Bitcoin’s first day as El Salvador’s legal tender

> El Salvador has a national ID called a DUI (Documento Unico de Identidad). When you first open the app, you type in your ID number and date of birth. Then you scan the front of your DUI card, the back, and take a selfie. You wait a bit for it to validate and then you're done. It knows your name already, there is no email/account registration, there are no address forms or weird credit check challenge questions to fill out. Easier than coinbase, venmo, or paypal to get onboarded and running... This really shows what's possible with a national ID system IMO

That's nothing revolutionary, neobanks in the EU have been doing this ( or an older school version where there's a video call with a real person that inspects your face and if it matches your ID) for some time now. Yes, having a national ID is some pretty basic "how to government 101" stuff. The reluctance by Americans for anything resembling that is baffling.

Which is why BTC is an asset and not a currency.

Currencies need stability of value so that everyone doesn't have to update their prices ever few hours: https://simplicable.com/new/money

But maybe in the new world, all prices can be in digital and thus ever changing?

That’s just another reason (along with all the others) it should never be imposed as a currency, particularly in a country with lots of people living near the poverty line. Imagine leaving home not sure if you can afford the bus ride to work or food to eat because of volatility.

IMO this is a likely explanation (includes timestamp): https://youtu.be/lEromo3ly4Q?t=542

Wild volatility can occur whenever a rich person or rich group liquidates a lot of their holdings.

At this stage its a clickbait/propaganda article.

Price went down few thousands, that's like ever other Tuesday in BTC world.

Stable coins are not "crypto" currencies. They have black lists (similar to your bank's fraud department) and they are backed by deposited money (so there is trusted issuer who promises to redeem them for actual cash).

So 2 key features of a crypto-currency are lacking in stablecoins: censorship-resistance and absence of centralized trusted parties.

That you can move them on a blockchain (as long as permitted) with your private key is not much different from signing TLS connection in your Venmo. But with higher fees and latencies.

One day, some crypto somewhere will figure out a way to implement a distributed mechanism to dynamically adjust the money supply to maintain a reasonable 0.5%-1% inflation rate per year.

Take reporting done by mainstream media on cryptocurrencies with a grain of salt.

I'm not a cryptocurrency proponent, but the standard of news regarding this space is atrocious. That's why many cryptocurrency followers focus so much on Twitter.

This is your typical modern "objective" journalism today. The only thing not clear is whoose financial and / or political interests they are trying to boost today. Follow the money / power, I guess?

Wait, is BTC really only doing 4 transactions a second? I knew it was bad, but I didn't realize this bad. Bitcoin is like a 1960s mainframe computer in an old bank headquarters that runs everything but is an archaic relic.

4 transactions a second!? I heard it was bad but that is absolutely pathetic, my local strip mall likely averages out to more then 4 transactions a second.

> chugged merrily along, at its usual 4 or so txns/second.

who needs failure when this is what success looks like?

Is it still 4 txns/second even with the Lightning network?

That's a mighty big if though, since to a first approximation nothing except maybe ransoms is priced in Bitcoin. Most shops notionally accepting it actually set prices in USD and simply convert as needed.

Bitcoin is volatile not in relation to USD, but to "real prices". USD or EUR are just more stable in relation to those, so it's convenient to measure BTC in USD. You can't fix the prices in BTC because you'd soon find that you are overpricing or underpricing in relation to real supply and demand of all the stuff around.

They don’t solely accept btc. They accept it in addition.

That never holds. Arbitrage will cause prices for goods to be equal in USD and BTC. https://www.investopedia.com/terms/a/arbitrage.asp

Unless you control the whole market via price controls but those eventually break as well. https://www.investopedia.com/terms/p/price-controls.asp

Products from outside that market will have a fixed cost in a different currency, someone has to assume a risk and lose/profit from it.

This happens a lot currently but usual currencies dont fluctuate this much.

As example, I dont expect El Salvador to build iPhones anytime soon and the price for that is usually fixed in USD

This is only true if its zoned market in the sense that the country is self sufficient and relies on no foreign imports, which is rarely the case.

> If a zoned market solely accept Bitcoin and a good costs say 1 BTC

The problem is that nobody selling regular goods WANTS to sell his goods with a fixed bitcoin price; the volatility of bitcoin would make it easy for buyers to buy the goods only when their prices where especially low in non-crazy-volatile currency and resell the goods at a favorable price immediately. There's arbitrage there

What about import/export prices? The matter is especially important for a small country, which relies heavily on the international trade.

