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El Salvador abandons Bitcoin as legal tender

(ticotimes.net)
927 points smallerfish | 17 comments | 04 Feb 25 00:00 UTC | HN request time: 1.92s | source | bottom
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portaouflop ◴[04 Feb 25 02:07 UTC] No.42926658[source]▶
IMF gave them 1.4 billion to abandon the “experiment”:

> 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.

—-

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

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dragonwriter ◴[04 Feb 25 04:41 UTC] No.42928058[source]▶
If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.
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willmadden ◴[04 Feb 25 05:43 UTC] No.42928498[source]▶
What are you talking about? Their Bitcoin holdings more than doubled in value.
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hagbarth ◴[04 Feb 25 06:15 UTC] No.42928708[source]▶
Would that not be a bad thing when using it as legal tender? Deflation tends to be disastrous for the economy.
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almosthere ◴[04 Feb 25 08:20 UTC] No.42929618[source]▶
that doesnt hold for a deflationary currency
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1. troupo ◴[04 Feb 25 09:05 UTC] No.42930016[source]▶
If the value of your coin only goes up in value, why would you use 1 bitcoin now to buy a pizza slice if you can use it 5-10 years from now to buy a house?
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2. oneeyedpigeon ◴[04 Feb 25 09:46 UTC] No.42930334[source]▶
A house in 5-10 years is nice, but it doesn't stop me from starving to death today.
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3. hagbarth ◴[04 Feb 25 09:53 UTC] No.42930377[source]▶
I think it was just an analogy. The incentives are to defer purchases, if possible, which lower economic activity overall.
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4. oneeyedpigeon ◴[04 Feb 25 09:55 UTC] No.42930394{3}[source]▶
Sure, my point was that there are many reasons someone might spend money today that might be better off saved for the future, however much it may increase in value.
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5. troupo ◴[04 Feb 25 13:14 UTC] No.42931884{4}[source]▶
> there are many reasons someone might spend money today

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.

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6. oneeyedpigeon ◴[04 Feb 25 14:57 UTC] No.42933147{5}[source]▶
I'm speaking from experience. I literally spent Bitcoin last week that I would rather have held, because I needed the money.
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7. troupo ◴[04 Feb 25 15:25 UTC] No.42933511{6}[source]▶
And yet, en masse Bitcoin is used as speculative investment, not money.
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8. freejazz ◴[04 Feb 25 15:59 UTC] No.42934066[source]▶
And who doesn't want to live in an economy where your purchasing decisions are made with the hunger of starvation!
9. robertlagrant ◴[04 Feb 25 16:14 UTC] No.42934307{5}[source]▶
> It's a speculative asset precisely because people are hoping its value will only go up.

This is the same for any currency trading.

10. dlubarov ◴[04 Feb 25 16:25 UTC] No.42934485{3}[source]▶
There are other ways to encourage spending though, like a wealth tax. Not that I necessarily support it, but that would be the more comprehensive solution to hoarding, since it couldn't be worked around by just exchanging fiat for other assets like gold.
11. ◴[04 Feb 25 16:41 UTC] No.42934770{7}[source]▶
12. lxgr ◴[04 Feb 25 17:02 UTC] No.42935229[source]▶
That's exactly the problem: People will (rationally!) limit their spending to bare necessities if they expect the currency they have on hand to strongly appreciate over time.
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13. ◴[04 Feb 25 20:26 UTC] No.42938114[source]▶
14. fastasucan ◴[04 Feb 25 22:46 UTC] No.42940190{4}[source]▶
Yes, bur you dont want to limit your populations spending to just those essential items.
15. npoc ◴[05 Feb 25 12:54 UTC] No.42947828{3}[source]▶
Imagine that, having the option of saving your money for things you really want instead of being forced to spend it on things you don't, or risk lending it out for essentially free to compensate for the continuous fall in value.
16. npoc ◴[05 Feb 25 12:57 UTC] No.42947847{7}[source]▶
All investments are speculative.
17. Ferret7446 ◴[07 Feb 25 10:35 UTC] No.42971208{3}[source]▶
That implies that 1. it is a problem and 2. that people are rational. The latter is definitely not true, and the former is definitely arguable.