El Salvador abandons Bitcoin as legal tender

Speculative asset class fails as non-speculative legal tender class.

If king for the day with a sovereign wealth fund I wouldn't forbid investment choices like this on risk grounds, I mean you need risk assets as well as boring ones, right? But I have problems with the moral quality: it's like state investing in the casino business. Monaco? works fine. Anywhere else? It's got problems.

Like a lot of people, I probably fall into severe errors which would be bread and butter for "bad economics" reddit groups but truly, I can't see how this wasn't forseen and expected. It was about WHEN, not IF.

> Speculative asset class fails as non-speculative legal tender class.

This. Bitcoin proponents often claim that eventually everyone will use Bitcoin for payments ("Finally no more governments or central banks!") and that's why it will increase in value, so everyone should invest in BTC.

But this argument is fundamentally flawed: A currency, in order for it to work (in order for people to be able to trust it), needs to be stable in value. Which contradicts it being an investment vehicle and drastically varying in value over time.

In fairness, markets can operate quite well with almost nobody in them being able to argue why. Gold has remarkable staying power but it is rare to find gold proponents who can explain why convincingly. A lot of the arguments for where the value comes from are bunk. If I hear one more person explaining that jewellery matters I'll ... go peacefully about my day I suppose.

Still holds its value though, the economy does not care if people understand why the price signals are so.