If you want to import anything at all you need foreign currency. One of the ways you can do this is by exporting goods, of course, but you could also sell some of your local currency in exchange for dollars or whatever. Bitcoin volatility makes this harder. Also I’m guessing that volatility makes it hard to get foreign currency loans collateralized by BTC

I think it has to do with the connections to other currencies. If you sell something priced in Bitcoin, that you acquire in dollars, you’re exposed to that volatility.

Say you sell gold retail. You collect Bitcoin. Then turn around and need dollars for buying more gold.

Same situation for any import really.

It also applies to debt. If your debt is denominated in dollars and you’ve been collecting and saving Bitcoin when Bitcoin surges vs the dollar debt is less of a burden. And vise versa. Similar to the sort of problems emerging markets dollar denominated debts have faced many times.

Because for import/export currency volatility matters a lot. 99% of goods depend on import in some way.

Let's say you buy a house for 1 BTC. I sell that house for $250K. Two things can happen:

* I made a profit if acquiring that 1 BTC cost me a lot less than $250K

* 1 BTC = $250K

The world does not work like that, if they starts selling bananas for 1btc (or 0.0000001, but in 3years the btc price goes to 500k) people from all over the world would go to el salvador to sell bananas to send btc abroad. i dont get why they didn't enforce the use of a stablecoin in addition of btc tho, that would be better

Unless the zoned market is fully self-sufficient, it would still rely on trading without outsiders. The trade between the zoned market and the outside would still cause the volatility to leak into the market.

Here's one. If you have 1 BTC and it pays for a sandwich, but that same BTC is worth a thousand sandwiches elsewhere, why would you spend it in the zoned market? Likewise, why would the sandwich shop put the btc back into the local economy?

I think, the main issue is, that the BTC price is affected by the outside world AND that the country has to import things from the outside world.

What you said would probably work if you had a token that was only minted and traded in only one country.

Why should BTC advocates care about USD inflation if this argument holds? The value of USD goes down but it doesn't matter because my rent and salary are both denominated in USD. But avoiding inflation is one of the major ideological reasons why advocates support BTC.

Unless the market is an autarky, it's a problem. Say you're a company that buys a bunch of components, many from overseas, assembles a widget from them, and sells it at a 5% margin. You're probably ordering your components ahead of time, because that's how it's done. At that point, significant volatility becomes a big problem.

> When the majority of the country doesn't have internet access, a "currency" that you can only transact in via the internet seems like a poor choice.

If the shops have WiFi that's enough. Also, public WiFi. Still, your point stands to a certain extend, connected to your next line:

> It makes it a lot easier for the government to track people

There is indeed a danger to the democratic process here. But I don't know if the solution is to just not do crypto. I don't know what would be best.

> My guess is that most people in El Salvador will download the wallet, get their $30, and then abandon it and just continue to use USD.

My guess BTC takes off over there.

> When the majority of the country doesn't have internet access

The Chivo application works for free over cellular data without the need for a data plan. WiFi public hotspots aren't hard to come by either, especially in stores. If anything, getting more people online would be a good thing.

> It makes it a lot easier for the government to track people though given that they are getting their citizens to download the government-sponsored wallet

It should be noted that you don't have to use the government-sponsored wallet, but that is how they're distributing the $30 drop. For all intents and purposes, you could get the drop and delete the application.

"Crash" of an asset/currency is always against other assets/currency -- you need to define what its comparable otherwise you can not measure it.

Was it a "crash" though in scope?

Black Friday in 1987 was a 22% drop in the stock market. Yesterday was a 14% to 18% drop depending on how you calculate it. Close to what was considered a prototypical "crash": https://en.wikipedia.org/wiki/Black_Monday_(1987)

Basically BTC is highly volatile, thus it probably crashes all the time based on standard definitions.

If any fiat currency would go down 15% we'd call it a crash.

USD/GBP fell 19% after the brexit-referendum, that was an abnormal noteworthy event with quite far-reaching consequences.

For BTC it's a daily occurence...

It loses (or gains) 10%+ every few weeks.

No conspiracy needed.

Other than, you know, regular and systemic market manipulation by large holders of trading capital... the sort of thing the SEC prevents.

Buy the rumours, sell the news. It was bought up in anticipation of this news. Then sold off, once someone starts selling enough to move the price down a few thousand, others pile in and drive it further down. Then those that sold at the beginning buy back their coins, with a nice profit.

It was done to cream leveraged punters who thought it would be a sure thing.

Correction relative to what fundamental value? And what’s the difference between a speculative high and the normal price?