Great write-up about some of the practical problems of Bitcoin adoption in such a scale. This government-controlled wallet is looking for trouble. And so far the bet has not paid off at all, as 6 months ago the price of Bitcoin was at its peak.
The concerns are infrastructure concerns, which as I read them have little to do with Bitcoin and everything to do with a sudden infrastructure shift: Those are very hard.
One of the key complaints I noticed in the article was that the value of Bitcoins fluctuated too wildly to be of use to a business. That has everything to do with Bitcoin.
At some point in the future, bitcoin price will become a lot more stable. For now, prices for goods should not be posted in bitcoin. Bitcoin should mostly be used only as an intermediary currency.
I mean that’s the beauty of crypto, the future is so bright. Why is the outlook so good? I’ll be honest I see no good evidence that it will be a viable currency, it’s slow and power hungry and not to mention confusing. We have no shortage of hype and people relentlessly defending it though.
Can you imagine the computing power it would take to use bitcoin to handle, say, all the transactions of just one large bank? It will never be a viable currency for widespread use.
The funny thing is most people are holding bitcoin to get rich, not for stability. As soon as there are signs that hyper growth has ended, it won’t be doing the job most people bought it for. Resulting in a stable price much lower than the current one.
This has been the sales pitch for the last decade but it hasn't been true. The reason why is simple: nobody _has_ to use Bitcoin and the baked-in deflationary model incentivizes using alternatives. Since it's failed at popular adoption that means that you're left with the margin plays described in the article where people will use it in the rare situations where it's cheaper or more convenient but they're not tied to it any more than they're tied to, say, Venmo. The absence of healthy demand means that the volatility isn't going away.
People have been saying this for a long time and it hasn’t come true, and while that doesn’t mean it won’t eventually, I would ask: what will make it become true?
It's a particularly bad gamble for El Salvador, since Bukele and/or the government -- the distinction is increasingly unclear -- punted a lot of taxpayer money on Bitcoin.