The Salvadoran government has 5,940 bitcoins worth $582M | Hacker News Reader

The Salvadoran government has 5,940 bitcoins worth $582M

lanoticiasv.com

64 pointsmistrial992 comments

GDP of $32b so 1.8% of their annual activity, invested in sovereign funds are in a high risk high yield asset class.

Fair enough. What the rest of their state financial asset investments are isn't clear: they've been doing smart debt recycling getting rid of high interest overhangs of being a basket case economy.

National exchequer isn't kitchen penny jar. I wouldn't personally invest in bitcoin because I don't like gambling and I'm content to live in an ETF world reflecting overall market trends, through my retirement fund. I wouldn't have a clue if they hold any and as long as it was a small % I wouldn't care much.

This represents less than 10% of annual government spending or revenue and less than 2% of their outstanding debt. It's cool, but not a huge deal at this point. If Bitcoin went up another 10x it would be significant.

The wallet:

https://platform.spotonchain.ai/en/profile?address=32ixEdVJW...

How are they storing the key, I wonder?

It's very likely a large threshold multisig setup. Possibly some infra is contracted out to a company that provides institutional custody services.

Very likely

It's a P2SH-P2WSH 3-of-5 multisig

Supposedly https://mempool.space/address/32ixEdVJWo3kmvJGMTZq5jAQVZZeuw...

Written on a post it note stuck to the side of somebody’s monitor at the central bank.

Probably the safest way for a state level treasury. Stealing it carries the risk of "suicide by cop".

> Stealing it carries the risk of "suicide by cop"

If you’re robbing the El Salvadorean central bank, you’re retiring under a false identity far away.

Makes one wonder. El Salvador brilliantly fixed the high homicide rate issue. But did they fixed also the huge corruption issue? Could they tackle both together? I wouldn't expect so.

Dumb questions: Are they going to sell? When? If not, what's the point?

Likewise, there is talk about people trying to get Trump to create a "strategic bitcoin reserve". Granted I have my biases against crypto/web3, but even trying to understand the argument, I don't get it.

What's the point of hoarding gold?

I'm not sure I understand that completely either.

One proposal to buy bitcoin would use money from a revaluation of the country's gold reserves:

https://prospect.org/power/2024-11-26-crypto-plot-against-am...

Gold has a direct usage in electronics and hi-tech in general.

Sure, but if these "direct uses" were the only reason people ever bought gold, it would cost orders of magnitude less.

There's an innate human desire for gold. Humans crave gold so much that empires have been built and destroyed over it. That's a utility baked into the commodity. Many cultures hoard gold. Most of that gold will never be sold. Much of it is purchased for ornamentation and most of the time it just sits in a locker. In many cultures it is in fact considered a shame if family gold has to be sold.

Think of it this way - if there was no one to buy the gold from you, would you still buy the gold? Answer is yes. Many people all over the world would buy gold even if they could never resell it. The same can't be said about magic internet tokens. They have no inherent utility apart from the hope that a bigger fool will buy it from you at a higher price in future.

> Many people all over the world would buy gold even if they could never resell it.

Why do you believe that?

Ever been to Vietnam? Literally anywhere you travel in the country, there are shops selling gold.

Women store it in their teeth as a sign of strength, wealth, marriage, class, and a way to protect it. Generally not 100% gold, as that would be expensive, but it is some % of gold, and satisfies the belief. [0]

The interesting thing for me is that as the price of gold is driven up by wealthy countries, it increases the value for poor people that save in gold. The same thing is happening in bitcoin/crypto today.

[0] http://vietnam-phototours.com/blog/the-golden-teeth-of-the-e...

It is mostly unnecessary for a modern country to do, so we mostly don’t, right?

> even trying to understand the argument, I don't get it.

It's not that hard to understand: The proponents of the proposal own bitcoin, if a big whale buys bitcoin the price of bitcoin will go up since the supply is fixed, and there's no bigger whale than Uncle Sam.

The point of reserves are to be there to be spent or used in times of need. Gold reserves are popular, also foreign currencies. The US also has an oil reserve and until recently a helium reserve.

I just spent a week traveling El Salvador.

They recently (<2 years ago) arrested basically every criminal in the country and have the highest incarceration rate in the world by far. It’s a bit controversial internationally but the El Salvadorian people love it.

All I can say is visit now while it’s a well kept secret. I’ve never felt safer in a Latin American country. it’s beautiful, cheap and authentic. It feels like a country on the rise. While driving there it felt like everything was under construction (in a good way)

Any of the people in charge of that program who want to come to the Bay or NYC and help with their local justice-impacted community?

They should go to Houston, which has a higher murder rate than either of those: https://en.wikipedia.org/wiki/List_of_United_States_cities_b...

