship with an iron fist while reigning un-checked.
I'm not convinced this iron fist move was the only answer either, but can at least accept the possibility that it was the only appropriate response to extreme level of gang violence they were facing.
starspangled 38 days ago [-]
> OK so you didn't need to say all that.
I'll take that as a "thank you" :)
> Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.
Yes I did, I did try to say that in the comment you replied to but on re-reading it could have been clearer and was probably a bit snarky.
> Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.
It can be that, but the previous government's treatment of the gang situation in El Salvadore be a flagrant violation of human rights of all the citizens who had been affected by crime and violence. The suffering endured by those people wasn't humane. That's the problem, right? I can see it's not a black and white situation, can you? Can you name a single "progressive" policy that has zero downsides, costs, unintended consequences, etc? No, on social scales and government policy, everything is a big mess of chaotic cause and effect and good and bad and statistical outcomes, so picking a narrow class of human rights for one class of people in a whole society and say "those are getting worse therefore it can't be progressive" is really reductionist and not even true because in the same way you can probably rule out anything being progressive.
I'm not going to respond to your points one by one because yet again I add the disclaimer that I think it is terrible things got so bad they came to such measures, and maybe not all measures were exactly right. But what is clear is that it is a bold and brave social reform that went against status quo and has been extraordinarily successful in restoring and defending human rights for many, and in many ways improving society for the better, for a huge majority of citizens. Safe to call it progressive, but really call it whatever you like I guess, but a flagrant violation of human rights I think lacks some understanding or nuance of the reality of the situation there.
bloopbloopscoop 38 days ago [-]
I’m really not a tough on crime guy but I agree with everything you’re saying, I do just worry that if Buekele is ousted that another leader could be elected who uses the same heavy hand to lock up more than just criminals.
bbbbq 38 days ago [-]
[flagged]
carlosjobim 38 days ago [-]
What would you say to the victims of these gangs?
threeseed 38 days ago [-]
This is just an intellectually lazy way to dismiss any criticism of policies.
You can care deeply about victims and not believe in a surveillance state or arresting people simply because they look a certain way. History has shown it’s a slippery slope that ends up hurting everyone.
carlosjobim 38 days ago [-]
A gang tattoo is a uniform. If you wear the uniform of an enemy soldier anywhere in the world, you will probably get arrested or worse.
> History has shown it’s a slippery slope that ends up hurting everyone.
You don't need to look far back into history when you can look at the real world right now. When things are so bad that they can't get worse, there's no point of arguing about a slippery slope.
mvdtnz 38 days ago [-]
You surely can't be accusing others of being intellectually lazy and using the slippery slope argument in the very same post?
38 days ago [-]
mvdtnz 38 days ago [-]
a - gang tattoos mean gang involvement. Let's stop pretending otherwise.
b - I'm not sure what you think you're reading but that article points to the scourge of gangs and their impact on children. I only skimmed it but I couldn't see anything in that article about detaining children.
c - So?
d - Gang members in places like El Salvador victimise communities. They are a scourge. I will not accept the humanizing of them - they are parasites. I absolutely support Bukele's policies to rid the country of them. I hope he keeps going.
venatiodecorus 38 days ago [-]
gangs are a symptom just like drug abuse, which they are also entwined with. striking out at gangs without addressing the issues motivating people to join them is just punishing poverty on both ends. the state has let you down, you feel the need to take survival into your own hands, and then are punished for that.
by no means am i excusing the violence that gang perpetuate, but i am unconvinced that enough people simply want to live the gangster lifestyle that gangs can sustain themselves outside situations of extreme poverty.
the_af 38 days ago [-]
Regardless of whether you think of them as successful or failed, I don't think you can see El Salvador's policies as "progressive".
influx 38 days ago [-]
How is it "progressive" to allow public safety issues to disproportionately impact vulnerable populations?
38 days ago [-]
aredox 38 days ago [-]
Is Omelas "progressive"?
next_xibalba 38 days ago [-]
[flagged]
aredox 38 days ago [-]
Bukele has emprisoned a large part of the population for the rest of their life in concentration camps.
If he was killing them directly in gas chambers instead of letting them rot in prison, the population would be as safe, if not safer, forever.
Would that still be "progressive" for you?
Would you have supported Jonathan Swift's "Modest Proposal" too, at the time? Or sterilizing poor people? I mean, those are perfectly logical suggestions that would work, wouldn't they?
next_xibalba 34 days ago [-]
These people have made the affirmative choice to join gangs that terrorize law abiding citizens. Their choke hold on El Salvador has prevented others from living safe, prosperous lives (not to mention the countless people they've killed). Removing them from society is progress. The amount of utils gained by the large majority far outweighs those lost by these criminals. And frankly, it's a false equivalence anyway bc they're, y'know, criminals.
> Would you have supported Jonathan Swift's "Modest Proposal" too, at the time? Or sterilizing poor people? I mean, those are perfectly logical suggestions that would work, wouldn't they?
You have erected a startling number of straw men in your response. I'll ignore them.
We should do things that both work and benefit society. We should not do things that don't work. Here's a short an non-exhaustive list of "progressive" things that don't work: restorative justice, tolerating crime, allowing the destruction of the commons by the mentally ill and addicted, allowing criminals to be free and wreck society due to legal technicalities, bureaucracy, and corruption.
And thus, as I wrote previously, the word "progressive" seems to have fully inverted. Things that enable or create progress are called regressive, while things that are actually regressive and destructure are called progressive.
the_af 38 days ago [-]
There are alternative paths one could take to address society's ills.
I'm saying Bukele's policies aren't progressive. Furthermore, he doesn't consider them progressive. His allies in the Latin American ultra right wing don't consider them progressive. "Progressive" to them is an insult.
38 days ago [-]
ks2048 38 days ago [-]
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.
ptero 38 days ago [-]
It is not an asset that goes up forever.
It is permissionless, very liquid asset that the governments cannot dilute. For many people this is a very big deal. A significant part of the world population lives under regimes where the governments control the money flow, heavily dilute savings in the single local fiat currency and can confiscate savings under a guise of money reform.
While not nearly as bad, most democratic, developed countries dilute their fiat to the tune of 5-7% a year. Would I buy bitcoin if I have an easy access to a convenient currency with no (or at least significantly under the average GDP growth) debasement? Hell no! Otherwise, I will (together with gold, income-generating stocks, real estate, etc.) as an insurance against government spending run amok. My 2c.
Turskarama 38 days ago [-]
It's false safety. If the government can't get their drop of blood by diluting their fiat, they will simply do it another, more direct way.
At best it will work as long as few enough people are doing it that the government doesn't care.
cylemons 38 days ago [-]
Sure they can criminalize bitcoin possession or use their police force and state apparatus to serveil and track all bitcoin usage. But that is way more effort than simply turning on the money printer.
Turskarama 38 days ago [-]
It's much simpler than that, they simply make selling bitcoin a capital gain event (which it is) and tax it. They could even make a separate special rate for cryptocurrency pretty easily.
Now maybe you think this is easy to avoid, in which case I would ask why you aren't already committing tax fraud.
cylemons 38 days ago [-]
The reason tax evasion with regular currency is so difficult is because pretty much all banks/financial institutions report your income to the state. But with crypto, especially anonymized ones like monero, the decentralized nature makes it almost impossible to track income and who it belongs to.
mvieira38 38 days ago [-]
It is almost trivial for a 3-letter agency to track bitcoin flow. Every transaction is entirely public with only pseudonyms to obfuscate identity, and with the current KYC laws good luck not getting doxxed while buying BTC.
We need to move this discourse away from "crypto" and towards Monero specifically if we want any progress on adoption
cylemons 37 days ago [-]
Isn't a wallet just a private-public key pair? One could easily generate those on a whim and start transacting using them. I assume the KYC laws apply to exchanges but what about individuals with bitcoin directly trading with each other? No way to track that
npoc 35 days ago [-]
Yes - I buy my bitcoin using a decentralised exchange over Tor. All the authorities can see is that I send a random person some money to their bank account. They have no idea what it's for, and would have to individually track down and successfully interrogate each different person I send money to, to discover how much bitcoin I had bought and even then they can't prove I own it.
georgeecollins 38 days ago [-]
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.
skybrian 38 days ago [-]
But that doesn't distinguish Bitcoin from other cryptocurrencies. The thing that distinguishes Bitcoin is fame, pure and simple. Everyone has heard of it.
markasoftware 38 days ago [-]
Fame is part of it, but it's more that it's IMO probably the only truly decentralized cryptocurrency. Not just in terms of the nodes and miners being well spread out between organizations and parts of the world, but also in terms of its development and governance. Sure, there's a relatively small group of core contributors to Bitcoin, but they don't have much fame or personality cults around them like Ethereum's Vitalik does. They are really just restricted to maintaining and adding well-agreed-upon new features to Bitcoin. Eg when Segwit happened, a lot of miners held out on supporting it for a long time becasue it was a bit controversial. Meanwhile with Ethereum, if Vitalik really pushed for some controversial change, it would probably happen. Once you go further down the list than Ethereum, things get really bad, with many cryptos' development being entirely driven by a small group of people in a for-profit company, with miners and users that will blindly update to the newest version regardless of what's in it.
2030ai 38 days ago [-]
Eth famously forked and reversed txns due to someone getting scammed.
markasoftware 38 days ago [-]
the fact that eth classic was created from this incident and still exists does inspire some confidence that ethereum's governance is somewhat decentralized also, to be fair.
And IIRC it wasn't a "scam", it was a bug in a smart contract.
2030ai 38 days ago [-]
Yes a smart contract bug. Hacked might be a better word. Or outsmarted?
127 38 days ago [-]
ETH forked because the contract was poorly written and they didn't want to honor the contract because their buddies would have lost a lot of money and the project would have gotten an egg to their face.
georgeecollins 38 days ago [-]
That's true, but you could say the same thing about a Van Gough painting. There are lots of old pretty paintings. But if you paid $xxm for your Van Gough you can be pretty sure its still worth a lot in ten years. There are no guarantees. But that's not just true of Van Goughs and bitcoins.
kragen 38 days ago [-]
Also nobody can premine it, no coalition of big stakeholders can lock you out of your coins, a 51% attack is less likely feasible than for any other PoW coin, the bandwidth needed for its blockchain is smaller than most alternatives, and it's less likely to conceal unknown cryptographic weaknesses. It's kind of shitty in some other ways, though.
postalrat 38 days ago [-]
And eventually the math will be solved and every bitcoin will be worth zero.
kragen 38 days ago [-]
While that's conceivable, Merkle-graph systems like Bitcoin are surprisingly resilient. It's been almost 20 years since MD5 was thoroughly broken, but still nobody has published a second preimage attack. For SHA2 and SHA3 nobody has even published a collision attack. And SHA-256 (what Bitcoin uses) is post-quantum-safe (Grover's algorithm still needs 2¹²⁸ time) though AFAIK there isn't yet a post-quantum cryptosystem deployed for signing transactions, which will require a hard fork.
Presumably if quantum computers (or better DLP algorithms on classical computers) start breaking keys, that will become a priority.
So I think there's an excellent chance that even if the math is solved Bitcoins will retain their value. Perhaps even without many of them getting stolen in the process. This is a big difference from many other uses of cryptography; if someone breaks IDEA 20 years from now, they can decrypt your PGP messages from the 20th century, and there's nothing you can do now to prevent that.
postalrat 38 days ago [-]
To me its inevitable. And just a matter of time. Any year there could be a breakthrough that quickly leads to missing math.
kragen 38 days ago [-]
We still don't know if P = NP. You seem peculiarly certain it is, which is odd given that most of the people who study the topic strongly suspect otherwise. They could of course be wrong, but what makes you so sure?
postalrat 38 days ago [-]
Assuming P != NP we still don't have any proof that sha-2 etc can't be reversed (obviously there is a loss of data). It's implausible for now but someday I guarantee we will have the math that makes it trivial. It does not require P = NP.
desumeku 38 days ago [-]
They would just patch the software.
postalrat 37 days ago [-]
You can't patch the rules for the existing bitcoins. People would have to move them to new rules.
desumeku 37 days ago [-]
That is not necessarily how this works. The only thing required to happen is that a super-majority of the miners running the bitcoin software voluntarily update to a new version. This is how changes have been done to BTC before.
127 38 days ago [-]
Fame and security. Bitcoin is the hardest crypto to attack socially and economically.
sporkydistance 38 days ago [-]
Here's one good use: I looked into leaving the US to become a citizen elsewhere. I have about $15MM in my retirement. I would have to pay a penalty on my taxes for early withdrawal, and be taxed when I renounce my citizenship. In theory I could cash everything out, buy a huge amount of BTC, move to another country (within a week, or quickly!!), and then cash it out in their currency. Of course, all sorts of alarm bells would go off if a normal schmoe like me tried to move that much money out of my investment account, because I'm not rich enough to break finance laws like people worth 10x, 100x or 1,000x more than me can do without going to jail. And I'd be terrified that the other country would OOPS my deposit like in the film Blow with Johnny Depp.
FireBeyond 38 days ago [-]
So your one good use is... tax evasion. Huh.
It's not illegal to move money out of your investment accounts, it's just reported so that yes, you can have a tax liability.
I too, would like tax-free investments and funds.
csomar 38 days ago [-]
One man tax evasion is another man escape from illegitimate capture.
bbbbq 38 days ago [-]
[flagged]
sporkydistance 38 days ago [-]
Yes! That's my one good use! :)
Seriously, that's all I got.
georgeecollins 38 days ago [-]
I think the government is figuring this out and has access to a lot of info about BTC from the Binance settlement. That's just speculation on my part, it may not be true.
What I think a lot of people don't realize is that the US government is not very interested in going after people who do tax evasion in the $5-50 m range. People like that can afford lawyers and representatives, it will take years, and never get any headlines. They love to go after people for $5-50k evasion because they just get paid.
mvieira38 38 days ago [-]
And it doesn't work unless you buy your bitcoin peer to peer, as any exchange will just leave a log relating your buying to your wallet, and liquidate it peer to peer as well. Any transactions with regulated institutions will doxx your wallet and then it's over, you can't use those funds anymore without being tracked (or at least trackable) by the feds.
bbbbq 38 days ago [-]
[flagged]
cozzyd 38 days ago [-]
Money laundering, tax evasion, and alimony avoidance. Yes there is a demand for those I suppose...
bbbbq 38 days ago [-]
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zmgsabst 38 days ago [-]
Around the time of SegWit, the “digital gold” camp won over the “digital money” camp — who moved on to ETH, SOL, etc.
jgord 38 days ago [-]
Many of us in the BC is digital money camp argued the case that more transactions and a lower transaction fee could be most easily implemented, within the spirit of the founders intent, if we simply increased the size of the transaction buffer, mitigating an obvious bottleneck.
We argued against the complexity of SegWit and Lightning Network.
I think greed and politics won rather than engineering or economics good sense - people didnt want cheaper transactions, it now costs around $15 USD per BTC transaction.
Despite the proliferation of alt-coins using essentially the same code-base, with shorter block-times and larger buffers.. and more programmability - ultimately proof-of-stake might be a better implementation of the block minting process, than proof-of-work.
bloatedGoat 38 days ago [-]
Transaction fees have been about as low as they can possibly be for months. It costs roughly $0.15 to move a UTXO right now.
The people who argued for increasing the block size were making a tradeoff between decentralization and "low" transaction fees. Increasing the block size makes the chain grow faster which causes several problems: the time to sync new blocks goes up, initial chain download time goes way up, and block verification takes more CPU.
The parameters were initially set so that anyone could run a full node for as many years as possible which is the most important part of the ecosystem by far. If you make it harder for the average person to run a node it doesn't matter how cheap the transactions are if ultimately a small group of people are capable of running it. You could argue that doubling or quadrupling the block size doesn't hurt decentralization, and maybe you're right, but that also doesn't move the needle much for transaction throughput either at least not enough to make a difference for adoption.
Bitcoin can and should be scaled in layers. The detractors are just impatient.
desumeku 38 days ago [-]
While it's not here yet, Vitalik's future plans for Ethereum involve making it possible to run validators on smartwatches[1], which is far more accessibly decentralized than BTC could be and far more possible with Ethereum's PoS consensus as opposed to PoW, without needing to cripple transaction speed to boot.
This says, afaict, the average BTC transaction cost today is $1:40 USD
The 5yr chart shows it spiking at $128 in April 2024.
If BTC transactions reliably cost 15c per transaction, it might make for a viable electronic money... but that is clearly not the case, so I think my point stands.
stevenwilkin 38 days ago [-]
It currently costs <1 USD to perform a Bitcoin transaction:
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.
derriz 38 days ago [-]
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.
markasoftware 38 days ago [-]
When I think of the "properties" of gold I don't think of how the price behaves, but rather that the total supply of it is limited (though Bitcoin actually does a much better job at limiting supply, since gold'll keep being mined for a long time and the supply is hard to predict) and that, other than theft, there's no way for someone else to take it from you (compare to eg money at a bank that can collapse or in a stock of a company that can go bankrupt)
LAMike 38 days ago [-]
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?
nadermx 38 days ago [-]
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
desumeku 38 days ago [-]
Electronics didn't exist for the thousands of years that gold was used as currency. The fact is, it only has most of the value that it does because it was rare, malleable, particularly shiny, and because metallism was simply the easiest way (or at least one of the easiest ways) to invent the concept of currency and a monetary system.
nadermx 38 days ago [-]
Even then it had a utility as jewlery. Bitcoin fails on that.
37 days ago [-]
heurist 38 days ago [-]
Bitcoin's utility is that you can both hold it in your hands and send it across the world in 10 minutes with no intermediaries. Can't do that with gold.
throwawaymaths 38 days ago [-]
you don't want your currency to be useful though. the value inherent in a currency is its ability to be verified without trusting the counterparty.
elevaet 38 days ago [-]
There is an infinite supply of computer algorithms. Gold is an element.
block_dagger 38 days ago [-]
Your comment indicates that you fundamentally misunderstand BTC. I recommend reading Broken Money by Lyn Alden.
elevaet 38 days ago [-]
No, I get it, thank you very much. Early adopter of BTC here, I've read the whitepaper and all that, sodl when I realized what an energy pig it had become.
The only thing that separates BTC from all the derivative shitcoins is hype and stories we tell about it. Bitcoin is itself interchangeable with an infinite number of related algorithms/schemes.
Gold extraction definitely has its problems, but it's a fundamental element of the universe.
In 100 years, I know which one will definitely still hold value.
LAMike 30 days ago [-]
Are you going to stop using AI because it consumes too much energy?
2030ai 38 days ago [-]
It is getting less less rare every 4 years.
LAMike 30 days ago [-]
In what way? I assume you know how the minting of coins work with miners
wyager 38 days ago [-]
I think people mostly realized that the more immediate priority is establishing Bitcoin as an international reserve commodity. Its usage as a currency, either directly or via intermediary layers, is kind of secondary to that. Bitcoin is making pretty good progress in that regard.
sporkydistance 38 days ago [-]
Why would anyone spend a single BTC/sat. if they know it could be worth 10x more in a few weeks/years?
sahila 38 days ago [-]
Because if you/they knew that, then they'd be buying more bitcoin.
On a much smaller scale, your dollar goes up by 5% every year but you still use it everyday because all your monies are in dollars. If all your monies are in btc, you'd have to sell to buy things.
cg5280 38 days ago [-]
If you suppose that BTC would be a widely adopted currency, you wouldn't "sell" it, you would simply exchange it for the good or service. But in this case if BTC is deflationary you would still hesitate to spend it. USD is inflationary, so there is hypothetically a small pressure to use it.
hackernudes 38 days ago [-]
Because they need toilet paper today.
cg5280 38 days ago [-]
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.
jdiff 38 days ago [-]
I've got good news for those people, you can't buy toilet paper with bitcoin today. And they aren't getting paid in bitcoin today, either. And if they tried to exchange bitcoin for fiat to buy toilet paper, they'd be subject to incredible fees that would make such a transaction pointless.
sporkydistance 38 days ago [-]
Selling a speculative investment for a necessity screams: "I don't understand personal finance."
forgotoldacc 38 days ago [-]
It used to be that buying a Bitcoin today would net you 10000x more if you waited a bit.
Then it was 100x more.
Now 10x more is the best people can dream of. The possibility of getting super rich from Bitcoin is now gone unless you're already rich to start with. Turning $100 into a million dollars made the whole world interested. Turning 100k into a million isn't anything interesting and it's out of reach of most normal people, and those who can throw 100k into something are already investing in other things with similar returns. As a normie, putting in $100 with the hopes of Bitcoin reaching a million would only get you $1000. That's not much different than a couple scratch off lottery tickets.
It'd be much smarter to find the new secret thing that costs $5 now and will net you a million dollars ten years down the road. There's loads of stuff out there that people aren't paying attention to yet. Crypto isn't one of those things.
__MatrixMan__ 38 days ago [-]
It's like those people who collect action figures and never take them out of the box. I'm not trying to knock it, but I don't think I'll ever understand it.
EVa5I7bHFq9mnYK 38 days ago [-]
Because people are mortal.
wmf 38 days ago [-]
Sell enough at the top to last you until the next top.
desumeku 38 days ago [-]
For daily usage, Bitcoin is simply inferior to Ethereum and other blockchains.
block_dagger 38 days ago [-]
That opinion is not shared by those who think Proof of Stake and no ceiling to supply are bugs vs features.
desumeku 38 days ago [-]
Those issues are not really relevant when it comes to factors like transaction speeds and the diversity of assets available to transact with, such as stablecoins, as well as DeFi platforms to actually use those assets on.
bloatedGoat 38 days ago [-]
If all you care about are transaction speeds then use the lightning network. Instant settlement of bitcoin and much lower fees. There are protocols like Cashu [1] that allow you to transact offline anonymously for no fees and settle on the lightning network.
Why do you need "diversity of assets to transact with"? Go to any store in almost any country and they usually accept a single currency. Maybe in some they take local + USD. You're arguing for something the market doesn't seem to care about outside of speculative trading for fiat gains.
And even if you really want stablecoins they've been added to bitcoin via the lightning network and taproot assets. Tether for example can be used via bitcoin [2]. There's a reason Bitcoin makes up well over 50% of the total crypto market.
You "can" do all these things on BTC. Almost nobody does. All of Tether & USDC usage takes place on other blockchains. The lightning network is notoriously tricky to use and isn't trustless. A diversity of assets enables things like PAXG, an ERC-20 token backed fully by real-world gold, as well as things like tokenized stocks, bonds, and t-bills, the last already existing, and the former surely coming in the near future.
Additionally BTC isn't "over 50% of the market", it's over 50% of the market capitalization, which is a huge difference. BTC doesn't have the raw TX speed to make up 50% of actual market activity.
verdverm 38 days ago [-]
When most people hear daily usage, they think groceries, bills and paycheck, not day trading on an exchange, defi or centralized.
