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El Salvador abandons Bitcoin as legal tender (ticotimes.net)
908 points by smallerfish 2 days ago | hide | past | favorite | 845 comments





IMF gave them 1.4 billion to abandon the “experiment”:

> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros). In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.

—-

I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself


If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.

The loan was not to mitigate the risk of the Bitcoin. They needed the loan for reasons. The IMF deemed the high involvement in Bitcoin risky for the loan. The IMF text has a "meanwhile": https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...

> They needed the loan for reasons.

One of them being that El Salvador lost affordable access to the international bond market for a good part of the past years due to higher country investment risk, there were multiple reasons for that that are too long for one comment.

Some for the consequences have been:

The government switched to funding their bonds locally, including a good chunk of the local banks deposits which then the banks had to refinance to a longer longer term.

The government has been taking a good chunk of the pension funds with no interest paid back. Few details about this deal are available because the pension fund administrators and government supervisors have stopped publishing most of the financial reports for months.


"...gov't supervisors stopped publishing financial reports."

And you thought OKRs were bad! Ha ha ha, reports suck? Let's really make reporting consequential for individuals, like in China.

The irony is just that "reporting" is not a popular human activity, and why we have things like GAAP and try to enforce the rule of law...


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because they started the experiment 20b in debt and have also managed to do a massive crime clean up + survive covid in that time. bitcoin is an overall benefit, but they are burdened but what has been

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... But what's wrong with his take? That's exactly what happened.

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FYI, I assume anyone using the words "stay mad" is actually the mad one. Just a note on your rhetoric, I have no opinion on El Salvador's bitcoins.

> mitigate the risks associated with Bitcoin

The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF. A subtle but important difference.


> The IMF gave them 1.4 billion dollars to mitigate the risk of bitcoin to the IMF.

You need to be functionally illiterate to draw that take from the announcement. Read the thing, be informed.

https://www.imf.org/en/News/Articles/2024/12/18/pr-24485-el-...


Lenders of money want to get their money back. They try to minimize the number of factors that threaten getting their money back. Those factors are called "risks".

El Salvador wants to borrow money. The IMF is willing to lend it, but sees El Salvador's Bitcoin policies as a risk to getting their money back.

From the IMF's perspective it is a risk to El Salvador's economy and therefore the repayment of the IMF's loan.

~ You may want to review the Hacker News Guidelines for commenting. Your comment is out of line with a few of them. https://news.ycombinator.com/newsguidelines.html


Your reply addresses nothing in my comment. The truth of the matter is that El Salvador reached out to the IMF for funding to address a number of issues listed in the announcement, and the adoption of Bitcoin as a national currency is one of many many topics covered by the deal. Spinning this as "the IMF paid off El Salvador to shut down Bitcoin" is, again, a take born out of functional illiteracy.

Where did you draw that conclusion? Because nothing in the article or reality would lead one to believe that.

> If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.

In addition, the whole country ditched Bitcoin as a payment system as soon as they cached out their sign on bonus. How is a national currency depicted as a success if no one uses it at all once they cached out the free money?

Crypto bros need to stop moving the goal posts they themselves plant arbitrarily and against any reason.


> to mitigate the risks associated with Bitcoin

Was that the goal of the loan? How did you come to this conclusion?


Its literally stated. in those words, in the upthread excerpt that describes them receiving the loan.

The target of the funds is not related to bitcoin.

"The program is anchored on improving the underlying primary balance by around 3½ percent of GDP over 3 years, to put the ratio of public debt to GDP on a firm downward path after peaking at 85 percent of GDP in 2024. High quality measures, worth 1½ percent of GDP in 2025, already included in the approved budget, will reduce the wage bill, spending on goods and services, and transfers to municipalities. To ensure fiscal sustainability and a further reduction in borrowing costs, reform efforts will center on strengthening the efficiency of the civil service, the viability of the pension system, and revenue mobilization. Fiscal consolidation will be conducted in a manner that strengthens support for the most vulnerable and protects priority public investment."

The assessment of their economy seems broadly positive

“The Salvadoran economy has steadily expanded since the pandemic, on the back of robust remittances and a remarkable pick-up in tourism, and amid an improved security situation, with climate shocks having only temporary negative effects. Meanwhile, the current account deficit has continued to narrow, and inflation has fallen further – supported also by lower global commodity prices. The fiscal situation continues to improve very gradually, and recent liability management operations have substantially lowered near-term financing needs, in the context of sharply lower sovereign spreads."

“Building on this progress, and recognizing El Salvador’s pending macroeconomic and structural challenges, the IMF-supported program aims to strengthen fiscal and external stability and help create the conditions for stronger and more inclusive growth."


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Can you please not post in the flamewar style here, regardless of how wrong another commenter is or you feel they are?

https://news.ycombinator.com/newsguidelines.html


[flagged]


Please don't respond to a bad comment by breaking the site guidelines yourself. That only makes things worse.

https://news.ycombinator.com/newsguidelines.html


Sorry about that

1. That's what stated by the IMF, and so far I don't see any reason to believe it's true.

2. That statement refers to government holding bitcoin as reserves. Which has little relation to use of Bitcoin in the country as legal tender.


>and so far I don't see any reason to believe it's true.

Yeah I guess bitcoin is only allowed to go UP everything negative is always false! There's no way that virtual beanie-babies couldn't overcome the evil IMF!


What are you talking about? Their Bitcoin holdings more than doubled in value.

Would that not be a bad thing when using it as legal tender? Deflation tends to be disastrous for the economy.

Exactly, too many people confuse investment (store of value) part of a currency with fungibility (medium of exchange) and debt (standard of deferred payment). Being good at one or even two of these things doesn't necessarily make it good at all three, good currencies balance all three to a greater or lesser degree.

> Exactly, too many people confuse investment (store of value) (...)

The "store of value" trait of money has nothing to do with the investment angle. It literally means value you store. It's the assurance that it retains it's value so to allow you to use it in the future to purchase something just like you could do today.


that doesnt hold for a deflationary currency

If the value of your coin only goes up in value, why would you use 1 bitcoin now to buy a pizza slice if you can use it 5-10 years from now to buy a house?

A house in 5-10 years is nice, but it doesn't stop me from starving to death today.

That's exactly the problem: People will (rationally!) limit their spending to bare necessities if they expect the currency they have on hand to strongly appreciate over time.

Imagine that, having the option of saving your money for things you really want instead of being forced to spend it on things you don't, or risk lending it out for essentially free to compensate for the continuous fall in value.

I think it was just an analogy. The incentives are to defer purchases, if possible, which lower economic activity overall.

There are other ways to encourage spending though, like a wealth tax. Not that I necessarily support it, but that would be the more comprehensive solution to hoarding, since it couldn't be worked around by just exchanging fiat for other assets like gold.

Sure, my point was that there are many reasons someone might spend money today that might be better off saved for the future, however much it may increase in value.

> there are many reasons someone might spend money today

Yes, because that's the value of money. Bitcoin isn't money. It's a speculative asset precisely because people are hoping its value will only go up.


I'm speaking from experience. I literally spent Bitcoin last week that I would rather have held, because I needed the money.

And yet, en masse Bitcoin is used as speculative investment, not money.

All investments are speculative.

> It's a speculative asset precisely because people are hoping its value will only go up.

This is the same for any currency trading.


Yes, bur you dont want to limit your populations spending to just those essential items.

And who doesn't want to live in an economy where your purchasing decisions are made with the hunger of starvation!

> that doesnt hold for a deflationary currency

I think crypto proponents in general share this inability to understand the fact that one of the most basic traits of money is stability of it's value, and anything that fails to meet this basic requirement is simply useless as a currency.


Bitcoiners understand it well. They realise that in order to stabilise in value and become a unit of account, it has to grow close to it's ultimate potential as a store of value first. Which in the case of bitcoin is potentially well over $100T market cap. This is why El Salvador is likely willing to back down in the currency aspect for now and focus onto accumulating and holding bitcoin reserves.

Useless after IMF bribed you with a huge pile of money.

deflation is fine for an economy. inflation is disastrous for an economy. the people in charge of the money printers are trying to keep you confused. don’t buy it.

LOL

I have $1,000.

I believe that tomorrow, my $1,000 will be worth $2,000.

Why would I ever spend my money?

Hence, economy freezes.

This is so plainly obvious to everyone except crypto zealots I literally gasped seeing your comment.


That 'LOL' comes across as very arrogant for someone who seems to have a tentative grasp at best on what they're commenting on. We have already experienced stagflation which runs counter to a lot of Keynesian ideas about inflation. It turns out it doesn't always encourage spending and employment. Similarly there is no evidence deflation will lead to stagnation of productivity[1]. People will always want to spend more than is needed for survival and doing so in a deflationary environment makes people think harder on how money is spent.

[1] Read this for a more comprehensive view of deflation from an economist who lived through it: https://www.amazon.com/Economic-Changes-Production-Distribut...


Not arguing too hard but people do have to spend some money to live regardless… it could be said people are less careful with their money when they feel like it’s losing value, so they spend more and save less. Yes it results in more spending but on what?

Yes, it would drive consumption toward the barest minimum to live and investment toward zero.

This is bad.

> Yet it results in more spending but on what?

Well near target inflation rates (which is a positive non-zero number) it results in a mix between consumption and investment.

This is good.


Are you saying low consumption is bad and high consumption is good?

High consumption has been improving the economy, and destroying the earth. I'm not saying I have the answers, but it's not so simple.


No, I'm saying that consumption at subsistence levels and investment opportunities having to overcome a deflation hurdle is bad.

It is very good that the default thing to do with excess money is invest it.


I'm not trying to strawman the opposing side, but I always found it ironic that many of the cryptocurrency proponents I talk to think that starting a business is amazing and innovation is important, but also hate inflation, which encourages those two things.

They'd have to think at least one or two steps further than chart-go-up.

> Not arguing too hard but people do have to spend some money to live regardless…

This isn't about a decision to buy bread and milk for your breakfast. It's about the decision on whether you invest in a grocery store vs let your money sit in a bank. If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity. This has disastrous consequences because the majority of people in a society do not have the luxury of having investments to live off their dividends.


> If doing nothing is more profitable than doing something then society as a whole will gravitate towards generating no economic activity.

You're operating off a false premise. Do you think all economic activity would be less profitable than the interest rate offered by deflation?

The whole point of investing in any business is to make a return. Giving businesses competition in the form of deflationary currencies will not eradicate businesses from being formed, and there's no evidence to suggest these businesses will be less profitable than holding a deflationary currency.

We see this in various cryptocurrencies claiming to be deflationary with the concept of 'yield', which shows investing to be a function of their wealth, interest, and expectation of return. Inflation does not need to be in the equation for this type of development.


Who cares? The "economy" is just people buying and selling things. If they choose not to and save instead, that's great. It's called freedom.

It's like saying - "if we have some money that keeps going up in value, we won't need to work anymore and unemployment figures will go up - that's terrible - we must not allow it to happen!"


computers have experienced rapid deflation in the previous decades. did that prevent people from buying computers? no, obviously not.

of course you are just trolling ("LOL") and you are incurious to any evidence or argument that contradicts your straight-from-cable-news talking points.


This isn't quite the same. Money that is deflating becomes literally more functionally useful the longer you hold it. Computers stay as functionally useful as you hold them and arguably degrade relative to the software you need to run on them. In your analogy you should be concerned with whether I want to sell my computer (analogous to spending my money). If a computer truly did become more functional with passing time then no, nobody would sell them unless they had to - illustrating the problem.

you're technically correct, yes it isn't exactly the same. good job! for an example that is exactly the same, look at the general monetary deflation in the united states during the majority of the 19th century. I know most people won't, so I used a similar example that everyone is familiar with.

Their argument isn't that it's not "exactly the same" (they were being polite), it's that it's functionally the opposite. And when you imagine a variation in which it's functionally the same, your argument clearly falls apart.

As far as deflation in the 1800s, are you referring to in 1818 after a credit collapse cratered England's economy and then spread to the US and put it into a recession; or maybe the Panic of 1837 which triggered a depression until the mid 1840s?; or do you mean the Panic of 1873 which triggered the Long Depression that lasted until 1899?

Which one of those are good examples we should look to?


it isn't the opposite, it is the same. many people are confused about money though, so understandable that you had trouble relating them.

how could panics be what I'm talking about? we are talking about price levels, or I'm trying to at least.


The glorious periods of deflation that you're glamorizing are referred to in the historical record as panics and depressions. Because they were very unenjoyable.

It's of course not that bankers put this spin on it to give them an excuse to continuously print money (all the money in fact) out of thin air and charge interest on it.

Remind me, why is the target inflation rate 2-3% again? It couldn't be that it's the amount of money creation they can get away with without devaluing the currency so much that it destabilises into hyperinflation could it?

I'm just having fun - I'm sure I'm completely wrong


> Remind me, why is the target inflation rate 2-3% again?

Because empirically it seems to yield a pretty sustainable mixture of consumption, investment, and savings, while also not risking a wage-price spiral.

You tell me what the target inflation rate should be and point to some moments in history informing that target so I can go read about them.


It should be a negative, just as the value of consumables are over time. But that's not possible in a system heavily indebted and addicted to interest rates under the free market rate (only possible because banks create money effortlessly and hold it artificially low to enable a monopoly on "debt"). Such a policy would quickly collapse the current system as the value of the debt would increase over time instead of decrease, and so instead the banks inflate the value of the currency down to 0 which takes more time for the system to collapse (which fiat currencies always do and always will).

Starting again with a hard money, we would thrive, instead of being enslaved by a system that continuously stealthily, steals the value out of the fruits of our labour (at a rate of ~7% year) and gives it to the bankers and those closest to them.


Because I need to buy food, clothes, pay rent, and replace my laptop that just died.

And I need to do this today or i’ll starve on the street.

I could delay buying a new laptop, but that’s a personal preference. I still need one at some point.

That’s why I would spend my money, because there are things I need or want.


Right, you'll spend the absolute bare minimum and proactively invest approximately never.

This is bad.

In fact, you'll only ever invest in highly speculative investments because they're the only things that might possibly justify the opportunity cost of your currency just accruing value.

This is bad.


By people in change of money printer, did you mean Giancarlo Devacini, who has printed hundred billion funny tokens in some non-extradition offshore with zero audit, and used those funny tokens to buy other tokens like BTC, ETH and others? Those people? Or he is fine, because you are directly benefiting from that token printer and doesn't care about others being swindled in the process?

If the wind blew the other way, you wouldn't be talking here.

Yeah, i really dislike bitcoin, but have to admit, it has been a very profitable investment for a lot of people (and still hasn't completely crashed like expected)...

... although as a form of currency (as opposed to an investment) for El Salvador, it looks like it's a failure


The risk that IMF would be concerned about is that the value of their holdings could go to 0 overnight by a wallet hack, data loss, an unscrupulous government employee, or the world running out of greater fools.

Tether collapse is still the big one.

Yeah, that's my theory too on one reason it hasn't fully crashed (meaning "the world running out of greater fools"). Unlike tulip bulbs or the dot.com crash, bitcoin is a world-wide phenomenon so there is large supply of bitcoin buyers. Yeah, even the dot.com crash was done in the highly regulated US stock market.

Also thinking, since it's extremely difficult to regulate, was wondering if some very clever people with huge holdings have formed a cartel and are doing a lot of price manipulation to prevent it from fully collapsing (maybe even during a rise in price, causing it to drop early to prevent a major run up). But that's just a theory.


It’s around 100k USD apiece, +875% in the last 5y, +340% over last 2y, +130% over last 1y… I’d also qualify this as “not quite crashed yet”

I dont know what the future hodls but it’s looking pretty good for bitcoin so far


That is not a currency in the same manner that gold isn't a currency or barrels of oil isn't either. Or in other words, you don't use for buying a coffee or grocery.

Sure that you can always point some exotic and rare exceptions to prove differently but even yourself don't use it on normal daily financial operations, and no, Lightning isn't even bitcoin so please don't argue with that.

There are more things backing up the value rise for that old tech. Just please diversify into other areas so you don't come out empty handed in some years from now.


