El Salvador abandons Bitcoin as legal tender

> 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.

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I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself

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.

All in all, billionaires are a bad example of holding legal tender, because that just doesn't happen.

royal family kingdom of saudi arabia

It was a terribly dangerous move for a sovereign country, worse than surrender to the Euro.

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.

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.

If the U.S. needed a bailout, the dollar would become a trash currency.

[0]: but also too quickly, hence all the breaches and 8-figure heists

https://www.reuters.com/markets/currencies/el-salvadors-bitc...

Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.

IMF loans have ALWAYS been political

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.

If the fees were lower I'd use it for plenty of other things too.

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.

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.

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.

this is a really ambiguous phrasing. Is bitcoin a "currency"? is el Salvador adopting bitcoin as a ___?____ a currency?

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.

This is how insane that sounds

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.

Is this really the general sentiment on HN?

+ 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.

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.

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).

Debased currency - a problem every large state eventually faced - is a consequence of deflation.

(This is where China swoops in and gives a loan at lower interest rates with shadow contracts to get the resources or assets)

IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies

Although of course it is unknowable how much of that money was bribe and how much El Salvador would have gotten without additional leverage.

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?

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.

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?

Otherwise it's just fiat all over again

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.

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.

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!

(Or a hardfork, if your changes have to apply to all transactions, though this would be extremely tricky.)

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.

Was that the goal of the loan? How did you come to this conclusion?

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.

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?

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.

It says a lot about the popularity of Bitcoin, no?

2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.

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.

The government literally give (almost) everybody $30 in btc to promote this, 8% is too low

The government were giving out btc

The gold escudo was 22-karat for basically it's entire existence,.

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.

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 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.

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).

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.

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!

https://news.ycombinator.com/newsguidelines.html

https://news.ycombinator.com/newsguidelines.html

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.

... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure

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"

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.

[0] https://en.wikipedia.org/wiki/Cognitive_dissonance

  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.

Basically, the IMF money is the carrot you get for bending the knee. The stick can be the CIA or other things.

> Countries do redenominations all the time

That’s not really the same, in several fundamental ways.

I dont know what the future hodls but it’s looking pretty good for bitcoin so far

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.

The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.

It's not like you just choose to issue debt in foreign denomination cause it's fun.

Just wow.

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.

cryptocurrencies are a failure and net negative, and the longer we hold on to believing they aren't, the more damage we are doing

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.

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.

El Salvador's cryptocurrency was helping other people (not sure if actual citizens), so it had to go.

https://acoup.blog/2025/01/03/collections-coinage-and-the-ty...

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.

Whether you find that a feature or a bug depends a lot on where you live.

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.

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.

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.

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.

3000 years from now what would be the store of value would be the question to ask.

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?

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.

The bank would be pretty reckless not to stipulate these things.

"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."

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.

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”.

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?

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.

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.

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.

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

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".

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

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 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.

Spouses are not very fungible though, not that I've ever tried ! ...

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.

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.

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.

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.

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.

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.

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.

I wish I could have a $333m failure like that.

(edit - see also his approval rating - 91% https://x.com/stats_feed/status/1875573928250179666)

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?

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.

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.

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.

Do you object to that?

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.

Because you wouldn't do either?

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.

This is the same for any currency trading.

I see you.

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.

They're billionaires because they own valuable companies, not because they have actual billions in the bank.

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

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.

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."

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's predominantly used for speculation. Back in the real world, it's the only purpose it has. There is no way around it.

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.

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

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.

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-...

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.

It is very good that the default thing to do with excess money is invest it.

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.

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.