In this regard, crypto currency is not really a currency that people can use for their daily lives without worry and risk from volatility
whimsicalism 38 days ago [-]
yes it is, just use stables. frankly it is a much more convenient way to move money if the other person has it as well
e: and i’m no crypto obsessive really, i don’t think it was usable even 3 years ago but it’s pretty handy now, can easily send $20 in usdc on base or use it to purchase carbon offsets or use it on election/sports betting or use it to purchase deepseek r1 credits…
verdverm 38 days ago [-]
I was emailing rent to my roommate 6+ years ago for zero fees with GPay, it's hard to see it being easier than that.
whimsicalism 38 days ago [-]
well, it is. for instance, for my rent rebalancing i have to pay more than $2500 and gpay doesn’t allow that. the fees would be fractional cents.
in fact short of wiring i have not found any service allowing me to send more than that in a day and certainly not with instant deposit
gpay takes 1-5 days to appear in account, i can spend the money i transfer here immediately
verdverm 37 days ago [-]
Too many malicious actors in crypto for it to become mainstream, sorry, not sorry
The community needs to self police and remove this problem if they ever want me to give it a third chance. There are several other fundamental issues in crypto, so not sure this will be enough on its own to reach mainstream adoption
For example, I don't want my transaction history on a public ledger, encrypted or not
desumeku 37 days ago [-]
"Crypto needs to self-police and remove malicious actors" and "Crypto needs to stop having a public ledger" are two contradictory actions where achieving one would make the other impossible.
verdverm 37 days ago [-]
How so? Plenty of private system are fully capable of removing bad actors, if anything they become easier together
verdverm 37 days ago [-]
I already have stable digital dollars in my bank account, why do I need another one that costs me more money to use?
tim333 38 days ago [-]
Proof of Stake etc are a bit irrelevant for daily use. If you want to do something like make a bet on polymarket the newer chains are faster, easier and cheaper than bitcoin or ethereum on the whole. Polymarket uses polygon for example which is a fork off ethereum but it doesn't matter much which such network you use and the bets are denominated in US$. Bitcoin lightning is ok but more awkward to use than polygon et al.
Proof of Stake and no ceiling to supply are important if you are going to hold the thing for decades which is a different issue.
LAMike 38 days ago [-]
You don't really believe that do you? The market disagrees as well
lawn 38 days ago [-]
Yes, some Bitcoin people still hold on to the idea that somehow layer 2 or layer 3 systems will somehow make Bitcoin practical for regular payments again.
But largely that's been abandoned for the "store of value"/"number go up" speculative use-case which is easily 99.99% of the point of Bitcoin today.
golergka 38 days ago [-]
I literally use USDT daily. Use it to pay for food delivery, for a massage or a manicure, or exchange it for cash delivered to my home. Literally 90% of my spending goes through it.
lawn 38 days ago [-]
USDT isn't Bitcoin.
golergka 38 days ago [-]
That's true. The claim that Bitcoin is useless for everyday transactions is obviously correct. It's more like digital gold.
However, I find time and time again that HN crows is absolutely unaware of how useful crypto can be in everyday life, so I offer my perspective.
toomim 38 days ago [-]
I do.
bbbbq 38 days ago [-]
[flagged]
LAMike 38 days ago [-]
[flagged]
7j67j67j76j6 38 days ago [-]
Yeah the rest of us can continue geeking out over layered network protocol design and technologies like Lightning or Liquid. There is so much going on under the hood but it is so much easier to take the piss and learn nothing. That is no surprise, with the current state of the world.
wyck 38 days ago [-]
They have made just over 300 Million off the initial BTC purchase, and as of 15 minutes ago, continue to buy BTC everyday.
The address is : 32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo
lern_too_spel 38 days ago [-]
It's just a private key. You don't "connect" private keys to the Internet. You just have poor processes keeping it hidden while not losing it. I'm surprised you think El Salvador can do that.
desumeku 38 days ago [-]
In order for transactions to be signed with the private key, the device holding them has to be connected to the internet, or at least be able to interface with another device that is. It is highly likely that anything involving their BTC reserves requires someone to be physically present at some sort of facility and it is 100% not available for hackers to just siphon whenever they wish with a virus. If possible, it would at least require physical infiltration.
wyck 36 days ago [-]
That's what cold storage is. And more than likely cold storage they requires multiple signatures, to prevent any single entity from being compromised.
twothreeone 38 days ago [-]
I don't particularly like BTC (as it senselessly burns huge amounts of energy, thereby actively contributing to the destruction of our biosphere), but this news post is intentionally misleading. As reported by many other outlets (e.g. [1,2]), El Salvador abandons BTC to qualify for an IMF loan - so the IMF is pressuring them towards this move (presumably for political reasons).
The resource usage is not senseless; it's the core aspect of Bitcoin that makes its security model so trustworthy.
bawolff 38 days ago [-]
Its not like IMF had a gun to their head. They could have refused the loan.
At the end of the day they abandoned the policy because they believe it will help the economy to abandon it (indirectly via the loan). I certainly wouldn't call that a success.
the_af 38 days ago [-]
In general, resorting to the IMF is not a good sign to begin with.
What were Bukele's goals with his policy of adopting bitcoin?
RabbiNoseberg 38 days ago [-]
[dead]
attila-lendvai 38 days ago [-]
and USD senselessly burns up entire countries... e.g. most recently that giant, and very destructive money loundering operation in ukraine...
somehow everyone forgets that wars don't make sense and shouldn't really be financeable... and yet they are.
BTC can burn orders of magnitude more energy if it makes financing wars just twice as hard as it is today...
mkoubaa 38 days ago [-]
PSA: If you don't like Bitcoin you might want to read the article before you post your knee-jerk reaction to avoid embarrassment.
k__ 38 days ago [-]
Yes. I'm not a Bitcoin fan, but that title seems a bit misleading.
dhosek 38 days ago [-]
Structurally, Bitcoin is a lousy idea for a currency as it is intrinsically deflationary (i.e., even without the speculative inflating of the cost of a Bitcoin, the structure of the coin is such that coins become increasingly scarce and expensive as time goes by). You do not want this in your currency. The ideal is a low-level of inflation which provides an incentive to spend sooner rather than later. With a deflationary currency, the incentive is to put off purchases as long as possible as your currency will buy more tomorrow than it does today. Deflation ends up being economically disastrous, as Japan’s battles with deflation over most of the twenty-first century have shown.
This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
ripped_britches 38 days ago [-]
Maybe more importantly even, you need a currency which you can tune in real-time via a central bank.
This is one of the reasons that dollar-dependent economies have a hard time managing fluctuations.
bufferout 38 days ago [-]
As a counter, inflationary systems slowly transfer more and more wealth from those without assets, to those with.
It might be different if wages grew at the same rate as inflation, but they rarely do.
The standard target rate of 2% inflation does not take into account the deflationary effects of ever increasing technology / efficiency. So in reality, it's much higher then the 2% stated figures.
MadSudaca 38 days ago [-]
These are the typical statements you hear repeated as gospel from the economists.
> With a deflationary currency, the incentive is to put off purchases as long as possible as your currency will buy more tomorrow than it does today.
What I hear from this is that people think twice before making a purchase, that is, they use their money more wisely. Seems like a bonus to me. Regardless of this, people will still need to buy things to conduct their lives, and there will still be people who are reckless with their money. So this seems like a non-issue.
> Deflation ends up being economically disastrous, as Japan’s battles with deflation over most of the twenty-first century have shown.
Any other example or it's only Japan? Because honestly it's not the country one associates with economic disaster, on the contrary, they were for quite a long time the 2nd world's economy, and if you visit it's a lovely place all around.
On the other hand, the list of countries that have had to contend with inflation is much much longer, as far as I can tell, and the problems stemming from inflationary currencies orders of magnitude more severe. If you put both prospects on a balance and weighing the evidence, deflation seems like a much better problem to have.
> This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
It has had little traction as a currency because it's unusable. You have to pay exorbitant fees to move it around and it takes way too long to work for every day transactions. Not to mention another host of problems, which other cryptocurrencies fix, by the way.
Unearned5161 38 days ago [-]
hahaha it was a good idea to remove that last sentence from your comment
I'll nibble at the bait regardless:
Your comment of spending patterns is missing the forest for the trees. A modern, capitalist infused, economy works like a big cardiovascular system, or like an engine. That is to say, it's happiest when blood/oil is pumping through it. Therefore, you can compare to a certain extent the different states an economy can be in to its cardiovascular counterpart.
When an economy is struggling with deflation, you can imagine this as the heart pumping slowly. Slower pumps mean less blood going everywhere, means less performance. The less money circulates, the smaller its multiplying effect, the harder it is for suppliers to stay afloat, prices fall.
The opposite of this would be someone walking around with their heart rate through the roof nonstop. Too high, too much blood, too much pressure, dangerous. When money is flowing too quickly through an economy, its effects are magnified, and in a sense, you can think of it as harder for the consumer now, prices rise.
To aid the visualization, step into the shoes of a dollar for a moment, and imagine its journey in these different scenarios. It comes into someone's account from a paycheck, it stays for a while, goes to the candy store, sits there, goes to a supplier of the candy store, etc. Now multiply that journey countless times. See if you can spot the effect that more or less tendency to spend can have on these journeys.
So you see now, it's a pendulum. A delicate balance that must be struck. And there you have the job of the federal reserve and other central banks like it. They are in charge of modulating the accelerator of an economy and making sure that we're neither going too fast nor too slow. Right in the middle is where you get the most stable and efficient economies.
Bitcoin is unsuitable as a currency because it belongs to the same family as other tried and failed systems of _hard currency_, think gold, but now its worse. Due to its decentralized nature, it will never (by design) be controlled by a central bank. And so it will be at the whim of all the things fixed supply currencies are at the whim of. If you want examples of why this is bad, just take a look at basically anything before 1970's.
If you want a more thought out and perhaps entertaining debrief on this, I encourage you to check out this blog post by Matt Ranger:
Thank you for your explanation, and the reason why I removed the last sentence is that I thought it was thoroughly unhelpful.
I'm not intending to bait. Really I find the arguments against deflation insufficient. I get the picture that some inflation is good to keep the system running smoothly, however, the description of why inflation is desirable is lacking when explaining why deflation is necessarily bad, all things considered. I don't see a first principles argument against deflation, neither do I see a thorough comparative analysis between deflationary and inflationary economies. The only example given is Japan, which, as I said before, doesn't seem to have fared too badly. Moreover, the list of countries that have had problems with runaway inflation is very long. Inflation is a well established economic malaise. In fact, it is almost a maxim that all states are destined to at some point or another, debase their currency.
I think one has to weigh the economic arguments, whatever they may be, against the fact that humanity has never had sound money that can't be debased, and that isn't at the whims of some elite, however well intentioned and wise they may be -- which more often than not, they aren't.
Cryptocurrencies will continue being developed, the flaws will be solved, and the wrinkles ironed. We will have something that may work as sound money. And I say we let it compete fairly against fiat money, put our theories to the test, and see what kind of money if preferred by the people. If it turns out that sound money is finally achieved, I'm sure it'll be a momentous time in human history, and could very well become a new human right: the right to own and use sound money.
aucisson_masque 38 days ago [-]
It has already been competing against fiat currencies and the least we can say is that it's a success.
No other currencies without a state to promote it, and basically force it on their citizens, made it through yet Bitcoin did it.
More and more people are buying it, people are valuing it more and more, close to 100k$ now when it worth nothing a few years ago.
That's quite a success to me and and I believe part of it's success is because Bitcoin is by nature deflationary.
No one would willingly buy an inflationary currency, the only reason they success is because they are forced by gouvernement.
Unearned5161 38 days ago [-]
You're not buying an inflationary currency. The inflationary currency is what you buy things with. Like commodities (bitcoin)!
Bitcoin (or any other commodity/crypto) being valued well and being a "good" investment is completely detached from its function as a national currency. One does not (and should not) imply the other.
You need something to exchange things with (currency), and you need things to exchange. The currency is the medium of exchange, the journey, not the destination.
Unearned5161 38 days ago [-]
Perhaps the argument I left in a different comment will illustrate why inflationary currencies are preferable. Please note that by inflationary I don't mean high inflation, I mean small, controlled, inflation.
> You should use a money that loses value because its purpose is as a medium of exchange and not a store of value. You need to have something in your life that you can reliably use to acquire things you need and exchange them for things you have (new laptop for hours worked). You want a hot potato, you get it, you pass it along to someone else. If you don't want to spend it on material goods and want to save, that's fine, you can instead "buy" a savings, or "buy" an index fund. You're still passing the hot potato around, but it's giving you different things.
Now think of this on a large scale. You want hot potatoes going around. That means they'll be moving at a reasonably fast pace, changing hands and going places. You need your money to move so that it reaches all parts and doesn't stagnate places. That's not to say that savings, like the type you'd do at a bank, are bad for the economy, but that is to say that if everyone were to save a bunch of money under a mattress, that would be bad. That would mean that a solid chunk of currency in the economy is frozen and effectively useless to everyone but its owner until they decide to take it out and spend it.
Again, controlled small inflation is the goal. Yes, this can, in the wrong hands, turn into too much inflation, but this is the same the other way too. These are not static states; they're highly dynamic systems that can spin out of control in either direction. And all things considered, it's easier to deal with high inflation than it is to deal with high deflation. It's playing with fire, but there is no other way, and if you find such a way, I and many others would be rather interested in hearing it.
Something to consider: economists' study, learn theory, and perform controlled experiments so that we can learn about these things. These are not unknowable truths of the economy that we can only roll the die and see what happens. And something that is often not considered by hard currency supporters is the results if things turn sour.
After all, you can have years upon years of nice solid performance of an economy built on whatever, for any sort of reasons, but the true assessment of that whatever as a means to serve as the currency for a nation, is how it performs under stress. Our modern fiat currencies and the ways we control them have been built on the ruins of previous methods and currencies. These ruins are costly and violent to a nations progress. This is not something you want to "wait and see". So instead of just thinking about the functions of bitcoin "during the day", while things are normal and people are behaving well, think also about that same currency at night. Think about what may happen if some exogenous shock hits the economy (not related to the currency itself), think oil embargo in the 70s. How will your economy deal with that? What are the tools at the government's disposal to get the economy repaired and back on track? Do they have any recourse? Do they have to just wait it out? This is beyond human lives at risk, this is human progress, human time.
Therefore, it's not about what people like, it's about what keeps the whole system as successful as possible for as long as possible. Economic systems are complex and unintuitive beasts, this is not an area that benefits from great civilian oversight and control. If your system works amazing for 20 years but then has a horrendous crash that wipes 10 years off of your progress, how good was it really?
MadSudaca 37 days ago [-]
Thanks for taking the time to argue with me. You make some good points, however, for me personally, the evidence seems insufficient to sway me into believing that a deflationary currency is not beneficial.
I agree with your arguments about why some inflation is desired, it incentivizes people into spending their money, this makes it so that people engage in trade more often and, when voluntarily made on the basis of sound information, trade is beneficial to both parties. The net positive done in the world increases, at the small cost of some inflation, that is, the loss of some of your net worth if you rest on your laurels keeping your cash.
All this being said, for me there is a great asymmetry in the demonstrable harm done by inflation vs deflation. The list of people who have suffered the consequences of irresponsible governments is just too large, with you and me being at risk of suffering from them during our lifetime. The temptation is just too large to mishandle currency. While deflation is something that we will very hardly experience in our lifetime, barring some massive technological breakthrough that changes the means of production forever.
Moreover, there's no reason to believe that an economy can't work with deflation. Believe me, it CAN work with extreme inflation where calculation into the future is made very hard, it can surely work with deflation. Yes, some psychological aspects will be new, like people holding off purchases because their money will be worth more in the future, but that will not necessarily translate into a wide-scale halt in purchases. People will still want things more right now than the equivalent of their increasingly valuable currency. This new modality will introduce problems, no doubt, but these will be overcome by new adaptations. There is simply not enough evidence to ensure that a system like this can't work.
I agree that one ought to proceed with care in these matters because a system that seems to work in the beginning might fail catastrophically later on. However, as any change, one ought to weigh the negative risks against the benefits. With the promise of cryptocurrency we're entering a new world. One in which each individual will be more empowered and global commerce will be facilitated. The complexity of the world shows us that no matter how much optimism or pessimism you bake into your decisions, for some things, you will just never know for sure.
Lastly, another problem with inflation is that it favors the elites. Possibly, this is one of the biggest reasons why it's so widely disseminated. Those close to the central banks, those that understand about finance, those that seek power for themselves at the expense of others, among others. This kind of centralization of power motivates individuals at the top to sell the idea to the masses as if it's for their own good, and sometimes it is, but you can't deny that the incentives do not point to this being something that overwhelmingly favors the disenfranchised and the ignorant.
aboardRat4 38 days ago [-]
>You do not want this in your currency.
I really want this in my currency.
Bitcoin might be a Ponzi scheme, but fiat currencies are even more so.
creato 38 days ago [-]
> I really want this in my currency.
A deflationary currency that you own a disproportionate amount of is great. For you.
aboardRat4 37 days ago [-]
Quite the opposite.
If you own a disproportionate amount of INflationary currency, you are, you know, still a rich person who can afford investments, investment consultants, tax optimization experts, have preferential treatment from banks and personal relations with the government employees, so you're good anyway.
Whereas if you're poor, you don't even have a chance to save enough to invest a little bit, because whatever you save today becomes useless paper tomorrow, so you're forced to spend, thus enriching service and goods providers, that is the rich.
In a deflationary currency you actually have a chance to save some money for an investment, plan for tomorrow, or even next year, and not spend everything today while money still have today's value.
not_really 38 days ago [-]
did the person you are responding to say that he owns a lot of a given currency? How do you know?
shortrounddev2 38 days ago [-]
[flagged]
josu 38 days ago [-]
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".
gameman144 38 days ago [-]
I would guess "Legal tender 2" was deemed a failed experiment, since rapid deflation is extremely undesirable in a currency.
toenail 38 days ago [-]
> since rapid deflation is extremely undesirable in a currency
What do you mean, why should my money NOT go up in value?
Unearned5161 38 days ago [-]
if you genuinely are interested in an answer to your question, I recommend this blog post by Matt Ranger:
That's a long post that seems to tell me it's bad for the economy. It's not my job to help the economy. Again, why should I use a money that loses value?
Unearned5161 38 days ago [-]
That's an odd take. What's bad for the economy is, for the most part, bad for you.
But to answer your question more directly, you should use a money that loses value because its purpose is as a medium of exchange and not a store of value. You need to have something in your life that you can reliably use to acquire things you need and exchange them for things you have (new laptop for hours worked). You want a hot potato, you get it, you pass it along to someone else. If you don't want to spend it on material goods and want to save, that's fine, you can instead "buy" a savings, or "buy" an index fund. You're still passing the hot potato around, but its giving you different things.
Now imagine you don't have a hot potato, you work and you get paid in... idk, something you don't want to get rid of. You struggle with letting go with your currency and so it costs you when you're trying to do exchanges. Similarly, if you're a shop owner or something, people are more hesitant to give you their currency as well. Things get slower, and darker, like a mechanical flashlight that you're spinning slower and slower.
toenail 38 days ago [-]
> But to answer your question more directly, you should use a money that loses value because its purpose is as a medium of exchange and not a store of value
That's an odd definition of money. The ancient Greeks already thought that money is medium of exchange AND a store of value, and throughout history people have preferred money that held its value. It's also circular reasoning. A medium of exchange should lose value, so you should use money that loses value.
> you can instead "buy" a savings, or "buy" an index fund
So money that loses value creates inefficiencies in the economy, because people have to waste time worrying about preserving their wealth, investing, etc.
> You struggle with letting go with your currency
I still need to eat, to live somewhere, I want to experience things, a money that increases in value does not destroy my desire to consume.
Unearned5161 38 days ago [-]
=) you're conflating meanings, perhaps due to some of my handwaving. There's a difference between a medium of exchange that loses value, and a medium of exchange that LOSES value. People don't want the latter. That potato is too hot. You want something that loses a measured, controlled, amount of value over time. How much? About 3% per year seems to be a good number that people more educated than me tout around.
I'm also not sure that's a circular reasoning as I provide the reasons why you want a medium of exchange that loses value...
Hmmm... sure, I suppose you can look at it that way. In an inflationary-esque economy, you worry about saving your wealth, so you create instruments to do so: fractional reserve banking, mutual funds, etc. This is a problem with many solutions. On the other hand, in a deflationary-esque economy, you worry about spending your wealth, and perhaps more importantly, getting everyone around you to spend it as well. That problem has less solutions.
I said you struggle, you don't hold on forever, you struggle letting go. As in you eventually do let go, but not as quickly as if it had been depreciating. It functions as a brake on consumption, not a full stop. It slows things down. Slow is not good. Things start to go down when things slow.
38 days ago [-]
sporkydistance 38 days ago [-]
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?
Palmik 38 days ago [-]
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.
josu 38 days ago [-]
Inflationary legal tender is a novel concept.
bawolff 38 days ago [-]
So novel... remind me again what happened to spain in the 16th century?
mkipper 38 days ago [-]
And if you wrote this comment in December 2022, Bitcoin would be sitting at -70%.
I sincerely don't know anything about monetary policy, but I can't imagine that sort of volatility in the value of your currency is considered a good thing.
georgeecollins 38 days ago [-]
If the value of the dollar increased or stayed 100% stable we would be in a depression. In fact, the only time the dollar increased in value for long was the great depression.
The point of legal tender is that it reduces in value slowly over time, so you don't just hoard it under your bed. If someone paid me in BTC, I wouldn't spend it, I would hang on to it. That's not how currency works. Currency is the thing you want to spend, not hand on to.
attila-lendvai 38 days ago [-]
hence the two words/concepts: currency and money.
and they both can share the same unit of account.
The Unadulterated Gold Standard articles have a more detailed discussion of this.
aucisson_masque 38 days ago [-]
> I wouldn't spend it, I would hang on to it.
Well the point of money is to use it at some point, your theory is right if people were to live for the infinity but we don't so at some point you will spend all your hard earned Bitcoin because you just don't want to die rich but live rich.
That's the basic reason why all this nonsense about how bad having an deflationary economy is crap. People spend at some point their money, they don't hold on to it for ever.
At some point a balance between reward (money taking more value) and loss (time spent starving, not benefiting from your assets) is reached.
sarcasmatwork 38 days ago [-]
Misleading.
Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender."
this article, though appearing pretty machine translated, points out that the law removes the obligation for anyone to accept Bitcoin as payment of a debt, while not (for some reason) removing the "legal tender" language -- which is a complete contradiction.
This makes as much sense as saying that Walmart has no obligation to accept Visa cards anymore, but that they're still a "valid method of payment at Walmart" -- except of course that "Legal Tender" has an explicit legal definition (apparently even in El Salvador).
This sounds like a really badly written piece of legislation. Perhaps there are shady dealings going on where someone powerful stands to lose a lot of money (or BTC) triggered by "if it ceases to be Legal Tender", but also apparently pressure was too great to abolish that legal tender status in practice, so this ridiculously-written law was passed to attempt to have it both ways.
cwillu 38 days ago [-]
“The reform eliminated the word “currency” when referring to bitcoin, but says it is “legal tender.” Despite the lack of clarity, it lifts, as required by the IMF, the obligation to accept it in transactions or debt payments, a key condition for it to be “legal tender,””
Edit to add a quote from your preferred link:
“Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts.”