As we all know, past results ARE an indicator of future performance

>I dont know what the future hodls but it’s looking pretty good for bitcoin so far

The future always looks good right before a crash. You really don't want a currency as unstable as bitcoin as your legal ledger. we would have had 2 crashes already in this decade alone: the obvious 2020 dip and the dip in 2023.

All the DOGE/Trump shennaigans + the investigation on the Hawk Tuah coin will probably crash it again late this year.


I don't think DOGE/Trump are real bitcoin advocates. I think they're using it as a financial weapon to exploit its vulnerability to crash and break things they don't want to exist.

"the lightbulb is always brightest right before it burns out"

> I dont know what the future hodls

I see you.


Despite that interference, from everything I’ve read though it’s hard to describe the bitcoin experiment as anything else than a massive failure…

If I could convince someone to give me 1.x billion to change my behaviour, I would consider that behaviour a massive success without much further thought. It isn't a huge amount of money at the scale of a national economy but >$1 billion for nothing is a win.

Although of course it is unknowable how much of that money was bribe and how much El Salvador would have gotten without additional leverage.


> If I could convince someone to give me 1.x billion to change my behaviour

I think you need to refresh your understanding of the difference between a loan and a gift; it wasn't an incentive to change the behavior, it was a loan to deal with the problems caused by the behavior.


There are loans and there are "loans". This isn't El Salvador issuing bonds on the market, it is politics that comes with political conditions. That means they negotiated it and that means they got something in exchange for any leverage they could find.

The IMF are tough guys, countries do not want to owe them, but usually don't have better options. They don't give "loans" and impose rather strict policies on everything. https://actionaid.org/publications/2023/fifty-years-failure-...

The IMF are an arm of the US "diplomatic" apparatus. The charitable interpretation of how they operate looks like this:

  1) A country is doing something the US doesn't like.
  2) The country is in some trouble of their own making.
  3) The IMF will come and bail them out if they would be inclined to start doing the things the US likes instead of the things it doesn't like.
The uncharitable interpretation of "2)" is "the country is doing alright so the US overtly or covertly causes problems for them so they become in trouble".

Basically, the IMF money is the carrot you get for bending the knee. The stick can be the CIA or other things.


That is also (to a rough approximation) how all foreign aid works. It's not specific to the US.

So your claim is that US administration through the IMF is forcing El Salvador to drop Bitcoin as a national currency. The same US administration that proposed creating a "national digital asset stockpile"??!? (per https://www.cnbc.com/2025/01/23/trump-signs-executive-order-... )

The IMF agreement requiring them to do this was from December, i.e. the prior US administration.

The IMF isn't run by the US any more than it is run by Russia or any of the other major members (those that have their own executive-director rather than being in a group that together shares one.)

"Large international banking things have strong ties to large governments" is kind of a weird thing to dispute.

Try starting an independent one if you think otherwise.


And, regardless, "you do this, we do that" in no way unusual for the US's foreign policy. Eg, the US military insists on democracy onshore and is mildly opposed to democracy in the middle east. Neutral at best. Any democracy they like in the ME as long as it never votes for any policy that inconveniences the nearest US general.

USA's own stockpile talk is to pump Doge and help the oligarchs get richer.

El Salvador's cryptocurrency was helping other people (not sure if actual citizens), so it had to go.


> The IMF are an arm of the US "diplomatic" apparatus.

No, they aren't.

> The charitable interpretation of how they operate looks like this:

You misspelled “conspiratorial”, and it's not even the most reasonable conspiracy theory.


IMF is the lender of last resort, their loans pretty much always come with strings attached which provide some assurance that the loan will be repaid.

> There are loans and there are "loans". This isn't El Salvador issuing bonds on the market, it is politics that comes with political conditions. That means they negotiated it and that means they got something in exchange for any leverage they could find.

I think you need to take a pause and read what you wrote because there's some serious cognitive dissonance in your claims.

The IMF is a fund put together and ran by the majority of countries in the world as a lender of last resort. It serves as the world's insurance policy on stability. So when a country like El Salvador knocks on their doors, it's a kin to stating the world they are in trouble and they desperately need a hand. The IMF then provides help, but requires as a tradeoff that the country cleans up their act and actually corrects it's course as to mitigate or eliminate the root causes of their instability. For example, countries that are hugely indebted have to comply with demands to lower their sovereign debt down to manageable levels.

Looking at El Salvador, their populist and ill-advised policy to adopt Bitcoin as a currency was a fantastic failure with a tradeoff of being a huge risk factor. Even the most firebrand crypto bro is forced to acknowledge that crypto currencies like Bitcoin have a number of traits that renders them unusable as money, among which the most popular one is the core reason driving it's popularity: volatility. It's to no surprise that one of the basic requirements for stability is to not use a highly volatile and uncontrollable asset as the nation's currency.


>_> Cheeky FYI, but cognitive dissonance is the "mental disturbance people feel when they realize their cognitions and actions are inconsistent or contradictory" [0]. While I'm certainly not above that, in this case I don't think I even made and defended enough claims here for them to be contradictory in principle and you don't seem to be arguing that. Consider going with the more straightforward "I disagree!" or "That isn't correct!".

[0] https://en.wikipedia.org/wiki/Cognitive_dissonance


It is a textbook case of cognitive dissonance. For example, you are somehow trying to hold contradictory claims on how Bitcoin's clear failure as a currency is somehow a sign of it's success.

The mental disturbance angle is also compounded by the far-fetched conspiracy theories on how El Salvador ditched Bitcoin because "the man" wants to kill it.


> Even the most firebrand crypto bro is forced to acknowledge that crypto currencies like Bitcoin have a number of traits that renders them unusable as money, among which the most popular one is the core reason driving it's popularity: volatility.

This is essentially the other way around. It's volatile if it's predominantly used for speculation rather than as a currency, because "widespread use as a currency" is a big value sink that absorbs volatility. In other words, if more or larger countries used it as a currency it would be less volatile.


> This is essentially the other way around. It's volatile if it's predominantly used for speculation rather than as a currency, (...)

It's predominantly used for speculation. Back in the real world, it's the only purpose it has. There is no way around it.


That it's predominantly used for speculation is the reason it has had high volatility, which is the point. Increased use as a currency would cause the volatility to decline, because when the majority of the value is held by a hundred million people each holding three-digit numbers of dollars worth, they don't try to predict the market and dump their holding of pocket money. So volatility not only doesn't preclude use as a currency, wider use as a currency solves the volatility.

There is also a pretty obvious way to avoid the volatility in the interim when using it as a currency: Don't use it to specify prices and don't hoard large quantities of it. If you have a Bitcoin wallet with the equivalent of $100 in it, it doesn't matter that much if it goes down to $50 and then up to $150 and then back to $100 again over the course of a year, because +/- $50/year is not a big deal. Meanwhile we have computers now, so prices can be listed in US dollars or any other currency and then use the live exchange rate when paying in cryptocurrency, while still accepting it widely.

And "it has no other purpose" is a weird claim. It has an obvious purpose: It allows you to exchange value without permission or identity. The "it's a public ledger so there's no privacy" claim is silly; your wallet address is public but you can have arbitrarily many of them, there is nothing inherently tying them to your identity, and there are known implementations (e.g. Monero) that provide even stronger privacy. These are things the existing banking system doesn't provide, and from the perspective of countries that actually respect the privacy of their citizens (or any citizens who want their privacy protected), are features.


Why are you guys saying adopting Bitcoin was a failure? Because the wallet used by its citizens is too complex and nobody uses it?

Or because Bircoin more than doubled in Price since El Salvador started buying?

El Salvador will not sell its bitcoins and keep on adding them, maybe now as strategic reserve.

Meanwhile Tether is moving to El Salvador.


> Why are you guys saying adopting Bitcoin was a failure?

Because it was a failure in each and every single thing it was claimed it would achieve, specially the fact that everyone in El Salvador ditched the system once they cached out their sign on bonus.

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


The thing they have in exchange is millions of citizens that the entire globe doesn’t want to see starve to death and the US in particular doesn’t want to deal with mass amounts of illegal migrants when their economy collapses.

I don't think current US leadership thinks more then 5 days in advance or cares about people dying.

US Leadership is focused on getting us to Mars, all of that takes long-term planning. Sure, a few of us will die in the process, but come on, a flag on Mars! There is a Planet B!

> it wasn't an incentive to change the behavior, it was a loan to deal with the problems caused by the behavior.

You are both incorrect in different ways. Bitcoin as legal tender in El Salvador was not a well-adopted initiative and thus they were okay with axing it. The loan was not to deal with the problems of their behavior, but to push more important things in El Salvador's agenda.


> If I could convince someone to give me 1.x billion to change my behaviour, (...)

I think you need to check up with reality because your scenario has nothing to do with the one reported in the article. If you read the report, you'll understand thay El Salvador reached out to the IMF, a lender of last resort, asking for funding to finance their reform agenda. Among the long list of requirements designed to improve financial health, Bitcoin ceases to be an official currency.


This statement assumes all costs and losses involved in the experiment were “for nothing”. I highly doubt that’s the case.

a billion for a country isn't that good though

>President Nayib Bukele’s government has accumulated 5,900 BTC, achieving profits of $333.59 million from an initial $269.74 million investment, fuelled by Bitcoin’s recent surge past $100,000. (dec 2024)

I wish I could have a $333m failure like that.

(edit - see also his approval rating - 91% https://x.com/stats_feed/status/1875573928250179666)


If the only thing it can accomplish is being traded back and forth for "hard" currencies such as the US Dollar than it's no more useful than the Soviet Ruble. It's not even useful as an actual anonymous currency, it's not even anonymous without a considerable amount of legwork.

Nobody has been advertising BTC as "anonymous" currency in over a decade. It was a public ledger since day 1. This is practically a strawman.

The soviet ruble is not widely accepted and did not hold its value well. Bitcoin functions more like gold reserves.

Yeh, it failed so hard no one even uses it anymore.

It’s being “used” as a speculative asset. That’s not a firm foundation to run a governmental monetary system on. Maybe there are other cryptocurrencies better suited to the task, but BTC isn’t

Don’t forget buying drugs online! Which is mostly what I use it for…

Well, for buying Monero to buy drugs online right?

Yes. First I buy bitcoin from the X, then I transfer it to my bitcoin wallet.

Next I transfer it to kraken, convert it to Monero and deposit it on my drug market of choice.

It used to be simpler but this is how I do it nowadays.


kraken must have some from of KYC, right?!? meaning that you're buying drugs online without trying to be anonymous. impressive...

It’s barely illegal where I live.

Don't try to reason with them. Their minds are as closed as a MAGA.

Sorry what?

I said "Don't try to reason with them. Their minds are as closed as a MAGA."

And what was your point?

My point is: Don't try to reason with them. Their minds are as closed as a MAGA.

I suspect Ransomware is a key part of its value

Governmental monetary systems are usually founded on hopes and prayers (and military might).

Government monetary systems are all inflationary, for a lot of very good reasons.

Governmental monetary systems have been used by every government for what now? 3000 years?

Humans didn't have the technology to build a decentralized currency for 3000 years. That tech was invented only 17 years back

3000 years from now what would be the store of value would be the question to ask.


I'm fine with letting decentralized currency maturing for say, 300 years, in some small corner of the world, before letting it loose on the rest of us.

They're founded on the shared illusion that the money they create is worth something, and the fact that this works pretty well is arguably one of the most important achievements of human civilization.

Military Might ( and hopes and prayers)

Depends on the particular government. The ones that are heavy on hopes and prayers usually don’t do well though.

Everything is a speculative asset.

Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.

S&P is a speculative asset that it will perform like it has been performing in last 30 years.

USD is a speculative asset on US not going bankrupt.

Your career is speculative asset that you don't get fired tomorrow and you can find another job if you do get fired.

Bitcoin is a speculative asset that a decentralized cryptocurrency is better than relying on coins issued by bankruptable nations.

You are a speculative asset of your ego.


Risks vary based on the mitigation strategy and the time available for preparation. Only S&P can distantly resemble the volatility of a pure speculative asset which depends on psychology and the amount of extra money in the markets. But even S&P depends on a lot of factors which don't trigger overnight for a knowledgeable investor. It's a snowball but not an avalanche.

BTC has shown itself magically profitable indeed, but its value could only be kept by the ability of holders to keep the asset. Most marriages and some jobs will endure even in the toughest times.


>Everything is a speculative asset. >Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.

Spouses are not very fungible though, not that I've ever tried ! ...


Spouse is an idea in your head though. Very hard to measure. Because she used not to be a spouse before getting married right. One day she became spouse. So it's an idea. Not tangible.

> Your marriage is a speculative asset

I’m guessing that you had a divorce /and/ that I know the reason why she left you


You are a smart man.

Nothing in this world is certain/forever, but that doesn't mean you should completely disregard probability distributions of possible futures.

>Your marriage is a speculative asset that your wife doesn't cheat on you in future and actually loves you.

Because you wouldn't do either?


Yeah, that’s true. We invest in a lot of things, hoping for future value. But I guess I still treat those differently. I only hold enough USD for upcoming purchases. And I struggle to understand how investing in my marriage is speculative. For a variety of reasons I can’t (or wouldn’t want to) manage that risk like I would in normal speculative investment. I can’t hedge, size up, size down.

So I think I’m missing something. I feel like you’re suggesting that we should be more comfortable speculating because we do it all the time, but I’m not seeing how those are all the same.


In my POV it's all the same since all of them are essentially beliefs with various probabilities.

You don't know what will happen in any of the cases. You just choose to believe one more over the other based on what has happened in the past.


I think that's right. At some level, any anticipation of a future state has to be measurable in some kind of confidence level.

I suppose where I get lost is that, at least subjectively, I end up treating different anticipated return distributions differently. I want a mixture of risks, both in terms of their covariance and the absolute properties.

When I think of "speculation", I am intentionally shaping only a small portion of my personal portfolio toward high risk, high reward activities. And I only really feel comfortable doing that because a larger fraction of my personal risk is in safer vehicles.

Atop that, I also think a lot about liquidity time bounds. I want access to a reasonable amount of highly-liquid, low-risk investments. I need that flexibility to be safe in the event that I need to buy something.

To my eye at least, I qualitatively differentiate between speculative investments and these liquid/low risk ones. If I felt I only had one kind of risk, I would seek out the other in some proportion.


Are you able to point to a single case where Bitcoin was used as legal tender in an every day business transaction? By this I mean, can you give an example where someone ordered a cup of coffee with Bitcoin directly and not through a proxy?

100% this.

Food, medicine, transportation, education, and everything else at or near the bottom of Maslow's pyramid of needs still cannot be directly purchased with bitcoin.

The other punchline to the Bitcoin joke is that it's finite. In 120 years it will begin to evaporate from existence as more and more wallets are simply lost to time.


It is highly divisible though, there’s 2.1e15 satoshi and 2.3e14 cents in the world (re google). It can lose 90% of itself before being unable to replace cents. Also, the network can just agree to change the protocol to fix this issue, should it arise. Countries do redenominations all the time.

I think the fundamental appeal of Bitcoin is the lack of ability to change the protocol based on any external factors at all.

Otherwise it's just fiat all over again


Of course the protocol can change if a large majority of miners agree to the change.

It's just a question about updating the source code.

The fundamental appeal of bitcoin is the lack of ability to change the protocol without buy-in from a sufficient fraction of the community.


But you can change the protocol – you just need to convince people to use your version, i.e. make a softfork. https://en.bitcoin.it/wiki/Softfork

(Or a hardfork, if your changes have to apply to all transactions, though this would be extremely tricky.)


and update the hardware wallets if needed

What it really is is basically a consensus between participants. Once the consensus about a change gains critical mass, that change just happens, by someone coding it into the software and people updating to it. The change (fork) becomes mainstream and the old version becomes fringe. And vice versa, if consensus never achieved. There will be people who stay on old version anyway. It’s up to who believes in what, based on available software based on ideas that are worth new code.

How can anything ever be changed once 51% is abandoned?

I also think there will be a gold rush of hacking old wallets one day when the encryption is broken. Not sure if that will happen before or after btc failure though. You can’t upgrade security on lost wallets.


I think you're confusing proof of work with proof of stake. The integrity of the Bitcoin network is enforced by the miners agreeing on the rules, not by anyone staking their ownership for governance.

