It's robbery': Salvadorans slow to adopt Bitcoin
news.yahoo.com
news.yahoo.com
Is this true? Do people really think that because the numbers on their bills can't change, their value is constant? Especially in South American, I would think people know better than to trust Bitcoin OR cash. Maybe US Dollars (relative to local currencies) seem stable, though.
Salvadorans having used the U.S. dollar for 21 years, and having a stable currency four about a hundred years in the past, had protected El Salvador from currency fluctuations that are normal in other Latin American countries.
It's strange though that the remittance scenario is so little used. The idea was that dollar remittances have high fees and that this would bypass it:
USD -> BTC -> send -> BTC -> USD.
When done quickly neither the sender nor receiver suffer much from volatility. There must be some reason why this scenario does not work or is not attractive?
I think the true benefit would only present itself if BTC circulated without being traded for USD and back constantly. This would require businesses to pay workers and suppliers in BTC, as well as accept BTC for their goods and services. That doesn't seem to be happening anywhere in significant enough volume as far as I know.
It would work if you have a lot of transactions in the two directions. Or, if Salvadorian transfered dollars to americans, and not the reverse.
Don't forget a giant asterisk that this only applies if you have easy access to any relatively-stable currencies that aren't under a realistic risk of absolutely insane hyperinflation, something like USD, EUR, various asian currencies (too many to list), etc. If you have no access to those or if you are only able to obtain those at an exchange rate that is extremely overpriced, it might be the case that Bitcoin would make more sense.
I know I would have my savings in Bitcoin than in Venezuelan Bolivar (given the inflation rate in 2018 alone hitting 100,000%+), if those were my only two options. Which afaik wasn't exactly the case in Venezuela, as people had black market exchanges happen and essentially preferring to take payments under the table in dollars (but the point still stands).
But otherwise, I fully agree with your point. For anyone who has access to the relatively-stable currencies, keeping savings in crypto is a massive risk that seems like a very poor idea.
Pretty much what I suspected, yeah. So it sounds like BTC would be a truly decent money storage vehicle only for the scenarios where you straight up only have a choice of a hyperinflating unstable currency and BTC (not even black market USD access). Which, I am not sure if the case anywhere.
> Argentina has been living like this for decades, so don't tell me this is a crazy notion.
Aye, makes sense, wasn't gonna tell you that this was a crazy notion at all. If anything, that's how it's been operating pre-crypto in a lot of places of the world for a long time, and I don't hear of crypto upending it anytime soon (outside of extremely biased pro-crypto takes that don't have much ground in reality).
The Salvadoran regulators have kept banks on check, and the last bank failure was a small bank in 1998. We didn't lose any banks in the 2008 or 2023 banking crisis. No recent memories of widespread failures like Iceland or Cyprus. We've never had limits on withdrawals like the ones they had on Greece or Argentina. I remember there were some bank failures in the 1980s when the social democratic party failed attempt to nationalize some banks, but if I recall correctly no savings were lost.
Almost every citizen 18 and older can get a simplified USD bank account, with international debit card by taking a selfie and picture of both sides of your ID (you get the first one free when you turn 18) on major banking apps. Remittances can be received automatically to bank accounts or by typing an MTCN in the banks app. In contrast some Latin American countries keep USD accounts out of reach to lower income consumers, and remittances incur in unfavorable currency conversion fees. Businesses are not affected by "forced" unfavorable currency conversions either or high taxes for payments in foreign currencies.
And we have a nice credit union system, which is a big alternative to "corporate-multinational-banks TM".
One of the things we don't have is many public companies listed on the local stock market, which makes people invest mostly in real estate asset class, increasing the value of properties faster than inflation.
Doesn't this contradict the headline?