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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: 0.213s | 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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1. KetoManx64 ◴[04 Feb 25 22:55 UTC] No.42940328[source]▶
Why does it need to be more than a store of value? If every single country In the world is off the gold standard and inflates their citizen's savings away at a whim, why does Bitcoin need to be more than a way to keep your savings safe, especially if it's the best way to do so with the least amount of government meddling.
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2. paulgb ◴[05 Feb 25 03:53 UTC] No.42943532[source]▶
Running the Bitcoin network securely is expensive. Currently, about 95% of the cost is covered by issuance of new Bitcoin, but the amount of remaining Bitcoin decays exponentially (currently it’s down to the last 5%).

The incentive design of Bitcoin assumed that it would be used as cash, so that transaction fees could take over as the main source of revenue for the miners that secure the network. As a “store of value”, it doesn’t generate enough transaction fees to secure the network.