El Salvador Made Bitcoin a National Currency. The Bet Isn’t Paying Off | Hacker News Reader

El Salvador Made Bitcoin a National Currency. The Bet Isn’t Paying Off

nytimes.com

46 pointsjaredwiener44 comments

What the article doesn't talk about is the huge amount of hype he's generated and the amount of tourism he's encouraged/ The fact that everyone is discussing El Salvador.

He's put them on the map as a country. When i went to El Zonte in 2017 it was pretty much a normal Central american beach town. Very poor, very little infrastructure, not alot of tourists. I went again this last April and it is absolutely packed, they've redesigned the pramanade and added tons of hostels and hotels. People flock to this area from around the world to use bitcoin.

Is is a gimick, yes. Has el Salvador definitely made more than $65m thanks to crypto bro tourism & foreign investment, yes.

Will the BTC investment pay off and make el salvador richer? it already has.

How much cryptotourism done?

Cryptourism nice portmanteau

I am sorry "everyone" is discussing El Salvador and is touristing there because of bitcoin? What?! Do you have even the slightest proof for that?

They just said they were recently there.

If you don't want to look up YouTube videos, or StreetView to confirm for yourself, what else are you expecting from us, here?

Actual visitor number data is a good start.

> I am sorry "everyone" is discussing El Salvador and is touristing there because of bitcoin? What?! Do you have even the slightest proof for that?

It did. In part because of the bitcoin news and also because El Salvador eased covid restrictions before the neighbouring countries.

Airbnb reported a 280% growth in bookings in El Salvador

https://twitter.com/BitcoinMagazine/status/15389654705896161...

However prices for stays in El Salvador have doubled in price everywhere.

Salvadorans living there feel priced out. A common complaint among El Salvador twitter users is complaining about local Airbnb prices.

Price is going to go down some more too. As the economy slowly but surely enters recession, and low net worth HOLDers sell their BTC to pay rent, the price will continue to go down. This system only works if people pump money into the system, not out of it.

Those sure are a lot of predictions stated as fact.

It's already a ~ bank run. Not sure what could reverse that trend.

Some discussion on eg. https://bitcointalk.org/index.php?topic=5403254.0

Agreed

I see very little incentives for the current “coin” holders and future potential “coin” holders to maintain a seemingly high “asset” price on btc.

I’m open to a convincing argument otherwise but most of what I’ve observed is hand wavy and requires a religious leap of faith and conversion.

> I see very little incentives for the current “coin” holders and future potential “coin” holders to maintain a seemingly high “asset” price on btc.

That's like saying people who own Tesla stock have no incentive to keep the stock price high. Of course their is incentive for current holders to want to maintain the high asset price...

It's not an unreasonable scenario. But yes, some 50/50 coin flip assumptions have been made.

Last time we had a recession, BTC Skyrocketted because of it.

Last time BTC crashed, it rebounded.

Last time BTC had a massive retail selloff, the HODLers accumulated big.

If you are so confident, why don't you short?

>"So far, Mr. Bukele’s trades have cost the country an estimated $63 million in lost value, according to estimates last week by the magazine Disruptive, published by Francisco Gavidia University in San Salvador."

A significant sum for any individual, but how impactful actually is this for a nation state like El Salvador? Not to blindly defend Bitcoin, but it seems like a tropical storm would inflict just as much, if not more, financial loss than this decision. And, it remains to be seen if this position will pay off in the long run.

"Not to blindly defend Bitcoin, but it seems like a tropical storm would inflict just as much, if not more, financial loss than this decision."

I know you are just theorizing here, but c'mon. By embracing Bitcoin they did as much damage to their nation as if a hurricane had hit? That seems like an incredibly poor choice for the people who are ostensibly in charge of keeping their nation safe and stable.

I was trying to put the loss in perspective, namely that this loss, while bad, is still an amount that El Salvador will be able to reasonably recover from. Not that I sensed there was doom and gloom about the situation, but this isn't the kind of large loss that will financially bog down El Salvador for the next decade or more.

I wonder how much of this was a marketing play by El Salvador. As a result of making Bitcoin a National Currency, they've had their name in the news quite a few times, they've had more tourists than normal (cryptocurrency enthusiasts visiting, etc), and they've likely had increased investment in their country.

There is no loss on an asset until it is sold.

They have not realized a loss other than for accounting, which may benefit their debt positions.

