El Salvador abandons Bitcoin as legal tender

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 ?

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.

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.

can you explain their reasoning ? just curious (i'm a newb)

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.

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)

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.

Lol

The US economy grew rapidly in the 19th century through long periods of deflation, particularly 1870-1896.