If I can't pay my taxes with a token of economic exchange, and people aren't required to accept my tokens of economic exchange, the only remaining sense I can make of it being “legal tender” is that it is not illegal to use it, but that's not what “legal tender” means.
fode 38 days ago [-]
I spent three months in El Salvador before the Bitcoin Legal Tender law passed, then another three months after it was enacted.
From day one, I knew it wasn’t going to work.
That’s when I flew back to Miami, went back to the drawing board, and stopped being a Bitcoin maxi.
arthurbrown 38 days ago [-]
Can you speak more to the difference between the two experiences?
AnotherGoodName 38 days ago [-]
“Bitcoin success in El Salvador nets country $600million as bitcoin gains value.”
It even seems that the above is a very minor change that in no way changes the outcome here. El Salvador did well and looks to continue to do well with its bitcoin policies.
38 days ago [-]
josu 38 days ago [-]
While it is true that adoption remained relatively low, the reason why they abandoned it is that the IMF made it a condition for the Salvadorian government to be able to receive a 1.4B loan.
rsanek 38 days ago [-]
Why did they need the loan so bad they had to change their currency?
josu 38 days ago [-]
They didn't, the IMF just offers better terms than the free market. And they are still doing their Bitcoin thing, this was just a small concession they were willing to make.
el-salvador 38 days ago [-]
El Salvador has had limited or very expensive access to the bond market for the past years. I thinkneed it, otherwise they wouldn't have made a law to loan money from El Salvador's pension funds with 0% interest.
wmf 38 days ago [-]
Because they're broke.
EdwardDiego 38 days ago [-]
Yes, but why.
epolanski 38 days ago [-]
Nobody wants to spend it anyway, just hoard or sell it to the next sucker willing to shell more $.
Among all the crypto shills I know I'm probably the only one who has used it for trade (0.25ish Bitcoins for a computer on caseking.de in late 2017 and few goodies on local bitcoin in the same year).
dmix 38 days ago [-]
Mostly because transferring BTC is very expensive. Every time I’ve done it I’m shocked at the fees that sites like Bitbuy requires. So if you’re going to do it then it has to be for a good reason.
epolanski 38 days ago [-]
I still remember getting mocked because "lighting network is coming"...8 years ago. Still doesn't work.
It's not just expensive, it's difficult, slow, error-prone and offers 0 convenience over standard means of payments.
38 days ago [-]
max51 38 days ago [-]
>Still doesn't work
I've been using LN regularly for over a year. It works fine and it's extremely cheap.
xp84 38 days ago [-]
This is fascinating to me because we were told 15 years ago (ish) that one of the main things that made crypto special (besides it being guaranteed finite unlike fiat) was that unlike say, Visa, it would be economic to use, even for small transactions, because The Big Banks wouldn't take their ~3% cut of every transaction. We all assumed that cut was determined by greed, but if Bitcoin is expensive to transact in now, it could be that in free market terms, that there is actually a certain value people place on the ability to move funds around, and if Bitcoin were much cheaper, that there is room for middlemen to take margin and push the effective cost of using crypto closer to the fees we hate being charged by banks to use the card networks.
attila-lendvai 38 days ago [-]
don't forget that when you use fiat you are also charged inflation, and your economic activity is kept inside their zoo for all kinds of benefits to the zoo keepers beside inflation.
this should all be added to that 3% card fees.
lawn 38 days ago [-]
The fees in Bitcoin are much higher than they have to be and there's absolutely zero desire from the developers or community to do anything about since number goes up, and that trumps all.
There are cryptocurrencies that follow the original idea but they're not as popular because they haven't increased in proce as much as Bitcoin.
bawolff 38 days ago [-]
Transaction fees are because bitcoin is an inherently inefficient system.
Don't get me wrong, satoshi is a genius, but there are severe tradeoffs required to get the properties bitcoin wants.
max51 38 days ago [-]
a major difference you are not considering is that bitcoin fees are fixed and don't change based on the value of the transaction.
Right now they are at around 0.15$. That's too much IMO to go buy a 1$ coffee with bitcoin, but it would also be 0.15$ if you were buying a 2000$ macbook, a 60000$ car or a 2M$ house.
desumeku 38 days ago [-]
There are blockchains other than Bitcoin which have no or almost no fees for transactions. Bitcoin could have low TX fees, but its core developers have deliberately kept the maximum block size at 1 megabyte and have refused to increase it.
epolanski 38 days ago [-]
And the community "decided" to follow the core developers who controlled the narrative on r/bitcoin, bitcointalk and various exchanges when Bitcoin was forked, with the first chain (Core) remaining "Bitcoin" and the other fork then being labeled "Cash".
BobbyTables2 38 days ago [-]
The cut was determined by greed.
Technically cryptocurrencies were meant to be held and exchanged directly, without an exchange.
Of course that isn’t convenient for non-enthusiasts…
How fortunate we are that crypto exchanges, run by private companies with little government regulation, operate out of the goodness of their heart /s…
epolanski 38 days ago [-]
Transaction fees have nothing to do with crypto exchanges (which would probably love them to be lower).
do_not_redeem 38 days ago [-]
Bitbuy is just a random exchange. You're placing blame at the wrong layer. Blaming bitcoin for Bitbuy fees is like blaming the Federal Reserve for Western Union fees.
georgeecollins 38 days ago [-]
Still cheap compared to most forms of money laundering.
modeless 38 days ago [-]
Hmm, sounds more like an IMF requirement than something the government wanted to do. It's not news that the IMF is opposed to the use of Bitcoin as legal tender.
riknos314 38 days ago [-]
An overview of a subset of the myriad issues that contribute to bitcoin being a very bad currency:
These are much more technical and don't even mention the more obvious issues:
Block settling time: If a transaction isn't complete until 1 (or n) blocks have been committed, and mining a block takes meaningful time, then this places significant constraints on spending.
If I go to the store, and buy something with bitcoin, but it takes 20 minutes for the next block to be mined, does the store need to hold the goods in escrow until the transaction clears leaving me stuck waiting for 20 minutes? There's also no guarantee that my transaction ends up in the next block being mined, so I may need to wait an indeterminate amount of time before I can walk out with my paper towels - horrible UX.
Lack of physical cash: if the power is out, how do we do business?
Tension between wallet security and convenience of spend.
john_minsk 38 days ago [-]
Didn't you get the news: BTC is no longer new money. It is new gold now.
the_clarence 38 days ago [-]
That's an interesting link but it's more about trivia than an argument against bitcoin. If you want to have a serious conversation I'm here for you: Bitcoin is slow, not user friendly (utxo model vs account model), wastes energy, and is barely programmable (scripting language is extremely limited)
donohoe 38 days ago [-]
The writing was on the wall way back in 2022. The launch was a dud. People were more likely to use the national wallets for stable-dollar coins then Bitcoin.
By branding itself as "crypto-friendly", El Salvador managed to get Tether to relocate there. That seems like a pretty big deal for a country that otherwise would never attract any sort of tech company.
So I wouldn't call it a "failed experiment" per se - more like a publicity stunt that has achieved publicity.
FreeTrade 38 days ago [-]
Bitcoin (BTC) was hijacked and oriented away from use as cash. It was quite obvious BTC was no longer capable of functioning this way and that the LN wouldn't help.
There were maybe a half a dozen other networks that might have made a more plausible and interesting experiment in testing crypto as a day to day currency.
Jimmc414 38 days ago [-]
El Salvador invested approximately $269.74 million to acquire 5,900 bitcoins ($595 million) and secure $1.4 billion in IMF loans.
I hope they can recover from this failed experiment.
ChrisArchitect 38 days ago [-]
Is there a new development here or same news as the IMF deal requirements 2 months ago:
El Salvador to scale back Bitcoin dreams to seal $1.3B IMF deal
Didn’t we learn back in the 1500s that asset-backed currencies are unsustainable? Bitcoin will never, ever be able to take the place of a fiat currency because it carries with it many of the same problems as Spanish silver the conquistadors were traveling all the way to SOUTH AMERICA to mine half a millennium ago. It was essentially a very difficult proof of work. The only real advantage bitcoin has is that it’s easy to carry.
Even when the entire world started selling off their gold to the US in the 30s and 40s it became obvious by the 70s that there wasn’t enough gold mining capacity on earth to sustain a global asset-backed currency.
hackernudes 38 days ago [-]
So the modern version of traversing the world for silver would be energy used to mine? Like hypothetically the US building tons of nuclear power plants to "win" at mining? Of course that wouldn't add to the supply of bitcoin (harder than silver), so I'm not convinced your analogy stands. I don't know much about 16th century history, so I'm not trying to be too snarky.
You might think about the long game where no more bitcoin is issued and only transaction fees are awarded to the miners. How much energy will bitcoin consume then? There will be an equilibrium somewhere between energy prices and transaction fees.
I'm not even saying we should abolish fiat currency, or that the USD has to be fully backed by a hard asset. Individuals will hold whatever asset/currency/whatever they think will be the best choice for them.
twodave 38 days ago [-]
The point is that the money supply needs to increase at or near the pace of the economy or we end up with a currency shortage, and bitcoin being harder to mine would prove that point faster than silver ever did.
hackernudes 38 days ago [-]
Thanks for clarifying!
Although I don't think I agree. Wouldn't a currency shortage be another way to say deflation? If your economy is producing more value than your currency represents, then your currency is more valuable.
I have also heard people say deflationary currencies inevitably lead to a catastrophic spiral where liquidity dries up because no one wants to spend (or loan) today what can be more valuable tomorrow. There's even a page on the Bitcoin wiki about it that has been there since 2010.
Also, a quick google brings me to the "Price revolution" page on Wikipedia (https://en.wikipedia.org/wiki/Price_revolution) where it says:
"Generally it is thought that this high inflation was caused by the large influx of gold and silver from the Spanish treasure fleet from the New World; including Mexico, Peru, Bolivia and the rest of the Spanish Empire."
In the end... I don't really know. I appreciate you sharing your thoughts.
twodave 38 days ago [-]
Yes, I mean, all the options are bad. So let’s start there :)
First, if your money supply is the actual asset (and not just backed by it) then it’s even worse, since fluctuations in overall supply of that asset can cause very large valuation changes of the money you own. E.g. if we find a silver deposit 4x bigger than all the silver we already have, then suddenly all the coins people are carrying around are worth 1/5 their previous value. So it makes the currency unattractive to hold. On the other hand, if you run out of coins then as your economy or even just population grows then everything has to get cheaper because there’s only the same amount of coins to buy more stuff. And that encourages hoarding. These two things together make for financial disaster because nothing can really be relied on. And, this wasn’t as much of a problem before countries like the UK industrialized, which led to population explosions across the major powers.
Then again after WW2, when globalized markets became a thing, we saw another wave of industrialization and accompanying population growth, to the point that even asset-backed paper currency became problematic. There’s just not enough gold on the planet to back every other economic output. There’s only about 400 million pounds of the stuff worldwide. Assuming you could even get ahold of it all, you could only use it to back about $200 billion. Between 1950 and 1971 global trade expanded by a trillion dollars. And the global population nearly doubled. And we couldn’t just say “gold is worth more now”. There were treaties in place that defined the price of gold as $35 per ounce (which led to countries like France to try and destabilize our currency by buying up a bunch of our gold, but that’s another story).
But in a fiat system by adopting the currency you add your economic output to the overall system and your currency stability is now tied up in that economic output, so—your output goes down, your people’s belief in your ability to pay also goes down. This works super well in a rapidly-growing economy. There’s always more! More money-printing, more economic output, more debt… but the problem with this is—what happens in a world where things stop growing all the time? We have a few small examples and they aren’t pretty (Greece, COVID, and coming soon—China).
Unearned5161 38 days ago [-]
if you would like to continue your mental journey, I recommend reading this:
I’m not sure what exact point or points you want me to care about, but none of these charts seem to suggest _why_ we and every other country moved to fiat. I’ll admit I didn’t look at them all, you didn’t give me nearly the effort in your comment that you’re asking from me…
toenail 38 days ago [-]
We moved to fiat because politicians like the indirect taxation through inflation. It's free money for them, what's not to like?
twodave 37 days ago [-]
That is not why we moved to fiat. It may be a consequence, but there are also seriously consequential checks against doing it too freely.
To me, Bitcoin seems way more like an asset class, rather than a currency. (Despite the name which is a HUGE misnomer for the average layperson.)
Nobody invested in Bitcoin believes you should be ordering pizzas or using it as an actual currency. Bitcoin is a long-term play.
You can't make a currency out of something that's fluctuating by more than 10,000 USD in a 24-hour period.
tim333 38 days ago [-]
Bitcoin as legal tender, as in something you are legally required to accept as a debt payment, is kind of a terrible idea. What if the person owed money has no idea how to muck around with private keys, not getting hacked and so on? Does your average small law firm who has to deal with legal stuff have any idea how to do that?
mab122 38 days ago [-]
What if the person owed money has no idea how to check if a bill is not a counterfeit, doesn't want to learn about really small security prints on every note, what if somebody robs their wallet?
tim333 38 days ago [-]
I'm not saying the current system is perfect but most people owed money can receive money in a bank account while most probably don't have a bitcoin wallet. Physical cash while legal is fading from use for large transactions.
zidad 38 days ago [-]
Does anyone know how/if using BTC as daily currency works in practice? Can El Salvadorians just add it to their Google Wallet?
I don't know much about cryptocurrencies but there seems to be a scaling issue, last thing I read it can only handle 7 transactions/s, is that still valid?
If so, then how would this scale to a country-wide payment system?
ffjffsfr 38 days ago [-]
IMF forced them to drop, but if they want to use crypto as legal tender, why use BTC which has high transaction fees? Why not something with low or zero fees and efficient chain? There is million of crypto out there and most open source, so govt could even launch their own coin on top of existing chains.
pavlov 38 days ago [-]
3rd world currency is often barely worth the paper it’s printed on. Making it crypto removes even that value.
Seriously though, the reason is that they can do digital currency without crypto just fine.
For example there are many popular payment operators in Africa who provide money transfers and micro-payments on phones. M-PESA launched in 2007 and has tens of millions of users:
These successes don’t usually get reported because they lack the exciting novelty of crypto, even though they are much more popular and usable. They are actual free market solutions, not coin casinos built around libertarian dogma. And for that reason lots of people don’t want to know.
127 38 days ago [-]
The lower the transaction fees, the lower the decentralization, security and usage. There has been no new breakthrough that gives "efficiency" without sacrificing other important factors.
ArtTimeInvestor 38 days ago [-]
This could be the IMF fighting fire with gasoline.
The IMF is afraid of Bitcoin because it threatens the Dollar.
The IMF bribes El Salvador to reduce their support for Bitcoin.
El Salvador uses the bribe to buy more Bitcoin.
If Bitcoin catches on around the world and the IMF is fighting it by throwing money at it, that could lead to an accelerated adoption curve.
natmaka 38 days ago [-]
Bitcoin's value: from mid-2022 to the end of 2023 it hovered between 20k and 30k USD, then 57k to 70k from February 2024 to October 2024, then from 90k to 110k since.
Therefore during 2024 people having or obtaining it tend to keep it instead of spending it. Is it surprising?
kkfx 37 days ago [-]
The reason why BTCs are not much an usable currency for a whole economy is that they are a deflationary currency like gold, meaning the more time passes the less new BTC are created till the end with no creation at all. This means they will always more interesting to be stockpiled then spent. Also they can't decrease nor increase "as needed" the BTC base, meaning that if you are short of natural resources you can't reduce their usage tightening the number of circulating money.
The idea behind BTC is very valid, but they can be more like the old ECU or CFA/CFP not money you normally use for day to day stuff.
Nothing says stability like a "currency" that swings +/-1000% in value.
wwwtyro 38 days ago [-]
How does anything swing -1000%?
bzmrgonz 38 days ago [-]
Maybe they put the cart before the horse. I understand some countries in Africa are having wonderful success with e-wallets. Perhaps El Salvador should have started with e-wallets before crypto to acclimatize the population.
abdullahkhalids 38 days ago [-]
In the 15 years since Bitcoin went viral, has someone proposed a reasonable social, legal and financial protocol for how a society can adopt a novel cryptocurrency without getting stuck in the phase where the cryptocurrency becomes a speculative asset rather than a common medium of exchange? By novel, I mean not using an existing cryptocurrency that is already stuck in the speculative asset phase.
Surely, if a government wants the people in the country to use a novel cryptocurrency, it has a lot of levers of control which some distributed libertarian minded community simply doesn't.
est31 38 days ago [-]
Customers use currencies if it lets them buy stuff. Shops accept currencies if people come and want to buy stuff with that currency. In touristy places, it's common to see people list their prices using currencies from common originating countries, regardless of the legal currency in that country.
Any new thing needs to be better than the current thing at least in one domain, if it wants to grow users. Fiat currencies work so well, that the only niches cryptocurrencies can find is crimes really, avoiding financial sanctions, etc.
Like China for example bans their citizens to trade the chinese currency for foreign currency (above small limits). Then buying bitcoin domestically makes sense if they don't trust the chinese government to keep their own currency valuable.
Of course, all the exchanges operating in countries where there is reasonable laws require KYC to be in place. Cryptocurrencies are also in many ways more trackable than non-crypto currencies. So for crime it makes no real sense to use most crypto currencies.
abdullahkhalids 38 days ago [-]
> Any new thing needs to be better than the current thing at least in one domain
For instance, my native country, in an effort to digitize the economy has passed a law that if you pay digitally or with a card at a restaurant you pay only 5% sales tax instead of 16% if you pay via cash. Some government wanting to encourage the adoption of a cryptocurrency can take similar measures. Governments have options that Vitalik Buterin does not.
As a cryptocurreny enthusiast I think the execution here and it's goals weren't aligned to begin with. It was nothing more than a custodial wallet and it was not implemented or deployed in any meaningful way. You can't write any useful smart contract to "do" anything and without any of that it doesn't compete for shit against centralized digital payment systems in terms of efficiency or simplicity.
ipaddr 38 days ago [-]
I heard they will be accepting American prisoners in exchange for money from the US. They will also hold US deportees from any country.
ggm 38 days ago [-]
For anyone else who enjoyed this tree, I enjoyed reading this book by Galbraith many years ago. I don't say you have to agree with him politically or economically, but as a basic introduction to the idea of money, and national economies, it's a great read.
Money: Whence It Came, Where It Went. John Kenneth Galbraith. (1975)
He had a very interesting life.
127 38 days ago [-]
I once bought video games from Steam with Bitcoin. Those were some expensive video games. Bitcoin is a completely new economic tool. It just doesn't seem to work that great as a traditional currency for day to day purchases.
65 38 days ago [-]
BTC doesn't work as legal tender since it's deflationary, has high fees, and is slow. Bukele got lucky gambling on BTC, perhaps now would be a good time to cash out.
kylebenzle 38 days ago [-]
The only reason BTC doesn't work as legal tender (but original Bitcoin did) was the GitHub repo was hijacked by Blockstream and several hacks injected to corrupt the project.
m3kw9 38 days ago [-]
How a currency increase or decrease in price so fast will affect how people spends it. It’s a bull market, yeah let’s wait for it to go up before buying that.
kernal 38 days ago [-]
Bitcoin as a currency was always going to fail. It’s a speculation instrument that wildly fluctuates. Satoshi sealed its fate by limiting it to 21000 coins.
sub7 38 days ago [-]
They can buy 100 Lummis-es and 100 El Salvadors and bitcoin still won't have a use case outside of fraud and more suckers = number go up
whimsicalism 38 days ago [-]
because the imf demanded it of them. not much has changed from the structural adjustment era of IMF fiat, despite all the controversy
strangescript 38 days ago [-]
Shouldn't they be loaded right now with all the BTC they bought when it was low?
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 probably fall into severe errors which would be bread and butter for "bad economics" reddit groups but truly, I can't see how this wasn't forseen and expected. It was about WHEN, not IF.
codethief 38 days ago [-]
> 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.
mikepurvis 38 days ago [-]
And quite apart from that fundamental misalignment, sovereign states having some measure of control over their own monetary policy is arguably a pretty good thing.
mindwok 38 days ago [-]
And on top of that, consumers prefer institutions in the loop. That’s why people use Amex to pay for stuff, because if it goes wrong you’ve got a massive institution with a tonne of clout to help you out.
varenc 38 days ago [-]
This is moot for El Salvador. They’ve been dollarized since 2001 and USD is effectively the only legal tender.
mikepurvis 38 days ago [-]
That is helpful context— it's too bad TFA wasn't a bit more clear on the history.
In any event, you could still make the case that prior to this bitcoin experiment, the people and economy of El Salvador still were benefiting from a human hand on the monetary tiller, it's just it was that of the US Fed rather than their own officials (elected or otherwise).
roenxi 38 days ago [-]
In fairness, markets can operate quite well with almost nobody in them being able to argue why. Gold has remarkable staying power but it is rare to find gold proponents who can explain why convincingly. A lot of the arguments for where the value comes from are bunk. If I hear one more person explaining that jewellery matters I'll ... go peacefully about my day I suppose.
Still holds its value though, the economy does not care if people understand why the price signals are so.
codethief 38 days ago [-]
I would argue that, in the case of gold (as well as many fiat currencies) the value is tightly coupled to the trust people put into the asset, and the other way around. "Gold has always been valuable and quite stable, so it won't lose all of its value over night." (and similarly for USD, EUR, …)
ggm 38 days ago [-]
Doing much shopping with gold coins lately? Even big things. Bought a car with a bar?
iforgot22 38 days ago [-]
The argument is that it'll become more stable if it's adopted as a worldwide currency, kinda like gold.
elevaet 38 days ago [-]
It also needs to scale well, which bitcoin doesn't. This is evidenced by the ever increasing energy demand, slow transaction times and high fees.
aydyn 38 days ago [-]
What currency is stable in value? Certainly not the U.S. dollar.
bangaladore 38 days ago [-]
A better way to put it is that a deflationary currency is, counterintuitively, not a particularly good currency.
The reality is, Bitcoin and similar, are not being used to actually purchase things. Not at any notable percentage. You're "best bet" is to horde it, and that doesn't make a good currency.
liontwist 38 days ago [-]
I come to these threads expecting criticism about bitcoin being funny internet money run by a small group of shady characters.
But most of the comments are about how stable currency and stores of wealth are actually bad! It kind of sounds like we think bitcoin is working.
If USD is inflating and Gold is staying still, is gold “deflating”?
chowchowchow 38 days ago [-]
What do you call someone who bought a pizza with BTC last year? Paper hands? Shouldn’t they have hodled and not had pizza? How can this be a currency.
chii 38 days ago [-]
> Shouldn’t they have hodled and not had pizza?
but then starved to death while hodling?
chowchowchow 38 days ago [-]
I don’t know that’s what I’m asking! Should you only spend your money in life or death situations in a btc economy?
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desumeku 38 days ago [-]
If BTC was widely used as a currency then it would not be subject to nearly as much speculation. I don't know why this needs to be pointed out.
chowchowchow 38 days ago [-]
Is that a fact? Any substance you'd care to offer or just leaving that assertion hanging?
desumeku 38 days ago [-]
Intuition. If the majority of bitcoin usage was for transactions involving services and goods instead of speculative investment, there's a pretty strong case for a wager that the impact of speculative investment on its price would decrease.
