Why would they adopt something as volatile as cryptocurrency as legal tender?
“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." - SN
Volatility is of far less concern than a 3rd party countries money printing.
Not when you get your weekly paycheck, it's not.
Getting your paycheck and not knowing it'll be worth roughly the same amount next week when rent is due is a serious problem.
So citizens can chose. Conservative ones pick USD for its stability, others may pick BTC. Which has appreciated by 200% for 12 years straight, but hey, who's counting.
Or, mix it up. 75% USD, 25% BTC. So...what is the problem again?
This ultimately means the rich get richer and the poor get poorer.
As a currency gains adoption and value, its volatility naturally goes down.
As far as what advantages bitcoin has over traditional existing currency? Numerous. Immutable, unseizable, uncensorable, fixed supply/non-inflationary/store of value, digitally transferrable without a 3rd party.
Why is “non inflationary” an advantage? It means less incentive to spend, more incentive to hoard, and anyone who comes later is necessarily poorer. It’s terrible, population increases and younger people fight for the scraps of the few bitcents left, so the pyramid early adopters can take advantage. That isn’t going to hold as a stable system.
The same way it seizes anything else; have people with guns show up [0] to the person with control over it, and inform them they must turn it over or face dire consequences. Seizing money held in a personal wallet means doing that to the owner (whether its a physical or digital wallet), seizing money held in a third-party service (often the case with Bitcoin) means doing it to the service operator.
> Stealing Bitcoin is not the same as seizing.
True, in that “stealing” is what is called when someone seizes property from another without legal authority. But false in the senae that seems intended, in that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
[0] Or people without guns with the implicit backing of people with guns. Or just messages from an agency known to be backed by people with guns.
Even not considering passphrases, anytime you set up a crypto wallet there is a 12 or 24 word mnemonic seed which could be memorized and not written down anywhere, and which could be used to restore a wallet at a later time. So, how exactly does seizing work in this case?
[1] https://wiki.trezor.io/Passphrase
[2] https://support.ledger.com/hc/en-us/articles/115005214529-Ad...
Whether the authorities believe you and whether they decide to inflict the alternative consequences implicitly or explicitly threatened as part of the seizure mechanism ... depends on the information that forms the basis of the seizure, the personality and nature of the individuals involved and the regime they serve, and other factors.
Features that make it harder for authorities to be certain you are lying when you are also make it harder for the authorities to be certain you are telling the truth when you are. This is not universally beneficial.
It is much easier to physically confiscate cash, than it is to confiscate a wallet that you don't have the keys to.
Sorry, but it just is. Yes, an arresting authority can always threaten people, with violence, but that has problem and roadblocks to it. People get mad. Courts come into the picture. And although yes it is possible it is still more difficult to do, with greater negative consequences to doing so.
The point of censorship "resistance" is not to be completely immune from a mind reading mecha-hitler, who will nuke the universe if you don't give up the password to your crypto wallet.
Instead, the point is to make it more difficult to confiscate assets, in more situations, such that it significantly reduces but does not stop completely, the times that assets are confiscated, as opposed to the absurd super hitler with nukes hypothetical.
> that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
Nope. The mechanics that are used and available to the government, in real life actual examples, of how actual governments work, make it easier for those existing governments to confiscate cash as opposed to crypto.
This is not about absurd hypotheticals. This is about existing government laws and implementations of those laws.
Once all the governments in the world, actually change their laws such that they can now threaten to nuke the universe, if you don't give up your keys, then you can start talking about how technical solutions have zero effect on getting around existing government policies.
Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement. So it is stupid to bring that up, as some gotcha counter example, for why you think technical solutions are worthless, when talking about actual real life, as opposed to your sci-fri fantasy novel.
No, it doesn't. Its literally what every government seizure of anything uses. It’s force or the threat thereof top to bottom. Sure, a lot of it is invisible because it is routine, but it is routine because society is adapted to the reality of the threat.
Even to the extent that you might be right, does “bitcoin disproportionately reduces the effectiveness of governments that have a strong evidentiary threshold for the application of force against those within their power” make it a good thing, likely to benefit the world by broad adoption?