Bitcoin is responding exactly like it has in the past, it also represents a better ~one year return than most investments. Now is a time to buy additional amounts as $13k-20k is the anticipated low range during the next 'slump' year

In comparison with the hurricane, Bitcoin is going to fix itself (or at least it always did). And projected -$63M damage can be +$200M very easily. I think that the linked article will not age well. Practicly no article of this kind since the Bitcoin creation did.

"very easily"

Tropical Storm Amanda caused $200m of damage, so presumably a hurricane would cost even more.

Not a big deal at all. These are long term reserve assets. They will not be sold perhaps forever.

How do we actually know that El Salvador is buying BTC when they say they are? Is there a government wallet that we can see to confirm the presence of the national BTC reserve? I have a suspicion that the announced purchases aren't aligned with actual purchases, especially since we've seen that relatively small volumes of buying/selling will move the BTC market by thousands of dollars.

They don't buy on the open market like a normal person would. They buy from Coinbase or other large exchanges off market. Much like how large stock deals are done.

> They don't buy on the open market like a normal person would. They buy from Coinbase or other large exchanges off market.

If they were being responsible about it (or, at least, as responsible as any government speculating in cryptocurrency could be), they would.

But, according to Bukele himself [1], these purchases are made from an app on Bukele's personal mobile phone. I wouldn't be surprised at all if they were buying through an over-the-counter exchange.

[1]: https://twitter.com/nayibbukele/status/1467333081505976323

The government of a sovereign nation is expending its treasury all through one person's cell phone?! Wild times we live in.

Yep. I don't think there's any good-faith argument that this is a responsible or appropriate approach to state-level investment. It's madness.

C'mon. That tweet is halarious. It's a joke. I know people aren't expecting that nowadays from heads of state, but it's the norm now. He's just trying to fit in with Elon.

the title implies that el salvador is playing in a casino. They simply want to opt out of the united states controlled monopoly game. bitcoin is the currency out of the system and yet the transition phase has it still pegged since the net buyers are people who own USD. We are early it's going to take some time and education to fully depeg. I would say we are 7-25 years away from more than 15% percent adoption.

this article is clearly opinioned piece, not a "report". You can pull up facts and write a piece on the benefits on bitcoin. these guys clearly hate the president

I was told there would be volcano powered Bitcoin mines

That’s hot.

It's real!

> I was told there would be volcano powered Bitcoin mines

There is one nearby Berlín, Usulután, operated by the state owned geothermal company La Geo.

A group of foreigner bitcoiners toured the plant published pictures and youtube videos during a tour. I'll link to a photo gallery from a local newspaper:

https://www.elsalvador.com/fotogalerias/noticias-fotogaleria...

Unfortunately there is very few public information available about the project so there is no way to know how much bitcoin El Salvador has mined or which wallet it's in.

There is no loss on an asset until it is sold.

They have not realized a loss other than for accounting, which may benefit their debt positions.

>$13k-20k is the anticipated low range during the next 'slump' year

What is the basis for this assessment? At least with a stock you can point to the underlying performance of the company. What factors affect BTC price other than sentiment?

The basis is the general performance of Bitcoin since its inception. You can look up the chart yourself, use the googley and choose 'log' view...

You're trying to compare to stocks and performance in the Era of Uber.

I can't help but think you jest. If Bitcoin had a Crack team of VC marketers on the doll you would be buying.

It is hilarious to hear the arguments that point to a rational stock market or valuation based on "performance". You clearly don't participate in the stock market.

It’s a liquid asset, so that’s a false distinction.

By whose assessment?

Not that it is liquid, but that it is a 'false distinction' -- which you have coined here as if it means something. Is a Bond a liquid asset? How do we account for a bond? How does otential liquidity change the nature of an asset?

You have made a very large statement and need to substantiate it.

It doesn’t matter at all whether you have realized a loss by selling the asset. If they sold the Bitcoin, they could easily buy it back with hardly any transaction costs.

I did not actually make a “very large statement”. It is trivial to substantiate (as seen above).

I can't help but think you have said nothing.

Please rephrase whatever argument that you are proposing.

>It doesn't matter...

Why?

>(as seen above)

I'm looking up, I just dont...yep, don't see it.

Spend some time thinking about the difference between holding $4M of dollars and $2M worth of Bitcoin, and which you’d rather have.

Can you see it now? Or is it still too confusing?

Hahaha, what?

This is not an argument.

Today, Bitcoin. 100% 2MM$BTC over $4MM.

I'm not confused. I know how money is made.

You seem to be very unclear on how money is made.

Dollars are depreciating at 8.6%. We are immensely fortunate the rest of the world is doing worse

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