I don't personally believe this will ever happen. BTC has too much legacy cruft. The "digital gold" narrative won out. Day-to-day transactions will happen in a newer, perhaps not invented yet crypto.
chowchowchow 38 days ago [-]
I agree but that’s like saying if my grandma had wheels she’d be a wheelbarrow innit? BTC is not set up to ever be a reasonable currency. Agree digital dollars is where we’re headed.
liontwist 38 days ago [-]
The utility of the money is in how you spend it. Your same question could be asked about the S&P.
Why would anyone sell? Well at some point in your life you want to use the money to accomplish your life goals
chowchowchow 38 days ago [-]
You should not sell your shares in the S&P 500 to buy pizza unless your financial situation changes drastically for the worse or I guess maybe you are near death. As I said in the other thread, the problem is that btc is too desirable in the market to be a functioning currency and using it for pizza or impulsive daily purchases is a nonstarter in reality.
liontwist 38 days ago [-]
But you’re wrong. People sell S&P and BTC everyday even if they aren’t dying.
This is time value of money. If I wait 20 years instead of buying a house, I can have more money. But that’s 20 years of my life I didn’t live in the house I wanted.
I could invest more in S&P and not go on vacation, but then I won’t have as much time to go on vacations.
Goods and services now can be more valuable than money later, and that’s why people sell. And that’s why deflationary currency is fine.
chowchowchow 38 days ago [-]
I notice you mentioned big ticket purchases which I specifically did not mention. Your argument looks a bit different if you replace houses and vacation with lattes and sneakers. We live in a consumer economy where a marginal drag on purchasing activity due to currency deflation would probably be pretty disruptive to put it mildly.
liontwist 38 days ago [-]
If you’re arguing that people would think harder about their purchases and frivolous spending would decline. I agree. And I think that’s a benefits
If you’re asking if people would not use their deflating currency to buy lattes and sneakers, I disagree. People like sneakers and lattes more than money. They prove this everyday by buying them instead of s&p.
There is an issue of the cost of a transaction - which nis bad for btc and s&p. Nobody wants a tax form for buying a pizza. But the regulatory environment creating high selling costs is orthogonal to the deflationary property.
chowchowchow 38 days ago [-]
More than money, yes. More than precious bitcoin?
The argument simply is that exchange should be frictionless and deflationary currency will slow the velocity of money. I guess you agree this will lead to reduced prosperity and economic activity, though you call it frivolous purchases. Your comment about preferences doesn’t play into it; this is about mechanics of exchange, and a precious asset is an inefficient medium for commerce which would lead to reduced economic activity because not only do you have to factor in the opportunity cost of buying a good or buying some other good (sneakers or s&p), now you also have hodling, zero economic activity, as a 3rd option with its own expected return and opportunity cost to forgo. When I buy sneakers, the s&p 500, or btc, my dollars don’t disappear. A counterparty receives them and they stay in the economy. If you pay me in btc and I just hold it, then that money effectively does disappear from the economy.
And I’m not even mentioning all the macro issues of not being able to provide liquidity in the form of new capital in times of crisis.
liontwist 38 days ago [-]
> More than precious bitcoin?
I’m advocating for stable currency. Not bitcoin.
> you agree this will lead to reduced prosperity
I agree that it will reduce the velocity of money and maybe “GDP”. But not prosperity, individuals being able to save wealth into the future is a better life outcome than more goods changing hands.
> and a precious asset is an inefficient medium for commerce
You are conflating liquidity with deflation. To be a currency it has to be liquid, we agree. We also agree btc is not as liquid as cash. But deflation or stability is orthogonal from liquidity.
> now you also have hodling, zero economic activity,
Already addressed. People want money to buy goods.
> my dollars don’t disappear.
The value isn’t lost in the exchange but it’s lost everyday due to inflation.
And by “lost” I mean transferred to government projects.
> that money effectively does disappear from the economy.
No it merely is saved for a future consumption date. If we average consumption needs of participants in the economy there is no reason to expect a monotonic hoarding effect. That would mean consumers are not satisfying their desires for goods.
Here is one last framing. The economy is not money, it’s goods and services. Money is just a tool for claiming them. So what does an inflationary currency do to help the economy? Does it cause more people to get out of bed and create new goods and services? No. It just transfers claims to resources to someone else.
chowchowchow 38 days ago [-]
> You are conflating liquidity with deflation. To be a currency it has to be liquid, we agree. We also agree btc is not as liquid as cash. But deflation or stability is orthogonal from liquidity.
I’m not; you have a limited view of what inefficiency means. The currency can be liquid and still inefficient for exchange due to other kinds of overhead such as opportunity cost of spending the currency itself.
The economy is not money but a frictionless (opportunity cost wise NOT liquidity wise as you keep trying to divert to) currency is better for facilitating exchange and access to goods and services.
I think a perfectly stable currency could be OK too but that would require incredible management on the monetary side to maintain that equilibrium. And absent being able to hit that bullseye it’s been proven, as much as things like this can be, that a stable little bit of inflation with a fiat currency is much stabler and leads to more prosperity than a currency bound by finite resources external to the economy.
Isn’t it enough that you can buy gold or whatever or bitcoin with your depreciating dollars? Why the fixation on it being a currency?
ggm 38 days ago [-]
Maybe it's improved but when i played with btc and made 3x and freaked out and bought a secondhand pixel with my $800 stake in milliBTC the friction was huge. I paid unpredictable vig getting $ and I had very indirect access to sell price which was being constantly fucked over by whales playing.
A true economy of low friction btc transactions for pizza has never existed at the scale banks do pay wave. Its hypothetical frictionless, not actual. I'm willing to bet even legalised state coins will be tracked, frictive and taxed.
chowchowchow 38 days ago [-]
Totally. The practicalities of BTC or any crypto as currency today are also a big problem. On top of the fundamental whyyyy of it all. If you can easily convert to/from USD to crypto or other desired store of value doesn’t that provide the required buffer against inflation? Why imbue the currency itself with value? I know societies used to do it that way but that’s not really an argument for doing so in the present day on its own…
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acdha 38 days ago [-]
You could and should ask the same question about stock shares - and indeed there’s an entire profession with centuries of history around that – but it’s a fundamental error to ignore magnitude. The stock market is based on real value and that avoids wild swings when nothing has fundamentally changed - even through the mortgage bubble my portfolio made made gains because people still needed to buy food, cars, phones, clothing, etc. and if did even a little research it had been easy to spot companies whose fundamentals didn’t support their valuation. In contrast, a pure fiat currency like bitcoin has value only from social consensus and has far more volatility.
liontwist 38 days ago [-]
I don’t own any btc. But I’m wondering why there is so much FUD about currency that doesn’t inflate.
chowchowchow 38 days ago [-]
The problem is a currency which is also considered a precious good. It’s like using diamonds as the medium of exchange. Gold is far from the most valuable commodity, and silver even less so. So I think it means we should use some other crypto than BTC if we want to have it be a currency.
bangaladore 38 days ago [-]
> stable currency
You lost me at stable currency. BTC is a speculative asset. Gold is a speculative asset. Neither are stable currencies.
If you'd like to speculate and INVEST in BTC, go ahead. But I'm quite frankly tired of people claiming it to be a currency.
liontwist 38 days ago [-]
Ok. But my point is many of the comments are attacking the idea of a stable currency - not btc.
simpsond 38 days ago [-]
None, really. They are all floating relative to each other. But USD is stable enough to know what you can get with $10. Although the last few years have put that to the test.
knowaveragejoe 38 days ago [-]
It is for all intents and purposes a stable store of value. There's a reason everyone in crypto thinks only in terms of the dollar value
protimewaster 38 days ago [-]
I think it's safe to read that as "relatively stable." USD is a relatively stable currency, and especially compared to BTC.
mystified5016 38 days ago [-]
The USD doesn't frequently lose all or nearly all value as we see from cryptocoins. My $10 today will be worth $10 tomorrow barring nuclear war or an apocalypse.
zomglings 38 days ago [-]
And 1 bitcoin in your possession today will be worth 1 bitcoin in your possession tomorrow, barring a successful and very expensive attack on the network.
You have little assurance that the buying power of $10 today will be the buying power of $10 tomorrow. If the tariffs had gone through as initially advertised, that would certainly not have been the case.
acdha 38 days ago [-]
This is only true to the extent that your debts are denominated in Bitcoin. Until people want it for purposes other than speculation what matters is the exchange rate because that’s what everyone uses for their expenses.
FabHK 38 days ago [-]
And anything beyond 3m you put into real estate, stocks, or bonds anyway. Real rates have mostly been positive; and if not, that's the result of an economy wide equilibrium process that can't be undone risklessly by some magic beans.
aydyn 38 days ago [-]
Sure but the USD has two order of magnitude more total value, and probably more than that in day to day usage.
So there's an implicit question there which apparently you and everyone else missed.
acdha 38 days ago [-]
Why do you think the USD has so many orders of magnitude usage? Nobody missed the question, that was the point: for currencies, stability is what makes them useful. You don’t have an incentive to hoard dollars hoping they’ll go up in value, so you spend them and boost the economy. Other countries use dollars because they have the same benefit: I can write a contract with you saying what we’ll pay over the next year and be confident that neither of us is going to be widely inconvenienced by the kind of swings Bitcoin has.
Remember that guy who spent 100BTC on a pizza? It’s a funny story but that’s why nobody uses Bitcoin for normal transactions.
aydyn 38 days ago [-]
> Why do you think the USD has so many orders of magnitude usage? Nobody missed the question, that was the point: for currencies, stability is what makes them useful.
Hint: cause and effect. You did miss the point and still do probably.
noirbot 38 days ago [-]
Gotta love crypto people putting "looking smarter than you" over actually explaining what it is they mean. If you've got a point to make, don't just hint at it, say something and then we can have a discussion. This just makes you look petty and like you're only in it to stroke your own ego.
aydyn 38 days ago [-]
> Gotta love crypto people putting "looking smarter than you"
Oh I'm sorry, that was your shtick. Apologies!
Also, I'm not a crypto person, I made some gains and sold a long time ago. I just have to laugh that you think one pointing out that an argument is weak makes one a part of the opposite tribe.
noirbot 38 days ago [-]
Then maybe you should explain the point you're trying to make instead of just hinting at it?
I didn't even specify if I thought you were pro or anti crypto - I just find that most conversations around crypto are dominated by statements of "the other side of this just doesn't understand basic facts like I do" instead of actually stating what the facts are and how they apply to the situation that would help someone learn what's being discussed.
I may very well be the stupid one here, and you may be quite a bit smarter than me, but I don't know because I still don't know the point you're hinting at making.
acdha 38 days ago [-]
Can you share the point you think people are missing?
rcpt 38 days ago [-]
It makes sense when you realize that it's a religion
Terr_ 38 days ago [-]
> 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 or subsidized and you don't really own land, you just rent it for a very long term from the government.
jaggederest 38 days ago [-]
> 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.
ggm 38 days ago [-]
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.
shipp02 38 days ago [-]
Land in HK is weird. The lease thing is true but there are massive national parks that have nothing built at all.
The buildings that do exist are ~50 stories even though that's not optimal because of the typhoon situation. So constructive cost is high because government does not release enough land for development.
The rents are high because someone wants it that way. It's not a land scarcity problem IMO.
Also the government and the upcoming merge with China is strange in itself.
ty6853 38 days ago [-]
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.
kiba 38 days ago [-]
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.
gsf_emergency 38 days ago [-]
That's "just" a bug-feature of common law systems
>The Kowloon Walled City was exempt and remained under the control of Qing China.
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.
3vidence 38 days ago [-]
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.
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jaggederest 38 days ago [-]
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.
FabHK 38 days ago [-]
> obviously HK is a bit of a special case
Reminds me of the old macro economist joke: There are 4 types of economies, developed economy, developing economy, Japan, and Argentina. Maybe HK should be added to that joke...
andreareina 38 days ago [-]
Or in Singapore
ty6853 38 days ago [-]
Singapore relies on the fact like 20 or 30% of their tax paying population is ineligible for public housing due to not being a PR nor citizen.
sidewndr46 38 days ago [-]
Economically, communism is a great idea. In practice, you get "collectivization" in the Soviet Union that basically starves millions to death
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MaxPock 38 days ago [-]
Don't millions starve too in capitalism?
kragen 38 days ago [-]
No. No liberal capitalist economy has ever had a famine. By contrast, most communist economies have created major famines, and history's largest famines have all been created by communist economies, outdoing even colonialism in their death tolls.
These are well-known historical facts.
cco 38 days ago [-]
To save some time, can you define the True Scotsman here? Would the US in the 1920s count as a liberal capitalistic country for example? England in the 1860s?
kragen 38 days ago [-]
Yes, and yes, which is one reason that, as it turns out, neither the US in the 01920s nor England in the 01860s experienced the famines that affected some other parts of the world at the same time. (In the 01920s Russia was experiencing its first famine that could reasonably be attributed to communism, and in the 01860s Sweden and Finland were experiencing their last famines before their transitions to capitalism.) But not, for example, Ireland in the 01840s and 01850s; that was neither, being colonialist and agricultural.
Nobody starved to death in "famines" like the so-called Lancashire Cotton Famine. By contrast, in the Finnish famine starting the next year, almost 10% of the population of Finland died. As it turns out, that was the last famine in Finland because it became capitalist over the following decades.
antifa 38 days ago [-]
> In the 1920s Russia was experiencing its first famine that could reasonably be attributed to communism
There were no famines in the USSR from 1947–1991, but there was a variety of considerations such as monarchy, civil war, 2 world wars, and anti-communist sanctions from the 1890-1947 period, so if anything, it appears that the evidence would imply communism ended the famines, not caused them.
kragen 35 days ago [-]
Certainly communism did eventually stop causing famines in the Soviet Union, but the Holodomor personally overseen by Stalin was worse than any Tsarist famine. And we have many other examples of communism causing famine: Mao's Great Leap Forward caused history's worst famine, for example (history's only famine worse than Stalin's Holodomor), but also, for example, the Ethiopian famine many of us remember from the 80s was caused by the Derg (who were technically socialist rather than communist), and one aspect of Pol Pot's democide in Cambodia was a famine, as well.
> But not, for example, Ireland in the 01840s and 01850s; that was neither, being colonialist and agricultural.
England was a capitalistic economy in the 1850s, no?
kragen 38 days ago [-]
Yes, and England was at that time and for almost another century causing famines in its colonies abroad by preventing them from becoming either capitalist or liberal. Ireland didn't even get the worst of it; India suffered much worse under the English yoke.
cco 37 days ago [-]
Agreed. So it sounds like capitalistic economies can cause famines?
kragen 35 days ago [-]
Certainly, if we're talking about their effects on people who aren't privileged to participate in the capitalist economy itself. Being colonized is much the same experience regardless of what economic system your colonists' families live under overseas. And I'd expect illiberal capitalist economies to cause famines, too; liberalism is more important than capitalism for preventing famines.
bawolff 38 days ago [-]
> 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.
Terr_ 38 days ago [-]
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.
HK has a currency pegged to the USD via a currency board, that is (similar to a stable coin) backed one-to-one with USD denominated short-dated treasuries. That is within the HK exchange fund operated by the HK Monetary Authority.
The exchange fund also (and somewhat controversially) runs additional portfolios (with foreign shares and bonds, and private equity, real estate etc.) in the manner of a sovereign wealth fund.
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r00fus 38 days ago [-]
This is such a huge thing. One of my relatives worked in the housing authority of the HK government - he said that at any given time at least 50% of the housing was publicly owned and rented directly to tenants for like 2k HKD (~300 USD)/mo.
That's why anyone can afford to live there. Actual property leases are incredibly expensive - in the 10s of millions of HKD.
Hong Kong functions as a free-trade market by socializing large parts of its basic economy.
xwolfi 38 days ago [-]
Like in the UK...
odo1242 38 days ago [-]
It might have worked if El Salvador made their own cryptocurrency which they control and could mint more of and backed it properly as a non-speculative legal tender, but they didn’t and that didn’t happen.
fny 38 days ago [-]
So... fiat?
odo1242 38 days ago [-]
Yes. A "digital fiat" currency, basically. It could potentially incorporate privacy features from cryptocurrencies or replace digital payment providers. Or be a ginormous waste of time. I don't really know enough to tell you which one.
hammock 38 days ago [-]
Correct. The IMF can’t run its debt trap/looting playbook without more currency control
Were you alive in the mid to late 90s? A string of balanced budgets and surpluses. There are new problems and no dot com bubble right now but most Americans were alive the last time we had balanced budgets. It is quite possible.
stephen_g 38 days ago [-]
Yes, it does happen from time to time coincidentally usually in the lead-up to financial crises…
acdha 38 days ago [-]
It became unbalanced by choice: a recreational war in the Middle East and tax cuts. The dotcom bubble helped, but those trillions in debt were not caused by people paying less capital gains tax on pets.com sales.
r00fus 38 days ago [-]
Yes, Democrats balance the budget, then Republicans sneak in and break the bank with wars, or deficit spending.
slashdev 37 days ago [-]
I remember it well.
It was possible. That’s not the same as saying it is still possible at this debt level with the massive shortfalls in social security and other entitlements.
I do not think it’s possible without also seriously eroding the debt burden through sustained higher inflation. That horse has left the barn.
ein0p 38 days ago [-]
Bukele says on Twitter they're still buying Bitcoin.
seinecle 38 days ago [-]
Read the story as if from the Onion and it actually fits
jongjong 38 days ago [-]
Bitcoin is a lousy currency but I'm glad it's valuable because it shows how much of a scam the fiat system is. It's ALL a scam. ALL OF IT. What part of 'ALL' don't you people understand?
When Bitcoin, a currency with a measly transaction throughput of 4 transactions per second max and which consumes more electricity than all of Argentina will be worth $1 billion per coin and every rich person around us will be a complete imbecile and every intelligent person will be broke, people will still not comprehend that the fiat system itself is the scam! Einstein was right, human stupidity is infinite.
Bitcoin has been growing from strength to strength for almost 15 years now and worth almost 2 trillion market cap... Even if you think it's a bubble, then what's to stop everything else from being a bubble too? Nothing, that's what, it is a BUBBLE it is ALL a bubble and nothing but a bubble and a scam.
Consider a system which can support a 2 trillion dollar scam for 15 years straight and ruin an entire generation of young people... What do you call such a system? That's not a sound system. How can you trust such system? What kind of gullible fool you have to be to trust such an obvious scam system?
It's like the system found all the most gullible people on the planet then bribed them to the eyeballs, gave them access to global media platforms, so now they run everything and can force their delusions on everyone else.
Did you people even hear about the recent USAID scandal or did it bounce right off your thick skulls? It's all a scam; whether you realize it or not; you're a scammer, your spouse is a scammer, your mum is a scammer, your dog is a scammer. We're all dealing in counterfeit money.
I've been saying this over and over again for like 10 years straight. Every year what I'm saying is increasingly obvious, but people still don't get it. People's skulls have been getting thicker faster than the information could penetrate it.
zombiwoof 38 days ago [-]
What about $MELANIA
pkrulz101 38 days ago [-]
They just added 11 BTCs to their reserves?
k__ 38 days ago [-]
"if someone owes you money and wants to pay you in bitcoin, you can refuse to be paid in bitcoin, but you cannot refuse if it’s legal tender"
Wat
mikeyouse 38 days ago [-]
Under the former law where bitcoin was legal tender, if someone owed you money, they could insist that you accept bitcoin to settle the debt. Most people wanted nothing to do with bitcoin so they removed the legal tender designation.
coliveira 38 days ago [-]
Who would want to receive payment in a currency that can lose 20% of its value in an afternoon? Only speculators are interested in this.
hsuduebc2 38 days ago [-]
This is not really a surprise.
outside1234 38 days ago [-]
Who could have predicted this
october8140 38 days ago [-]
Has anyone in this thread used Bitcoin to buy anything in the last month? What was it?
9cb14c1ec0 38 days ago [-]
Sorry bitcoin enthusiasts. This was always the most likely outcome.
WhereIsTheTruth 38 days ago [-]
The people behind bitcoin perhaps thought of creating technologies for their respective CBDC
But for the common mortal, cryptocurrencies are not about replacing anything, it's a highly volatile speculative playground, digital gangsters who want to make a quick buck
Nobody cares about the ideology
Bitcon as legal tender? lol
dgfitz 38 days ago [-]
I hope this is the domino that tips crypto over the edge.
LAMike 38 days ago [-]
Yes I think this is going to be the end of Bitcoin, we'll never hear about it again after this year
do_not_redeem 38 days ago [-]
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/
NonEUCitizen 38 days ago [-]
"Failed Experiment" is euphemism for "IMF pressure."
the_af 38 days ago [-]
Well, if you're successful you don't need an IMF loan...
Smithalicious 38 days ago [-]
Bleh. Seems like the IMF, which was against this for blatantly selfish reasons, basically strongarmed them into this. This is essentially a continuation of colonialism by other means.
justo-rivera 38 days ago [-]
Should have used monero, virtual cash with a little less privacy
By the way all the comments in a thread like this will look like bots
exabrial 38 days ago [-]
Bitcoin has a lot of flaws as a currency. Don't worry.... there are at least 100,000 other "coins" to choose from. /s
EVa5I7bHFq9mnYK 38 days ago [-]
In fact, there are 11 million coins, 10k new are created every day. Still, 57% of all the value is in only one coin, guess which one.
bigbacaloa 38 days ago [-]
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saranshsharma 38 days ago [-]
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throwccp 38 days ago [-]
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bogota 38 days ago [-]
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ionwake 38 days ago [-]
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sebmellen 38 days ago [-]
All for a mere $1.4B in international loans from the (supposedly evil and corrupt) IMF…
Wasn’t El Salvador supposed to be Balaji’s first “Network State”? What happened to strike wallet and that whole crypto grifter crew?
xiphias2 38 days ago [-]
Bukele realized that it's more profitable to leave the legal tender and get a loan and buy Bitcoin from it instead.
hackernudes 38 days ago [-]
Do you mean Chivo wallet? It will probably shut down. Strike is still operating (in many countries including the US and El Salvador) and has a physical office in El Salvador.
38 days ago [-]
rozap 38 days ago [-]
> What happened to strike wallet and that whole crypto grifter crew?
They always seem to get out before the prices tumble.
wnevets 38 days ago [-]
this is good for bitcoin
openrisk 38 days ago [-]
Imagine if the amount of ingenuity that went into building the elaborate speculative digital game that is crypto was actually used to lift underdeveloped countries from their misery. Fighting corruption, enabling healthier local economies, reducing the siphoning of wealth to offshore centers, improving financial literacy etc. etc.