What about if you hack a lost wallet and then you transfer the coins to yourself. No proof of work needed then. It is just there, in your wallet.

Just… really suggest you take a deep dive into blockchain technologies. You’re confusing a few things.

Sure, all you have to do is compute until the heat-death of the universe. No proof of work needed!

Why would the people who are getting richer and richer by hoarding btc and not engaging in anything productive ever agree to that?

> Countries do redenominations all the time

That’s not really the same, in several fundamental ways.


They don't need to increase the supply of bitcoin, the nodes can simply be updated to recognize that a satoshi is also divisible by a billion.

That would be terrible for the economy and everyone not sitting on piles of bitcoin.

It’s hard to imagine a financial instrument that’s less suited to be used as an actual currency than bitcoin. Even going back to the gold standard would be a better idea.


I mean, what I'm about is really the same, just the other way round. Countries usually erase zeroes after hyperinflation adds them, cryptocoins can just add extra zeroes due to deflation. No change in value, just higher granularity.

The rest left me puzzled, can you elaborate? Why should the money holder do anything productive? Why getting richer and richer becomes something bad when we go crypto?


> Why should the money holder do anything productive? Why getting richer and richer becomes something bad when we go crypto?

This question works better the other way round. Why should people that do all the work and take all the investment risks to make the riches get continually decreasing returns on their efforts whilst the people that sit and HODL get continually increasing returns on doing nothing?


Because people are willing to pay more. Why should I make money because my house is worth more than it was? Because people are willing to pay more. There's no more "should" required than that.

Um... if the only legal tender around was an asset with fixed supply, people holding it wouldn't be willing to pay more, (or invest it in making more stuff) that's the whole point.

But you see my point, right? I'm challenging the question of "why should someone buy that thing for more than the seller paid for it?" The answer is: because the new buyer is willing to pay that for it.

> Why getting richer and richer becomes something bad when we go crypto?

Is that sarcasm? It discourages any type of economic activity.

Why would someone invest into or try to start a business when you can become richer by just sitting on your money pile with no risk.

Artificially constricting the supply of money in a non static economy is a bad idea. Like the gold standard just much worse.


Because starting a business might still lead to higher returns for you than hoping that your money will be worth more.

One thing i’ve always wondered: If something like Bitcoin was the only currency, then it would be like a direct mapping of 21 Million Bitcoin <-> all global economic activity and goods and services. In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes? Like in big natural disasters increasing the cost of certain goods?

I’m not a crypto zealot, but I’m not a big believer in the idea that the economy needs to be stimulated and I need to be forced to spend my money before it loses its value. I just want to buy what I need or really want.

And in the hypothetical case of having a mapping of “all economic activity” <-> “21M payment units”, then the relative stability of this money might still make investments more lucrative than just hoping for my money to be worth slightly more tomorrow. In this hypothetical scenario it would be more like “my money is worth 1000 eggs today, next month it might be 1001 (if others grow the economy) or 999 (if something unforeseen happens halfway across the globe). So if an investment looks like it might yield the value of 1100 eggs there would still be people to take the risk of investing, no?


> might still

It might. It would be significantly less likely. Basic economics. Unless you don’t think that most people are at least marginally rational..

> In that case, shouldn’t its price be relatively stable, and might actually even go down sometimes

That’s true only if there is no economic growth. Gold standard had a similar problem.


Any type of economic activity in USD involves paying rent or huge surplus to those who hoarded real estate (which doesn’t go away any soon). I don’t see the big difference here. Doesn’t mean it’s a good thing, but let’s at least apply the arguments symmetrically.

Why would someone invest into or try to start a business when you can become richer by just sitting on your _property_ pile with no risk.

Yeah, I guess.


What? People buy food with bitcoin all the time …

Your being silly. Its an INTERNET currency for use on the INTERNET. I use it to pay for cloud storage, VPN and web hosting on the INTERNET.

>The other punchline to the Gold joke is that it's finite. In 120 years it will begin to evaporate from existence as more and more gold chests are simply lost to time.

This is how insane that sounds


That's because it's actually quite sane; relying on commodity backed currencies - especially those which are _finite_ leads to deflation. You see that with BTC, where the value keeps rising and you need more and more fractional denominations to make sense. With gold (and historically, more so silver), it was _very rarely_ used for actual trade because it ended up being like five gold coins == someone's entire life savings. It was always silver, copper and unit of account.

Debased currency - a problem every large state eventually faced - is a consequence of deflation.


A bit more detail on the subject of historical coinage and the place of gold in it:

https://acoup.blog/2025/01/03/collections-coinage-and-the-ty...


I was literally thinking of this article!

>Debased currency - a problem every large state eventually faced - is a consequence of deflation

Inflation in the monetary supply, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.

Edit: I'd remembered wrong. It was silver, not gold, that Spain experienced an influx of.


> Inflation, not deflation, leads to the debasement of a currency. An example is how the influx of gold from the conquistadors into 16th century Spain led to inflation, due to the increased supply of this means of exchange resulting in the debasement in value of a given unit of this means of exchange.

No, that's not debasement - in fact it was the opposite, the huge supply of silver (not so much gold) meant those Spanish coins were good-quality bullion. Inflation happened, and while that can commonly be caused by debasement, that wasn't the cause in this instance.


Em. Spain, famously, didn't debase its currency.

The gold escudo was 22-karat for basically it's entire existence,.


I was more thinking in terms of the modern conception of currency debasement resulting from the increase in the monetary supply, though I think I must have just been thinking of the real, not the escudo. Several years ago, I read a couple of books on the conquistadors, where the details of the devaluation of silver was discussed, but it's been a while since the information was fresh in my mind.

Interesting take. Therefore they needed a bridge between the deflationary BTC and a low-inflationary day-to-day note. Is there an obvious fix, my liege?

I used to pay my dish network bill with it before they stopped accepting it. I've also used it to send money to friends and family, and to donate to open source projects and other things.

If the fees were lower I'd use it for plenty of other things too.


> If the fees were lower

Aye, there's the rub.

With all due respect, why not Bitcoin Cash or some other coin? Bitcoin Cash is the exact same thing as Bitcoin - same protocol, same 21 million coin limit, same Satoshi whitepaper, same everything, except bigger blocks and thus, much lower fees. If you are using a coin as an actual currency, and not as a speculator, why stick with high-fee Bitcoin?


Took a lot of scrolling to find a mention of Bitcoin Cash.

I used to believe in Bitcoin in the beginning, but the high fees make it impractical to use as everyday currency.

Bitcoin Cash is much closer to what I had hoped Bitcoin would become. It’s the same as Bitcoin, except that it ideologically split exactly for the reason that some people wanted it to behave more like an actual currency, while others invented the “digital gold” narrative.


Gresham's law says that "bad money drives out good". Due to the dynamic this describes, it is unlikely bitcoin would commonly be used to buy and sell things even if it did not suffer practical obstacles.

Bitcoin experiences less inflation than regular currencies. Some coins get created now, but over time we know its character will become deflationary: no new coins will be created, and some will be lost at times due to poor wallet management.

As a result, people will chose to spend other currency in preference to spending bitcoin. This is self-reinforcing. The infrastructure will not be in place to use it on the odd occasion that someone wanted to.

You could create a blockchain currency which had a natural and continuous rate of inflation, to encourage people to spend it. You could bootstrap this by mutualising it across an industry. e.g. imagine if the largest datacentre groups got together to create ModestlyInflationaryCoin, and then said they would offer discounts to customers who paid in ModestlyInflationaryCoin, as a means of bootstrapping it. Other groups might start to use it, and it would stay in circulation because people would want to be rid of it once they had it.

Even if such a currency existed, it would probably be short-lived. /Once it was bootstrapped/, its stakeholders would have strong incentive to change its contract to be non-inflationary. Making that change would convert their holdings from Bad Money to Good Money, and as a result the character it would significantly increase its value.

But the datacentre groups could then mutualise a new currency in place of the old one. It is possible that there is a virtuous loop here, and that there will be a race to quality in currencies in our future, grown from how easy it is to create new currencies. We might start to see the identity of currencies a bit more like the way we see futures contracts in our current era.


Society needs at least some inflation for things to keep moving, but an individual usually wants the opposite.

The elected government serves the society of its citizens, while inventors and holders of unofficial currencies are individuals who ultimately serve only themselves.


There is a legitimate role for both things: to have some non-inflationary things that serve as a store-of-value, and then some inflationary things to serve as regular currency.

It is worth emphasising here: non-inflationary currency does not grow its value, so it would be unusual for people to want to put their wealth exclusively into store-of-value. Rather, most people will want a mix of inflationary-currency, store-of-value, and investment in growth-generating businesses.

When people talk about wanting to use bitcoin as a day-to-day currency, I feel like they are missing the best benefit if could offer us.

We already have effective day-to-day currencies. But we have not had a reliable store of value. The US, UK and Australia each have a history of denying ownership of gold when it suits them, which is when people need it most.

The lack of reliable store-of-wealth has made it too-easy for governments to fleece wealth-generating people in order to buy votes. This is not the long-term strategic path, but it creates a race-to-the-bottom due to short-term incentives. Perhaps blockchain will change that, by allowing the creation of an easily accessed utility that sits beyond the easy influence of the nation state.

To be effective it does not need to be perfect, just better than the options we have now. It has been encouraging to me to see the CCP struggling with blockchain, and then outlawing it because they cannot control it.


An argument can be made that if there is a 100% reliable, maybe even deflationary, store of value, it would have a similar effect to currency deflation: since it is worth more tomorrow, then you are disincentivized to spend your wealth, and not spending wealth (not investing it in some value-producing enterprises, buying things and services) seems like a recipe for stagnation and wealth gap increase.

Is it even possible with BTC? I mean, how long does the transaction take to completely confirm? 30 mins? I guess if you paid way in advance; or loaded up a prepaid wallet.

Lightning transactions are instant

If bitcoin utility is storing value outside of tax jurisdiction and moving it without obstruction, globally – then the question is Why should that even matter? Former is every rich person's dream, and latter enables a lot of things, good or bad.

A counter-example: can you come up to a coffee shop with a gold collectible coin, chew a piece out, and use it to pay for your coffee directly? You need a proxy in form of a pawn shop for that.

Instruments are instruments, if it is not used for every day business transactions doesn't mean it is not heavily ab-used inside it's niche


There have been stores which accepted bitcoin as payment. Webhallen.com is an electronics store in Sweden which at least used to accept bitcoin (not sure if they still do).

As a general rule it's not very convenient to do so though since the value can fluctuate. (Which naturally all currencies do, but it would be kind of like paying with USD in the EU. You could do that, but most stores are not interested in the extra hassle of keeping track of multiple currencies.)

It is also not uncommon for services like VPN or IPTV streaming ("pirate streaming") providers to accept crypto.


does buying drugs count?

The post you're replying to is about Bitcoin being "used", not specifically "used for everyday transactions". Bitcoin has so far been a decent asset to hold as a store of value if you don't want to or can't store your money in the traditional financial system. Lots of everyday people in countries with high inflation or strict controls or how people can store money hold Bitcoin (or perhaps more commonly, stablecoins) for a very practical purpose other than speculation.

Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.


>Bitcoin has only failed so far as a replacement for Visa and Mastercard. So no, nobody's using it to buy coffee.

It not being "used" in this context is referring to it not being used as legal tender. The law that was walked back was one which had made bitcoin legal tender throughout the country. As others have mentioned, it seems to have largely failed in being adopted as such, as surveys seem to indicate that less than 10% of people in the country had used it as legal tender in the previous year.


Trying to use bitcoin like this is like trying to use certificates of deposit to buy coffee. Bitcoin is a store of value, it’s nonsense to try and use it like this. Look at Ethereum if you want a medium of exchange fit for the digital age.

Lightning transactions are instant and near zero cost …

More like Solana… Eth fees are also way too high.

BTC cash has lower fees I believe, I wonder if it could actually work as a currency for day to day payments.

It can work as a day-to-day currency, but it compromises the decentralization that is key to Bitcoin's usefulness as a store of value:

+ By allowing 8x larger blocks (unless it's even larger now?), if in widespread use with full blocks, the blockchain would be 8x larger. Bitcoin's blockchain is already the better part of 1TB, though you can still fit that on a cheap SSD. Imagine if it were 8 and growing fast.

+ Because BCH uses the same hash algo as Bitcoin, but is much less popular, it's at risk of 51% attack.

+ Because there is no pressure on block sizes, fees are very low, which means that as halvings continue the block rewards for BCH will get extremely small. This will result in hashrate continuing to decrease, putting it at even greater risk of 51% attacks. Bitcoin's high fees allow it to remain profitable for miners even without inflation. Miners have to be paid to keep the network secure, and that's either going to come from tx fees or from inflation. BCH aims to have neither and that puts it at risk.

And anyway, there are much better solutions for day to day payments, such as Monero and Ethereum.


> By allowing 8x larger blocks (unless it's even larger now?), if in widespread use with full blocks, the blockchain would be 8x larger. Bitcoin's blockchain is already the better part of 1TB, though you can still fit that on a cheap SSD. Imagine if it were 8 and growing fast.

This has always felt like a completely weaksauce argument to me. Even with Bitcoin, very few people other than dedicated miners download a full blockchain (like it or not). 1TB is already too large to keep on your phone or laptop, but 8TB is at most a minor inconvenience on a server or dedicated mining rig. What's the demographic where a measly factor of 8 makes a difference?


> very few people other than dedicated miners download a full blockchain

I'm gonna have to ask for evidence on this one, I strongly believe most full nodes are not mining pools. http://bitdash.io/ says there are ~10,000 running full nodes, yet there are only ~100 mining pools that have produced a block in recent history: https://miningpoolstats.stream/bitcoin

> 1TB is already too large to keep on your phone or laptop

On your phone, sure. But my desktop already has a few TB of storage. But not 8. And Bitcoin Cash supporters usually seem to indicate that they'd increase it beyond 8 if the 8mb blocks filled up.


I used to run nodes to “contribute”, but it’s cumbersome and does not really contribute to decentralization .

The only ones who need to have full blockchain nodes are the miners, and for them it’s just another disk in their data center.


Every Bitcoin Cash transaction is on the chain itself. Bitcoin is increasingly reliant on off-chain "Lightning" transactions. An extra few TB of data or majority of transactions not on the chain at all? I'll go with more data & transparency, thank you.

30 minute transaction times are kind of a deal-breaker. 3 seconds is the edge of reasonable.

The article says "92% of Salvadorans did not use bitcoin in their transactions in 2024". Which means that 8% did use it in their transactions.

it is probably the same with gold - in fact, i say gold is used even less in transactions. Yet, nobody would deny that gold cannot form a good monetary foundation . Of course, it's not the best - fiat is still, imho, better - but it doesn't mean it can't work.

So why is the IMF so against bitcoins that they'd rather pay to eliminate it? Or are the IMF scared that bitcoin can actually succeed, in a way which prevents IMF members from asserting monetary pressure in ways that benefits them?


> Yet, nobody would deny that gold cannot form a good monetary foundation

I wouldn’t say nobody (fools exist), but, sure, only a fool would deny the statement “gold cannot form a good monetary system”.

But... Isn't that the opposite of your Bitcoin claim?


Ahh yes, the age old “let’s use a precious metal to denominate our currency” idea.

Cryptocurrency bros are literally speedrunning the entirety of monetary system failures. All of them. You’d think, maybe after the first couple they’d read a book or something?

Heck no! YOLO!


Just to be clear, people who have downvoted you are likely doing so because of tone and attitude, not because they're pro-bitcoin.

I wonder what volume of all transactions it represents. I've used Swiss Franc this year but it's a fraction of a percent of all my transactions.

In 2021, the percentage of Salvadorans who were using Bitcoin was 26%. After three years of mandatory acceptance requirement, it's now 8%.

It says a lot about the popularity of Bitcoin, no?


...had used at least once, not "using"

The government were giving out btc


8% use at least one.

The government literally give (almost) everybody $30 in btc to promote this, 8% is too low


this is the funniest way to reply

8% is huge

[flagged]


This really feels like it doesn't belong here.

Fine but what does this have to do with the price of bitcoin in El Salvador?

You should report him to the police for misogyny.

