I never really understood what incentive a government had to recognize bitcoin as legal tender. There are no real benefits over something like UPI in terms of user UX. It takes things out of the government's hands, as it's harder to print money.
Bukele is promoting BTC as a way to attract talent and capital, and also to modernize El Salvador's economy. Similar to how Africa skipped landlines and jumped right to mobile phones. It remains to be seen how effective that part is. But, either way, it gives El Salvador some more independence from the US and sovereignty in a world where alliances are shifting fast.
That doesn't have anything to do with USD. Any reserves (or really any asset) that is outside the country's jurisdiction can be seized by a foreign one. El Salvador could as easily lose all their Bitcoin reserves if they held them in a Coinbase wallet, for example.
Comment you're responding to is saying this is not unique to U.S. dollars. All currencies are controlled by their issuing sovereigns.
Separately, the idea that Bitcoin is unsanctionable is laughable. It may require enabling legislation. But marking wallets as sanctioned, and threatening any wallets that transact with it to be either similarly sanctioned or subject to heightened scrutiny, would diminish the value of those coins relative to coins which can be freely traded with anyone. Given the public nature of the blockchain, enforcement would likely be easier than e.g. enforcing an Iranian oil embargo.
Doesn't this already happen? Basically any bitcoin that comes out of a tumbler or any wallet address that has transacted with tumbled coins is banned on KYC exchanges: https://sethforprivacy.com/posts/fungibility-graveyard/
Litecoin just introduced a sidechain called (mimblewimble extension blocks) MWEB, it permits “cut-through” transactions where UTXOs can mix. It looks like a single UTXO on the main chain. Very Fungible!
The problem is one of pragmatism. All money is dirty. All great fortunes are founded on exploitation.
Every dollar in your pocket has been used for crime many times. The system works because we choose to ignore this. If we could programmatically enforce rules, the system would be fail in a day.
So it’s not about money laundering, it’s about achieving some kind of pragmatic equivalence, while permitting the system to continue to function.
My point is that eventually the major cryptocurrencies will have some fungibility enhancement mechanisms to deal with the practical limitations of taint and chain analysis. Tornado cash, Coinjoin, MW, etc. Its not about normalization of crime. It’s the default ignorant status quo.
I hear similar things from the NRA about how we'd all be safer if everyone carried a concealed firearm. I just don't want the world to be a place where we all have to be armed and launder our money after every transaction.
There is always a balance that needs to be struck between privacy and accountability. Bob Woodward violated the privacy of the Nixon white house, but we generally believe the public interest there outweighs the privacy concerns at stake. I am always particularly skeptical of financial privacy maneuvers, since they are of considerably greater interest to the already rich and powerful.
I don’t know if I agree about accountability balance — accountable to whom?? It is better if everyone is equally blind. Technology that takes power from the powerful is our weapon. You don’t need accountability if there is nobody to be accountable to.
Creating a new form of privacy means creating a new arena in which to conceal malfeasance, and some will inevitably take advantage of that. Privacy can become a means of entrenching power as easily as it can become a means of distributing power. Wealthy people and organizations in the US sue journalists for invasion of privacy to prevent embarrassing information from being published. In the US, some parties have been lobbying and suing for decades to be able to spend unlimited sums with no public disclosure on political and influence campaigns.
Interesting to consider that many gun owners likely don't want the world to be a place in which they feel the need to carry a firearm.
This is because the Taliban is a terrorist organization that captured the capitol, not a government. You don't give $7bn to al qaeda, ISIS or lashkar-e-taiba either.
You can thank Trump and Pompeo and their plan to withdraw 100% of US forces by a fixed deadline for that (removing all support for the afghan government's armed forces), and Biden for going along with the foolish plan.
The pre-Taliban government of Afghanistan as well as the US puppet state in 2021 failed in this core responsibility, and consequently lost the right to govern. Whether or not the Taliban will produce a stable or good government is a different question. I personally weep for those forced to live under it's rule.
It would make about as much sense to say the United States in 1783 was not a government, but a terrorist organization that attacked the rightful British government of the American colonies. The British lost the right to govern when they failed to maintain their monopoly on violence in the American colonies, and a new governmental organization formed from the ashes of the war that proved it.
Russia defaulted on their USD loans, not because they don't have dollars, but because the US won't allow them to pay.
Another massive issue is that as a currency with an inelastic supply Bitcoin price volatility is guaranteed to remain unstable. This is not a desirable feature for any currency.
https://www.wsj.com/articles/argentina-names-new-economy-min...
The annual inflation rate in Argentina is ~76%. It's basically impossible to do business in Pesos when it's devaluing so quickly. Every contract programmer in Argentina is doing business in Bitcoin or stablecoins because they would lose ~40-60% if they were paid in USD from abroad. People are stashing savings dollars (and Bitcoin) to keep it out of government hands and protect it from becoming worthless.
