El Salvador abandons Bitcoin as legal tender

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.

>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

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.

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.

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.

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?

>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.

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

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.)

> 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.

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.

Em. Spain, famously, didn't debase its currency.

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

and update the hardware wallets if needed

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.

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.

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.

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.

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.

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.

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.

Just… really suggest you take a deep dive into blockchain technologies. You’re confusing a few things.

A bit more detail on the subject of historical coinage and the place of gold in it:

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

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?

Sure, all you have to do is compute until the heat-death of the universe. No proof of work needed!

What? People buy food with bitcoin all the time …

> 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?

> 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.

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.

I was literally thinking of this article!

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?

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.

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.

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.

> 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.

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.

> 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.

And I was talking about property. Replying about something else made no sense here.