Massive success actually for anyone holding. Did you forget the price is $100k?

And it was $92k just less than 24 hours ago. That’s why it’s bad for currencies because people can’t make meaningful plans more than a few hours out, and it’s terrible for the economy if you incentivize everyone to reduce spending in the hopes that speculators will make you rich later.

Real currencies circulate so the same dollar is spent by many people, benefiting each of them while you’re still holding onto your Bitcoin hoping it’ll reach $110k next. You do not want to live in a country where people are staying out of the local economy.


But gold fluctuates rapidly at times at well. Not the same volatility but it does fall

Did you notice most countries don't use gold as their currency?

So, same as with bitcoin

Yes; gold would also be a bad thing to use as a currency.

Which is why I prefer to buy my milk with euros instead.

Debased euros

But you're not supposed to hold legal tender, by design you're supposed to spend it.

gestures at all of the billionaires

People don't get rich holding currency. They spend it to invest in businesses, stocks, real estate, bonds, etc.

A currency that encourages people to hold on to it instead of spending it is a disaster for the economy.

Have you seen the economy lately?

And how would Bitcoin make the economy better?

The government couldn't constantly print more to hand to their mates, thus diluting the value of held dollars.

I dare you to come up with a single example of someone that has a billion dollars in liquid assets. They probably don't exist: "billionaries" are worth billions on paper, thanks to stocks, investments, real estate holdings, etc.

All in all, billionaires are a bad example of holding legal tender, because that just doesn't happen.


"I dare you to come up with a single example of someone that has a billion dollars in liquid assets."

royal family kingdom of saudi arabia


Yeah, but they accumulate dollars for a lot of very specific reasons.

I think they were making a joke about "liquid" assets, i.e. oil is liquid.

Warren Buffett. Berkshire Hathaway has over $300B in cash reserves, Buffett owns 15% of Berkshire and directs investments — he chose to park all that value in cash reserves, roughly $50B of that is his share.

> While Buffett has stated that Berkshire Hathaway will maintain a permanent cash reserve of about $30 billion to fund potential insurance payouts, Bloomstran takes a more conservative approach and adds about $50 billion to that reserve level to account for a full year's worth of potential insurance losses.

From this article in 2024: https://markets.businessinsider.com/news/stocks/warren-buffe...

There is additional context there explaining why Berkshire holding cash reserves is unique to their needs, and historically has only represented 17.5% of their total assets.

Billionaires and large firms are not sitting on piles of cash Scrooge McDuck style, because holding cash is costly.


That's still shares of a company, isn't it?

The way I understand it, billionaires would hold it if they could, but then they'd actually have to pay tax when they spent it.

This way, they get to control unlimited assets without paying any tax.

Personally, I don't think that's so great "for the economy", because I actually don't care about the economy...

I care about people, and having 500 billionaires owning everything and charging everyone to use it is not the economy I want for people.

I'd rather that everyone pays tax, especially the super-rich.


No it's that billionaires mostly aren't worth their estimated net worth in actual cash.

If Elon Musk wanted to turn his Tesla holdings into cash, then his estimated net worth of $436 billion dollars would very rapidly not be worth anywhere near that much (i.e. probably by at least an order of magnitude).


Are you claiming TSLA is fundamentally worth less than $43.6B, and the mere fact that Elon owns 23% of TSLA shares is worth four hundred billion dollars?

I know that selling 23% of a company in one go would move the market, but a 90% haircut would be bonkers.

Or are you claiming TSLA is special, and the haircut would be 90% just for Elon and just for TSLA because that particular stock is super overvalued due to his celebrity and reality distortion field? That seems a little more believable, but this was a discussion on net worth of generic billionaires to start.


Why not work to become a billionaire, then donate your wealth? Or begin donating your earnings today? I would guess most people on Hacker News are in the upper decile of wealth globally — there are still billions of people living poverty. Feels like a fairer way to help people than trying to do it with other people’s wealth — the latter feels like hypocrisy.

>fairer way to help people than trying to do it with other people’s wealth

That "other people's wealth" you're talking about is everyone's wealth.

Billionaires stole the profits of our work from us, and they didn't do it fairly.

I feel you underestimate how much a billion dollars is.

https://mkorostoff.github.io/1-pixel-wealth/

Nobody in history has ever worked hard enough to earn a billion dollars fairly.

It's crazy to me that you'd defend these people who have corrupted and degraded the entire system - the government, the finance sector, the media - to only favor holding everyone else to ransom. Not producing but holding. Societal wealth stolen without paying tax to benefit society. People didn't choose this.

I'm not starving, sure. And I'd be absolutely fine paying significantly more tax than I am now.

But I'm not about to voluntarily donate while I am still forced to work towards retirement, and there are people controlling literally 10,000 times more assets than I am that pay zero tax.

Do you not see the inevitable outcome of that?

You and your children, and their children, will own nothing because the super-rich will outbid you and everyone else for everything.

Food, houses, cars, travel, hotels, healthcare, medicine. EVERYTHING.

You will be poor. The rich is a tiny club and you're not in it.

Everyone, even the wealthy ones here on hn will eventually succumb. You will be outbid for everything.

You will have to sell your house to afford necessities while all your work goes towards luxuries for oligarchs.

There must be some mechanism to limit wealth or that is the inevitable outcome.

Here's a little thought experiment...

It's a hot day and everyone's thirsty. You have $9. There's a bottle of water on the table that you want to buy and the price on it is $10.

I give you $1. You can almost feel your thirst satiated.

Then I give the person next to you $1,000. How do you feel now?

Well our current system is like that, but multiplied by 100.

I do not agree that society should exist solely for the benefit of a handful of super-rich freeloaders.

On the desert island, they would starve and/or be eaten. That's not my definition of a useful member of society.


> Billionaires stole the profits of our work from us

This seems like a very skewed perspective. You work for a salary, I imagine, and you freely agreed to take that job and in return get a salary, even if the company was losing money or its share price was plummeting. I.e. taking a salary because of the security of payments.

Lots of people who invest in businesses lose all their money. You can't point at the very very peak performers who a) didn't lose their money and b) made a really valuable company instead, and decide that they owe you something other than what you agreed you would work for. That's just not how agreements work, and it's also the apex fallacy[0].

[0] https://rationalwiki.org/wiki/Apex_fallacy


That's a good point and I do agree in principle.

But there still needs to be some mechanism to limit wealth inequality or we still get the inevitable conclusion.

The US minimum wage hasn't changed in 16 years!

Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.

It's just not fair at all. Governments are funneling money to the rich hand over fist. It's obvious who they represent and who they don't.

You have to agree that trickle down is not trickling down.


> The US minimum wage hasn't changed in 16 years!

I don't mind this, because minimum wage is a national minimum. States (and even more fine-grained than that) need to have contextualised minimum wage, or it's just silly. That's why it hasn't changed. Minimum wage increases wages at the expense of reducing employment, for any job that isn't worth that wage. You can't increase the national US minimum wage to what would get you an apartment in California and expect jobs to exist in Appalachia.

Honestly, the national minimum wage seems almost pointless. States should handle it, as they can contextualise at least a bit better.

And it not changing isn't evidence of anything when state-level minimum wages exist.

> Which means many of these peak performers are built on the back of poverty, people who don't have the luxury of "freely agreeing" to take their labor elsewhere.

Thus I don't think it means that. And also - your false dichotomy of you're either a wealthy business owner or you're on national minimum wage is not helpful either. People are paid what they can negotiate. Companies pay what they can negotiate. Companies exist if they charge a low enough price for their level of service or product. It's a tri-party system. The existence of other companies in in-demand businesses is what drives up wages, as if you don't like your job you can move, and people do. That's why I would say where possible, things that stop new companies springing up should be removed. Thinking it's all about national minimum wage is honestly the wrong approach, in my opinion.

> You have to agree that trickle down is not trickling down.

I don't know what this means. I didn't mention anything trickling down.


re: the minimum wage. I'm in Australia, not the US, but is there any place in the US where a fulltime worker on minimum wage is paid enough to have a reasonable life, let's say a 2 bedroom home with two children, without struggling?

I was not implying that "you're either a wealthy business owner or you're on national minimum wage". You can safely substitute a "middle class" person, or even a "rich, but not super-rich" person, for "on national minimum wage", because in a few years I believe the middle class will completely cease to exist.

This is already happening and is actually the inevitable conclusion of all the funneling of money towards the super-rich and the subsequent increase in wealth inequality.

I wasn't even actually talking about business owners, but the super-rich that those business owners borrow money and pay interest to.

https://en.wikipedia.org/wiki/Trickle-down_economics

That's the trickling down I'm talking about, which you didn't mention because it appears you don't think that som trickling down is even necessary.

Some trickle down or other mechanism to limit the rich from owning everything is necessary if that inevitable outcome of a tiny group of people owning absolutely everything is to be avoided.

Do you disagree with that?

I believe you're alluding to some kind of nearly perfect system where large businesses have not created artificial regulatory and other moats to protect their business and hamstring competitors.

eg, imagine a large factory that employs most of the people in an area. Potential workers for that factory do not have the ability to negotiate a fair wage, and also don't have the mobility to uproot their entire life to move somewhere else. Also another company cannot reasonably expect to move in and out-compete for the workers in that area. Thus the fictional factory is in a massively favorable position to "negotiate" wages for its workers.

I think we have largely differing views on the fundamental fairness of a system where low-paid workers are expected to negotiate with multinational corporations that already have all the advantages in any negotiation.

Those corporations are also able to monetize the profits from those workers productivity to actively lobby governments for even more favorable conditions in those "negotiations".

I believe it is a very unfair system.

I doubt we will end up finding a middle ground here if you do not think a system where the super-rich are not limited in some way from accumulating wealth is unfair.


There are early bitcoin holders who are now billionaires continuing to hold their highly liquid bitcoin.

> a single example of someone that has a billion dollars in liquid assets

Lots of billionaires manage their portfolios conservatively. Your equating currency with liquid assets is unnecessary and tanks your argument. Almost nobody holds billions of dollars in legal tender other than those who have to, e.g. sanctioned countries and criminals.


Billionaires hold very little legal tender.

The term "Billionaire" refers to a person who has total assets over a billion. In most cases those assets are shares in some company (or companies). It's not like they have a billion in their sock drawer.

By contrast, when at rest in my wallet, bitcoin is "dormant". It's not earning any interest and other not circulating in the economy. The only "growth" is capital growth.

That growth is predicted on demand outstripping supply. Or on "bigger fools". When the fools run out you're left with tulips.


> gestures at all of the billionaires

They're billionaires because they own valuable companies, not because they have actual billions in the bank.


Billionaires do not literally have big rooms full of money, like a common Disney duck-plutocrat. In general, no-one much is holding large amounts of _cash_/cash-equivalent, except to some extent for the likes of insurance companies, who are obliged to do it for risk management reasons.

... and banks, of course.

I sleep better at night knowing my savings aren't part of a massive Ponzi scheme that's going to one day leave lots of working class people holding the bag as the savings they invested in bitcoin are transferred to the wealthy insiders.

If you own a house you are part of a Ponzi scheme in most developed nations.

Japan already has houses worth $0 because Japan has run out of population growth to keep the demand for houses growing.

The same issue will occur in other countries that have low population growth. In New Zealand we have been importing people so house prices have been appreciating. However my impression is that other countries are competing for immigrants (NZ seems to be slowly relaxing our filters).

Also if you ever had a mortgage then you had a leveraged investment (often dangerously leveraged).


> If you own a house you are part of a Ponzi scheme in most developed nations.

Not unless you explicitly choose to. If you own a house to have a roof above you, to have a comfortable and safe place for you and your family, if you love and care about that place, then that's what you are getting out of the house. Its monetary value changes are "just" a side story.

But if you buy a house purely as an investment, then yeah.


It's part of a Ponzi scheme either way. Even if not an investment, you have to buy it, and it will eventually be sold.

People don't own the house just to sell it for more later on. Some live in them.

Wait until you learn about social security.

What does that mean? USD value decreased that much and bitcoin proved itself as an asset with tangible value (like gold?), or did value of bitcoin itself rise? I’m not a currency guy, so I don’t pretend to know crap, it’s a real question, not rhetorical.

It means that if you bought under $100k, you are no longer the biggest fool. Bitcoin is completely unworkable as an everyday currency and this this is due to multiple factors. Any attempt to address these shortcomings ends up slowly[0] re-inventing the modern financial system and its various systems of trust. People who try to convince you otherwise are simply in search of a bigger fool, since they bring up the USD value of bitcoin.

[0]: but also too quickly, hence all the breaches and 8-figure heists


Compared to the dollar over the past five years…

The dollar down vs itself by 20ish percent.

The median home price is up 30ish percent.

Oil is up 45ish percent.

Gold and the SP500 are each up 80ish percent.

Bitcoin is up 1000ish percent.

If you snooze through the day-by-day, season-by-season noise, the volatility of Bitcoin is a fun and relaxing rocket to ride. You just have to ignore all discussion focused on time frames of less than four years.


Thats deflation, which makes for a poor tender, albeit attractive asset (less of volatility)

Yeah, but what about when the country has to make good on bond payments to a cryptocurrency becoming stronger, entirely out of their control?

It was a terribly dangerous move for a sovereign country, worse than surrender to the Euro.


Conversely if that’s all it takes to induce them to give up it tells you something about the benefits they felt were accruing from BTC.

They're not giving up on Bitcoin. In fact, it's likely that they'll use the loan to buy more Bitcoin.

https://www.reuters.com/markets/currencies/el-salvadors-bitc...


Who are they possible gonna offload that bitcoin on to? Their neighbor? That doesn't strike me as a socially acceptable thing to do.

There's a deep and liquid market for Bitcoin - El Salvador isn't even a major holder in the grand scheme of things. I don't see what's socially unacceptable about selling Bitcoin to a willing buyer; it's simply a transaction between two parties, no different from trading foreign currency like USD. There's also no indication that they plan to spend or trade their Bitcoin anytime soon.

> i don't see what's socially unacceptable about selling Bitcoin to a willing buyer

Well you're accepting payment for something people are expecting to hold value. Bitcoin only has value to a small subset of people with money. I'd definitely judge you for selling it if you have options for financial transactions via SWIFT.


They already are. Just bought 20

Keep in mind that El Salvador is tiny. This is like 14 days of El Salvador's entire GDP. Or scaled to GDP, it's like giving a $1.2 Trillion loan to the USA.

El Salvador has been in the IMF debt trap since 1949. It’s not just a billion dollar loan we’re talking about. Although scaled to GDP it’s quite a lot

Is that really the message?

What do you mean "gave" them 1.4 Billion? It's a loan so it has to be repaid. Usually, this is unsaid but with crypto people you sometimes have to explain basic financial conditions. Also, the loan was to bail them from risks of Bitcoin.

Being granted a loan of $1.4B with favourable terms under the extended fund facility is an enormous privilege. El Salvador is certainly getting far more favourable terms than would for their USD-denominated bonds. Putting it another way, El Salvador being given a line of credit that would have cost them hundreds of millions of dollars had they sold bonds to raise this cash through traditional means.

It's funny to have to explain basic government loan mechanics to this comment, given the derisive comment about "crypto people" needing basic financial concepts explained.


If bitcoin was such a success then why did they need an enormous loan?

El Salvador and their Bitcoin experiment are ultimately both quite small. This loan is multiple times larger than their total BTC holdings

They hold 6k BTC, around 600M USD. So just a bit over 2x.

2 is a multiple

If the USD was such a good currency, why does the US operate at a deficit?

A deficit is not a loan. The USD and the historical strength and faith on the US allowed the US to offer its own securities, not ones pwned by and with terms dictated by external entities.

the US borrows money. sure it can monetize its own debt at any time but that would have its own set of very high costs

It smells, looks and quacks like a loan.

Smells more like a tokenomics scheme than a loan to me.

>why does the US operate at a deficit?

are you talking about a trade deficit (the US operated at a trade deficit virtually the entire time it grew from 13 former colonies to the post WWII economic colossus. Lending money to a growing economy so it can turn around and purchase the equipment you are selling which it will use to be more productive is the secret sauce of a growing economy)

or are you talking about a budget deficit? many countries around the world operate with budget deficits; "socialist" governments generally have higher deficits as they spend to maintain living standards whether the economy justifies it or not. The size of the deficit (they will grow all the time) does not matter, what matters is "as a %age of GDP".

none of this, btw, has much to do with monetary policy, the maintenance of the currency.