Just because it's a pet issue of mine: the FBI specifically warns against making a table like this one because crime stats from different agencies simply cannot be compared like that. It also tends to distort reality when a city with a relatively small Census resident population has a much larger daytime population due to commute patterns.

https://ucr.fbi.gov/ucr-statistics-their-proper-use

Lol, houston is not even in the top 35 on that list. It's not even the biggest city in that list. Chicago has it beat. And my home town continues to represent as #1.

> They recently (<2 years ago) arrested basically every criminal in the country

I hope we can take their word for it, and they weren't abusing this power, because Amnesty International says they just threw huge numbers in prison without any due process[1]:

> The majority of the detentions carried out under the state of emergency were arbitrary because they violated due process guarantees through absence of clear judicial orders, prolongation of administrative detentions, lack of precise information from authorities to detainees’ families regarding their whereabouts, and concealment of the identity of the judges processing detainees.

Call me old fashioned, but I don't think it's necessarily awesome when the government just 'disappears' people and I hope that doesn't happen here.

[1] https://www.amnesty.org/en/location/americas/central-america...

You’re old fashioned.

Of note: the US accuses Bukele of essentially bribing the gangs not to make too much fuss. https://www.theguardian.com/world/2021/dec/08/el-salvador-us...

When Juan Manuel Santos negotiated a peace treaty with the FARC, he won a Nobel. When Bukele makes El Salvador the safest country in the Americas, there are 'explosive accusations' of bribery.

Is it not functionally similar? Santos was defense minister during the Colombian False Positives scandals which was arguably much more evil than anything Bukele has done [0].

Can't make heads or tails of this, honestly.

[0] https://en.wikipedia.org/wiki/%22False_positives%22_scandal The extrajudicial murder of innocent young men, conducted in order to boost body count OKRs for promotions and yearly bonuses.

EDIT: the purpose of this comment is not to be pro-Bukele, but to encourage critical examination of the _framing and wording_ English-language publications use when discussing Latin American politics. As a Venezuelan, I am especially wary of authoritarians and you do not have to convince me about the slippery slope of judicial abuses of power.

> Is it not functionally similar

No. Negotiating a peace treaty in which the gangs disarm in exchange for political participation versus paying them to be quiet for the moment are fundamentally different.

It’s analogous to the U.S. strategies in Germany and Japan, on one hand, and in Afghanistan, on the other hand.

It looks like the first step to calm down things before he can arrest them all

It's not "old fashioned", I think you are being fed propaganda by these NGOs.

Sadly, same goes for a huge part of the mainstream media that becomes an echo chamber for them (Guardian, NYT for example that used to be reference of truth but lost that status).

Don't take my word for it, please take the time to read opposite views and try to honestly make your own opinion.

Do you have any credible sources?

"Do your own research" is a pretty thin rebuttal to "here's a source by a well regarded NGO".

And if you are saying Amnesty International is feeding propaganda through the mainstream media, that's also going to need some credible sources. They are generally considered a fairly highly factual organization.

I didn't say it was old fashioned, I said I was old fashioned because I can't cheer for the government effectively 'disappearing' large numbers of people. In the US we've enthusiastically taken up arms against governments which did this type of thing. We have parades to honor people who died fighting against it.

Amnesty International isn't editorializing and this isn't a remotely controversial claim: the roundups happened via emergency powers which, by design, denied due process. It's not a secret, El Salvador wasn't trying to hide this.

The secret isn't that El Salvador is breaking human rights law, the secret is that El Salvador is an amazing place to visit and it won't break the bank. I can say first hand that Mexico and Ecuador have become sketchy; you can't feel completely safe anywhere IMO in those countries.

[flagged]

God you're dense. Who said I visited El Salvador? Even if I did, judge much? Are you on the way to jump off a cliff because of the arms we're gifting Israel?

> In the US we've enthusiastically taken up arms against governments which did this type of thing

If by “enthusiastically” you mean “reluctantly”, then yes.

What would be Amnesty’s agenda in feeding us propaganda about El Salvador?

Not just that, the tradeoffs in developing countries are different on the ground. They have to do practical decision making based on limited resources and issues. The alternative is simply criminals taking over.

Do you have evidence that basic human rights and due process is unusually expensive and not feasible for developing countries ?

Because that doesn't seem to be the case given we've seen much of the world become developed over the last 50 years. And almost all have a functioning judicial system.

It is not only in developing countries, even in developed countries it is a bit of a problem, the rise of “far right” in Europe etc is an example to this.

* Latin America has a sad history of using what's been called "enforced disappearance" [0]. It's sickening that it seems to be happening again in El Salvador in 2024.

* There's no justification for ethnic or ideologic cleansings of any type, period. No, making tourists happy is not a good reason for state terrorism (nothing is).