Solving real problems is hard. Being distracted by snake oil salesmen, whether they sell digital scarcity or AGI only makes things worse.
coliveira 38 days ago [-]
Especially when to maintain their Ponzy scheme, crypto players need to use an enormous amount of electricity that could be used to benefit humanity. It is a huge waste or energy and time.
desumeku 38 days ago [-]
Bitcoin is the only large crypto that still uses Proof of Work. Almost all competitors use Proof of Stake, which uses almost no energy in comparison.
yuppiemephisto 38 days ago [-]
Unsurprised. I got the impression Bukele picked bitcoin in a sort of manic ADHD moment and no one pushed him on it, figuring it was their president’s personal indulgence.
kylebenzle 38 days ago [-]
Actually it was the for profit corporation that hijacked the Bitcoin GitHub repo a decade ago, Blockstream, that pushed the idea, Samson Mow specially is the one who deserves most blame.
Rendered at 08:06:08 GMT+0000 (Coordinated Universal Time) with Vercel.
> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros). In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.
—-
I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself
One of them being that El Salvador lost affordable access to the international bond market for a good part of the past years due to higher country investment risk, there were multiple reasons for that that are too long for one comment.
Some for the consequences have been:
The government switched to funding their bonds locally, including a good chunk of the local banks deposits which then the banks had to refinance to a longer longer term.
The government has been taking a good chunk of the pension funds with no interest paid back. Few details about this deal are available because the pension fund administrators and government supervisors have stopped publishing most of the financial reports for months.
And you thought OKRs were bad! Ha ha ha, reports suck? Let's really make reporting consequential for individuals, like in China.
The irony is just that "reporting" is not a popular human activity, and why we have things like GAAP and try to enforce the rule of law...
The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.
You need to be functionally illiterate to draw that take from the announcement. Read the thing, be informed.
https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...
El Salvador wants to borrow money. The IMF is willing to lend it, but sees El Salvador's Bitcoin policies as a risk to getting their money back.
From the IMF's perspective it is a risk to El Salvador's economy and therefore the repayment of the IMF's loan.
~ You may want to review the Hacker News Guidelines for commenting. Your comment is out of line with a few of them. https://news.ycombinator.com/newsguidelines.html
In addition, the whole country ditched Bitcoin as a payment system as soon as they cached out their sign on bonus. How is a national currency depicted as a success if no one uses it at all once they cached out the free money?
Crypto bros need to stop moving the goal posts they themselves plant arbitrarily and against any reason.
Was that the goal of the loan? How did you come to this conclusion?
"The program is anchored on improving the underlying primary balance by around 3½ percent of GDP over 3 years, to put the ratio of public debt to GDP on a firm downward path after peaking at 85 percent of GDP in 2024. High quality measures, worth 1½ percent of GDP in 2025, already included in the approved budget, will reduce the wage bill, spending on goods and services, and transfers to municipalities. To ensure fiscal sustainability and a further reduction in borrowing costs, reform efforts will center on strengthening the efficiency of the civil service, the viability of the pension system, and revenue mobilization. Fiscal consolidation will be conducted in a manner that strengthens support for the most vulnerable and protects priority public investment."
The assessment of their economy seems broadly positive
“The Salvadoran economy has steadily expanded since the pandemic, on the back of robust remittances and a remarkable pick-up in tourism, and amid an improved security situation, with climate shocks having only temporary negative effects. Meanwhile, the current account deficit has continued to narrow, and inflation has fallen further – supported also by lower global commodity prices. The fiscal situation continues to improve very gradually, and recent liability management operations have substantially lowered near-term financing needs, in the context of sharply lower sovereign spreads."
“Building on this progress, and recognizing El Salvador’s pending macroeconomic and structural challenges, the IMF-supported program aims to strengthen fiscal and external stability and help create the conditions for stronger and more inclusive growth."
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.
Yeah I guess bitcoin is only allowed to go UP everything negative is always false! There's no way that virtual beanie-babies couldn't overcome the evil IMF!
The "store of value" trait of money has nothing to do with the investment angle. It literally means value you store. It's the assurance that it retains it's value so to allow you to use it in the future to purchase something just like you could do today.
Yes, because that's the value of money. Bitcoin isn't money. It's a speculative asset precisely because people are hoping its value will only go up.
This is the same for any currency trading.
I think crypto proponents in general share this inability to understand the fact that one of the most basic traits of money is stability of it's value, and anything that fails to meet this basic requirement is simply useless as a currency.
I have $1,000.
I believe that tomorrow, my $1,000 will be worth $2,000.
Why would I ever spend my money?
Hence, economy freezes.
This is so plainly obvious to everyone except crypto zealots I literally gasped seeing your comment.
This is bad.
> Yet it results in more spending but on what?
Well near target inflation rates (which is a positive non-zero number) it results in a mix between consumption and investment.
This is good.
High consumption has been improving the economy, and destroying the earth. I'm not saying I have the answers, but it's not so simple.
It is very good that the default thing to do with excess money is invest it.
This isn't about a decision to buy bread and milk for your breakfast. It's about the decision on whether you invest in a grocery store vs let your money sit in a bank. If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity. This has disastrous consequences because the majority of people in a society do not have the luxury of having investments to live off their dividends.
You're operating off a false premise. Do you think all economic activity would be less profitable than the interest rate offered by deflation?
The whole point of investing in any business is to make a return. Giving businesses competition in the form of deflationary currencies will not eradicate businesses from being formed, and there's no evidence to suggest these businesses will be less profitable than holding a deflationary currency.
We see this in various cryptocurrencies claiming to be deflationary with the concept of 'yield', which shows investing to be a function of their wealth, interest, and expectation of return. Inflation does not need to be in the equation for this type of development.
[1] Read this for a more comprehensive view of deflation from an economist who lived through it: https://www.amazon.com/Economic-Changes-Production-Distribut...
of course you are just trolling ("LOL") and you are incurious to any evidence or argument that contradicts your straight-from-cable-news talking points.
As far as deflation in the 1800s, are you referring to in 1818 after a credit collapse cratered England's economy and then spread to the US and put it into a recession; or maybe the Panic of 1837 which triggered a depression until the mid 1840s?; or do you mean the Panic of 1873 which triggered the Long Depression that lasted until 1899?
Which one of those are good examples we should look to?
how could panics be what I'm talking about? we are talking about price levels, or I'm trying to at least.
Remind me, why is the target inflation rate 2-3% again? It couldn't be that it's the amount of money creation they can get away with without devaluing the currency so much that it destabilises into hyperinflation could it?
I'm just having fun - I'm sure I'm completely wrong
Because empirically it seems to yield a pretty sustainable mixture of consumption, investment, and savings, while also not risking a wage-price spiral.
You tell me what the target inflation rate should be and point to some moments in history informing that target so I can go read about them.
Starting again with a hard money, we would thrive, instead of being enslaved by a system that continuously stealthily, steals the value out of the fruits of our labour (at a rate of ~7% year) and gives it to the bankers and those closest to them.
It's like saying - "if we have some money that keeps going up in value, we won't need to work anymore and unemployment figures will go up - that's terrible - we must not allow it to happen!"
And I need to do this today or i’ll starve on the street.
I could delay buying a new laptop, but that’s a personal preference. I still need one at some point.
That’s why I would spend my money, because there are things I need or want.
This is bad.
In fact, you'll only ever invest in highly speculative investments because they're the only things that might possibly justify the opportunity cost of your currency just accruing value.
This is bad.
... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure
Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.
I dont know what the future hodls but it’s looking pretty good for bitcoin so far
Sure that you can always point some exotic and rare exceptions to prove differently but even yourself don't use it on normal daily financial operations, and no, Lightning isn't even bitcoin so please don't argue with that.
There are more things backing up the value rise for that old tech. Just please diversify into other areas so you don't come out empty handed in some years from now.
The future always looks good right before a crash. You really don't want a currency as unstable as bitcoin as your legal ledger. we would have had 2 crashes already in this decade alone: the obvious 2020 dip and the dip in 2023.
All the DOGE/Trump shennaigans + the investigation on the Hawk Tuah coin will probably crash it again late this year.
I see you.
I wish I could have a $333m failure like that.
(edit - see also his approval rating - 91% https://x.com/stats_feed/status/1875573928250179666)
Although of course it is unknowable how much of that money was bribe and how much El Salvador would have gotten without additional leverage.
I think you need to refresh your understanding of the difference between a loan and a gift; it wasn't an incentive to change the behavior, it was a loan to deal with the problems caused by the behavior.
Basically, the IMF money is the carrot you get for bending the knee. The stick can be the CIA or other things.
Try starting an independent one if you think otherwise.
El Salvador's cryptocurrency was helping other people (not sure if actual citizens), so it had to go.
No, they aren't.
> The charitable interpretation of how they operate looks like this:
You misspelled “conspiratorial”, and it's not even the most reasonable conspiracy theory.
I think you need to take a pause and read what you wrote because there's some serious cognitive dissonance in your claims.
The IMF is a fund put together and ran by the majority of countries in the world as a lender of last resort. It serves as the world's insurance policy on stability. So when a country like El Salvador knocks on their doors, it's a kin to stating the world they are in trouble and they desperately need a hand. The IMF then provides help, but requires as a tradeoff that the country cleans up their act and actually corrects it's course as to mitigate or eliminate the root causes of their instability. For example, countries that are hugely indebted have to comply with demands to lower their sovereign debt down to manageable levels.
Looking at El Salvador, their populist and ill-advised policy to adopt Bitcoin as a currency was a fantastic failure with a tradeoff of being a huge risk factor. Even the most firebrand crypto bro is forced to acknowledge that crypto currencies like Bitcoin have a number of traits that renders them unusable as money, among which the most popular one is the core reason driving it's popularity: volatility. It's to no surprise that one of the basic requirements for stability is to not use a highly volatile and uncontrollable asset as the nation's currency.
[0] https://en.wikipedia.org/wiki/Cognitive_dissonance
The mental disturbance angle is also compounded by the far-fetched conspiracy theories on how El Salvador ditched Bitcoin because "the man" wants to kill it.
This is essentially the other way around. It's volatile if it's predominantly used for speculation rather than as a currency, because "widespread use as a currency" is a big value sink that absorbs volatility. In other words, if more or larger countries used it as a currency it would be less volatile.
It's predominantly used for speculation. Back in the real world, it's the only purpose it has. There is no way around it.
There is also a pretty obvious way to avoid the volatility in the interim when using it as a currency: Don't use it to specify prices and don't hoard large quantities of it. If you have a Bitcoin wallet with the equivalent of $100 in it, it doesn't matter that much if it goes down to $50 and then up to $150 and then back to $100 again over the course of a year, because +/- $50/year is not a big deal. Meanwhile we have computers now, so prices can be listed in US dollars or any other currency and then use the live exchange rate when paying in cryptocurrency, while still accepting it widely.
And "it has no other purpose" is a weird claim. It has an obvious purpose: It allows you to exchange value without permission or identity. The "it's a public ledger so there's no privacy" claim is silly; your wallet address is public but you can have arbitrarily many of them, there is nothing inherently tying them to your identity, and there are known implementations (e.g. Monero) that provide even stronger privacy. These are things the existing banking system doesn't provide, and from the perspective of countries that actually respect the privacy of their citizens (or any citizens who want their privacy protected), are features.
Or because Bircoin more than doubled in Price since El Salvador started buying?
El Salvador will not sell its bitcoins and keep on adding them, maybe now as strategic reserve.
Meanwhile Tether is moving to El Salvador.
Because it was a failure in each and every single thing it was claimed it would achieve, specially the fact that everyone in El Salvador ditched the system once they cached out their sign on bonus.
https://en.wikipedia.org/wiki/Bitcoin_in_El_Salvador
You are both incorrect in different ways. Bitcoin as legal tender in El Salvador was not a well-adopted initiative and thus they were okay with axing it. The loan was not to deal with the problems of their behavior, but to push more important things in El Salvador's agenda.
I think you need to check up with reality because your scenario has nothing to do with the one reported in the article. If you read the report, you'll understand thay El Salvador reached out to the IMF, a lender of last resort, asking for funding to finance their reform agenda. Among the long list of requirements designed to improve financial health, Bitcoin ceases to be an official currency.
Next I transfer it to kraken, convert it to Monero and deposit it on my drug market of choice.
It used to be simpler but this is how I do it nowadays.
3000 years from now what would be the store of value would be the question to ask.
Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.
S&P is a speculative asset that it will perform like it has been performing in last 30 years.
USD is a speculative asset on US not going bankrupt.
Your career is speculative asset that you don't get fired tomorrow and you can find another job if you do get fired.
Bitcoin is a speculative asset that a decentralized cryptocurrency is better than relying on coins issued by bankruptable nations.
You are a speculative asset of your ego.
BTC has shown itself magically profitable indeed, but its value could only be kept by the ability of holders to keep the asset. Most marriages and some jobs will endure even in the toughest times.
Spouses are not very fungible though, not that I've ever tried ! ...
Because you wouldn't do either?
I’m guessing that you had a divorce /and/ that I know the reason why she left you
So I think I’m missing something. I feel like you’re suggesting that we should be more comfortable speculating because we do it all the time, but I’m not seeing how those are all the same.
You don't know what will happen in any of the cases. You just choose to believe one more over the other based on what has happened in the past.
I suppose where I get lost is that, at least subjectively, I end up treating different anticipated return distributions differently. I want a mixture of risks, both in terms of their covariance and the absolute properties.
When I think of "speculation", I am intentionally shaping only a small portion of my personal portfolio toward high risk, high reward activities. And I only really feel comfortable doing that because a larger fraction of my personal risk is in safer vehicles.
Atop that, I also think a lot about liquidity time bounds. I want access to a reasonable amount of highly-liquid, low-risk investments. I need that flexibility to be safe in the event that I need to buy something.
To my eye at least, I qualitatively differentiate between speculative investments and these liquid/low risk ones. If I felt I only had one kind of risk, I would seek out the other in some proportion.
Food, medicine, transportation, education, and everything else at or near the bottom of Maslow's pyramid of needs still cannot be directly purchased with bitcoin.
The other punchline to the Bitcoin joke is that it's finite. In 120 years it will begin to evaporate from existence as more and more wallets are simply lost to time.
Otherwise it's just fiat all over again
It's just a question about updating the source code.
The fundamental appeal of bitcoin is the lack of ability to change the protocol without buy-in from a sufficient fraction of the community.
(Or a hardfork, if your changes have to apply to all transactions, though this would be extremely tricky.)
I also think there will be a gold rush of hacking old wallets one day when the encryption is broken. Not sure if that will happen before or after btc failure though. You can’t upgrade security on lost wallets.
> Countries do redenominations all the time
That’s not really the same, in several fundamental ways.
It’s hard to imagine a financial instrument that’s less suited to be used as an actual currency than bitcoin. Even going back to the gold standard would be a better idea.
The rest left me puzzled, can you elaborate? Why should the money holder do anything productive? Why getting richer and richer becomes something bad when we go crypto?
This question works better the other way round. Why should people that do all the work and take all the investment risks to make the riches get continually decreasing returns on their efforts whilst the people that sit and HODL get continually increasing returns on doing nothing?
Is that sarcasm? It discourages any type of economic activity.
Why would someone invest into or try to start a business when you can become richer by just sitting on your money pile with no risk.
Artificially constricting the supply of money in a non static economy is a bad idea. Like the gold standard just much worse.
One thing i’ve always wondered: If something like Bitcoin was the only currency, then it would be like a direct mapping of 21 Million Bitcoin <-> all global economic activity and goods and services. In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes? Like in big natural disasters increasing the cost of certain goods?
I’m not a crypto zealot, but I’m not a big believer in the idea that the economy needs to be stimulated and I need to be forced to spend my money before it loses its value. I just want to buy what I need or really want.
And in the hypothetical case of having a mapping of “all economic activity” <-> “21M payment units”, then the relative stability of this money might still make investments more lucrative than just hoping for my money to be worth slightly more tomorrow. In this hypothetical scenario it would be more like “my money is worth 1000 eggs today, next month it might be 1001 (if others grow the economy) or 999 (if something unforeseen happens halfway across the globe). So if an investment looks like it might yield the value of 1100 eggs there would still be people to take the risk of investing, no?
It might. It would be significantly less likely. Basic economics. Unless you don’t think that most people are at least marginally rational..
> In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes
That’s true only if there is no economic growth. Gold standard had a similar problem.
Why would someone invest into or try to start a business when you can become richer by just sitting on your _property_ pile with no risk.
Yeah, I guess.
Well that implies that you are more or less economically illiterate. I’m not talking about property and even renting residential/commercial property (as relatively safe as it is) does provide an actual service.
Anyway.. a very basic example, imagine you have $1000000, you can:
- keep it under your bed and lose 2% every year
- invest it into real estate etc. and make e.g. 4% every year.
- invest into the stock market and make 6%.
Now with a deflationary currency like bitcoin (or gold back in the mid to late 1800s) you can just hoard it and conservatively make 2-3% every year* invest into safe bonds and gain another 3-4%. Business would need to grow at an extremely fast pace to be able to attract much capital in such an environment.
* of course it’s only hypothetical. You’d need the economy to grow and productivity to increase YoY for this. That would be unlikely in any economy that used Bitcoin as its primary currency.
This is how insane that sounds
Debased currency - a problem every large state eventually faced - is a consequence of deflation.
https://acoup.blog/2025/01/03/collections-coinage-and-the-ty...
Inflation in the monetary supply, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.
Edit: I'd remembered wrong. It was silver, not gold, that Spain experienced an influx of.
No, that's not debasement - in fact it was the opposite, the huge supply of silver (not so much gold) meant those Spanish coins were good-quality bullion. Inflation happened, and while that can commonly be caused by debasement, that wasn't the cause in this instance.
The gold escudo was 22-karat for basically it's entire existence,.
If the fees were lower I'd use it for plenty of other things too.
Aye, there's the rub.
With all due respect, why not Bitcoin Cash or some other coin? Bitcoin Cash is the exact same thing as Bitcoin - same protocol, same 21 million coin limit, same Satoshi whitepaper, same everything, except bigger blocks and thus, much lower fees. If you are using a coin as an actual currency, and not as a speculator, why stick with high-fee Bitcoin?
I used to believe in Bitcoin in the beginning, but the high fees make it impractical to use as everyday currency.
Bitcoin Cash is much closer to what I had hoped Bitcoin would become. It’s the same as Bitcoin, except that it ideologically split exactly for the reason that some people wanted it to behave more like an actual currency, while others invented the “digital gold” narrative.
Bitcoin experiences less inflation than regular currencies. Some coins get created now, but over time we know its character will become deflationary: no new coins will be created, and some will be lost at times due to poor wallet management.
As a result, people will chose to spend other currency in preference to spending bitcoin. This is self-reinforcing. The infrastructure will not be in place to use it on the odd occasion that someone wanted to.
You could create a blockchain currency which had a natural and continuous rate of inflation, to encourage people to spend it. You could bootstrap this by mutualising it across an industry. e.g. imagine if the largest datacentre groups got together to create ModestlyInflationaryCoin, and then said they would offer discounts to customers who paid in ModestlyInflationaryCoin, as a means of bootstrapping it. Other groups might start to use it, and it would stay in circulation because people would want to be rid of it once they had it.
Even if such a currency existed, it would probably be short-lived. /Once it was bootstrapped/, its stakeholders would have strong incentive to change its contract to be non-inflationary. Making that change would convert their holdings from Bad Money to Good Money, and as a result the character it would significantly increase its value.
But the datacentre groups could then mutualise a new currency in place of the old one. It is possible that there is a virtuous loop here, and that there will be a race to quality in currencies in our future, grown from how easy it is to create new currencies. We might start to see the identity of currencies a bit more like the way we see futures contracts in our current era.
The elected government serves the society of its citizens, while inventors and holders of unofficial currencies are individuals who ultimately serve only themselves.
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-of-value, and investment in growth-generating businesses.
When people talk about wanting to use bitcoin as a day-to-day currency, I feel like they are missing the best benefit if could offer us.
We already have effective day-to-day currencies. But we have not had a reliable store of value. The US, UK and Australia each have a history of denying ownership of gold when it suits them, which is when people need it most.
The lack of reliable store-of-wealth has made it too-easy for governments to fleece wealth-generating people in order to buy votes. This is not the long-term strategic path, but it creates a race-to-the-bottom due to short-term incentives. Perhaps blockchain will change that, by allowing the creation of an easily accessed utility that sits beyond the easy influence of the nation state.
To be effective it does not need to be perfect, just better than the options we have now. It has been encouraging to me to see the CCP struggling with blockchain, and then outlawing it because they cannot control it.
A counter-example: can you come up to a coffee shop with a gold collectible coin, chew a piece out, and use it to pay for your coffee directly? You need a proxy in form of a pawn shop for that.
Instruments are instruments, if it is not used for every day business transactions doesn't mean it is not heavily ab-used inside it's niche
As a general rule it's not very convenient to do so though since the value can fluctuate. (Which naturally all currencies do, but it would be kind of like paying with USD in the EU. You could do that, but most stores are not interested in the extra hassle of keeping track of multiple currencies.)
It is also not uncommon for services like VPN or IPTV streaming ("pirate streaming") providers to accept crypto.
Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.
It not being "used" in this context is referring to it not being used as legal tender. The law that was walked back was one which had made bitcoin legal tender throughout the country. As others have mentioned, it seems to have largely failed in being adopted as such, as surveys seem to indicate that less than 10% of people in the country had used it as legal tender in the previous year.
+ By allowing 8x larger blocks (unless it's even larger now?), if in widespread use with full blocks, the blockchain would be 8x larger. Bitcoin's blockchain is already the better part of 1TB, though you can still fit that on a cheap SSD. Imagine if it were 8 and growing fast.
+ Because BCH uses the same hash algo as Bitcoin, but is much less popular, it's at risk of 51% attack.
+ Because there is no pressure on block sizes, fees are very low, which means that as halvings continue the block rewards for BCH will get extremely small. This will result in hashrate continuing to decrease, putting it at even greater risk of 51% attacks. Bitcoin's high fees allow it to remain profitable for miners even without inflation. Miners have to be paid to keep the network secure, and that's either going to come from tx fees or from inflation. BCH aims to have neither and that puts it at risk.
And anyway, there are much better solutions for day to day payments, such as Monero and Ethereum.
This has always felt like a completely weaksauce argument to me. Even with Bitcoin, very few people other than dedicated miners download a full blockchain (like it or not). 1TB is already too large to keep on your phone or laptop, but 8TB is at most a minor inconvenience on a server or dedicated mining rig. What's the demographic where a measly factor of 8 makes a difference?
I'm gonna have to ask for evidence on this one, I strongly believe most full nodes are not mining pools. http://bitdash.io/ says there are ~10,000 running full nodes, yet there are only ~100 mining pools that have produced a block in recent history: https://miningpoolstats.stream/bitcoin
> 1TB is already too large to keep on your phone or laptop
On your phone, sure. But my desktop already has a few TB of storage. But not 8. And Bitcoin Cash supporters usually seem to indicate that they'd increase it beyond 8 if the 8mb blocks filled up.
The only ones who need to have full blockchain nodes are the miners, and for them it’s just another disk in their data center.
So why is the IMF so against bitcoins that they'd rather pay to eliminate it? Or are the IMF scared that bitcoin can actually succeed, in a way which prevents IMF members from asserting monetary pressure in ways that benefits them?
I wouldn’t say nobody (fools exist), but, sure, only a fool would deny the statement “gold cannot form a good monetary system”.
But... Isn't that the opposite of your Bitcoin claim?