"strong" or "weak" currency really makes no difference. The strength/weakness of the currency how the books are balanced after the fact of what has happened in the actual economy. A country with a strong currency will find imports inexpensive, and will have trouble selling its goods, and citizens will be incented to buy imports. A country with a weak currency will have difficulty importing goods, but will have less trouble exporting. It's the currency that balances these books.


This is essentially my point, I guess too briefly put- a country getting a loan is not an indictment of that country's currency; that is a huge leap to conclusions as evidenced by the world's best currency being maintained by a country that is borrowing 5% of its GDP each year.

The USD, being the world reserve currency and currency of trade, must operate at a deficit. It's only through a USD deficit that other countries can grow their reserves commensurately with economic growth, which is how the USD stays the reserve currency. The USD operates at a deficit because it's such a good currency.

If you can get a 10 year loan at 2% interest rates (below inflation), you would be an idiot not to take it.

> If the USD was such a good currency, why does the US operate at a deficit?

If the U.S. needed a bailout, the dollar would become a trash currency.


> I dislike cryptocurrencies as much as the next guy

Is this really the general sentiment on HN?


It should be. It’s dumb as hell. Bitcoin and blockchain have no real use.

That sounds equally wrong as "crypto is everything, blockchain is the solution" sentiment

The real use is black market transactions.

Whether you find that a feature or a bug depends a lot on where you live.


We have USD for that …

Now try sending some to, say, Iran.

I used to be close minded as well before actually studying Bitcoin.

There are plenty of bad actors in crypto but Bitcoin is at worst a very interesting experiment that can profoundly change the world for the better. Most is not all of the rest of crypto is basically hawk tuah coin with less obvious illegitimacy. In fact bitcoiners don't consider Bitcoin as "crypto"


Bitcoin has lots of uses, you just haven't found one you need.

TBF Monero is pretty decent for buying drugs.

There are probably a billion bitcoiners (direct or indirect owners) and you basically state that you're smarter than all of them.

Just wow.


You don't need to be dumb to fall for a dumb idea. Also, the average person is smarter than about 4 billion people.

> You don't need to be dumb to fall for a dumb idea

I get you can do something stupid in a rush but the longer you have time to reconsider, the higher the likelihood that you "didn't just fall for a dumb idea". Bitcoin is 15 years old.

> Also, the average person is smarter than about 4 billion people.

Bitcoiners are drawn from a normal distribution and not from the bottom part of the distribution, so that argument doesn't really work here.


> Bitcoiners are drawn from a normal distribution and not from the bottom part of the distribution

I think it's objective truth to note that "Bitcoiners" are predominantly comprised of:

a) people conducting illegal affairs (don't read this as "illegal" in the sense of jaywalking)

b) technically illiterate people, down on their luck and hoping to get rich quickly

With those in mind, I would argue that "Bitcoiners" are instead drawn from the left side of most distributions.


Do you have any facts to support your assumptions a) or b)?

and the true believers of those are maybe 0.001%, the rest are just hoping for a quick buck by riding the wave

cryptocurrencies are a failure and net negative, and the longer we hold on to believing they aren't, the more damage we are doing


A lot of things are net negative and straight up dangerous

But we keep doing them because enough people can get money out of it


There are less than 5 billion smartphone users, and you think every fifth has a bitcoin? Though, I'm not surprised hearing such estimations from a bitcoiner.

Anyway, no matter how large the unity of dumbs is or how passionate they are about their goal, it won't make them smarter. What they can achieve, though, is making other people dumber than they are, so that they can appear relatively "smarter".


A lot (if not most) bitcoiners think they are smarter than all the non-bitcoiners.

Do you object to that?


Let's say they're taking a financial risk which incentivizes (some of) them to study the matter more closely than someone else that is not taking that risk.

Does that mean they're smarter? I don't think so. It's a bet they're willing to take and time will tell who was right.


It probably is the general sentiment. Though I quite like them - it's like a new art form almost.

It’s definitely interesting to follow! Like in this ancient Chinese curse: “may you live in interesting times”

There is a book called "Talking to your daughter about Economics", where the author explains one of the problems with bitcoin is, you cant print more of it in a crisis. Maybe thats what happened here.

That may be one of the problems with bitcoin as legal tender and official state currency but not a problem with Bitcoin itself, quite the opposite: as evidenced by the genesis block’s embedded message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”

Ironically part of the long-term problem was El Salvador's dollarization, also preventing them from printing in a crisis (that crisis being the COVID pandemic).

Dollarization was unpopular at first in El Salvador but after 24 years of dollarization, and both right and left wing governments, there are are no official plans of rolling it back. It's way too convenient to use the world's most used currency as our everyday currency.

Or maybe the IMF doesn't want the money they "give" to El Salvador to be dissipated into a synthetic commodity masquerading as a deflationary currency.

I'm not going to defend the IMF here... they're sort of like sharks swimming in the national currency markets (look up "Our Brand is Crisis" and "Life and Debt" for more info, and then read Summers' "The Payment System" for the IMF's take on things.)

But... I think my point is... I don't think there's any more conspiracy going on here than normal IMF conspiracy. But the IMF is sort of open about it, so is it still a conspiracy? I don't think the IMF or WB care one whit about cryptocurrencies, they just don't even register.

EDIT: Oh, and "Confessions of an Economic Hit-Man" is also nice and conspiratorial. If half of the author's assertions are truthful, there's WAY more happening in Latin America vis a vis international banking cabals.


> IMF gave them 1.4 billion to abandon the “experiment”

No, that is not what the quote says. It says it was a condition on a loan.

There is a huge difference between unsolicitedly saying “hey, I’ll give you money for you to stop betting on horses” or being asked for money and replying “OK, but if I do lend you the money you have to promise me you won’t spend it on horse betting; I want it back”.


The very first IMF loan ever given was to France for reconstruction. One of the terms for the condition was to remove the only elected communist in their government from their position.

IMF loans have ALWAYS been political


Arguably, both preconditions could have been simply intended to secure an eventual return on the loan. Having a communist in political leadership and allowing citizens to pay their taxes in Bitcoin both increase fiscal risk. I can understand the IMF wanting to reduce that risk as much as possible before providing a loan.

^ unsure why downvoting this as it’s 100% correct. IMF doesn’t hand out loans it doesn’t think will be paid back.

(This is where China swoops in and gives a loan at lower interest rates with shadow contracts to get the resources or assets)


No country with its own money ever needs to get the IMF involved.

Largely because the only place the IMF can get your money is from you.

Currencies are public monopolies.

The problems always arise when a state starts issuing state backed liabilities in other denominations - as there is no way for a state to absolve itself of that debt without paying it back. It becomes a debtors prison.


Even if you have your own money you need stable foreign currency to operate.

It's not like you just choose to issue debt in foreign denomination cause it's fun.


You don't. There is no requirement for the state to get involved in other people's money.

That's for the private sector to sort out - largely because they can go bankrupt and wipe out the debt when things inevitably go wrong.


If the IMF was loaning them 1.4B to do economic development then its reasonable that the country not keep a massive liability on its balance sheets.

Imagine I wanted to loan your car company 100M to build out a factory because I believe in the product. I'm told that your company keeps all its reserves in bitcoin and its possible that even if the factory is successful that the loan wont be repaid if bitcoin falls.

I think if you are obsessed with bitcoin its easy to see this as conspiratorial, but the reality is no bank is going to loan a (company, person, country) money in cash if they are told the loan may default if bitcoin falls.


Of course it was an utter failure. Why else would they need 1.4 B USD from the IMF when BTC has run up what... 6x or so since they started with this "experiment"?

They're actually paying to give it up then. That's a hard fail.

Did the value of their holdings drop over the past few years?

If your country depends on Michael Saylor not blowing up, it’s probably worth mitigating

> this was clearly something else than a failure of the currency itself

They needed the loan. The original thesis was taxes on crypto bros’ business and tourism would increase revenues while crypto-based lending would provide an alternative to the IMF. Neither panned out. This was a failure of Bitcoin to provide any of the international benefits of the dollar financial system.


>a failure of the currency itself

this is a really ambiguous phrasing. Is bitcoin a "currency"? is el Salvador adopting bitcoin as a ___?____ a currency?


El Salvador adopted Bitcoin as one of its national currencies.

like, "not your keys, not your bitcoin", if it's bitcoin, it's not your currency

It failed independently of this, nobody over there was using it for transactions, many businesses already didn’t accept it.

They probably also have a condition not to spunk it on crypto.

The bank would be pretty reckless not to stipulate these things.


Did they use it daily? If the answer is no, then it's a failure of the currency itself.

They gave it to them, with a contingency that they need to stop reckless financially dangerous policies, like allowing a wildly volatile cryptocurrency to be legal tender backed by the government at various levels of society.

IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies


This wasn't a vendetta or a political maneuver. The IMF is intending to enforce stability on loan recipients but insisting on sensible policy. Per the article, the program was already unsuccessful and they wanted it removed as a risk factor.

I'm not seeing the obvious I guess. Care to share what the else was? And what the evidence is that the currency was "doing just fine" otherwise?

1.35 billion dollars is an awfully small amount to purchase the promise of not developing a sovereign currency. By a couple orders of magnitude.

Facts help bolster an argument

Why do they need a loan if BTC makes them an economic powerhouse?

This seems to speak more to the general incompetency of the IMF than to any anti-crypto conspiracy

"I dislike crypto as much as the next guy but this was clearly something else than a failure of the currency itself."

Zeke Faux who wrote the book "Number Go Up", a George Plimpton-styled account which was released last year, went to El Salvador and tried to use crypto as currency.

https://www.wwno.org/2023-09-19/tales-from-the-world-of-cryp...

BECKER: ... But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year's Bitcoin conference with a lot of cheers from crypto enthusiasts about his government's use of Bitcoin.

Let's listen.

NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).

BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you find out there?

FAUX: ... And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it's the future, it's going to help the poor, they're all using Bitcoin. And the listeners are probably asking themselves, "What does this even mean, how does this make sense?" And it doesn't make sense. I got there, and one of the first places I went to was this little roadside store.

And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country's main currency is the dollar, and they didn't abandon that. But they're supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.

And the clerk gave it to me, so I'm holding the water. And then in my terrible gringo Spanish, I said, "Puedo pagar con Bitcoin, por favor?" And the clerk just said, "Basura!" Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don't want to use your Bitcoin.

And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.

They're very slow on there and people complained. "Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?" So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I became one of."


That's heavy editorializing:

El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it.

But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status.

Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.


There seems to be two concepts that are getting conflated. One concept is that BTC is a good investment. Historically that is undeniable.

The other concept is that it is a good medium of exchange. I think that is not so true because 1) its neither cheap nor easy to buy a lot of things with it 2) a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it.

If you accept that BTC is a reasonable investment, but not a great medium of exchange then what is happening makes sense.

I am not saying that a decentralized token couldn't be a good medium of exchange -- honestly I don't know. But so far BTC is not that.


You're also conflating two distinct concepts: "Bitcoin the currency" and "Bitcoin the payment network."

The currency itself can be used independently of its base-layer network, which is intentionally slow and costly (functioning primarily as a settlement layer). This separation is enabled by off-chain or layer 2 systems, such as the Lightning Network or custodial platforms. These solutions retain Bitcoin's monetary benefits - like a predictable money supply, off/on ramping through the base layer - while enabling fast, cheap transactions. The tradeoff is that you must trust an intermediary, but this mirrors the same compromise inherent to digital USD payment systems (Venmo, credit cards, PayPal, etc.).

In fact, USD lacks a true "base layer" altogether. The closest equivalent would be the Federal Reserve Bank’s ledger, but accounts there are restricted to large financial institutions, not individuals.


That’s a lot of words for “it cannot be used in everyday financial transactions”.

It's not convenient to use "Bitcoin the payment network" for everyday financial transactions, just as it's not convenient to use the "USD the payment network" (e.g. the Federal Reserve ledger) for everyday financial transactions (in fact, it's impossible).

However, “Bitcoin the currency” and “USD the currency” work perfectly for daily use if you route them through trusted intermediaries (Strike, Cash App, PayPal, etc.). These third parties abstract away the base layer and offer fast, cheap, and reversible transactions.


But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger.

Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.


> But Bitcoin qua payment network is/was a major part of the Bitcoin value proposition—what a Bitcoin _is_ is an entry in a distributed ledger.

I know that's what hardcore Bitcoiners have typically pushed for, but I personally disagree. To me, the most interesting thing about Bitcoin is its predictable and unmanipulatable money supply. The payment network is nice though because it can let you easily and permissionlessly take your Bitcoin wherever you want. Fees are actually not that exorbitant, certainly cheaper than SWIFT transfers. The current average transaction fee is around 1 USD and the first confirmation, which is sufficient for most kind of transactions, takes 10 minutes on average.

> Whereas USD is ultimately bearer tokens. Yes, those tokens can be optimized away as entries on a balance sheet when held by a large entity. But USD is a token system, not a payment network. Bitcoin is the opposite.

USD cash is (paper bills and coins), not digital USD. Bitcoin is a digital bearer token system. As a side note, it wouldn't be very hard to replicate a cash system for Bitcoin, if there was an entity responsible for emitting and redeeming cash for digital Bitcoin (a bit like the US Mint but for Bitcoin).


What do you mean, I use bitcoin and the lightning network all the time for small payments.

I wish there was usdc over lightning

if there is, it’s poorly advertised

does seem like a huge swing and a miss for lightning to only have unstable value units of account going over it

the market clearly wants something else, and has that, on other networks at large volumes



thanks! yes I mean to check on bitcoin after major network upgrades like Taproot. okay that article was last updated 10 months, how is that panning out with standardized protocols and wallet integration and issuance?

I’m curious where the communities about this are, or are nowadays


I personally have no need for "stable" assets, so I don't know more than that they exist.

Same here. I'd rather hold and use an asset that unstably increases in value greatly over time, than one which continuously goes down in value to 0 (all fiat currencies go to zero eventually)

That's a good point. The payment layer can be different then the ones I have and encountered, and it could evolve. Going forward I will keep that in mind because I think in the back of my head I just assume BTC is a pain to use and that may not always be the case.

> a thing that goes up in value is not a good medium of exchange because people don't want to spend it, they want to hoard it.

So... traditional money is good because it forces poor people to spend it? Rich people have no problem converting cash into assets that go up in value and holding onto them converting back at need. It's only poor people that have to hold comparatively high percentage of their assets in something that loses value.


Yes it is good to have currency that is distinct from an investment asset. It allows you to do currency things with one, and investment things with the other.

Yes, exactly. It forces the poor (and the rich) to spend it.

When you take out a mortgage on a house its partly because someone took cash they received and deposited it in the bank. If they kept the cash the bank would not have reserves to loan.


You don't even need to do anything to deposit money in the bank anymore. Most people automatically receive their salary in the form of direct bank deposits. And if the value of your money grows, why would you want to do anything with it? You would just let it sit there in the bank.

Let me add a third concept which, to me, is a much more useful feature (as I wrote in a sister thread): a store of value for people whose governments like to control the money flow, dilute savings in the single available local fiat currency and confiscate savings calling it a money reform. Which, sadly, is a large part of the world.

Value oscillating against some golden reference by a factor of 4? Many will likely take that if it means avoiding their own government shenanigans. I saw a currency reform which turned savings to zero. My parents lived through two such devaluations. As did my grandparents. Buying dollars or another hard currency, if found, meant prison. In this setup a permissionless, anonymous store of value, warts and all, is very valuable.


Beautifully explained. This applies to just about every single country in the world. There are no countries in the modern world that operate on the gold standard, which means they all print just about as much money as they want and deflate the savings of their citizens.

> One concept is that BTC is a good investment. Historically that is undeniable.

I'll deny it.

Bitcoin has seen large gains, that is undeniable. However, that is not the same thing as being a good investment.


Makes me wonder why the BTC original design tilted toward deflationary, since allegedly, 'satoshi' was trying to create currency, not speculation. Was it a two phase idea ? Attract people for 80 years as investment then when it's stable, use them as stupid coins ?