* Bukele is untrustworthy. See "liquid ideology" on [1], just for a start.

0: https://en.wikipedia.org/wiki/Enforced_disappearance

1: https://en.wikipedia.org/wiki/Nayib_Bukele#Social_issues

> I think you are being fed propaganda by these NGOs.

Which parts of Amnesty International's statement are inaccurate and why ?

You know because we want to form our own opinion.

NYT has never been different than it is now. It has always been a willing propaganda outlet, and has always pushed the agenda ownership wanted.

You just liked when it was saying before.

It is a balancing act: If you follow procedure, you'll be too slow to make an impact. If you don't follow procedure, you'll throw innocent Pablo in jail, but your actions will make impact.

Politicians are specifically elected for this. Otherwise, you just put bureaucrats; because what difference would it make?

So deeply ethically puzzled about the situation in Salvador that I'm linking it to the trolley problem.

Salvador could stay being one of the countries with the highest murder and rape, and kinda respecting human rights by following the presumption of innocence VS could put 2% of the population in jail to raise the quality of life for the remaining 98%?

I even heard someone say that Bukele proposed that any country that want Salvador to respect human rights for those arrested could just take the prisoners as refugees. (No source on that).

Which bring me back to the trolley problem, would you want your own country to take those ~75.000 people as refugee and consider them all as innocent?

I believe Bukele has claimed that the state is working to get trials for everyone, it's just taking a long time.

I totally believe that El Salvador lacks the necessary state capacity to try so many people rapidly.

My idea: To release innocent people faster, let friends/family members/etc. post a bond. Prisoners are tried in order from highest to lowest bond value. The bond is returned to the family if the prisoner is found innocent. If they're found guilty, the bond goes to the Salvadorean healthcare system or something like that.

> don't think it's necessarily awesome when the government just 'disappears' people and I hope that doesn't happen here

Disappearing means no paper trail.

These are mass arrests. Also problematic. But closer to a martial strategy than a civil one. But when you’re the murder capital of the world, maybe that’s merited.

Not saying they should have due process but there flip side is they will take 20 years to get through the queue while more pop up. Not sure how they have have it both ways.

It’s clearly not an ideal situation. It might well be the start of something very dark. But also it’s worth examining how unserious some of Amnesty’s quoted claims are:

> lack of precise information from authorities to detainees’ families regarding their whereabouts,

Because the gangs will bust them out

> and concealment of the identity of the judges processing detainees.

Because the gangs will kill the judges

> Amnesty International says they just threw huge numbers in prison without any due process

Due process just means... process that is due. But (for better or for worse, depending on how you view this) it could totally be the case that nothing was due in the particular situation, at least legally. Since people look at this from a USA angle, here's the US constitution:

"The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it."

Notice that in the scenario described, a right such as habeas corpus simply isn't due. You can't be violating due process if there was no process due.

Notice this isn't pedantry; national security has always been something states have at least partially prioritized over individual rights. I make no judgment of the morals of the situation, but I thought it was worth pointing out that rights aren't as absolute (legally, anyway) as people think they are.

When I think about a country who just incarcerates everyone I think:

* Do I want to support authoritarianism?

* Will I be arrested if I do a bad thing?

Also, I was surprised to see the prison incarceration rates, but yeah, El Salvador is absolutely the highest, by a country mile.

The top 5 are El Salvador, Cuba, Rwanda, Turkmenistan, and the USA.

> * Will I be arrested if I do a bad thing?

Are you suggesting you should not be arrested if you do something bad? I think that's how it works everywhere.

"A bad thing" is a highly variable judgement based on local rules, mores, and culture. And not every bad thing results in arrest. If I swear loudly, once, some people might think that's bad, but it's not going to get me arrested.

https://en.wikipedia.org/wiki/List_of_countries_by_incarcera...

El Salvador has over twice as many per capita as Cuba. USA has the most in absolute numbers, but China is not far behind.

It’s hard to blame them for trying given what conditions were like there. But this is the sort of thing that’s very likely to end in tears. To do this kind of mass roundup requires a great deal of discretionary power and historically those granted such powers have very often abused them sooner or later.

When I hear this I just wonder whether the prison infrastructure can keep up?

They built a huge new prison that packs inmates very densely. CNN went inside: https://www.youtube.com/watch?v=E-Oz14D5sz0

For those who may want to spent an hour or so of their Sunday really learning about what has been happening in El Salvador, I recommend the wonderful Notes on El Salvador by Matt Lakeman [1]. The type of long form content that we all need more of; subjects like these have too many angles to learn from HN comments.

[1] https://mattlakeman.org/2024/03/30/notes-on-el-salvador/

Hard to imagine 1.7% of the population is in prison. In the USA we only have .5% in prison and .2% in jail.

