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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: 0s | source
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ptero ◴[04 Feb 25 00:17 UTC] No.42925410[source]▶
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.

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yalogin ◴[04 Feb 25 00:46 UTC] No.42925759[source]▶
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.

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paulgb ◴[04 Feb 25 02:04 UTC] No.42926628[source]▶
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.

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elevaet ◴[04 Feb 25 04:43 UTC] No.42928071[source]▶
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?
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1. AyyEye ◴[04 Feb 25 06:12 UTC] No.42928680[source]▶
Transaction times are independent of mining power. One block every ~10 minutes.
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2. elevaet ◴[04 Feb 25 18:46 UTC] No.42936785[source]▶
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.