El Salvador will adopt Bitcoin as legal tender from today | Hacker News Reader

El Salvador will adopt Bitcoin as legal tender from today

economist.com

I’m super into crypto, but I don’t see how this will help anyone in Salvador at all. In fact it seems to me that it will likely just aid corrupt elements in the country. I just can’t think of a reason for them to do this.

Why do you say this? How does bitcoin = corruption – it's simply PKI-based ownership of DLT data. If anything the restriction on money-printing should abet corruption, no?

Why do you say this? How does money-printing = corruption?

Yes.

Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings or the ability to invest in appreciating assets.

As technology advances, things should naturally become cheaper. A gallon of milk today is not comparable to a gallon of milk produced 20 years ago due to technological advances. So it should naturally get cheaper. Of course it doesn't because there is more money in circulation.

Think of the extreme, electronics. These do get cheaper for the same capabilities because the technological advancement is so much faster than the technological advancements of milk production.

It's fine if you want to increase taxes to fund public expenditures, but this should be done explicitly through taxes, rather than hidden through increasing the monetary base. I believe a lot of waste and corruption would be rooted out if we were honest about what we're funding and how we're funding it. If everyone saw their tax bills go up a few hundred dollars a year to fund foreign interventionists policies, I don't think it would be politically feasible. Money printing is a way to fund expenditures without being honest about how much its actually costing us.

>>Money printing is a hidden tax that hits especially hard on those that don't have a lot of savings

Wouldn't inflation hurt people with a lot of cash savings, the most?

Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth?

Isn't their a student debt crisis, that can be helped out by inflation.

The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar.

I haven't ever heard anyone say cash is good store of value, so when coiners present this argument it feels like a real strawman.

The dollars value comes from its predictability, unless some catastrophe happen affecting food supply,I know next year food will be about the same as it is right now. I have no idea how much bitcoin it will cost could be 10x or could be 10%, this makes it hard to plan and hard to run an economy.

> Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth?

This is only true if wages keep up with inflation. Many will claim they haven't.

> Wouldn't inflation hurt people with a lot of cash savings, the most?

Almost no one with a vast amount of wealth keeps their wealth in cash.

> Also, Wouldn't people with a lot of debt welcome inflation. Don't poor people tend to have the most amount of debt relative to their networth?

Not necessarily. The poorest households hold less than their fair share of mortgage debt, but they hold more than their share of consumer debt. The bottom half of households by wealth hold almost 54% of consumer debt. Consumer debt includes credit cards, student loans and car loans. That distribution isn’t a surprise, either [0]. If you rely on debt for every day purchases (credit card revolving debt), higher prices don't help you out. If you have inflation in the form of home valuations and you own a home (perhaps w/ a mortgage), you're better off in that regard

> Isn't their a student debt crisis, that can be helped out by inflation.

Inflation doesn't necessarily mean your salary goes up. Salaries for low wage workers is fairly sticky.

> The only people I really see getting hurt by inflation are those hoarding cash, which there is a ton of ways to put that money to work. You can buy fractional stocks for less then a dollar.

If you're on a fixed salary, or your salary doesn't go up by at least the inflation amount you're worse off. And if you have a large percentage of your income go to pay for every day living expenses, you're also worse off.

The dollar value is predictable until it's not. There are plenty of examples of hyperinflation that turned a country on its head.

[0] https://www.barrons.com/articles/rich-borrow-mortgates-consu...

None of this really amounts to corruption; dishonest or fraudulent conduct by those in power, typically involving bribery. Indeed your suggestion to raise taxes to fund spending sounds more like corruption to me. You get to select who has to pay more, then you get to select who gets that money. Debasing your money supply on a predictable and expected shedule over time affects all parties equally, and is actually the cornerstone of at least the major crypto currencies to date.

If anything it is certainly theft, if not outright corruption for a country to issue debt while continuing to run large budget deficits. It is theft from future generations, in exchange for votes from the current generations. Making people directly see the effect of their wish list for free shit certainly would help, but anyone who attempts it would get thrown out of office immediately by the candidate promising to borrow or print instead, and spend even more. It is the will of the people.

