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I’m about as far from a crypto defender as you can get, but I think this page misses the point. If El Salvador is planning to use Bitcoin as a medium of exchang
by jfasi 4y ago
I’m about as far from a crypto defender as you can get, but I think this page misses the point. If El Salvador is planning to use Bitcoin as a medium of exchange, which by all accounts they are, their being “up” or “down” must be measured by the size of the economic activity that Bitcoin allowed them to facilitate. That figure is harder to get at.
Viewed this way, the additional purchases which seem foolish and laughable might even be signs of success: perhaps Bitcoin business is booming so hard they need to expand their reserves?
To be clear, I highly doubt that’s the case here, but if we’re going to assess success we should at least try to steelman their position. There’s plenty to mock about this change without taking cheap shots.
- stingraycharles 4y agoMaybe the larger point is that bitcoin is too volatile a currency to be used as a medium of exchange? Surely they must be holding on to a decent amount of BTC and as such lost value, if not the government itself, then at least the country as a whole.
- audessuscest 4y agoHow Bitcoin really facilitate anything ?
- lawn 4y agoThey're not trying to use Bitcoin as a medium of exchange. They're trying to funnel people into their own centralized crypto app, where people may (or may not) be allowed to send Bitcoin via the Lightning Netowrk.
- JumpCrisscross 4y agoThey're investing FX reserves in Bitcoin. Their imports are not priced in Bitcoin. Bitcoin going down relative to the currencies they import in hurts El Salvador's ability to finance them. Which raises borrowing costs [1]. Which leads to exporters demanding earlier payment [2]. San Salvador has less than three months' imports in reserves [3][4][5]. Their Bitcoin experiment has scared off crisis lenders [6]. There is no good ending for them right now. [1] https://www.reuters.com/markets/europe/crypto-crash-leaves-el-salvador-with-no-easy-exit-worsening-crisis-2022-05-19/ https://www.reuters.com/markets/europe/crypto-crash-leaves-e... [2] https://fred.stlouisfed.org/series/SLVBCAGDPBP6 https://fred.stlouisfed.org/series/SLVBCAGDPBP6 [3] https://tradingeconomics.com/el-salvador/imports https://tradingeconomics.com/el-salvador/imports [4] https://tradingeconomics.com/el-salvador/foreign-exchange-reserves https://tradingeconomics.com/el-salvador/foreign-exchange-re... [5] https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?locations=SV https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?location... [6] https://www.imf.org/en/News/Articles/2022/02/15/cf-el-salvadors-comeback-constrained-by-increased-risks https://www.imf.org/en/News/Articles/2022/02/15/cf-el-salvad...
- aardvarkr 4y agoThanks for the sources to read further in the topic! I was always curious to know how their “experiment” was going to turn out and it seems like the results so far aren’t good
- davidgerard 4y agoit's been 100% an utter disaster
- JumpCrisscross 4y ago> was always curious to know how their “experiment” was going to turn out and it seems like the results so far aren’t good They were in a bad position to start with. There was no happy ending even if they'd done everything right. But had they spent the boom years borrowing cheaply where possible, renegotiating and paying off expensive debt where necessary, moderating fiscal expansion and fighting violence around their tourist centers, they would have had better options. Instead, they voted in a magician. San Salvador is between a rock (currency crisis prompting food and fuel shortages) and a hard place (austerity and an IMF loan).
- tsimionescu 4y agoMinor note: it's El Salvador (The Savior), not San Salvador (Holy/Saint Savior).
- elros 4y agohttps://en.m.wikipedia.org/wiki/Metonymy https://en.m.wikipedia.org/wiki/Metonymy San Salvador is the capital, like saying Moscow to refer to Russia.
- JumpCrisscross 4y agoThanks! I was trying to remember the term.
- deleted 4y ago
- pirate787 4y agoThe president of El Salvador is buying Bitcoin on his cellphone. There is no governance over these millions and it isn't going to end well.
- rmbyrro 4y agoCurrently, Bitcoin adds zero value, even if it was used for every single transaction in the country. Currencies are not money because they don't store value. Bitcoin was a promise to be money in the full sense. It's ability to store value is questionable, since it became a highly speculative and fraud facilitation asset. And the other aspects of being money are worse than currencies.
- Alex7845 4y agothe same argument can be said about literally every non-crypto currency. A US dollar doesn't have any "value" other than the small amount of heat you get if you burn your paper bills.
- Tao3300 4y agoHey, at least you didn't say "fiat". That's the magic word for "stop reading this comment".
- CrazyStat 4y agoOnce a month or so I search Twitter for the phrase "fiat maximalist" to find the dumbest cryptobro takes.
- JumpCrisscross 4y ago> same argument can be said about literally every non-crypto currency. A US dollar doesn't have any "value" other than the small amount of heat you get if you burn your paper bills. Or the food and fuel one can import with it, which one can't with Bitcoin.
- notch656a 4y agoIf you offer high enough margins and volume I guarantee someone will import food or fuel for you in exchange for bitcoin.
- deleted 4y ago