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El Salvador abandons Bitcoin as legal tender

(ticotimes.net)
927 points smallerfish | 2 comments | 04 Feb 25 00:00 UTC | HN request time: 0.518s | source
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Mengkudulangsat ◴[04 Feb 25 00:11 UTC] No.42925325[source]▶
> 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.

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cwillu ◴[04 Feb 25 00:26 UTC] No.42925524[source]▶
“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.”

--https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...

Sounds pretty failed to me.

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desumeku ◴[04 Feb 25 00:29 UTC] No.42925557[source]▶
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.
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daedrdev ◴[04 Feb 25 01:09 UTC] No.42926019[source]▶
The IMF probably rightfully sees a structurally deflationary currency (bitcoin) as a massive risk should it gain widespread adoption
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throw101010 ◴[04 Feb 25 02:51 UTC] No.42927121[source]▶
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.

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1. daedrdev ◴[04 Feb 25 04:43 UTC] No.42928069[source]▶
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
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2. throw101010 ◴[04 Feb 25 08:20 UTC] No.42929626[source]▶
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).