I have read a lot of crypto articles recently, and yet the community cannot answer this: How do you account for the global population growth (and consequently GDP growth) that is constantly in need for a relatively stable exchange medium for value of goods produced? Cycle: More people > more production > more money

Money is a tool to fuel production. Controlled inflation/devaluation fuels growth, as long as it is backed by actual production (tied to economic output).

Contrast this with popular crypto examples: Germany (WWI), Venezuela, Greece, Argentina, Lebanon, etc. countries that dramatically devalued their currency without an increase in production = corruption of value.

The problem with any limited supply is that it benefits and incentivizes hoarders and non-producers, having nonbeneficial effects for society as a whole.

Is the US really that corrupt? Or is the entire crypto narrative a marketing scheme by speculators & scammers? https://m-g-h.medium.com/in-data-we-trust-2978dacc8c22

The lightning network could make small sized cross border money transfers cheaper. (Transfers less than $100).

It can do the same without having bitcoin as legal tender.

Not exactly. Legal tender changes the calculus. Because bitcoin is legal tender, there are no capital gains or investment tax in El Salvador. You can spend received the funds with no tax implication. This is a big deal for a country with so many folks unbanked and use international remittance services.

Thank you, that makes sense of course.

I’m surprised that the United States hasn’t clamped down harder on cryptocurrency. Whenever a foreign government tries to, say, sell oil for currency other than US dollars, they get invaded or a coup is staged or crippling sanctions get applied pretty quickly. I suspect that if crypto starts to undermine the dollar, the hammer will come down. Probably the United States military financial complex is just slow to understand what is happening.

Oil is required by every single country on earth. It matters what currency it's priced in, due to the sheer volumes being purchased and consumed each day.

BTC is one of thousands of cryptocurrencies that are not the de facto medium of exchange for anything. Well, that's not fully accurate, I guess Tether is useful...for buying other cryptos with.

I cannot understand why the petrodollar myth persists but here we are so I'll break it down: 1. Oil is traded in dollars because dollars are a reserve currency. 2. Dollars are not a reserve currency because of oil.

You mean saudi arabia could trade oil for euro if they wanted but saudis actually prefer to not diversify their assets because they are stupid ?

Their currency is pegged to the USD so its not a huge surprise their central bank prefers it. This of course has not stopped them from issuing euro-denominated bonds and holding other assets.

Either way it makes a ton of sense for them to trade an extremely volatile commodity (oil) for a stable currency. This is what allows them to borrow internationally and attract outside investment. If they floated their own currency it would be a disaster. But yes they absolutely could do this and it would not impact the value of the dollar in any appreciable way. The Riyad would tank and Vision 2030 would be dead in the water.

We either coup, sanction, manipulate with predatory loans or invade every country that tries to sell its resources for something other than US dollars, or nationalize their natural resources, or seize property from United States corporations. The goal being that raw materials are kept cheap and that cheap goods continue to flow into the USA. And it’s our ability to print infinite amounts of money that in turn makes it possible for us to fund such an oversized army. It’s just an empire, by other means.

If that’s not true, perhaps you can name a single exception? Sure, without coercion the dollar would still be the reserve currency for a while just on momentum. But keeping it that way requires a bit more.

Or, a lot more.

From https://williamblum.org/essays/read/overthrowing-other-peopl...

Instances of the United States overthrowing, or attempting to overthrow, a foreign government since the Second World War. (* indicates successful ouster of a government)