1.7% is terrifying police state territory. I don't see El Salvadore coming back from this without a complete governmental overhaul.

So, I read that when it popped up on HN a while ago. As someone who know approximately nothing about El Salvador I found it quite informative. Then I checked out an article on the sidebar about a country where I have lots of first hand knowledge, and found a fair bit of inaccuracies, and worse, omissions due to ideological slant. As always, lying by omission is powerful and you’re not even technically lying. Now, I’m not accusing the author of intentionally lying, but our opinions on things are all shaped by biased sources and the author themself is no different, and the point is to not so readily have your opinions shaped by some “wonderful” article online, especially when you know nothing about the topic otherwise.

Very good to know! May I ask what slant it was? From the article on El Salvador the conclusion felt like overall was that the Bukele's approach has probably been a net positive compared to predecessors, though he did point out plenty of negatives as well. Did this align with a particular slant you noticed on the other article?

Very true that it's necessary to keep in mind that even with texts that present themselves as well-researched, there could be plenty of angles omitted that may drastically change the conclusion. Still, I won't hesitate recommending it over random <200 character comments.

Well without going totally offtopic I’ll just say the other article has a typical “Western” slant, is replete with stereotypes and little things blown way out of proportions to fit the narrative, it’s clear the author has no first hand experience and is retelling a source (which is not even a somewhat neutral academic work but something released to fit a narrative), but they have no problem going into a confident meta-analysis of their own.

Since the typical “Western” view of El Salvador, AFAIK, is/was murderous shithole and not much else, I don’t know how that slant(?) could have tilted this piece.

"Basically every criminal in the country" without regard for charging them with any particular crime. Guilt by popular reputation, guilt by association, guilt by tattoo, guilt by suspicion or dislike. Indefinite sentence. No trial. Prison conditions as proudly abusive & humiliating as diplomatically feasible.

This is martial law, an internal military occupation with dictatorial control. An act of desperation welcomed only because El Salvador was previously, for decades, a bit of a failed state undergoing something tantamount to a low-grade civil war.

Martial law in the developing world doesn't have a history of going very well for very long. It's a brittle situation.

I'm glad you enjoyed visiting! Btw our demonym is “Salvadoran”.

Doesn't it have the highest murder rate in the world, still? I wouldn't dare to try.

One of the lowest, now.

https://www.statista.com/statistics/715019/homicide-rates-in...

Lowest in 2023

Travel bloggers have been covering this too:

https://www.youtube.com/watch?v=bKLnMSvbBmk

https://www.youtube.com/watch?v=il4Hb5f2bgE

Coming soon to every G-7’s national government and every administrative subdivision within them via multiple agencies at each level

As already mentioned by another, there is a proposal for a US strategic bitcoin reserve. It has bipartisan support. <https://bitcoinist.com/bitcoin-reserve-legislation-gain-bipa...>

I’m aware, that bill is going to expire in 30 days so its irrelevant and will have to be reintroduced next year.

the President-Elect is interested too and campaigned on the same premise

what I’m talking about is far more expansive than 1 country’s national government instructing 1 agency to do it

In talking about several agencies across every sovereign and subdivision thereof. all municipalities doing the same. the sovereign credit market being leveraged to buy bitcoin continuously, just like we’re seeing the beginning of in the corporate credit market.

in case anyone wants to think about where this is really going and what that means for bitcoin’s scarcity

Govt become exit liquidity, they won’t be exit liquidity I’m sure

That’s… reductive. Government isnt either an amorphous entity when referring to a single one, and isnt an amorphous concept when referring to many

For the people that sell bitcoin, sovereign institutions will be amongst the exit liquidity

the sovereign's problem is that nobody, or less people, will want to be exit liquidity for their fiat

its fine that your patriotic indoctrination makes that an absurd concept to imagine about a government you respect, but there are also governments you dont respect and where this has already occurred, and that's going to continue occurring as they all compete for exit liquidity of their fiat

Buying one million when only ~20 million are in circulation is shocking, to put it mildly. It would be 5% of global supply just owned by the US government. Assuming prices didn't go up much after they started buying it would be 100 billion dollars worth

A single US corporation is already on the path to doing that

But yes I believe the liquidity will dry up as entities with short time horizons will have stopped selling

Of course, most of those entities and people have a number, it will just be a much higher price of bitcoin

The game is to frontrun the Feds. And nobody in the federal government cares as it will just be instructed to do so by the President and Congress

> Buying one million when only ~20 million are in circulation is shocking, to put it mildly. It would be 5% of global supply just owned by the US government.

5% would be completely consistent with the US's share of the world gold reserves. <https://www.gold.org/goldhub/data/gold-reserves-by-country>

Reply on news.ycombinator.com