Bitcoin is like this for all governments and currencies. It is honest true hard money that cannot be devalued by the money printers. It’s the hard money of last resort and you bet this will be more and more important as we lose trust for each other’s currency.
The charitable answer I would give is that Bukele hoped to attract cryptocurrency investors with the move, perhaps to supplement existing institutional investors who haven't been happy with some of Bukele's policies.
The uncharitable answer I would give is that Bukele is trying to innovate and translate core cryptocurrency strategies of extracting money from people's pockets into extracting money from El Salvador's citizens' pockets.
El Salvador is very corrupt, in the neighborhood of Sierra Leone and Algeria [1]. It is unclear to what degree the state has a monopoly on violence [2]. Bitcoin is a precedented dark money channel.
[1] https://www.transparency.org/en/cpi/2021/index/slv
[2] https://www.cfr.org/in-brief/why-has-gang-violence-spiked-el...
There is a reason that nations have abandoned the gold standard.
The reason we ditched the gold standard was for deviance. It’s very hard to fight wars if you can’t print the money. Ww1 ww2 Vietnam, Afghanistan, Iraq … try that on gold. Bitcoin = End of all war.
...?
Holding back the floodgates until the problem is ready to kill everyone equally is stupid, and the opposite of a meritocracy.
With Bitcoin, no one has control!
Well, until a little over 50% of the miners decide they don't like you.
Ethereum's fork proved "no one has control" is an illusion.
The 2017 Bitcoin scaling wars proved that one can't simply change Bitcoin's consensus rules by majority control of the miners. I think at one point 80% of the miners were in favor of large blocks, yet they didn't have buy-in from the rest of the network participants (developers, regular users, merchants, exchanges).
Bitcoin has really robust decentralization.
The ETH fork happened before the people on HN were even following cryptocurrency happenings.
That's how early in the project a fork was done — the project would never survive another at this stage of maturity.
And everyone knows that.
So stop repeating it?
The fork stuck because it was still an alpha, as far as society was concerned.
It's currently in a grey area between a social movement and a FOSS project, and it simply started as a FOSS project.
I think it's important to characterize what occurred with this context. Devs won't get another chance at that without the project (and movement!) ending — and everyone knows it.
In fact trying to get a neutral or deflationary currency is a no brainer. Especially, if you have a small banking system/network.
Of course there are gotchas.
Can you make your own currency? Of course. How will you back it? Who will trust it? Who governs those policies? These are people problems people want to solve without people (crypto folks), with expected results (speed running financial regulation). They came at the king (reserve currencies) and missed by a mile.
Imo you're just trading "beholden to the usgovt" with "beholden to miners, whales and wall street" plus wild price swings. Former or latter may be preferable for certain reasons, but for fiscal stability or day-to-day use the choice seems obvious to me.
The price of BTC, even today, seems very easy to manipulate.
If it's actually used as a currency, a person with a large stockpile will gradually lose their relative share over time as they consume, since you don't generate interest on it.
It's also confusing to me that people can hold the cognitive dissonance of defending a post gold standard, infinitely inflatable currency with a negative view income inequality, which only started increasing drastically after we abandoned the gold standard.
An inflationary currency benefits the wealthy asset owners more than the working class almost by design. Asset owners get to borrow against their assets and pay it back in a depreciating currency, while at the same time getting to use a psychological magic trick to make poorly educated employees think they're getting a pay raise, when in real terms they're getting a pay cut.
If I was a greedy rich person who wanted to make sure I could never lose my wealth, I would build a financial system on a currency that inflates away by design.
Why are you presenting it as such?
There is limited evidence for connecting countries' foreign debt levels to their degree of democratization [1].
More pointedly, there is ample evidence--millenia of it!--for empires on commodity money waging war and whatnot and having a fine time of it.
> deficit spending funded with inflation is not really what people have voted for
Deficit spending / bond issuance is voted on at multiple levels of government practically every cycle. People have voted for this. Because the alternative is austerity, and fanatical governments that pursue that for its own sake tend to get replaced.
[1] https://d1wqtxts1xzle7.cloudfront.net/68966375/bf00224681202...
Anyway, my point was that bitcoin can limit government spending and protect individuals against inflation due to government spending. It doesn't mean that a rich nation couldn't wage war.
I believe Bitcoin standard world is post war. It is uneconomical, and that hits the people very hard very quickly. No home propaganda could convince the people it was just…
El Salvador banks don't exchange or accept bitcoin as deposit. Some of them accept bitcoin for loan payments, via an external payment processor.