Cryptocurrency bros are literally speedrunning the entirety of monetary system failures. All of them. You’d think, maybe after the first couple they’d read a book or something?
Heck no! YOLO!
It says a lot about the popularity of Bitcoin, no?
The government were giving out btc
The government literally give (almost) everybody $30 in btc to promote this, 8% is too low
Real currencies circulate so the same dollar is spent by many people, benefiting each of them while you’re still holding onto your Bitcoin hoping it’ll reach $110k next. You do not want to live in a country where people are staying out of the local economy.
All in all, billionaires are a bad example of holding legal tender, because that just doesn't happen.
royal family kingdom of saudi arabia
From this article in 2024: https://markets.businessinsider.com/news/stocks/warren-buffe...
There is additional context there explaining why Berkshire holding cash reserves is unique to their needs, and historically has only represented 17.5% of their total assets.
Billionaires and large firms are not sitting on piles of cash Scrooge McDuck style, because holding cash is costly.
This way, they get to control unlimited assets without paying any tax.
Personally, I don't think that's so great "for the economy", because I actually don't care about the economy...
I care about people, and having 500 billionaires owning everything and charging everyone to use it is not the economy I want for people.
I'd rather that everyone pays tax, especially the super-rich.
If Elon Musk wanted to turn his Tesla holdings into cash, then his estimated net worth of $436 billion dollars would very rapidly not be worth anywhere near that much (i.e. probably by at least an order of magnitude).
I know that selling 23% of a company in one go would move the market, but a 90% haircut would be bonkers.
Or are you claiming TSLA is special, and the haircut would be 90% just for Elon and just for TSLA because that particular stock is super overvalued due to his celebrity and reality distortion field? That seems a little more believable, but this was a discussion on net worth of generic billionaires to start.
That "other people's wealth" you're talking about is everyone's wealth.
Billionaires stole the profits of our work from us, and they didn't do it fairly.
I feel you underestimate how much a billion dollars is.
https://mkorostoff.github.io/1-pixel-wealth/
Nobody in history has ever worked hard enough to earn a billion dollars fairly.
It's crazy to me that you'd defend these people who have corrupted and degraded the entire system - the government, the finance sector, the media - to only favor holding everyone else to ransom. Not producing but holding. Societal wealth stolen without paying tax to benefit society. People didn't choose this.
I'm not starving, sure. And I'd be absolutely fine paying significantly more tax than I am now.
But I'm not about to voluntarily donate while I am still forced to work towards retirement, and there are people controlling literally 10,000 times more assets than I am that pay zero tax.
Do you not see the inevitable outcome of that?
You and your children, and their children, will own nothing because the super-rich will outbid you and everyone else for everything.
Food, houses, cars, travel, hotels, healthcare, medicine. EVERYTHING.
You will be poor. The rich is a tiny club and you're not in it.
Everyone, even the wealthy ones here on hn will eventually succumb. You will be outbid for everything.
You will have to sell your house to afford necessities while all your work goes towards luxuries for oligarchs.
There must be some mechanism to limit wealth or that is the inevitable outcome.
Here's a little thought experiment...
It's a hot day and everyone's thirsty. You have $9. There's a bottle of water on the table that you want to buy and the price on it is $10.
I give you $1. You can almost feel your thirst satiated.
Then I give the person next to you $1,000. How do you feel now?
Well our current system is like that, but multiplied by 100.
I do not agree that society should exist solely for the benefit of a handful of super-rich freeloaders.
On the desert island, they would starve and/or be eaten. That's not my definition of a useful member of society.
This seems like a very skewed perspective. You work for a salary, I imagine, and you freely agreed to take that job and in return get a salary, even if the company was losing money or its share price was plummeting. I.e. taking a salary because of the security of payments.
Lots of people who invest in businesses lose all their money. You can't point at the very very peak performers who a) didn't lose their money and b) made a really valuable company instead, and decide that they owe you something other than what you agreed you would work for. That's just not how agreements work, and it's also the apex fallacy[0].
[0] https://rationalwiki.org/wiki/Apex_fallacy
But there still needs to be some mechanism to limit wealth inequality or we still get the inevitable conclusion.
The US minimum wage hasn't changed in 16 years!
Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.
It's just not fair at all. Governments are funneling money to the rich hand over fist. It's obvious who they represent and who they don't.
You have to agree that trickle down is not trickling down.
I don't mind this, because minimum wage is a national minimum. States (and even more fine-grained than that) need to have contextualised minimum wage, or it's just silly. That's why it hasn't changed. Minimum wage increases wages at the expense of reducing employment, for any job that isn't worth that wage. You can't increase the national US minimum wage to what would get you an apartment in California and expect jobs to exist in Appalachia.
Honestly, the national minimum wage seems almost pointless. States should handle it, as they can contextualise at least a bit better.
And it not changing isn't evidence of anything when state-level minimum wages exist.
> Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.
Thus I don't think it means that. And also - your false dichotomy of you're either a wealthy business owner or you're on national minimum wage is not helpful either. People are paid what they can negotiate. Companies pay what they can negotiate. Companies exist if they charge a low enough price for their level of service or product. It's a tri-party system. The existence of other companies in in-demand businesses is what drives up wages, as if you don't like your job you can move, and people do. That's why I would say where possible, things that stop new companies springing up should be removed. Thinking it's all about national minimum wage is honestly the wrong approach, in my opinion.
> You have to agree that trickle down is not trickling down.
I don't know what this means. I didn't mention anything trickling down.
I was not implying that "you're either a wealthy business owner or you're on national minimum wage". You can safely substitute a "middle class" person, or even a "rich, but not super-rich" person, for "on national minimum wage", because in a few years I believe the middle class will completely cease to exist.
This is already happening and is actually the inevitable conclusion of all the funneling of money towards the super-rich and the subsequent increase in wealth inequality.
I wasn't even actually talking about business owners, but the super-rich that those business owners borrow money and pay interest to.
https://en.wikipedia.org/wiki/Trickle-down_economics
That's the trickling down I'm talking about, which you didn't mention because it appears you don't think that som trickling down is even necessary.
Some trickle down or other mechanism to limit the rich from owning everything is necessary if that inevitable outcome of a tiny group of people owning absolutely everything is to be avoided.
Do you disagree with that?
I believe you're alluding to some kind of nearly perfect system where large businesses have not created artificial regulatory and other moats to protect their business and hamstring competitors.
eg, imagine a large factory that employs most of the people in an area. Potential workers for that factory do not have the ability to negotiate a fair wage, and also don't have the mobility to uproot their entire life to move somewhere else. Also another company cannot reasonably expect to move in and out-compete for the workers in that area. Thus the fictional factory is in a massively favorable position to "negotiate" wages for its workers.
I think we have largely differing views on the fundamental fairness of a system where low-paid workers are expected to negotiate with multinational corporations that already have all the advantages in any negotiation.
Those corporations are also able to monetize the profits from those workers productivity to actively lobby governments for even more favorable conditions in those "negotiations".
I believe it is a very unfair system.
I doubt we will end up finding a middle ground here if you do not think a system where the super-rich are not limited in some way from accumulating wealth is unfair.
Lots of billionaires manage their portfolios conservatively. Your equating currency with liquid assets is unnecessary and tanks your argument. Almost nobody holds billions of dollars in legal tender other than those who have to, e.g. sanctioned countries and criminals.
The term "Billionaire" refers to a person who has total assets over a billion. In most cases those assets are shares in some company (or companies). It's not like they have a billion in their sock drawer.
By contrast, when at rest in my wallet, bitcoin is "dormant". It's not earning any interest and other not circulating in the economy. The only "growth" is capital growth.
That growth is predicted on demand outstripping supply. Or on "bigger fools". When the fools run out you're left with tulips.
They're billionaires because they own valuable companies, not because they have actual billions in the bank.
Japan already has houses worth $0 because Japan has run out of population growth to keep the demand for houses growing.
The same issue will occur in other countries that have low population growth. In New Zealand we have been importing people so house prices have been appreciating. However my impression is that other countries are competing for immigrants (NZ seems to be slowly relaxing our filters).
Also if you ever had a mortgage then you had a leveraged investment (often dangerously leveraged).
Not unless you explicitly choose to. If you own a house to have a roof above you, to have a comfortable and safe place for you and your family, if you love and care about that place, then that's what you are getting out of the house. Its monetary value changes are "just" a side story.
But if you buy a house purely as an investment, then yeah.
People are not paying into bitcoin expecting to redistribute their wealth to the insiders.
[0]: but also too quickly, hence all the breaches and 8-figure heists
The dollar down vs itself by 20ish percent.
The median home price is up 30ish percent.
Oil is up 45ish percent.
Gold and the SP500 are each up 80ish percent.
Bitcoin is up 1000ish percent.
If you snooze through the day-by-day, season-by-season noise, the volatility of Bitcoin is a fun and relaxing rocket to ride. You just have to ignore all discussion focused on time frames of less than four years.
It was a terribly dangerous move for a sovereign country, worse than surrender to the Euro.
https://www.reuters.com/markets/currencies/el-salvadors-bitc...
Well you're accepting payment for something people are expecting to hold value. Bitcoin only has value to a small subset of people with money. I'd definitely judge you for selling it if you have options for financial transactions via SWIFT.
It's funny to have to explain basic government loan mechanics to this comment, given the derisive comment about "crypto people" needing basic financial concepts explained.
are you talking about a trade deficit (the US operated at a trade deficit virtually the entire time it grew from 13 former colonies to the post WWII economic colossus. Lending money to a growing economy so it can turn around and purchase the equipment you are selling which it will use to be more productive is the secret sauce of a growing economy)
or are you talking about a budget deficit? many countries around the world operate with budget deficits; "socialist" governments generally have higher deficits as they spend to maintain living standards whether the economy justifies it or not. The size of the deficit (they will grow all the time) does not matter, what matters is "as a %age of GDP".
none of this, btw, has much to do with monetary policy, the maintenance of the currency.
"strong" or "weak" currency really makes no difference. The strength/weakness of the currency how the books are balanced after the fact of what has happened in the actual economy. A country with a strong currency will find imports inexpensive, and will have trouble selling its goods, and citizens will be incented to buy imports. A country with a weak currency will have difficulty importing goods, but will have less trouble exporting. It's the currency that balances these books.
If the U.S. needed a bailout, the dollar would become a trash currency.
Is this really the general sentiment on HN?
Whether you find that a feature or a bug depends a lot on where you live.
There are plenty of bad actors in crypto but Bitcoin is at worst a very interesting experiment that can profoundly change the world for the better. Most is not all of the rest of crypto is basically hawk tuah coin with less obvious illegitimacy. In fact bitcoiners don't consider Bitcoin as "crypto"
Just wow.
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 doesn't really work here.
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.
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".
cryptocurrencies are a failure and net negative, and the longer we hold on to believing they aren't, the more damage we are doing
But we keep doing them because enough people can get money out of it
Do you object to that?
Does that mean they're smarter? I don't think so. It's a bet they're willing to take and time will tell who was right.
No, that is not what the quote says. It says it was a condition on a loan.
There is a huge difference between unsolicitedly saying “hey, I’ll give you money for you to stop betting on horses” or being asked for money and replying “OK, but if I do lend you the money you have to promise me you won’t spend it on horse betting; I want it back”.
I'm not going to defend the IMF here... they're sort of like sharks swimming in the national currency markets (look up "Our Brand is Crisis" and "Life and Debt" for more info, and then read Summers' "The Payment System" for the IMF's take on things.)
But... I think my point is... I don't think there's any more conspiracy going on here than normal IMF conspiracy. But the IMF is sort of open about it, so is it still a conspiracy? I don't think the IMF or WB care one whit about cryptocurrencies, they just don't even register.
EDIT: Oh, and "Confessions of an Economic Hit-Man" is also nice and conspiratorial. If half of the author's assertions are truthful, there's WAY more happening in Latin America vis a vis international banking cabals.
IMF loans have ALWAYS been political
(This is where China swoops in and gives a loan at lower interest rates with shadow contracts to get the resources or assets)
Largely because the only place the IMF can get your money is from you.
Currencies are public monopolies.
The problems always arise when a state starts issuing state backed liabilities in other denominations - as there is no way for a state to absolve itself of that debt without paying it back. It becomes a debtors prison.
It's not like you just choose to issue debt in foreign denomination cause it's fun.
That's for the private sector to sort out - largely because they can go bankrupt and wipe out the debt when things inevitably go wrong.
Imagine I wanted to loan your car company 100M to build out a factory because I believe in the product. I'm told that your company keeps all its reserves in bitcoin and its possible that even if the factory is successful that the loan wont be repaid if bitcoin falls.
I think if you are obsessed with bitcoin its easy to see this as conspiratorial, but the reality is no bank is going to loan a (company, person, country) money in cash if they are told the loan may default if bitcoin falls.
They needed the loan. The original thesis was taxes on crypto bros’ business and tourism would increase revenues while crypto-based lending would provide an alternative to the IMF. Neither panned out. This was a failure of Bitcoin to provide any of the international benefits of the dollar financial system.
this is a really ambiguous phrasing. Is bitcoin a "currency"? is el Salvador adopting bitcoin as a ___?____ a currency?
The bank would be pretty reckless not to stipulate these things.
IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies
Zeke Faux who wrote the book "Number Go Up", a George Plimpton-styled account which was released last year, went to El Salvador and tried to use crypto as currency.
https://www.wwno.org/2023-09-19/tales-from-the-world-of-cryp...
BECKER: ... But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year's Bitcoin conference with a lot of cheers from crypto enthusiasts about his government's use of Bitcoin.
Let's listen.
NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).
BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you find out there?
FAUX: ... And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it's the future, it's going to help the poor, they're all using Bitcoin. And the listeners are probably asking themselves, "What does this even mean, how does this make sense?" And it doesn't make sense. I got there, and one of the first places I went to was this little roadside store.
And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country's main currency is the dollar, and they didn't abandon that. But they're supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.
And the clerk gave it to me, so I'm holding the water. And then in my terrible gringo Spanish, I said, "Puedo pagar con Bitcoin, por favor?" And the clerk just said, "Basura!" Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don't want to use your Bitcoin.
And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.
They're very slow on there and people complained. "Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?" So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I became one of."
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.
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.
If you accept that BTC is a reasonable investment, but not a great medium of exchange then what is happening makes sense.
I am not saying that a decentralized token couldn't be a good medium of exchange -- honestly I don't know. But so far BTC is not that.
The currency itself can be used independently of its base-layer network, which is intentionally slow and costly (functioning primarily as a settlement layer). This separation is enabled by off-chain or layer 2 systems, such as the Lightning Network or custodial platforms. These solutions retain Bitcoin's monetary benefits - like a predictable money supply, off/on ramping through the base layer - while enabling fast, cheap transactions. The tradeoff is that you must trust an intermediary, but this mirrors the same compromise inherent to digital USD payment systems (Venmo, credit cards, PayPal, etc.).
In fact, USD lacks a true "base layer" altogether. The closest equivalent would be the Federal Reserve Bank’s ledger, but accounts there are restricted to large financial institutions, not individuals.
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.). These third parties abstract away the base layer and offer fast, cheap, and reversible transactions.
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.
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).
if there is, it’s poorly advertised
does seem like a huge swing and a miss for lightning to only have unstable value units of account going over it
the market clearly wants something else, and has that, on other networks at large volumes
I’m curious where the communities about this are, or are nowadays
So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.
When you take out a mortgage on a house its partly because someone took cash they received and deposited it in the bank. If they kept the cash the bank would not have reserves to loan.
Value oscillating against some golden reference by a factor of 4? Many will likely take that if it means avoiding their own government shenanigans. I saw a currency reform which turned savings to zero. My parents lived through two such devaluations. As did my grandparents. Buying dollars or another hard currency, if found, meant prison. In this setup a permissionless, anonymous store of value, warts and all, is very valuable.
I'll deny it.
Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.
For money to work as a convenient way for people or companies to settle transactions, long-term inflation or deflation does not matter. If A wants cement and has mangoes, B wants pants and has mangoes and C wants mangoes and can do tooth fillings they just need something universally accepted to convert what they have into. And, a bit later, buy what they want. Most money satisfy this, but usually people want more features.
For money to also be a store of value it should maintain its purchasing power. This allows an individual to, say, pay for an education of a child when the child grows up: I can save in today's money and be fairly confident that when the time comes to pay it will cover the (future) cost. This feature is what people tend to refer to as "digital gold" as gold generally maintains its purchasing power over very long times.
For money to enable governments to stimulate society in different ways, money should be deflationary. Easy long term store of value makes people less responsive to short-term government stimuli. Without deflationary money a government cannot print extra money when it overspends or if not enough players want to lend to that government.
The last two tend to cause eternal strife between individualists (who want small government that does not do things people did not explicitly ask for) and progressivists (who want to push the society along the path they see as the best one).
There are more features of money (highly recommend reading "Broken Money" by Lyn Alden)
Ergo, the exact reason it’s a horrible currency for the system.
It’s really just the infamous libertarian inability to consider the needs of the system as separate but still important and sometimes in tension with the desires of the individual.
It’s just a particularly goofy one because a deflationary currency very obviously cannot support an economy.
Bitcoin tried for 15-20 years to find a use case but now it’s just an asset class like gold and nothing else, it will never be more than that.
Satoshi’s paper assumed that transaction costs would make up for the exponentially declining subsidy, but that hasn’t really happened since it never lived up to his “digital cash” vision.
Tokenized stocks are coming this year.
The incentive design of Bitcoin assumed that it would be used as cash, so that transaction fees could take over as the main source of revenue for the miners that secure the network. As a “store of value”, it doesn’t generate enough transaction fees to secure the network.
But why is it necessary for it to survive? Like, I think even cryptocurrency true believers would acknowledge that there are better cryptocurrencies out there if you want a currency; bitcoin seems at this point of largely symbolic value.
That largely hasn’t happened; transaction fees have dropped as it became a store of value and moved less frequently (and increasingly moved off-chain in tradfi rails).
Alternatively, if transaction fees stay low, there might be very little incentive to secure the network with hash power and you could end up with fewer and fewer miners controlling the network and a 51% attack becomes quite feasible.
I'm really curious how this will play out over the next 100 years.
Lol, gold that can be teleported around the globe for fractions of a cent, yeah.. it sucks that bitcoin will never be more than that.
Right, so it's no longer legal tender.
https://www.merriam-webster.com/dictionary/legal%20tender
For instance, the euro is legal tender in the eurozone. I can pay a tax bill or a bank loan with 10cent coins, and technically they have to accept that (though note that some countries do have special rules around whether small change is legal tender). However, a merchant is not required to take my wheelbarrow full of 10cent coins in exchange for goods and services; no debt exists before the purchase.
El Salvador was forcing the merchant to take the wheelbarrow.
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.
I don't know if that is good or bad but I have heard smart economists argue both sides.
Sounds like the term "Failed Experiment" is the writer's assertion and not the government official position.
--https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...
Sounds pretty failed to me.
Presumably they require their loan to be repaid in fiat because of their internal charter. If Bitcoin adoption eventually removes El Salvador's ability to issue fiat, their loan can't be repaid.
Actually I can't think of any fiat currency that hasn't at least halved in value?
You can also offset the risks of sudden devaluation through matching assets and liabilities, trading derivatives and so on.
US dollars are also not legal tender outside the US, with a few exceptions (I think including both El Salvador and Ecuador.)
https://www.imf.org/en/Blogs/Articles/2021/07/26/blog-crypto...
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.
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 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.
Deflation will kill that. Your loan will cost more over time instead of less. The assumption with inflation is loans will follow it. With deflation and loans not following then people who bought into the system might be well off but those who are not yet in are worse. Same thing with inflation and loans not following as is happening now.
So I'd assume a small amount of predictable deflation would shrink an economy.
Anyone know more about this?
So how many IMF bailout loans must be dispersed, without condition of course, before this BTC economy will magically work?
The "massive risk" the IMF sees is that without central banks or even less influential central banks the IMF existence would be threatened.
Bitcoin's supply doesn't become inflationary or deflationary "structurally" based on the growth of x or y economies. The word inflation is used for both concepts but, structurally, Bitcoin will remain an inflationary system until around year 2140... then block subsidies are going to to stop, no new bitcoins are going to be emitted and then you (or more likely our descendants) can call Bitcoin a structurally deflationary money. Hence the use of the word disinflationary, it currently is in the process of becoming a deflationary system by progressively reducing the inflation of its own money supply (through "halvings" approx. every 4 years).
not taking loans from them…
The IMF (or its donor nations) aren’t forcing anyone to take loans from them. Countries do that because the IMF offers much cheaper rates they can get anywhere else and is willing to forgive those loans far more easily than any other entity.
In return it expects certain good governance changes that are stated upfront as conditions to receive the loans you could very well get from anywhere else in the world.
Don’t like what they consider good governance? Don’t take a loan from them. Go get in the private market or the variety of nations willing to lend at far more onerous terms.
For example, in Argentina (2001), President Fernando de la Rúa followed the IMF’s austerity policies despite mass protests. The economy collapsed, and he fled the country via helicopter. But the elites who benefited from privatization kept their wealth while everyday citizens suffered
The IMF is the pinnacle of western imperialism.
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.
> Salvadorans, with the exception of a few, never embraced Bukele’s initiative, who enjoys enormous popularity for his war against gangs, which dropped homicides to historic lows in El Salvador. A recent survey by the Central American University (UCA) revealed that 92% of Salvadorans did not use bitcoin in their transactions in 2024.
I would say this points to an actual failed experiment, if true.
In a place where people (who have on average very low incomes) were given $30 worth of bitcoin by their government just for signing up to a wallet app, so a very, very large proportion of the populous (compared to any other country on Earth) already had an app and wallet set up and ready to go. That's not a lot. That's a clear indication that the experiment simply didn't work.
I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.
I suspect that the trend would be impressive either way, you'd just lose the "safer than New Zealand" line.
Some people called Obama progressive and he definitely helped destroy Libya and Syria, ordered the extrajudicial execution of a US citizen under presidential immunity, droned poor brown people living on the other side of the planet, let Citi group pick his cabinet, etc. Nevertheless, the progressive things that Obama did do were still progressive.
Assad and Ghadaffi destroyed Syria and Lybia respectively being asshole dictators that caused revolutions and that attempted to stay in power by claiming over mountains of dead Syrians and Lybians. The west didn't interfere much in Syria so Assad was able to stay in power a while longer and kill many more of his own citizens. The west messed up the post revolution period but letting Gaddafi do what he wanted would have lead to a worse situation
Far less so now, because they refused to listen to the dogma preached from these experts and institutions (significantly coming from those associated with or funded by the US), about how they should run their country.
That's what the usa did to the entire south and middle America.
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.
(And that’s before we start dissecting the bribery and corruption of those who wield this power.)
Is your position that no innocent people were convicted of crimes before the reforms, or that innocent people do not get caught in the crimes that have been reduced so dramatically?
> How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society?
And how many young people are not killed or maimed or dragged into a life of crime indefinitely and without recourse in the alternative?
As I said, I acknowledge the issues with it, but no social policy is perfect and all social policy is a balance. You can't pull out "human rights" as a trump card to say Bukele's policies are bad or worse than before. Because you are confining and defining human rights in a very narrow specific way, and that does not account for many other rights of many other classes of people.