Deflation is the natural state of the economy because progress makes everything cheaper. We only have an inflationary system because central banks print money. Putting a central bank into code and micro-managing the money supply was not possible, so bitcoin is more like a commodity, like gold for example. Gold has worked just fine as a money for thousands of years.

A lot of people on libertarian right genuinely believe that deflationary money is desirable. BTC is often referred to as "digital gold" for a reason.

can you explain their reasoning ? just curious (i'm a newb)

We need to be clear about the features of money we are talking about (and there are many):

For money to work as a convenient way for people or companies to settle transactions, long-term inflation or deflation does not matter. If A wants cement and has mangoes, B wants pants and has mangoes and C wants mangoes and can do tooth fillings they just need something universally accepted to convert what they have into. And, a bit later, buy what they want. Most money satisfy this, but usually people want more features.

For money to also be a store of value it should maintain its purchasing power. This allows an individual to, say, pay for an education of a child when the child grows up: I can save in today's money and be fairly confident that when the time comes to pay it will cover the (future) cost. This feature is what people tend to refer to as "digital gold" as gold generally maintains its purchasing power over very long times.

For money to enable governments to stimulate society in different ways, money should be deflationary. Easy long term store of value makes people less responsive to short-term government stimuli. Without deflationary money a government cannot print extra money when it overspends or if not enough players want to lend to that government.

The last two tend to cause eternal strife between individualists (who want small government that does not do things people did not explicitly ask for) and progressivists (who want to push the society along the path they see as the best one).

There are more features of money (highly recommend reading "Broken Money" by Lyn Alden)


Sure: if I buy today, I’ll be richer tomorrow.

Ergo, the exact reason it’s a horrible currency for the system.

It’s really just the infamous libertarian inability to consider the needs of the system as separate but still important and sometimes in tension with the desires of the individual.

It’s just a particularly goofy one because a deflationary currency very obviously cannot support an economy.


You're right, It is a horrible currency for the system. How would we prop up the military industrial complex and wars with foreign third world countries if we could no longer print money out of thin air? Just dreadful to think about.

Lol

Looks like a fair take to me. They are not forcing people to accept it anymore because it didn’t work. It was never supposed to work.

Bitcoin tried for 15-20 years to find a use case but now it’s just an asset class like gold and nothing else, it will never be more than that.


The trouble is, it needs to be more than that if it is to survive. Since inception, mining has mostly been subsidized by new bitcoin, which is capped by design (and about 95% distributed).

Satoshi’s paper assumed that transaction costs would make up for the exponentially declining subsidy, but that hasn’t really happened since it never lived up to his “digital cash” vision.


Ethereum solves both of these issues. It is an entire platform designed for the development of distributed applications and will probably win over BTC in the long-long-term.

No. Ethereum is a solution searching for a problem. Have you seen any widely used successful application developed using Ethereum?

There are tens of billions of dollars locked up in DeFi ecosystems with hundreds of millions of dollars worth of assets exchanging hands daily, but you would probably just say that it doesn't count for some inane reason.

Tokenized stocks are coming this year.


Why does it need to be more than a store of value? If every single country In the world is off the gold standard and inflates their citizen's savings away at a whim, why does Bitcoin need to be more than a way to keep your savings safe, especially if it's the best way to do so with the least amount of government meddling.

Running the Bitcoin network securely is expensive. Currently, about 95% of the cost is covered by issuance of new Bitcoin, but the amount of remaining Bitcoin decays exponentially (currently it’s down to the last 5%).

The incentive design of Bitcoin assumed that it would be used as cash, so that transaction fees could take over as the main source of revenue for the miners that secure the network. As a “store of value”, it doesn’t generate enough transaction fees to secure the network.


> The trouble is, it needs to be more than that if it is to survive.

But why is it necessary for it to survive? Like, I think even cryptocurrency true believers would acknowledge that there are better cryptocurrencies out there if you want a currency; bitcoin seems at this point of largely symbolic value.


I’m not talking about losing mindshare, I mean in the literal sense that transaction volume is necessary for Bitcoin to avoid an attack on the network. The incentive system that secures it is designed to increasingly rely on transaction fees increasing over time to make up for the diminishing pool of unmined Bitcoin that currently subsidize network security.

That largely hasn’t happened; transaction fees have dropped as it became a store of value and moved less frequently (and increasingly moved off-chain in tradfi rails).


Yeah, but what I mean is, if bitcoin went away tomorrow, why would anyone care? Advocates of cryptocurrency as currency, I think, have largely already gone beyond bitcoin in any case at this point, and the speculators could just move on to the next speculative asset.

I'm so curious what will happen as mining approaches the asymptote. When the mining rewards become more and more rare and if people aren't incentivizing the network with a lot of transactions, will transaction times just get slower and slower until it becomes a stranded asset?

Transaction times are independent of mining power. One block every ~10 minutes.

But as the block rewards diminish from halving it will approach 0, so that will leave the only incentive for "miners" to secure the network to be transaction fees. At that point transaction fees will have to be extemely high to justify all that hash power right? So I can imagine it could get to the point where transaction fees exceed the value held in some wallets and you get stranded assets.

Alternatively, if transaction fees stay low, there might be very little incentive to secure the network with hash power and you could end up with fewer and fewer miners controlling the network and a 51% attack becomes quite feasible.

I'm really curious how this will play out over the next 100 years.


> asset class like gold and nothing else, it will never be more than that

Lol, gold that can be teleported around the globe for fractions of a cent, yeah.. it sucks that bitcoin will never be more than that.


For 100000/1 fraction of a cent?

The transaction fee is currently $1.64 and frequently spikes to tens of dollars. (Yes, sometimes LN can reduce that.) You can buy gold via something like $GLD for free.

It's funny how people keep pretending like there's only on chain bitcoin or that lightning is broken in 2025.

>Now the businesses are free to accept it or not instead of being required to accept it. That's all.

Right, so it's no longer legal tender.


Day to day there won't be much change, as bitcoin acceptance wasn't really enforced.

Legal tender does not have to be a mandatory means of exchange.

That is actually the defining characteristic of legal tender: “money that is legally valid for the payment of debts and that must be accepted for that purpose when offered”

https://www.merriam-webster.com/dictionary/legal%20tender


Its status in El Salvador was actually a bit more than _just_ legal tender; merchants were _required_ to accept it.

For instance, the euro is legal tender in the eurozone. I can pay a tax bill or a bank loan with 10cent coins, and technically they have to accept that (though note that some countries do have special rules around whether small change is legal tender). However, a merchant is not required to take my wheelbarrow full of 10cent coins in exchange for goods and services; no debt exists before the purchase.

El Salvador was forcing the merchant to take the wheelbarrow.


Thanks, you're right and I was totally wrong. I'd delete my comment if I could

Why do they need an IMF loan? (that's typically a sign of the economy not doing great)

They've needed IMF loans for decades, this is unrelated to Bitcoin: https://www.imf.org/external/np/fin/tad/extarr2.aspx?memberK...

Why does the IMF care what denomination they use domestically?

It's reasonable when you think about it from a risk assessment point of view.

The IMF wants to feel that El Salvador (a) will likely be able repay the debt, (b) in a currency that is unlikely to devalue too much. For that reason, the debt would probably be in USD or some other prominent world currency (letting the debt be in El Salvador's local currency would risk them printing money to devalue it, threatening (b)).

So the IMF would probably make the debt in USD. In theory, bitcoin can be exchanged for USD, so in theory, El Salvador could exchange some of their bitcoin into USD to pay the IMF back. But what if bitcoin's value drops precipitously? Or if it becomes illiquid?

It seems the IMF thinks bitcoin is hype, so it expects its value to drop to near zero eventually. That would make it very difficult for a country that has large bitcoin reserves (instead of large reserves of a more stable currency) to repay the loan.


They care about the economic stability of a country they make loans to. Their loans often come with conditions about how the government can run fiscal or trade policy.

I don't know if that is good or bad but I have heard smart economists argue both sides.


Sounds reasonable. Which countries got better after the IMF got involved?

There's a lot of information about the IMF online.

> The government, she assured, will continue buying bitcoin and having reserves in this cryptocurrency

Sounds like the term "Failed Experiment" is the writer's assertion and not the government official position.


“Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts.”

--https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...

Sounds pretty failed to me.


They did this to receive a loan from the IMF. The IMF was withholding the loan because of BTC and would not disburse it until they got rid of its status as legal tender.

Fair demand by the IMF.

Presumably they require their loan to be repaid in fiat because of their internal charter. If Bitcoin adoption eventually removes El Salvador's ability to issue fiat, their loan can't be repaid.


That's not really how that works. IMF can demand their loan be repaid in whatever currency they want. Its totally normal for international loans to be denominated in a currency other than the recipient's legal tender, particularly for high risk countries (although that is usually bad for the recipient)

In particular El Salvador doesn't even have its own legal tender and haven't for a long time. They use the US dollar.

They don't want Bitcoin in exchange. Seems entirely reasonable to me given how much the value of cryptocurrency fluctuates with low predictability. They could get paid in it one day and lose half the value the next.

Fiat currencies also can and have lost half their value plenty of times.

Actually I can't think of any fiat currency that hasn't at least halved in value?


Usually over a long time. They are a lot less volatile than Bitcoin.

You can also offset the risks of sudden devaluation through matching assets and liabilities, trading derivatives and so on.


This is why otc tradfi crypto futures are needed. You can buy a train car full of corn a year out trivially on a liquid futures market, regardless if corn prices fluctuate wildly you will pay what was agreed. Listing BTC derivatives would solve the predictability for fixed loan terms.

El Salvador can't issue fiat. They use US dollars. Only the US Federal Reserve can issue USD.

They could. Ecuador does in fact mint its own US-dollar coins, and El Salvador could dedollarize.

Ecuador mints their own centavo coins, but they are not legal tender outside of Ecuador. They've never released their own $1 coin into general circulation – their ubiquitous Sacagawea dollars are minted in the US.

Sorry, I didn't mean to say they minted US$1 coins, just coins whose value is denominated in dollars. I think the biggest one is US$0.25?

US dollars are also not legal tender outside the US, with a few exceptions (I think including both El Salvador and Ecuador.)


El Salvador doesn't have a fiat currency. They are dollarized since 2001.

Hmm.. I didn't know that. Which makes the demand purely political then. I recall IMF making the same demand from an island country a few years ago too.

https://www.imf.org/en/Blogs/Articles/2021/07/26/blog-crypto...


The IMF feels bitcoin is a risky asset and doesn’t want to be a part of that gamble when making its loan. The IMF has a history of making lots of conditions they feel minimize risk.

To me it looks more like my bank mandating I carry certain kinds of insurance in the terms of my mortgage than a political bias, but I am not an expert.


"urged officials to limit its exposure" is what the Reuters article said, so yeah. They think El Salvador's ability to repay the loan is tied too much to BTC.

El Salvador hasn't issued fiat since 2001. Any other presumptions as to why its a fair demand?

The IMF will definitely not accept repayment in El Salvador's own fiat currency! That would be obviously stupid of them.

Especially since it doesn't have one.

It could certainly create one. It has in the past.

How many people in the Bitcoin community actually think a predictably deflationary asset is good to use as a currency?

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

I'd much prefer a small amount of deflation to the massive inflation that USD is currently undergoing. And furthermore I think our economic system which encourages young people to take on debt in order to have niceties such as housing and transportation is massively exploitative and unsustainable.


High inflation discourages high debt.

High inflation effectively front loaded loans that had fixed repayments (such as mortgage repayments) and the high interest rates that went with them (they move togeter - its called the Fisher Effect - https://moneyterms.co.uk/fisher-effect/ ) meant lenders were willing to lend a much lower multiple or income.

In most places (and definitely in the UK) house prices were much lower relative to incomes when we had 10% annual inflation.


> And furthermore I think our economic system which encourages young people to take on debt in order to have niceties such as housing and transportation is massively exploitative and unsustainable.

Deflation will kill that. Your loan will cost more over time instead of less. The assumption with inflation is loans will follow it. With deflation and loans not following then people who bought into the system might be well off but those who are not yet in are worse. Same thing with inflation and loans not following as is happening now.


From my (maybe naive) understanding of current economic theory, it's that a small amount of inflation is what grows an economy. And an important part of that is unpredictable levels of inflation/deflation.

So I'd assume a small amount of predictable deflation would shrink an economy.

Anyone know more about this?


'Withholding'...well how dare they.

So how many IMF bailout loans must be dispersed, without condition of course, before this BTC economy will magically work?


The IMF probably rightfully sees a structurally deflationary currency (bitcoin) as a massive risk should it gain widespread adoption

It is structurally disinflationary, not just deflationary. Bitcoin is still emitted every ~10 minutes with currently an average inflation rate just under 1% of its supply per year.

The "massive risk" the IMF sees is that without central banks or even less influential central banks the IMF existence would be threatened.


If an economy grows at 2% and the supply grows by 1% it is in permanent deflation. For a country like el salvador with much higher growth, the deflation can easily be much higher

You were discussing "structural" inflation, referring to Bitcoin as a system, not relative to inflation of goods and services in a specific economy. These are two distinct economic phenomena that can influence each other but should not be conflated.

Bitcoin's supply doesn't become inflationary or deflationary "structurally" based on the growth of x or y economies. The word inflation is used for both concepts but, structurally, Bitcoin will remain an inflationary system until around year 2140... then block subsidies are going to to stop, no new bitcoins are going to be emitted and then you (or more likely our descendants) can call Bitcoin a structurally deflationary money. Hence the use of the word disinflationary, it currently is in the process of becoming a deflationary system by progressively reducing the inflation of its own money supply (through "halvings" approx. every 4 years).


If the Bitcoin experiment had been a success, they wouldn't be needing an IMF loan.

They also use USD as legal tender. Is their USD experiment a failure too?

It's a failed economy with both BTC and USD, so...yes? I'm sure they would accept a BTC denominated bailout. Problem solved, right?

[flagged]


Yeah, the all so powerful IMF that can be thwarted by the incredibly difficult task of…checks notes….

not taking loans from them…

The IMF (or its donor nations) aren’t forcing anyone to take loans from them. Countries do that because the IMF offers much cheaper rates they can get anywhere else and is willing to forgive those loans far more easily than any other entity.

In return it expects certain good governance changes that are stated upfront as conditions to receive the loans you could very well get from anywhere else in the world.

Don’t like what they consider good governance? Don’t take a loan from them. Go get in the private market or the variety of nations willing to lend at far more onerous terms.


When a country takes an IMF loan, it’s often the political elites—not the general population—who make the decision. And in many cases, these elites personally benefit from the deal, even if it devastates their nation in the long run

For example, in Argentina (2001), President Fernando de la Rúa followed the IMF’s austerity policies despite mass protests. The economy collapsed, and he fled the country via helicopter. But the elites who benefited from privatization kept their wealth while everyday citizens suffered


Read a book!

Seriously this is the most BS flag I have ever gotten. I am ashamed of you hacker news points having people.

The IMF is the pinnacle of western imperialism.


Not mandating businesses to accept Bitcoin is a more free market solution.

Imagine you have 6,050 bitcoins but they didn't work out for you the way that you hoped. The most reasonable thing to do is to still advertise a bullish position because otherwise you are devaluing your own asset.

There is a strong sentiment around bitcoin in El Salvador and it can make them money; but the experiment around it being a legal tender, well, failed.


They only doubled and tripled in value. Gotta wonder what you think they expected

It to be a viable currency? Not a speculative asset?

That’s called a rug pull IRL.

Investment is not legal tender, its moved from a functional role to a high risk investment strategy, would be my take. They're different buckets of money/value and expectations.

From the article:

> Salvadorans, with the exception of a few, never embraced Bukele’s initiative, who enjoys enormous popularity for his war against gangs, which dropped homicides to historic lows in El Salvador. A recent survey by the Central American University (UCA) revealed that 92% of Salvadorans did not use bitcoin in their transactions in 2024.

I would say this points to an actual failed experiment, if true.


Homicides are at historic lows because they stopped counting bodies found in mass graves and murders in prison.

8% is quite a lot though.