China 1949 to early 1960s

Albania 1949-53

East Germany 1950s

Iran 1953 *

Guatemala 1954 *

Costa Rica mid-1950s

Syria 1956-7

Egypt 1957

Indonesia 1957-8

British Guiana 1953-64 *

Iraq 1963 *

North Vietnam 1945-73

Cambodia 1955-70 *

Laos 1958 , 1959 , 1960 *

Ecuador 1960-63 *

Congo 1960 *

France 1965

Brazil 1962-64 *

Dominican Republic 1963 *

Cuba 1959 to present

Bolivia 1964 *

Indonesia 1965 *

Ghana 1966 *

Chile 1964-73 *

Greece 1967 *

Costa Rica 1970-71

Bolivia 1971 *

Australia 1973-75 *

Angola 1975, 1980s

Zaire 1975

Portugal 1974-76 *

Jamaica 1976-80 *

Seychelles 1979-81

Chad 1981-82 *

Grenada 1983 *

South Yemen 1982-84

Suriname 1982-84

Fiji 1987 *

Libya 1980s

Nicaragua 1981-90 *

Panama 1989 *

Bulgaria 1990 *

Albania 1991 *

Iraq 1991

Afghanistan 1980s *

Somalia 1993

Yugoslavia 1999-2000 *

Ecuador 2000 *

Afghanistan 2001 *

Venezuela 2002 *

Iraq 2003 *

Haiti 2004 *

Somalia 2007 to present

Honduras 2009 *

Libya 2011 *

Syria 2012

Ukraine 2014 *

Bolivia 2018 *

And probably, now Guinea 2021 *

And that’s not even considering the dozens of countries we have sanctions or embargoes against or the ones we’re actively bombing. Or the ones we’ve manipulated through predatory financial instruments. Considering the oceans of blood we’ve spilled to maintain the dollar empire it’s honestly a little bit insulting to suggest it’s all based on good feelings or some such nonsense. It’s maintained at the barrel of a gun, baby. You don’t build a globe spanning empire by being nice.

I get it: US is big and bad and really mean. But no one is arguing that "good feelings" are the basis for anything. And it doesn't change the fact that the petrodollar myth completely confuses cause and effect, at such a basic level that it is laughable. This remains true even if you copy/paste a long list with zero support of your underlying claim, namely that every single one of these military actions was done primarily to prop up the USD "empire" as you call it. More USD change hands every day than the total value of oil sold in a year. Its just not a factor.

The use of USD as a reserve currency certainly is a net positive for the US, but the theory that we start major wars over that is not supported by the evidence. Hell, the price of oil and the value of the dollar more often than not have an inverse relationship traditionally based on empirical evidence, which is the opposite of the petrodollar conspiracy theory.

Oil is mostly traded for dollars because everyone is selling/buying in dollars, so the best most liquid prices are in dollars, not because the US government forces it.

You can sell oil in whatever currency you like - Iran settled in Euros before (and probably after) sanctions, there's physically settled oil futures denominated in Chinese Yuan and oil producing countries often make deals directly with other countries in currencies that offer less fluctuation.

I fail to see how something with an approximately US$3 transaction fee is going to be a usable currency for anything other than very large purchases.

See this: https://lightning.network/

> Security is enforced by blockchain smart-contracts

Hard pass, there've been too many smart contract failures to even think about going down that road.

You’re thinking of Ethereum’s Turing-complete scripting language, a prime example of why that functionality doesn’t belong on the base layer.

I'm happy El Salvador adopted Bitcoin. Not so much that I think it will transform the economy or even be practical, but that if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general.

I don't understand why so many people are bearish on this decision. We should encourage more experimentation as long as no one is forced to use Bitcoin.

> if a nation state adopted it, it'll be harder for governments and international governing bodies to clamp down on crypto in general.

This is vastly overstating the relevance of El Salvador on the world stage. It's a country of less than 7 million people and not a rich one at that.

It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math)

Is this how you imagine it's going to play out?

Behemoth A: We should immediately prohibit our banks from offering services to anyone dealing with Bitcoin.

Behemoth B: Hold on just a second. There is this tiny Latin American country that you probably never heard of that uses Bitcoin as legal tender.

Behemoth A: You're right, this needs more thought. The last thing we should do is upset a country we do virtually no trade with and has negligible diplomatic clout.

See original reply

> It'll still have to be consideration when some country tries to put in draconian restrictions on crypto (i.e. math)

The key is the word "consideration"

If by "consideration" you mean it would have the effect of a flea standing in the way of a steam roller, then sure.

No major nation is going to temper it's stance on crypto in any meaningful way because of concern for El Salvador.

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