Yes it does. Walk across the border of the USA and mexico with 20k in cash, and try it again by memorizing a crypto password.
Once you do that, see how both go.
The proveable fact, is that the actual examples that we have, of real life laws and governments, shows that the cash would be confiscated, and the crypto password would be more difficult to do so.
That is a falsifiable experiment that people can do. And the experiment goes my way. That actual, real life example, proves me right, in that specific circumstance.
I don't care about hypotheticals that don't exist in the real world right now. The only thing that I will accept, is real life proof, of crypto passwords being as easy to confiscate, as cash, in the real world.
As in, show me, specifically, how a random border patrol agent, in the US right now, would just as easily figure out that I memorized a crypto password, as opposed to figure out that I am physically carrying 20k in cash, as I go on vacation to mexico, tomorrow.
In the real world, right now, if you cross the US border to mexico your cash would be more easily confiscated than a crypto password, by the random border guard that you talk to.
> It’s force or the threat thereof top to bottom.
Then show me the government mind reading machines, that the border patrol, on the current US border, uses to scan my brain for crypto passwords. Because I can show you how they will confiscate cash. Because I have examples of them confiscating cash. There are no examples of the government turning on their mind reading devices, and stealing my crypto password.
> that have a strong evidentiary threshold
Oh but technical solutions change the evidentiary threshold! A person with a suitcase full of money, has much more evidence of them carrying money (because the suitcase can just be opened), than in the situation of a random, poorly paid border patrol agent, interrogating someone for their crypto password, that the border patrol agent doesn't even know exists!
That is one way how it makes it much more difficult to apply force.
That said, since they're on the US Dollar anyway, I think it might have made more sense to use a stablecoin like GUSD or DAI or something.
I think blockchain kind of solves these two particular problems; the money transfers are relatively quick (around 20 minutes for bitcoin), and you have all this cryptographic goodness to minimize the potential for fraud.
Like most of the world, I use credit cards or debit cards or a cash sending app.
In the case of Mexico, remittances would be 3.8% of the GDP, and the WU fee is 8% [1], which means that 0.3% of the GDP is being left in the table. In El Salvador I think it is about 20%, which would mean that 1.6% of the GDP is being left in the WU and similar services.
[1] https://www.westernunion.com/us/en/send-money/app/price-esti...
This immediately raises the question of why not establish or partner with another bank that would allow lower fee remittances, and instead partner with a shadow bank to do so. And the most reasonable answer, to me at least, is that by using a shadow banking mechanism, they'd evade (international) inspection, which would allow them to potentially skim money out of ordinary El Salvadoran bank accounts.
Bitcoin is the best performing asset with a 200% average YoY return for 12 years straight. Whilst still volatile, there's enough trust in long term value for institutional adaption, which is the phase we're in the middle of.
1 in 6 Americans own Bitcoin. Companies are holding it. Clearly, it no longer is an internet joke. It's accepted as an asset.
Just my two cents.
The real reason is probably so the El Salvador political powers can enrich themselves, either through simply holding bitcoin, or some form of corruption.
In practice, I assume most El Salvadorians aren't on Binance or Coinbase Pro.
With traditional bank accounts there's usually a whole circus of verifying your real identity involved that's directly tied to the account.
While getting a BC wallet involves none of that, heck, it can probably be automated to such a degree that asking the question "Who actually owns the wallet created by a bot?" could become an interesting legal conundrum.
Step 1: Buy a lot of bitcoin.
Step 2: Convince/bribe the President of El Salvador to make bitcoin the legal tender.
Step 3: Bitcoin goes up because "OMG legal tender status" even though it is in a super minor country that was de facto using the USD as currency anyway.
Step 4: Sell your bitcoin at a profit due to the events of step 3.
Step 5: Who cares about what happens after step 4.
BTC price swings occurs due to institutional buying (or selling) which are generally triggered by macro conditions. Nothing else triggers it because the market cap is too large to move on minor news.
Finally, an opportunistic Bitcoin trader wants Bitcoin to go down, not up. So that they can buy more.