8% of people used it at least one time in an entire year.

In a place where people (who have on average very low incomes) were given $30 worth of bitcoin by their government just for signing up to a wallet app, so a very, very large proportion of the populous (compared to any other country on Earth) already had an app and wallet set up and ready to go. That's not a lot. That's a clear indication that the experiment simply didn't work.


Depends for what. What were Bukele's stated goals? Only with this in mind can we decide whether 8% is high or low.

Doing better than Firefox

This "everything's going great as long as you squint hard enough" stuff is why people don't give cryptocurrency proponents the time of day. At some point admitting you've lost actually better preserves your ability to be heard at the next debate.

When I consider 8% to be high and you don't, that makes me more skeptical of mainstream adoption as a currency than you are.

I'd be surprised if anyone really used it there, for technical reasons alone, and not even considering the risk part. BTC is still not easy to use.

It's no longer legal tender; merchants will no longer be forced to accept it. That's the key point; if the state wants to indulge in speculation, that's its business (though you'd question whether a state which needs to take IMF loans, which are kind of a last resort, should really be engaging in this...)


The recurring theme is people will keep explaining why bitcoin has failed and will fail. And bitcoin will keep hitting all time high.

That's probably why OP chose a highly editorialized "Tico Times" article as the source for this. What's even funnier is it's a Costa Rican newspaper. So one Central American country publishes an article smearing another Central American country, and then HN sees the bias-confirming headline and tries to glean some economic lesson from it. Classic.

It's interesting and nice to see how progressive and creative El Salvador has been. Some failures are perfectly understandable when one is willing to try new things. Their approach to crime is another thing that comes to mind that was lambasted and ridiculed by the "international community" and "experts". Yet in the space of a single decade they went from murder capital of the world to safer than New Zealand (in terms of homicide rate), which is just staggering.

I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.


Note that their official homicide numbers no longer include bodies found in unmarked graves (as of 2021), people killed in conflicts between police and gangs (as of 2022), and people killed in prison. These are arguably reasonable decisions but unless you backfit the old numbers, you don't have the real trend.

I suspect that the trend would be impressive either way, you'd just lose the "safer than New Zealand" line.


Well there's no need to suspect, homicide rates were dropping like a rock before 2021. Perhaps faster than has been achieved by any other social reform on record.

They just offered to accept any criminal of any nationality (including American citizens) from the USA for a fee. https://www.nytimes.com/2025/02/04/us/politics/el-salvador-p... It's creative but hard to see as progressive, importing the idea of a for profit prison system from the USA.

Yes I am certain that not everything El Salvador does is progressive, even before reading this link.

Some people called Obama progressive and he definitely helped destroy Libya and Syria, ordered the extrajudicial execution of a US citizen under presidential immunity, droned poor brown people living on the other side of the planet, let Citi group pick his cabinet, etc. Nevertheless, the progressive things that Obama did do were still progressive.


El Salvador is a gang-infested shithole because US interventionists backed those who would later lead gangs to stop a left-wing revolution. The Salvadoran government often targeted civilians, and massacred peaceful protestors. Then after the civil war, the same US-backed mercenaries and soldiers who had engaged in massacres and violence came back home, they employed the same terror techniques to build up the gangs and gain power for themselves, exploiting all the displaced peoples, especially the Lost Children of Central America who were kidnapped and raised in the gangs.

> El Salvador is a gang-infested shithole

Far less so now, because they refused to listen to the dogma preached from these experts and institutions (significantly coming from those associated with or funded by the US), about how they should run their country.


What's your point?

That's what the usa did to the entire south and middle America.


Let's be 100% clear on this

Assad and Ghadaffi destroyed Syria and Lybia respectively being asshole dictators that caused revolutions and that attempted to stay in power by claiming over mountains of dead Syrians and Lybians. The west didn't interfere much in Syria so Assad was able to stay in power a while longer and kill many more of his own citizens. The west messed up the post revolution period but letting Gaddafi do what he wanted would have lead to a worse situation


Let me be clear, folks. Lots of people contributed to their destruction, and Obama was one of them. One of the major players involved in those messes.

This is... a strange and jarring thing to read. My kneejerk response was that yes, they are innovating and experimenting with oppressive and corrupt governance, but that is ultimately uncharitable. A more balanced response is that while you may personally think of Bitcoin as progressive (I can't imagine why) you certainly can't claim that Bukele's El Salvador is progressive. You may like the gang crackdown, you may appreciate the suspension of habeus corpus, but you can't claim that's a progressive position.

I don't think "bitcoin" is progressive, bitcoin is a technology. I think the idea of trying a decentralized electronic currency is progressive. Whether they implemented it well or should have seen the problems with using it as a currency is one thing, but in the idea of trying something new sure I think it was good. I don't think it caused grave harm to try.

And I certainly can claim that their policies on crime are progressive. They are prioritizing the rights of the many law abiding people who have a fundamental human right to live unmolested and unterrorized by criminals. I think that is very progressive and quite a radical departure from the status quo. I don't think I have ever heard "human rights advocates" and UN types opine and lament the human rights of people who have to endure this type of criminal society and I think it is brave and progressive to fight for them. I absolutely understand that it has required concessions and weakening of rights in other areas, and I don't say that is a good thing, but everything is a tradeoff right? If they continued conservative status quo the tradeoff would have been other peoples rights continuing to be violated.

Just because it's not "progressive" as exactly defined by an elite ruling class in the "international community" and think-tanks and academia, and the leftist intelligentsia at large, does not mean it is not progress in social reform and improvement for the greater good. To the actual people who have to live in El Salvador, approval for Bukele's reforms are staggering. I'm sure a lot of the "experts" who assured everybody they would never work are upset about it because they have a lot of egg on their face now, but fortunately the country has a bright young progressive leader who cares about the people more than the elitists say.


That’s all well and good until innocent people get caught in the net. How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society at large? Would you throw your own child into the pit if it meant that the happiness and safety of your town was ensured? In the extreme, why not just make every crime carry a death penalty? Would that society be perfect by your measure?

(And that’s before we start dissecting the bribery and corruption of those who wield this power.)


> That’s all well and good until innocent people get caught in the net.

Is your position that no innocent people were convicted of crimes before the reforms, or that innocent people do not get caught in the crimes that have been reduced so dramatically?

> How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society?

And how many young people are not killed or maimed or dragged into a life of crime indefinitely and without recourse in the alternative?

As I said, I acknowledge the issues with it, but no social policy is perfect and all social policy is a balance. You can't pull out "human rights" as a trump card to say Bukele's policies are bad or worse than before. Because you are confining and defining human rights in a very narrow specific way, and that does not account for many other rights of many other classes of people.


> How many thousands of young people are worth incarcerating indefinitely and without legal recourse for the benefit of society at large?

You can actually do the math for that. If the number of innocent people harmed by the gangs is more than the number of innocent people caught in the legal cross-fire then it is worth it.


That assumes a lot, most importantly that the harm is limited to "innocent person in prison" rather than, "Government has the power to throw anyone it wants into prison, effectively disappearing them." The history of these sort of measures is a history of a slide into something worse than whatever was being solved in the first place.

The word progressive has a real meaning besides the popular figure-of-speech of calling leftist policies "progressive". Progress in anything, including politics, can move in a direction you like or in a direction you don't like. It's still progress.

No, it does not. Progress is positive. The word you are thinking of is change. Change can take you in any direction, even though the left also likes that word.

Progress is positive as in forward, which is not exclusive for any political leaning.

CNN says Secretary Rubio just struck a deal with Bukele to accept deportees from the United States regardless of nationality, including US citizens, as long as we pay to house them in his prison.

They're deporting US citizens? How is that even legal?

That is not what is happening. The agreement is to use El Salvadorian prisons instead of US prisons for prisoners. El Salvador said they would be willing to accept any prisoner, regardless of nationality. The US citizens would not be deported, but imprisoned in another country. However, it is not clear if the US will use El Salvadoran prisons for US citizens, only foreigners or not at all.

That's deportation.

The definition according to Google is

> the action of deporting a foreigner from a country.

A citizen would obviously not be deported.


Forcing someone out of a country is deportation. Maybe not in your dictionary, but in reality.

Tell me, when in history has the US sent its citizens to overseas prisons?


I literally just pulled the first definition. It is not my dictionary, but Google's. If you don't like the first definition that comes up, that is on you, not me.

Second, it is not even clear that any US citizens will be shipped off. Bukele is just offering it and Trump said he isn't sure if it will happen.

Third, US citizens are able to serve their sentence in a foreign country if they so choose since 1977 [1]. Obviously this situation is not the same, but the US does send its citizens to foreign prisons sometimes.

[1] https://travel.state.gov/content/travel/en/legal/travel-lega...


Isn’t this what caused the gang problem in the first place in El Salvador? I’m no expert but that was my understanding.

El Salvador is going to keep them in prisons, not just let them loose.

Regardless of whether you think of them as successful or failed, I don't think you can see El Salvador's policies as "progressive".

How is it "progressive" to allow public safety issues to disproportionately impact vulnerable populations?

Is Omelas "progressive"?

Right. Letting drug addicts destroy the commons as they die horrific public overdose deaths is “progressive”. Stifling free speech is “progressive”. Letting mentally ill children be irreversibly mutilated is “progressive”.

Dramatically reducing a country’s murder rate while breaking the narcos’ stranglehold on it is… something else.

I guess at this point the meaning of the word “progressive” has achieved a full inversion?


Bukele has emprisoned a large part of the population for the rest of their life in concentration camps.

https://www.france24.com/en/live-news/20250128-no-way-out-gr...

If he was killing them directly in gas chambers instead of letting them rot in prison, the population would be as safe, if not safer, forever.

Would that still be "progressive" for you?

Would you have supported Jonathan Swift's "Modest Proposal" too, at the time? Or sterilizing poor people? I mean, those are perfectly logical suggestions that would work, wouldn't they?


There are alternative paths one could take to address society's ills.

I'm saying Bukele's policies aren't progressive. Furthermore, he doesn't consider them progressive. His allies in the Latin American ultra right wing don't consider them progressive. "Progressive" to them is an insult.


> nice to see how progressive and creative El Salvador has been

Alright so let's have a look at these progressive/creative approaches: https://en.wikipedia.org/wiki/Crime_in_El_Salvador

(a) Mass arrests of anyone who merely had a gang tattoo, (b) Jailing of children, (c) Security cameras everywhere, (d) Inhumane treatment of prisoners.

Trashing human rights is always effective but hardly creative nor progressive.


Human rights of victims of these criminals were being routinely trashed and ignored before Bukele's reforms, so that's just not a trump card. His progressive reforms have significantly improved society for the greater good and has stood up for human rights that were being trampled, it is also against the conservative status quo thinking of how to deal with crime, so it very much fits the dictionary definition of progressive. Just not the elitist status quo definition of the word (ironically, they are conservative by at least some definitions).

> it is also against the conservative status quo thinking of how to deal with crime

How are tough on crime policies "against the conservative status quo"?


The people who are seen to be the experts and authorities in social theory and practice in their ivory towers in the UN and academia cling to their outdated and falsified ideas of what works and what doesn't and refuse to change or accept new things.

Firstly, they are adamant that "tough on crime" policies do not work, they were adamant that Buekele's reforms would not work. Now sure there are probably ways they may fail and situations where they don't apply, it has now been proven by counter-example that they are wrong. They still refuse to accept it.

They now address their little El Salvador embarrassment by claiming it has caused calamitous violations of "human rights". This is a sneaky tool they use to win a debate and end the conversation, but when you look behind the curtain, really they are the ones who defined what human rights are and what is important for society, and they make no attempt to really weigh any of the multitide of very complicated issues as a whole. They just pick some human rights and some classes of people and say they were violated and that's the end of it. They would have the poor people of El Salvador live with gangs running rampant and murder rates hundreds of times higher than the rich areas of the wealthy countries they live in, and it would be worth it if only it could prevent one accused criminal having their human rights violated. It's just absolutely ludicrous, especially when you see the outcomes of these policies and they're still raging against Bukele for them and refusing to admit they don't have all the answers.

That is why they are conservative. Again, not conservative in their definitions, but conservative according to the dictionary. They hold to their views and work to maintain the status quo in terms of social and governance theories and practices.

Again I don't disagree with having strong individual rights against the justice system, and "tough on crime" policies sure can be pushed where they are not effective for political gain. But it's not black and white, it is many shades and countless inter-related moving parts. Very limited powers of police and very strong rights for accused in a justice system is a wonderful thing to have. In a society stricken by violence and crime and ruled by gangs and on the brink of collapse, it is not always possible to have without violating more rights of more people.

And if El Salvador continues long enough and keeps making progress reducing crime and breaking gangs and lifting people out of generational crime, they will actually eventually would likely to be in a much better position to implement stronger individual rights against the justice system.

What is actually important in a society is how they choose to be governed, their right to self-determination, including what rights they decide should be important and how those should be weighed and traded off among one another. Not some fixed, rigid decrees by an elitist ruling class of mostly foreigners with their lists of rights developed decades ago by and for different countries, missing many rights, and no real framework to make adjustments or make value judgements between conflicting rights, they are just used as a hammer to shut down debate that is awkward for their conservative and outdated views.


OK so you didn't need to say all that.

Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.

Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.

I'm glad El Salvadore is safer. I don't love how Bukele handled things. And I don't know that I'd necessarily say he made the wrong call either; the net effect may be overwhelmingly positive for the vast majority of El Salvadorians.

Still, I don't think leaving people to rot in incredibly inhumane jails, without proper course for appeal, or the possibility of rehabilitation is humane. His handling of the situation has certainly made it more difficult if not impossible to determine innocence, or just sentencing for those who may have had very little criminal involvement prior to the emergency mobilization of El Salvador's police and military forces.

And it's certainly created more corruption in the "official" system with regards to respect for El Salvadorian and/or international laws, as is common with dictatorships. Corruption which cements his dictatorship with an iron fist while reigning un-checked.

I'm not convinced this iron fist move was the only answer either, but can at least accept the possibility that it was the only appropriate response to extreme level of gang violence they were facing.


> OK so you didn't need to say all that.

I'll take that as a "thank you" :)

> Saying you meant conservative in the sense that it's the opposite of radical, rather than conservative as in right-wing politics, would have sufficed.

Yes I did, I did try to say that in the comment you replied to but on re-reading it could have been clearer and was probably a bit snarky.

> Anyway, Bukele's treatment of the gang situation in El Salvadore can simultaneously be a flagrant violation of human rights while also being an effective measure to curtail untenable levels of gang violence.

It can be that, but the previous government's treatment of the gang situation in El Salvadore be a flagrant violation of human rights of all the citizens who had been affected by crime and violence. The suffering endured by those people wasn't humane. That's the problem, right? I can see it's not a black and white situation, can you? Can you name a single "progressive" policy that has zero downsides, costs, unintended consequences, etc? No, on social scales and government policy, everything is a big mess of chaotic cause and effect and good and bad and statistical outcomes, so picking a narrow class of human rights for one class of people in a whole society and say "those are getting worse therefore it can't be progressive" is really reductionist and not even true because in the same way you can probably rule out anything being progressive.

I'm not going to respond to your points one by one because yet again I add the disclaimer that I think it is terrible things got so bad they came to such measures, and maybe not all measures were exactly right. But what is clear is that it is a bold and brave social reform that went against status quo and has been extraordinarily successful in restoring and defending human rights for many, and in many ways improving society for the better, for a huge majority of citizens. Safe to call it progressive, but really call it whatever you like I guess, but a flagrant violation of human rights I think lacks some understanding or nuance of the reality of the situation there.


I’m really not a tough on crime guy but I agree with everything you’re saying, I do just worry that if Buekele is ousted that another leader could be elected who uses the same heavy hand to lock up more than just criminals.

> Trashing human rights is always effective

Hardly. What made Bukele's presidency impressive is that many other governments had tried the "mano dura" approach before, but he was the first one to make it work, and nobody is sure why. There's evidence even he didn't expect it to work that well.


What would you say to the victims of these gangs?

This is just an intellectually lazy way to dismiss any criticism of policies.

You can care deeply about victims and not believe in a surveillance state or arresting people simply because they look a certain way. History has shown it’s a slippery slope that ends up hurting everyone.