You can actually do the math for that. If the number of innocent people harmed by the gangs is more than the number of innocent people caught in the legal cross-fire then it is worth it.
> the action of deporting a foreigner from a country.
A citizen would obviously not be deported.
Tell me, when in history has the US sent its citizens to overseas prisons?
Second, it is not even clear that any US citizens will be shipped off. Bukele is just offering it and Trump said he isn't sure if it will happen.
Third, US citizens are able to serve their sentence in a foreign country if they so choose since 1977 [1]. Obviously this situation is not the same, but the US does send its citizens to foreign prisons sometimes.
[1] https://travel.state.gov/content/travel/en/legal/travel-lega...
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.
Hardly. What made Bukele's presidency impressive is that many other governments had tried the "mano dura" approach before, but he was the first one to make it work, and nobody is sure why. There's evidence even he didn't expect it to work that well.
How are tough on crime policies "against the conservative status quo"?
Firstly, they are adamant that "tough on crime" policies do not work, they were adamant that Buekele's reforms would not work. Now sure there are probably ways they may fail and situations where they don't apply, it has now been proven by counter-example that they are wrong. They still refuse to accept it.
They now address their little El Salvador embarrassment by claiming it has caused calamitous violations of "human rights". This is a sneaky tool they use to win a debate and end the conversation, but when you look behind the curtain, really they are the ones who defined what human rights are and what is important for society, and they make no attempt to really weigh any of the multitide of very complicated issues as a whole. They just pick some human rights and some classes of people and say they were violated and that's the end of it. They would have the poor people of El Salvador live with gangs running rampant and murder rates hundreds of times higher than the rich areas of the wealthy countries they live in, and it would be worth it if only it could prevent one accused criminal having their human rights violated. It's just absolutely ludicrous, especially when you see the outcomes of these policies and they're still raging against Bukele for them and refusing to admit they don't have all the answers.
That is why they are conservative. Again, not conservative in their definitions, but conservative according to the dictionary. They hold to their views and work to maintain the status quo in terms of social and governance theories and practices.
Again I don't disagree with having strong individual rights against the justice system, and "tough on crime" policies sure can be pushed where they are not effective for political gain. But it's not black and white, it is many shades and countless inter-related moving parts. Very limited powers of police and very strong rights for accused in a justice system is a wonderful thing to have. In a society stricken by violence and crime and ruled by gangs and on the brink of collapse, it is not always possible to have without violating more rights of more people.
And if El Salvador continues long enough and keeps making progress reducing crime and breaking gangs and lifting people out of generational crime, they will actually eventually would likely to be in a much better position to implement stronger individual rights against the justice system.
What is actually important in a society is how they choose to be governed, their right to self-determination, including what rights they decide should be important and how those should be weighed and traded off among one another. Not some fixed, rigid decrees by an elitist ruling class of mostly foreigners with their lists of rights developed decades ago by and for different countries, missing many rights, and no real framework to make adjustments or make value judgements between conflicting rights, they are just used as a hammer to shut down debate that is awkward for their conservative and outdated views.
Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.
Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.
I'm glad El Salvadore is safer. I don't love how Bukele handled things. And I don't know that I'd necessarily say he made the wrong call either; the net effect may be overwhelmingly positive for the vast majority of El Salvadorians.
Still, I don't think leaving people to rot in incredibly inhumane jails, without proper course for appeal, or the possibility of rehabilitation is humane. His handling of the situation has certainly made it more difficult if not impossible to determine innocence, or just sentencing for those who may have had very little criminal involvement prior to the emergency mobilization of El Salvador's police and military forces.
And it's certainly created more corruption in the "official" system with regards to respect for El Salvadorian and/or international laws, as is common with dictatorships. Corruption which cements his dictatorship with an iron fist while reigning un-checked.
I'm not convinced this iron fist move was the only answer either, but can at least accept the possibility that it was the only appropriate response to extreme level of gang violence they were facing.
I'll take that as a "thank you" :)
> Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.
Yes I did, I did try to say that in the comment you replied to but on re-reading it could have been clearer and was probably a bit snarky.
> Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.
It can be that, but the previous government's treatment of the gang situation in El Salvadore be a flagrant violation of human rights of all the citizens who had been affected by crime and violence. The suffering endured by those people wasn't humane. That's the problem, right? I can see it's not a black and white situation, can you? Can you name a single "progressive" policy that has zero downsides, costs, unintended consequences, etc? No, on social scales and government policy, everything is a big mess of chaotic cause and effect and good and bad and statistical outcomes, so picking a narrow class of human rights for one class of people in a whole society and say "those are getting worse therefore it can't be progressive" is really reductionist and not even true because in the same way you can probably rule out anything being progressive.
I'm not going to respond to your points one by one because yet again I add the disclaimer that I think it is terrible things got so bad they came to such measures, and maybe not all measures were exactly right. But what is clear is that it is a bold and brave social reform that went against status quo and has been extraordinarily successful in restoring and defending human rights for many, and in many ways improving society for the better, for a huge majority of citizens. Safe to call it progressive, but really call it whatever you like I guess, but a flagrant violation of human rights I think lacks some understanding or nuance of the reality of the situation there.
You can care deeply about victims and not believe in a surveillance state or arresting people simply because they look a certain way. History has shown it’s a slippery slope that ends up hurting everyone.
> History has shown it’s a slippery slope that ends up hurting everyone.
You don't need to look far back into history when you can look at the real world right now. When things are so bad that they can't get worse, there's no point of arguing about a slippery slope.
b - I'm not sure what you think you're reading but that article points to the scourge of gangs and their impact on children. I only skimmed it but I couldn't see anything in that article about detaining children.
c - So?
d - Gang members in places like El Salvador victimise communities. They are a scourge. I will not accept the humanizing of them - they are parasites. I absolutely support Bukele's policies to rid the country of them. I hope he keeps going.
by no means am i excusing the violence that gang perpetuate, but i am unconvinced that enough people simply want to live the gangster lifestyle that gangs can sustain themselves outside situations of extreme poverty.
https://www.france24.com/en/live-news/20250128-no-way-out-gr...
If he was killing them directly in gas chambers instead of letting them rot in prison, the population would be as safe, if not safer, forever.
Would that still be "progressive" for you?
Would you have supported Jonathan Swift's "Modest Proposal" too, at the time? Or sterilizing poor people? I mean, those are perfectly logical suggestions that would work, wouldn't they?
> Would you have supported Jonathan Swift's "Modest Proposal" too, at the time? Or sterilizing poor people? I mean, those are perfectly logical suggestions that would work, wouldn't they?
You have erected a startling number of straw men in your response. I'll ignore them.
We should do things that both work and benefit society. We should not do things that don't work. Here's a short an non-exhaustive list of "progressive" things that don't work: restorative justice, tolerating crime, allowing the destruction of the commons by the mentally ill and addicted, allowing criminals to be free and wreck society due to legal technicalities, bureaucracy, and corruption.
And thus, as I wrote previously, the word "progressive" seems to have fully inverted. Things that enable or create progress are called regressive, while things that are actually regressive and destructure are called progressive.
I'm saying Bukele's policies aren't progressive. Furthermore, he doesn't consider them progressive. His allies in the Latin American ultra right wing don't consider them progressive. "Progressive" to them is an insult.
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 is permissionless, very liquid asset that the governments cannot dilute. For many people this is a very big deal. A significant part of the world population lives under regimes where the governments control the money flow, heavily dilute savings in the single local fiat currency and can confiscate savings under a guise of money reform.
While not nearly as bad, most democratic, developed countries dilute their fiat to the tune of 5-7% a year. Would I buy bitcoin if I have an easy access to a convenient currency with no (or at least significantly under the average GDP growth) debasement? Hell no! Otherwise, I will (together with gold, income-generating stocks, real estate, etc.) as an insurance against government spending run amok. My 2c.
At best it will work as long as few enough people are doing it that the government doesn't care.
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.
And IIRC it wasn't a "scam", it was a bug in a smart contract.
Presumably if quantum computers (or better DLP algorithms on classical computers) start breaking keys, that will become a priority.
So I think there's an excellent chance that even if the math is solved Bitcoins will retain their value. Perhaps even without many of them getting stolen in the process. This is a big difference from many other uses of cryptography; if someone breaks IDEA 20 years from now, they can decrypt your PGP messages from the 20th century, and there's nothing you can do now to prevent that.
It's not illegal to move money out of your investment accounts, it's just reported so that yes, you can have a tax liability.
I too, would like tax-free investments and funds.
Seriously, that's all I got.
What I think a lot of people don't realize is that the US government is not very interested in going after people who do tax evasion in the $5-50 m range. People like that can afford lawyers and representatives, it will take years, and never get any headlines. They love to go after people for $5-50k evasion because they just get paid.
We argued against the complexity of SegWit and Lightning Network.
I think greed and politics won rather than engineering or economics good sense - people didnt want cheaper transactions, it now costs around $15 USD per BTC transaction.
Despite the proliferation of alt-coins using essentially the same code-base, with shorter block-times and larger buffers.. and more programmability - ultimately proof-of-stake might be a better implementation of the block minting process, than proof-of-work.
The people who argued for increasing the block size were making a tradeoff between decentralization and "low" transaction fees. Increasing the block size makes the chain grow faster which causes several problems: the time to sync new blocks goes up, initial chain download time goes way up, and block verification takes more CPU.
The parameters were initially set so that anyone could run a full node for as many years as possible which is the most important part of the ecosystem by far. If you make it harder for the average person to run a node it doesn't matter how cheap the transactions are if ultimately a small group of people are capable of running it. You could argue that doubling or quadrupling the block size doesn't hurt decentralization, and maybe you're right, but that also doesn't move the needle much for transaction throughput either at least not enough to make a difference for adoption.
Bitcoin can and should be scaled in layers. The detractors are just impatient.
[1]: https://vitalik.eth.limo/general/2024/10/23/futures4.html
Checking now :
https://ycharts.com/indicators/bitcoin_average_transaction_f...
This says, afaict, the average BTC transaction cost today is $1:40 USD
The 5yr chart shows it spiking at $128 in April 2024.
If BTC transactions reliably cost 15c per transaction, it might make for a viable electronic money... but that is clearly not the case, so I think my point stands.
https://bitcoinfees.net/
As for “magically,” there’s nothing magic about its increase in value as it replaces legacy technology, chiefly gold as a store of value.
What is the current supply of gold and what will it be in 2050?
The only thing that separates BTC from all the derivative shitcoins is hype and stories we tell about it. Bitcoin is itself interchangeable with an infinite number of related algorithms/schemes.
Gold extraction definitely has its problems, but it's a fundamental element of the universe.
In 100 years, I know which one will definitely still hold value.
On a much smaller scale, your dollar goes up by 5% every year but you still use it everyday because all your monies are in dollars. If all your monies are in btc, you'd have to sell to buy things.
Then it was 100x more.
Now 10x more is the best people can dream of. The possibility of getting super rich from Bitcoin is now gone unless you're already rich to start with. Turning $100 into a million dollars made the whole world interested. Turning 100k into a million isn't anything interesting and it's out of reach of most normal people, and those who can throw 100k into something are already investing in other things with similar returns. As a normie, putting in $100 with the hopes of Bitcoin reaching a million would only get you $1000. That's not much different than a couple scratch off lottery tickets.
It'd be much smarter to find the new secret thing that costs $5 now and will net you a million dollars ten years down the road. There's loads of stuff out there that people aren't paying attention to yet. Crypto isn't one of those things.
Why do you need "diversity of assets to transact with"? Go to any store in almost any country and they usually accept a single currency. Maybe in some they take local + USD. You're arguing for something the market doesn't seem to care about outside of speculative trading for fiat gains.
And even if you really want stablecoins they've been added to bitcoin via the lightning network and taproot assets. Tether for example can be used via bitcoin [2]. There's a reason Bitcoin makes up well over 50% of the total crypto market.
----
1. https://cashu.space/
2. https://www.coindesk.com/business/2025/01/30/tether-brings-i...
Additionally BTC isn't "over 50% of the market", it's over 50% of the market capitalization, which is a huge difference. BTC doesn't have the raw TX speed to make up 50% of actual market activity.
In this regard, crypto currency is not really a currency that people can use for their daily lives without worry and risk from volatility
e: and i’m no crypto obsessive really, i don’t think it was usable even 3 years ago but it’s pretty handy now, can easily send $20 in usdc on base or use it to purchase carbon offsets or use it on election/sports betting or use it to purchase deepseek r1 credits…
in fact short of wiring i have not found any service allowing me to send more than that in a day and certainly not with instant deposit
gpay takes 1-5 days to appear in account, i can spend the money i transfer here immediately
The community needs to self police and remove this problem if they ever want me to give it a third chance. There are several other fundamental issues in crypto, so not sure this will be enough on its own to reach mainstream adoption
For example, I don't want my transaction history on a public ledger, encrypted or not
Proof of Stake and no ceiling to supply are important if you are going to hold the thing for decades which is a different issue.
But largely that's been abandoned for the "store of value"/"number go up" speculative use-case which is easily 99.99% of the point of Bitcoin today.
However, I find time and time again that HN crows is absolutely unaware of how useful crypto can be in everyday life, so I offer my perspective.
They even have their own tracker, https://bitcoin.gob.sv/
For example, about 1 hour ago they bought 1m in BTC: https://bitcoin.gob.sv/tx/83ddfe67485d322e9c017d8ba6aee53d8f...
The address is : 32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo
[1] https://finance.yahoo.com/news/el-salvador-changes-bitcoin-r... [2] https://www.msn.com/en-us/money/financial-regulation/el-salv...
At the end of the day they abandoned the policy because they believe it will help the economy to abandon it (indirectly via the loan). I certainly wouldn't call that a success.
What were Bukele's goals with his policy of adopting bitcoin?
somehow everyone forgets that wars don't make sense and shouldn't really be financeable... and yet they are.
BTC can burn orders of magnitude more energy if it makes financing wars just twice as hard as it is today...
This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
This is one of the reasons that dollar-dependent economies have a hard time managing fluctuations.
It might be different if wages grew at the same rate as inflation, but they rarely do.
The standard target rate of 2% inflation does not take into account the deflationary effects of ever increasing technology / efficiency. So in reality, it's much higher then the 2% stated figures.
> With a deflationary currency, the incentive is to put off purchases as long as possible as your currency will buy more tomorrow than it does today.
What I hear from this is that people think twice before making a purchase, that is, they use their money more wisely. Seems like a bonus to me. Regardless of this, people will still need to buy things to conduct their lives, and there will still be people who are reckless with their money. So this seems like a non-issue.
> Deflation ends up being economically disastrous, as Japan’s battles with deflation over most of the twenty-first century have shown.
Any other example or it's only Japan? Because honestly it's not the country one associates with economic disaster, on the contrary, they were for quite a long time the 2nd world's economy, and if you visit it's a lovely place all around.
On the other hand, the list of countries that have had to contend with inflation is much much longer, as far as I can tell, and the problems stemming from inflationary currencies orders of magnitude more severe. If you put both prospects on a balance and weighing the evidence, deflation seems like a much better problem to have.
> This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
It has had little traction as a currency because it's unusable. You have to pay exorbitant fees to move it around and it takes way too long to work for every day transactions. Not to mention another host of problems, which other cryptocurrencies fix, by the way.
I'll nibble at the bait regardless:
Your comment of spending patterns is missing the forest for the trees. A modern, capitalist infused, economy works like a big cardiovascular system, or like an engine. That is to say, it's happiest when blood/oil is pumping through it. Therefore, you can compare to a certain extent the different states an economy can be in to its cardiovascular counterpart.
When an economy is struggling with deflation, you can imagine this as the heart pumping slowly. Slower pumps mean less blood going everywhere, means less performance. The less money circulates, the smaller its multiplying effect, the harder it is for suppliers to stay afloat, prices fall.
The opposite of this would be someone walking around with their heart rate through the roof nonstop. Too high, too much blood, too much pressure, dangerous. When money is flowing too quickly through an economy, its effects are magnified, and in a sense, you can think of it as harder for the consumer now, prices rise.
To aid the visualization, step into the shoes of a dollar for a moment, and imagine its journey in these different scenarios. It comes into someone's account from a paycheck, it stays for a while, goes to the candy store, sits there, goes to a supplier of the candy store, etc. Now multiply that journey countless times. See if you can spot the effect that more or less tendency to spend can have on these journeys.
So you see now, it's a pendulum. A delicate balance that must be struck. And there you have the job of the federal reserve and other central banks like it. They are in charge of modulating the accelerator of an economy and making sure that we're neither going too fast nor too slow. Right in the middle is where you get the most stable and efficient economies.
Bitcoin is unsuitable as a currency because it belongs to the same family as other tried and failed systems of _hard currency_, think gold, but now its worse. Due to its decentralized nature, it will never (by design) be controlled by a central bank. And so it will be at the whim of all the things fixed supply currencies are at the whim of. If you want examples of why this is bad, just take a look at basically anything before 1970's.
If you want a more thought out and perhaps entertaining debrief on this, I encourage you to check out this blog post by Matt Ranger:
https://singlelunch.com/2020/10/21/badeconomics-putting-400m...
I'm not intending to bait. Really I find the arguments against deflation insufficient. I get the picture that some inflation is good to keep the system running smoothly, however, the description of why inflation is desirable is lacking when explaining why deflation is necessarily bad, all things considered. I don't see a first principles argument against deflation, neither do I see a thorough comparative analysis between deflationary and inflationary economies. The only example given is Japan, which, as I said before, doesn't seem to have fared too badly. Moreover, the list of countries that have had problems with runaway inflation is very long. Inflation is a well established economic malaise. In fact, it is almost a maxim that all states are destined to at some point or another, debase their currency.
I think one has to weigh the economic arguments, whatever they may be, against the fact that humanity has never had sound money that can't be debased, and that isn't at the whims of some elite, however well intentioned and wise they may be -- which more often than not, they aren't.
Cryptocurrencies will continue being developed, the flaws will be solved, and the wrinkles ironed. We will have something that may work as sound money. And I say we let it compete fairly against fiat money, put our theories to the test, and see what kind of money if preferred by the people. If it turns out that sound money is finally achieved, I'm sure it'll be a momentous time in human history, and could very well become a new human right: the right to own and use sound money.
No other currencies without a state to promote it, and basically force it on their citizens, made it through yet Bitcoin did it.
More and more people are buying it, people are valuing it more and more, close to 100k$ now when it worth nothing a few years ago.
That's quite a success to me and and I believe part of it's success is because Bitcoin is by nature deflationary.
No one would willingly buy an inflationary currency, the only reason they success is because they are forced by gouvernement.
Bitcoin (or any other commodity/crypto) being valued well and being a "good" investment is completely detached from its function as a national currency. One does not (and should not) imply the other.
You need something to exchange things with (currency), and you need things to exchange. The currency is the medium of exchange, the journey, not the destination.
> You should use a money that loses value because its purpose is as a medium of exchange and not a store of value. You need to have something in your life that you can reliably use to acquire things you need and exchange them for things you have (new laptop for hours worked). You want a hot potato, you get it, you pass it along to someone else. If you don't want to spend it on material goods and want to save, that's fine, you can instead "buy" a savings, or "buy" an index fund. You're still passing the hot potato around, but it's giving you different things.
Now think of this on a large scale. You want hot potatoes going around. That means they'll be moving at a reasonably fast pace, changing hands and going places. You need your money to move so that it reaches all parts and doesn't stagnate places. That's not to say that savings, like the type you'd do at a bank, are bad for the economy, but that is to say that if everyone were to save a bunch of money under a mattress, that would be bad. That would mean that a solid chunk of currency in the economy is frozen and effectively useless to everyone but its owner until they decide to take it out and spend it.
https://en.wikipedia.org/wiki/Deflation#Historical_examples should give you some other examples of situations in which economies have been in deflation.
Again, controlled small inflation is the goal. Yes, this can, in the wrong hands, turn into too much inflation, but this is the same the other way too. These are not static states; they're highly dynamic systems that can spin out of control in either direction. And all things considered, it's easier to deal with high inflation than it is to deal with high deflation. It's playing with fire, but there is no other way, and if you find such a way, I and many others would be rather interested in hearing it.
Something to consider: economists' study, learn theory, and perform controlled experiments so that we can learn about these things. These are not unknowable truths of the economy that we can only roll the die and see what happens. And something that is often not considered by hard currency supporters is the results if things turn sour.
After all, you can have years upon years of nice solid performance of an economy built on whatever, for any sort of reasons, but the true assessment of that whatever as a means to serve as the currency for a nation, is how it performs under stress. Our modern fiat currencies and the ways we control them have been built on the ruins of previous methods and currencies. These ruins are costly and violent to a nations progress. This is not something you want to "wait and see". So instead of just thinking about the functions of bitcoin "during the day", while things are normal and people are behaving well, think also about that same currency at night. Think about what may happen if some exogenous shock hits the economy (not related to the currency itself), think oil embargo in the 70s. How will your economy deal with that? What are the tools at the government's disposal to get the economy repaired and back on track? Do they have any recourse? Do they have to just wait it out? This is beyond human lives at risk, this is human progress, human time.
Therefore, it's not about what people like, it's about what keeps the whole system as successful as possible for as long as possible. Economic systems are complex and unintuitive beasts, this is not an area that benefits from great civilian oversight and control. If your system works amazing for 20 years but then has a horrendous crash that wipes 10 years off of your progress, how good was it really?
I agree with your arguments about why some inflation is desired, it incentivizes people into spending their money, this makes it so that people engage in trade more often and, when voluntarily made on the basis of sound information, trade is beneficial to both parties. The net positive done in the world increases, at the small cost of some inflation, that is, the loss of some of your net worth if you rest on your laurels keeping your cash.
All this being said, for me there is a great asymmetry in the demonstrable harm done by inflation vs deflation. The list of people who have suffered the consequences of irresponsible governments is just too large, with you and me being at risk of suffering from them during our lifetime. The temptation is just too large to mishandle currency. While deflation is something that we will very hardly experience in our lifetime, barring some massive technological breakthrough that changes the means of production forever.
Moreover, there's no reason to believe that an economy can't work with deflation. Believe me, it CAN work with extreme inflation where calculation into the future is made very hard, it can surely work with deflation. Yes, some psychological aspects will be new, like people holding off purchases because their money will be worth more in the future, but that will not necessarily translate into a wide-scale halt in purchases. People will still want things more right now than the equivalent of their increasingly valuable currency. This new modality will introduce problems, no doubt, but these will be overcome by new adaptations. There is simply not enough evidence to ensure that a system like this can't work.
I agree that one ought to proceed with care in these matters because a system that seems to work in the beginning might fail catastrophically later on. However, as any change, one ought to weigh the negative risks against the benefits. With the promise of cryptocurrency we're entering a new world. One in which each individual will be more empowered and global commerce will be facilitated. The complexity of the world shows us that no matter how much optimism or pessimism you bake into your decisions, for some things, you will just never know for sure.
Lastly, another problem with inflation is that it favors the elites. Possibly, this is one of the biggest reasons why it's so widely disseminated. Those close to the central banks, those that understand about finance, those that seek power for themselves at the expense of others, among others. This kind of centralization of power motivates individuals at the top to sell the idea to the masses as if it's for their own good, and sometimes it is, but you can't deny that the incentives do not point to this being something that overwhelmingly favors the disenfranchised and the ignorant.
I really want this in my currency.
Bitcoin might be a Ponzi scheme, but fiat currencies are even more so.
A deflationary currency that you own a disproportionate amount of is great. For you.
If you own a disproportionate amount of INflationary currency, you are, you know, still a rich person who can afford investments, investment consultants, tax optimization experts, have preferential treatment from banks and personal relations with the government employees, so you're good anyway.
Whereas if you're poor, you don't even have a chance to save enough to invest a little bit, because whatever you save today becomes useless paper tomorrow, so you're forced to spend, thus enriching service and goods providers, that is the rich.
In a deflationary currency you actually have a chance to save some money for an investment, plan for tomorrow, or even next year, and not spend everything today while money still have today's value.
Legal tender 1: -15%
Legal tender 2: +115%
Guess which one has been deemed a "Failed experiment".
What do you mean, why should my money NOT go up in value?
https://singlelunch.com/2020/10/21/badeconomics-putting-400m...
But to answer your question more directly, you should use a money that loses value because its purpose is as a medium of exchange and not a store of value. You need to have something in your life that you can reliably use to acquire things you need and exchange them for things you have (new laptop for hours worked). You want a hot potato, you get it, you pass it along to someone else. If you don't want to spend it on material goods and want to save, that's fine, you can instead "buy" a savings, or "buy" an index fund. You're still passing the hot potato around, but its giving you different things.
Now imagine you don't have a hot potato, you work and you get paid in... idk, something you don't want to get rid of. You struggle with letting go with your currency and so it costs you when you're trying to do exchanges. Similarly, if you're a shop owner or something, people are more hesitant to give you their currency as well. Things get slower, and darker, like a mechanical flashlight that you're spinning slower and slower.
That's an odd definition of money. The ancient Greeks already thought that money is medium of exchange AND a store of value, and throughout history people have preferred money that held its value. It's also circular reasoning. A medium of exchange should lose value, so you should use money that loses value.
> you can instead "buy" a savings, or "buy" an index fund
So money that loses value creates inefficiencies in the economy, because people have to waste time worrying about preserving their wealth, investing, etc.
> You struggle with letting go with your currency
I still need to eat, to live somewhere, I want to experience things, a money that increases in value does not destroy my desire to consume.
I'm also not sure that's a circular reasoning as I provide the reasons why you want a medium of exchange that loses value...
Hmmm... sure, I suppose you can look at it that way. In an inflationary-esque economy, you worry about saving your wealth, so you create instruments to do so: fractional reserve banking, mutual funds, etc. This is a problem with many solutions. On the other hand, in a deflationary-esque economy, you worry about spending your wealth, and perhaps more importantly, getting everyone around you to spend it as well. That problem has less solutions.
I said you struggle, you don't hold on forever, you struggle letting go. As in you eventually do let go, but not as quickly as if it had been depreciating. It functions as a brake on consumption, not a full stop. It slows things down. Slow is not good. Things start to go down when things slow.
Do you see the absurdity?
I sincerely don't know anything about monetary policy, but I can't imagine that sort of volatility in the value of your currency is considered a good thing.
The point of legal tender is that it reduces in value slowly over time, so you don't just hoard it under your bed. If someone paid me in BTC, I wouldn't spend it, I would hang on to it. That's not how currency works. Currency is the thing you want to spend, not hand on to.
and they both can share the same unit of account.
The Unadulterated Gold Standard articles have a more detailed discussion of this.
Well the point of money is to use it at some point, your theory is right if people were to live for the infinity but we don't so at some point you will spend all your hard earned Bitcoin because you just don't want to die rich but live rich.
That's the basic reason why all this nonsense about how bad having an deflationary economy is crap. People spend at some point their money, they don't hold on to it for ever.
At some point a balance between reward (money taking more value) and loss (time spent starving, not benefiting from your assets) is reached.
Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender."
https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...
https://x.com/monicataher/status/1884971499129610322
This makes as much sense as saying that Walmart has no obligation to accept Visa cards anymore, but that they're still a "valid method of payment at Walmart" -- except of course that "Legal Tender" has an explicit legal definition (apparently even in El Salvador).
This sounds like a really badly written piece of legislation. Perhaps there are shady dealings going on where someone powerful stands to lose a lot of money (or BTC) triggered by "if it ceases to be Legal Tender", but also apparently pressure was too great to abolish that legal tender status in practice, so this ridiculously-written law was passed to attempt to have it both ways.
Edit to add a quote from your preferred link:
“Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts.”
If I can't pay my taxes with a token of economic exchange, and people aren't required to accept my tokens of economic exchange, the only remaining sense I can make of it being “legal tender” is that it is not illegal to use it, but that's not what “legal tender” means.
From day one, I knew it wasn’t going to work.
That’s when I flew back to Miami, went back to the drawing board, and stopped being a Bitcoin maxi.
https://apnews.com/article/bitcoin-elsalvador-bukele-musk-tr...
It even seems that the above is a very minor change that in no way changes the outcome here. El Salvador did well and looks to continue to do well with its bitcoin policies.
Among all the crypto shills I know I'm probably the only one who has used it for trade (0.25ish Bitcoins for a computer on caseking.de in late 2017 and few goodies on local bitcoin in the same year).
It's not just expensive, it's difficult, slow, error-prone and offers 0 convenience over standard means of payments.
I've been using LN regularly for over a year. It works fine and it's extremely cheap.
this should all be added to that 3% card fees.
There are cryptocurrencies that follow the original idea but they're not as popular because they haven't increased in proce as much as Bitcoin.
Don't get me wrong, satoshi is a genius, but there are severe tradeoffs required to get the properties bitcoin wants.
Right now they are at around 0.15$. That's too much IMO to go buy a 1$ coffee with bitcoin, but it would also be 0.15$ if you were buying a 2000$ macbook, a 60000$ car or a 2M$ house.
Technically cryptocurrencies were meant to be held and exchanged directly, without an exchange.
Of course that isn’t convenient for non-enthusiasts…
How fortunate we are that crypto exchanges, run by private companies with little government regulation, operate out of the goodness of their heart /s…
https://github.com/theborakompanioni/bitcoin-spring-boot-sta...
Block settling time: If a transaction isn't complete until 1 (or n) blocks have been committed, and mining a block takes meaningful time, then this places significant constraints on spending.
If I go to the store, and buy something with bitcoin, but it takes 20 minutes for the next block to be mined, does the store need to hold the goods in escrow until the transaction clears leaving me stuck waiting for 20 minutes? There's also no guarantee that my transaction ends up in the next block being mined, so I may need to wait an indeterminate amount of time before I can walk out with my paper towels - horrible UX.
Lack of physical cash: if the power is out, how do we do business?
Tension between wallet security and convenience of spend.
https://restofworld.org/2022/el-salvador-chivo-bitcoin-walle...
So I wouldn't call it a "failed experiment" per se - more like a publicity stunt that has achieved publicity.
There were maybe a half a dozen other networks that might have made a more plausible and interesting experiment in testing crypto as a day to day currency.
I hope they can recover from this failed experiment.
El Salvador to scale back Bitcoin dreams to seal $1.3B IMF deal
https://news.ycombinator.com/item?id=42372064
Even when the entire world started selling off their gold to the US in the 30s and 40s it became obvious by the 70s that there wasn’t enough gold mining capacity on earth to sustain a global asset-backed currency.
You might think about the long game where no more bitcoin is issued and only transaction fees are awarded to the miners. How much energy will bitcoin consume then? There will be an equilibrium somewhere between energy prices and transaction fees.
I'm not even saying we should abolish fiat currency, or that the USD has to be fully backed by a hard asset. Individuals will hold whatever asset/currency/whatever they think will be the best choice for them.
Although I don't think I agree. Wouldn't a currency shortage be another way to say deflation? If your economy is producing more value than your currency represents, then your currency is more valuable.
I have also heard people say deflationary currencies inevitably lead to a catastrophic spiral where liquidity dries up because no one wants to spend (or loan) today what can be more valuable tomorrow. There's even a page on the Bitcoin wiki about it that has been there since 2010.
Also, a quick google brings me to the "Price revolution" page on Wikipedia (https://en.wikipedia.org/wiki/Price_revolution) where it says: "Generally it is thought that this high inflation was caused by the large influx of gold and silver from the Spanish treasure fleet from the New World; including Mexico, Peru, Bolivia and the rest of the Spanish Empire."
In the end... I don't really know. I appreciate you sharing your thoughts.
First, if your money supply is the actual asset (and not just backed by it) then it’s even worse, since fluctuations in overall supply of that asset can cause very large valuation changes of the money you own. E.g. if we find a silver deposit 4x bigger than all the silver we already have, then suddenly all the coins people are carrying around are worth 1/5 their previous value. So it makes the currency unattractive to hold. On the other hand, if you run out of coins then as your economy or even just population grows then everything has to get cheaper because there’s only the same amount of coins to buy more stuff. And that encourages hoarding. These two things together make for financial disaster because nothing can really be relied on. And, this wasn’t as much of a problem before countries like the UK industrialized, which led to population explosions across the major powers.
Then again after WW2, when globalized markets became a thing, we saw another wave of industrialization and accompanying population growth, to the point that even asset-backed paper currency became problematic. There’s just not enough gold on the planet to back every other economic output. There’s only about 400 million pounds of the stuff worldwide. Assuming you could even get ahold of it all, you could only use it to back about $200 billion. Between 1950 and 1971 global trade expanded by a trillion dollars. And the global population nearly doubled. And we couldn’t just say “gold is worth more now”. There were treaties in place that defined the price of gold as $35 per ounce (which led to countries like France to try and destabilize our currency by buying up a bunch of our gold, but that’s another story).
But in a fiat system by adopting the currency you add your economic output to the overall system and your currency stability is now tied up in that economic output, so—your output goes down, your people’s belief in your ability to pay also goes down. This works super well in a rapidly-growing economy. There’s always more! More money-printing, more economic output, more debt… but the problem with this is—what happens in a world where things stop growing all the time? We have a few small examples and they aren’t pretty (Greece, COVID, and coming soon—China).
https://singlelunch.com/2020/10/21/badeconomics-putting-400m...
https://singlelunch.com/2023/09/13/the-bad-economics-of-wtfh...
To me, Bitcoin seems way more like an asset class, rather than a currency. (Despite the name which is a HUGE misnomer for the average layperson.)
Nobody invested in Bitcoin believes you should be ordering pizzas or using it as an actual currency. Bitcoin is a long-term play.
You can't make a currency out of something that's fluctuating by more than 10,000 USD in a 24-hour period.
I don't know much about cryptocurrencies but there seems to be a scaling issue, last thing I read it can only handle 7 transactions/s, is that still valid?
If so, then how would this scale to a country-wide payment system?
Seriously though, the reason is that they can do digital currency without crypto just fine.
For example there are many popular payment operators in Africa who provide money transfers and micro-payments on phones. M-PESA launched in 2007 and has tens of millions of users:
https://en.wikipedia.org/wiki/M-Pesa
These successes don’t usually get reported because they lack the exciting novelty of crypto, even though they are much more popular and usable. They are actual free market solutions, not coin casinos built around libertarian dogma. And for that reason lots of people don’t want to know.
The IMF is afraid of Bitcoin because it threatens the Dollar.
The IMF bribes El Salvador to reduce their support for Bitcoin.
El Salvador uses the bribe to buy more Bitcoin.
If Bitcoin catches on around the world and the IMF is fighting it by throwing money at it, that could lead to an accelerated adoption curve.
Therefore during 2024 people having or obtaining it tend to keep it instead of spending it. Is it surprising?
The idea behind BTC is very valid, but they can be more like the old ECU or CFA/CFP not money you normally use for day to day stuff.
Surely, if a government wants the people in the country to use a novel cryptocurrency, it has a lot of levers of control which some distributed libertarian minded community simply doesn't.
Any new thing needs to be better than the current thing at least in one domain, if it wants to grow users. Fiat currencies work so well, that the only niches cryptocurrencies can find is crimes really, avoiding financial sanctions, etc.
Like China for example bans their citizens to trade the chinese currency for foreign currency (above small limits). Then buying bitcoin domestically makes sense if they don't trust the chinese government to keep their own currency valuable.
Of course, all the exchanges operating in countries where there is reasonable laws require KYC to be in place. Cryptocurrencies are also in many ways more trackable than non-crypto currencies. So for crime it makes no real sense to use most crypto currencies.
For instance, my native country, in an effort to digitize the economy has passed a law that if you pay digitally or with a card at a restaurant you pay only 5% sales tax instead of 16% if you pay via cash. Some government wanting to encourage the adoption of a cryptocurrency can take similar measures. Governments have options that Vitalik Buterin does not.
Money: Whence It Came, Where It Went. John Kenneth Galbraith. (1975)
He had a very interesting life.
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 probably fall into severe errors which would be bread and butter for "bad economics" reddit groups but truly, I can't see how this wasn't forseen and expected. It was about WHEN, not IF.
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.
In any event, you could still make the case that prior to this bitcoin experiment, the people and economy of El Salvador still were benefiting from a human hand on the monetary tiller, it's just it was that of the US Fed rather than their own officials (elected or otherwise).
Still holds its value though, the economy does not care if people understand why the price signals are so.
The reality is, Bitcoin and similar, are not being used to actually purchase things. Not at any notable percentage. You're "best bet" is to horde it, and that doesn't make a good currency.
But most of the comments are about how stable currency and stores of wealth are actually bad! It kind of sounds like we think bitcoin is working.
If USD is inflating and Gold is staying still, is gold “deflating”?
but then starved to death while hodling?
I don't personally believe this will ever happen. BTC has too much legacy cruft. The "digital gold" narrative won out. Day-to-day transactions will happen in a newer, perhaps not invented yet crypto.
Why would anyone sell? Well at some point in your life you want to use the money to accomplish your life goals
This is time value of money. If I wait 20 years instead of buying a house, I can have more money. But that’s 20 years of my life I didn’t live in the house I wanted.
I could invest more in S&P and not go on vacation, but then I won’t have as much time to go on vacations.
Goods and services now can be more valuable than money later, and that’s why people sell. And that’s why deflationary currency is fine.
If you’re asking if people would not use their deflating currency to buy lattes and sneakers, I disagree. People like sneakers and lattes more than money. They prove this everyday by buying them instead of s&p.
There is an issue of the cost of a transaction - which nis bad for btc and s&p. Nobody wants a tax form for buying a pizza. But the regulatory environment creating high selling costs is orthogonal to the deflationary property.
The argument simply is that exchange should be frictionless and deflationary currency will slow the velocity of money. I guess you agree this will lead to reduced prosperity and economic activity, though you call it frivolous purchases. Your comment about preferences doesn’t play into it; this is about mechanics of exchange, and a precious asset is an inefficient medium for commerce which would lead to reduced economic activity because not only do you have to factor in the opportunity cost of buying a good or buying some other good (sneakers or s&p), now you also have hodling, zero economic activity, as a 3rd option with its own expected return and opportunity cost to forgo. When I buy sneakers, the s&p 500, or btc, my dollars don’t disappear. A counterparty receives them and they stay in the economy. If you pay me in btc and I just hold it, then that money effectively does disappear from the economy.
And I’m not even mentioning all the macro issues of not being able to provide liquidity in the form of new capital in times of crisis.
I’m advocating for stable currency. Not bitcoin.
> you agree this will lead to reduced prosperity
I agree that it will reduce the velocity of money and maybe “GDP”. But not prosperity, individuals being able to save wealth into the future is a better life outcome than more goods changing hands.
> and a precious asset is an inefficient medium for commerce
You are conflating liquidity with deflation. To be a currency it has to be liquid, we agree. We also agree btc is not as liquid as cash. But deflation or stability is orthogonal from liquidity.
> now you also have hodling, zero economic activity,
Already addressed. People want money to buy goods.
> my dollars don’t disappear.
The value isn’t lost in the exchange but it’s lost everyday due to inflation. And by “lost” I mean transferred to government projects.
> that money effectively does disappear from the economy.
No it merely is saved for a future consumption date. If we average consumption needs of participants in the economy there is no reason to expect a monotonic hoarding effect. That would mean consumers are not satisfying their desires for goods.
Here is one last framing. The economy is not money, it’s goods and services. Money is just a tool for claiming them. So what does an inflationary currency do to help the economy? Does it cause more people to get out of bed and create new goods and services? No. It just transfers claims to resources to someone else.
I’m not; you have a limited view of what inefficiency means. The currency can be liquid and still inefficient for exchange due to other kinds of overhead such as opportunity cost of spending the currency itself.
The economy is not money but a frictionless (opportunity cost wise NOT liquidity wise as you keep trying to divert to) currency is better for facilitating exchange and access to goods and services.
I think a perfectly stable currency could be OK too but that would require incredible management on the monetary side to maintain that equilibrium. And absent being able to hit that bullseye it’s been proven, as much as things like this can be, that a stable little bit of inflation with a fiat currency is much stabler and leads to more prosperity than a currency bound by finite resources external to the economy.
Isn’t it enough that you can buy gold or whatever or bitcoin with your depreciating dollars? Why the fixation on it being a currency?
A true economy of low friction btc transactions for pizza has never existed at the scale banks do pay wave. Its hypothetical frictionless, not actual. I'm willing to bet even legalised state coins will be tracked, frictive and taxed.
You lost me at stable currency. BTC is a speculative asset. Gold is a speculative asset. Neither are stable currencies.
If you'd like to speculate and INVEST in BTC, go ahead. But I'm quite frankly tired of people claiming it to be a currency.
You have little assurance that the buying power of $10 today will be the buying power of $10 tomorrow. If the tariffs had gone through as initially advertised, that would certainly not have been the case.
So there's an implicit question there which apparently you and everyone else missed.
Remember that guy who spent 100BTC on a pizza? It’s a funny story but that’s why nobody uses Bitcoin for normal transactions.
Hint: cause and effect. You did miss the point and still do probably.
Oh I'm sorry, that was your shtick. Apologies!
Also, I'm not a crypto person, I made some gains and sold a long time ago. I just have to laugh that you think one pointing out that an argument is weak makes one a part of the opposite tribe.
I didn't even specify if I thought you were pro or anti crypto - I just find that most conversations around crypto are dominated by statements of "the other side of this just doesn't understand basic facts like I do" instead of actually stating what the facts are and how they apply to the situation that would help someone learn what's being discussed.
I may very well be the stupid one here, and you may be quite a bit smarter than me, but I don't know because I still don't know the point you're hinting at making.
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 or subsidized and 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.
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.
The buildings that do exist are ~50 stories even though that's not optimal because of the typhoon situation. So constructive cost is high because government does not release enough land for development.
The rents are high because someone wants it that way. It's not a land scarcity problem IMO.
Also the government and the upcoming merge with China is strange in itself.
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.
>The Kowloon Walled City was exempt and remained under the control of Qing China.
https://www.thecollector.com/kowloon-walled-city-lawlessness...
https://en.wikipedia.org/wiki/999-year_lease https://en.wikipedia.org/wiki/999-year_leases_in_Hong_Kong#V...
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.
I contrast that to places like the USA and Canada that have huge amounts of area but policies that encourage inefficient land usage.
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.
Reminds me of the old macro economist joke: There are 4 types of economies, developed economy, developing economy, Japan, and Argentina. Maybe HK should be added to that joke...
These are well-known historical facts.
Nobody starved to death in "famines" like the so-called Lancashire Cotton Famine. By contrast, in the Finnish famine starting the next year, almost 10% of the population of Finland died. As it turns out, that was the last famine in Finland because it became capitalist over the following decades.
There were no famines in the USSR from 1947–1991, but there was a variety of considerations such as monarchy, civil war, 2 world wars, and anti-communist sanctions from the 1890-1947 period, so if anything, it appears that the evidence would imply communism ended the famines, not caused them.
https://www.hawaii.edu/powerkills/COM.ART.HTM has more details, and https://en.wikipedia.org/wiki/Category:20th-century_famines lists some other examples, along with the odd non-communist famine. But none in liberal capitalist economies.
England was a capitalistic economy in the 1850s, no?
That doesn't sound like a soverign wealth fund. Foreign currency reserves are not the same thing as a soverign weath fund.
> 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_...
The exchange fund also (and somewhat controversially) runs additional portfolios (with foreign shares and bonds, and private equity, real estate etc.) in the manner of a sovereign wealth fund.
That's why anyone can afford to live there. Actual property leases are incredibly expensive - in the 10s of millions of HKD.
Hong Kong functions as a free-trade market by socializing large parts of its basic economy.
Trump Calls for Wealth Fund in Executive Order https://www.nytimes.com/2025/02/03/us/politics/sovereign-wea...
Not in my lifetime
Were you alive in the mid to late 90s? A string of balanced budgets and surpluses. There are new problems and no dot com bubble right now but most Americans were alive the last time we had balanced budgets. It is quite possible.
It was possible. That’s not the same as saying it is still possible at this debt level with the massive shortfalls in social security and other entitlements.
I do not think it’s possible without also seriously eroding the debt burden through sustained higher inflation. That horse has left the barn.
When Bitcoin, a currency with a measly transaction throughput of 4 transactions per second max and which consumes more electricity than all of Argentina will be worth $1 billion per coin and every rich person around us will be a complete imbecile and every intelligent person will be broke, people will still not comprehend that the fiat system itself is the scam! Einstein was right, human stupidity is infinite.
Bitcoin has been growing from strength to strength for almost 15 years now and worth almost 2 trillion market cap... Even if you think it's a bubble, then what's to stop everything else from being a bubble too? Nothing, that's what, it is a BUBBLE it is ALL a bubble and nothing but a bubble and a scam.
Consider a system which can support a 2 trillion dollar scam for 15 years straight and ruin an entire generation of young people... What do you call such a system? That's not a sound system. How can you trust such system? What kind of gullible fool you have to be to trust such an obvious scam system?
It's like the system found all the most gullible people on the planet then bribed them to the eyeballs, gave them access to global media platforms, so now they run everything and can force their delusions on everyone else.
Did you people even hear about the recent USAID scandal or did it bounce right off your thick skulls? It's all a scam; whether you realize it or not; you're a scammer, your spouse is a scammer, your mum is a scammer, your dog is a scammer. We're all dealing in counterfeit money.
I've been saying this over and over again for like 10 years straight. Every year what I'm saying is increasingly obvious, but people still don't get it. People's skulls have been getting thicker faster than the information could penetrate it.
Wat
But for the common mortal, cryptocurrencies are not about replacing anything, it's a highly volatile speculative playground, digital gangsters who want to make a quick buck
Nobody cares about the ideology
Bitcon as legal tender? lol
By the way all the comments in a thread like this will look like bots
Wasn’t El Salvador supposed to be Balaji’s first “Network State”? What happened to strike wallet and that whole crypto grifter crew?
They always seem to get out before the prices tumble.
Solving real problems is hard. Being distracted by snake oil salesmen, whether they sell digital scarcity or AGI only makes things worse.