A gang tattoo is a uniform. If you wear the uniform of an enemy soldier anywhere in the world, you will probably get arrested or worse.

> History has shown it’s a slippery slope that ends up hurting everyone.

You don't need to look far back into history when you can look at the real world right now. When things are so bad that they can't get worse, there's no point of arguing about a slippery slope.


You surely can't be accusing others of being intellectually lazy and using the slippery slope argument in the very same post?

a - gang tattoos mean gang involvement. Let's stop pretending otherwise.

b - I'm not sure what you think you're reading but that article points to the scourge of gangs and their impact on children. I only skimmed it but I couldn't see anything in that article about detaining children.

c - So?

d - Gang members in places like El Salvador victimise communities. They are a scourge. I will not accept the humanizing of them - they are parasites. I absolutely support Bukele's policies to rid the country of them. I hope he keeps going.


gangs are a symptom just like drug abuse, which they are also entwined with. striking out at gangs without addressing the issues motivating people to join them is just punishing poverty on both ends. the state has let you down, you feel the need to take survival into your own hands, and then are punished for that.

by no means am i excusing the violence that gang perpetuate, but i am unconvinced that enough people simply want to live the gangster lifestyle that gangs can sustain themselves outside situations of extreme poverty.


Do pro-bitcoin people still talk about goals of bitcoin being a currency that people use daily?

I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.


It is not an asset that goes up forever.

It is permissionless, very liquid asset that the governments cannot dilute. For many people this is a very big deal. A significant part of the world population lives under regimes where the governments control the money flow, heavily dilute savings in the single local fiat currency and can confiscate savings under a guise of money reform.

While not nearly as bad, most democratic, developed countries dilute their fiat to the tune of 5-7% a year. Would I buy bitcoin if I have an easy access to a convenient currency with no (or at least significantly under the average GDP growth) debasement? Hell no! Otherwise, I will (together with gold, income-generating stocks, real estate, etc.) as an insurance against government spending run amok. My 2c.


It's false safety. If the government can't get their drop of blood by diluting their fiat, they will simply do it another, more direct way.

At best it will work as long as few enough people are doing it that the government doesn't care.


Sure they can criminalize bitcoin possession or use their police force and state apparatus to serveil and track all bitcoin usage. But that is way more effort than simply turning on the money printer.

It's much simpler than that, they simply make selling bitcoin a capital gain event (which it is) and tax it. They could even make a separate special rate for cryptocurrency pretty easily. Now maybe you think this is easy to avoid, in which case I would ask why you aren't already committing tax fraud.

The reason tax evasion with regular currency is so difficult is because pretty much all banks/financial institutions report your income to the state. But with crypto, especially anonymized ones like monero, the decentralized nature makes it almost impossible to track income and who it belongs to.

It is almost trivial for a 3-letter agency to track bitcoin flow. Every transaction is entirely public with only pseudonyms to obfuscate identity, and with the current KYC laws good luck not getting doxxed while buying BTC. We need to move this discourse away from "crypto" and towards Monero specifically if we want any progress on adoption

Isn't a wallet just a private-public key pair? One could easily generate those on a whim and start transacting using them. I assume the KYC laws apply to exchanges but what about individuals with bitcoin directly trading with each other? No way to track that

It doesn't have to be "magic" that causes it to go up forever. People need a way to put large amounts of money in places that are difficult for governments to get to and /or easy to move across jurisdictional borders. Think: money launderers, people that are worried their corrupt government will seize their assets, people hiding money from someone they owe like a spouse in a divorce. These all seem to me to be reasonable use cases for bitcoin.

All the things that make bitcoin a pain to buy a pizza are irrelevant if your goal is to hide $100m in your shoe. Nothing can do that better than bitcoin and there is a demonstrated need.

If you assume the reason to use bitcoin isn't going away and the wealth of the world goes up-- while the supply of bitcoin is pretty constant-- it can keep going up without magic.


But that doesn't distinguish Bitcoin from other cryptocurrencies. The thing that distinguishes Bitcoin is fame, pure and simple. Everyone has heard of it.

Fame is part of it, but it's more that it's IMO probably the only truly decentralized cryptocurrency. Not just in terms of the nodes and miners being well spread out between organizations and parts of the world, but also in terms of its development and governance. Sure, there's a relatively small group of core contributors to Bitcoin, but they don't have much fame or personality cults around them like Ethereum's Vitalik does. They are really just restricted to maintaining and adding well-agreed-upon new features to Bitcoin. Eg when Segwit happened, a lot of miners held out on supporting it for a long time becasue it was a bit controversial. Meanwhile with Ethereum, if Vitalik really pushed for some controversial change, it would probably happen. Once you go further down the list than Ethereum, things get really bad, with many cryptos' development being entirely driven by a small group of people in a for-profit company, with miners and users that will blindly update to the newest version regardless of what's in it.

Eth famously forked and reversed txns due to someone getting scammed.

the fact that eth classic was created from this incident and still exists does inspire some confidence that ethereum's governance is somewhat decentralized also, to be fair.

And IIRC it wasn't a "scam", it was a bug in a smart contract.


Yes a smart contract bug. Hacked might be a better word. Or outsmarted?

ETH forked because the contract was poorly written and they didn't want to honor the contract because their buddies would have lost a lot of money and the project would have gotten an egg to their face.

That's true, but you could say the same thing about a Van Gough painting. There are lots of old pretty paintings. But if you paid $xxm for your Van Gough you can be pretty sure its still worth a lot in ten years. There are no guarantees. But that's not just true of Van Goughs and bitcoins.

Also nobody can premine it, no coalition of big stakeholders can lock you out of your coins, a 51% attack is less likely feasible than for any other PoW coin, the bandwidth needed for its blockchain is smaller than most alternatives, and it's less likely to conceal unknown cryptographic weaknesses. It's kind of shitty in some other ways, though.

And eventually the math will be solved and every bitcoin will be worth zero.

While that's conceivable, Merkle-graph systems like Bitcoin are surprisingly resilient. It's been almost 20 years since MD5 was thoroughly broken, but still nobody has published a second preimage attack. For SHA2 and SHA3 nobody has even published a collision attack. And SHA-256 (what Bitcoin uses) is post-quantum-safe (Grover's algorithm still needs 2¹²⁸ time) though AFAIK there isn't yet a post-quantum cryptosystem deployed for signing transactions, which will require a hard fork.

Presumably if quantum computers (or better DLP algorithms on classical computers) start breaking keys, that will become a priority.

So I think there's an excellent chance that even if the math is solved Bitcoins will retain their value. Perhaps even without many of them getting stolen in the process. This is a big difference from many other uses of cryptography; if someone breaks IDEA 20 years from now, they can decrypt your PGP messages from the 20th century, and there's nothing you can do now to prevent that.


To me its inevitable. And just a matter of time. Any year there could be a breakthrough that quickly leads to missing math.

We still don't know if P = NP. You seem peculiarly certain it is, which is odd given that most of the people who study the topic strongly suspect otherwise. They could of course be wrong, but what makes you so sure?

Assuming P != NP we still don't have any proof that sha-2 etc can't be reversed (obviously there is a loss of data). It's implausible for now but someday I guarantee we will have the math that makes it trivial. It does not require P = NP.

They would just patch the software.

You can't patch the rules for the existing bitcoins. People would have to move them to new rules.

That is not necessarily how this works. The only thing required to happen is that a super-majority of the miners running the bitcoin software voluntarily update to a new version. This is how changes have been done to BTC before.

Fame and security. Bitcoin is the hardest crypto to attack socially and economically.

Here's one good use: I looked into leaving the US to become a citizen elsewhere. I have about $15MM in my retirement. I would have to pay a penalty on my taxes for early withdrawal, and be taxed when I renounce my citizenship. In theory I could cash everything out, buy a huge amount of BTC, move to another country (within a week, or quickly!!), and then cash it out in their currency. Of course, all sorts of alarm bells would go off if a normal schmoe like me tried to move that much money out of my investment account, because I'm not rich enough to break finance laws like people worth 10x, 100x or 1,000x more than me can do without going to jail. And I'd be terrified that the other country would OOPS my deposit like in the film Blow with Johnny Depp.

So your one good use is... tax evasion. Huh.

It's not illegal to move money out of your investment accounts, it's just reported so that yes, you can have a tax liability.

I too, would like tax-free investments and funds.


One man tax evasion is another man escape from illegitimate capture.

Yes! That's my one good use! :)

Seriously, that's all I got.


I think the government is figuring this out and has access to a lot of info about BTC from the Binance settlement. That's just speculation on my part, it may not be true.

What I think a lot of people don't realize is that the US government is not very interested in going after people who do tax evasion in the $5-50 m range. People like that can afford lawyers and representatives, it will take years, and never get any headlines. They love to go after people for $5-50k evasion because they just get paid.


And it doesn't work unless you buy your bitcoin peer to peer, as any exchange will just leave a log relating your buying to your wallet, and liquidate it peer to peer as well. Any transactions with regulated institutions will doxx your wallet and then it's over, you can't use those funds anymore without being tracked (or at least trackable) by the feds.

Money laundering, tax evasion, and alimony avoidance. Yes there is a demand for those I suppose...

Those who continue to invest in and use the Lightning (layer 2) network think it will be used as currency but most see it as a long term storage of value, at least until infrastructure supporting layers 2 and 3 mature.

As for “magically,” there’s nothing magic about its increase in value as it replaces legacy technology, chiefly gold as a store of value.


Except it has none of the properties of gold as an asset. The value of bitcoin is highly correlated with equities and anti-correlated with gold. It’s the opposite of what you want to be holding as a hedge against a stock market crash.

When I think of the "properties" of gold I don't think of how the price behaves, but rather that the total supply of it is limited (though Bitcoin actually does a much better job at limiting supply, since gold'll keep being mined for a long time and the supply is hard to predict) and that, other than theft, there's no way for someone else to take it from you (compare to eg money at a bank that can collapse or in a stock of a company that can go bankrupt)

It is more rare than gold and getting more rare every 4 years.

What is the current supply of gold and what will it be in 2050?


Gold has a utility, used in a large swath of electronics. Can always be sold to make something. Bitcoin can only be sold if there is a fiat currency trading in it

Electronics didn't exist for the thousands of years that gold was used as currency. The fact is, it only has most of the value that it does because it was rare, malleable, particularly shiny, and because metallism was simply the easiest way (or at least one of the easiest ways) to invent the concept of currency and a monetary system.

Even then it had a utility as jewlery. Bitcoin fails on that.

Bitcoin's utility is that you can both hold it in your hands and send it across the world in 10 minutes with no intermediaries. Can't do that with gold.

you don't want your currency to be useful though. the value inherent in a currency is its ability to be verified without trusting the counterparty.

There is an infinite supply of computer algorithms. Gold is an element.

Your comment indicates that you fundamentally misunderstand BTC. I recommend reading Broken Money by Lyn Alden.

No, I get it, thank you very much. Early adopter of BTC here, I've read the whitepaper and all that, sodl when I realized what an energy pig it had become.

The only thing that separates BTC from all the derivative shitcoins is hype and stories we tell about it. Bitcoin is itself interchangeable with an infinite number of related algorithms/schemes.

Gold extraction definitely has its problems, but it's a fundamental element of the universe.

In 100 years, I know which one will definitely still hold value.


It is getting less less rare every 4 years.

Around the time of SegWit, the “digital gold” camp won over the “digital money” camp — who moved on to ETH, SOL, etc.

Many of us in the BC is digital money camp argued the case that more transactions and a lower transaction fee could be most easily implemented, within the spirit of the founders intent, if we simply increased the size of the transaction buffer, mitigating an obvious bottleneck.

We argued against the complexity of SegWit and Lightning Network.

I think greed and politics won rather than engineering or economics good sense - people didnt want cheaper transactions, it now costs around $15 USD per BTC transaction.

Despite the proliferation of alt-coins using essentially the same code-base, with shorter block-times and larger buffers.. and more programmability - ultimately proof-of-stake might be a better implementation of the block minting process, than proof-of-work.


Transaction fees have been about as low as they can possibly be for months. It costs roughly $0.15 to move a UTXO right now.

The people who argued for increasing the block size were making a tradeoff between decentralization and "low" transaction fees. Increasing the block size makes the chain grow faster which causes several problems: the time to sync new blocks goes up, initial chain download time goes way up, and block verification takes more CPU.

The parameters were initially set so that anyone could run a full node for as many years as possible which is the most important part of the ecosystem by far. If you make it harder for the average person to run a node it doesn't matter how cheap the transactions are if ultimately a small group of people are capable of running it. You could argue that doubling or quadrupling the block size doesn't hurt decentralization, and maybe you're right, but that also doesn't move the needle much for transaction throughput either at least not enough to make a difference for adoption.

Bitcoin can and should be scaled in layers. The detractors are just impatient.


While it's not here yet, Vitalik's future plans for Ethereum involve making it possible to run validators on smartwatches[1], which is far more accessibly decentralized than BTC could be and far more possible with Ethereum's PoS consensus as opposed to PoW, without needing to cripple transaction speed to boot.

[1]: https://vitalik.eth.limo/general/2024/10/23/futures4.html


I did lookup the BTC transaction fee, but it looks like 15 USD was completely wrong .. my bad.

Checking now :

https://ycharts.com/indicators/bitcoin_average_transaction_f...

This says, afaict, the average BTC transaction cost today is $1:40 USD

The 5yr chart shows it spiking at $128 in April 2024.

If BTC transactions reliably cost 15c per transaction, it might make for a viable electronic money... but that is clearly not the case, so I think my point stands.


It currently costs <1 USD to perform a Bitcoin transaction:

https://bitcoinfees.net/


I think people mostly realized that the more immediate priority is establishing Bitcoin as an international reserve commodity. Its usage as a currency, either directly or via intermediary layers, is kind of secondary to that. Bitcoin is making pretty good progress in that regard.

Why would anyone spend a single BTC/sat. if they know it could be worth 10x more in a few weeks/years?

Because if you/they knew that, then they'd be buying more bitcoin.

On a much smaller scale, your dollar goes up by 5% every year but you still use it everyday because all your monies are in dollars. If all your monies are in btc, you'd have to sell to buy things.


If you suppose that BTC would be a widely adopted currency, you wouldn't "sell" it, you would simply exchange it for the good or service. But in this case if BTC is deflationary you would still hesitate to spend it. USD is inflationary, so there is hypothetically a small pressure to use it.

Because they need toilet paper today.

While people will always need to buy the essentials, I do buy that a deflationary currency could discourage discretionary spending. Maybe people are slightly less likely to splurge on a big purchase or a nice dinner. I don't know what the delta would be in GDP growth compared to now; it certainly could be negligible.

I've got good news for those people, you can't buy toilet paper with bitcoin today. And they aren't getting paid in bitcoin today, either. And if they tried to exchange bitcoin for fiat to buy toilet paper, they'd be subject to incredible fees that would make such a transaction pointless.

Selling a speculative investment for a necessity screams: "I don't understand personal finance."

It used to be that buying a Bitcoin today would net you 10000x more if you waited a bit.

Then it was 100x more.

Now 10x more is the best people can dream of. The possibility of getting super rich from Bitcoin is now gone unless you're already rich to start with. Turning $100 into a million dollars made the whole world interested. Turning 100k into a million isn't anything interesting and it's out of reach of most normal people, and those who can throw 100k into something are already investing in other things with similar returns. As a normie, putting in $100 with the hopes of Bitcoin reaching a million would only get you $1000. That's not much different than a couple scratch off lottery tickets.

It'd be much smarter to find the new secret thing that costs $5 now and will net you a million dollars ten years down the road. There's loads of stuff out there that people aren't paying attention to yet. Crypto isn't one of those things.


It's like those people who collect action figures and never take them out of the box. I'm not trying to knock it, but I don't think I'll ever understand it.

Because people are mortal.

Sell enough at the top to last you until the next top.

For daily usage, Bitcoin is simply inferior to Ethereum and other blockchains.

That opinion is not shared by those who think Proof of Stake and no ceiling to supply are bugs vs features.

Those issues are not really relevant when it comes to factors like transaction speeds and the diversity of assets available to transact with, such as stablecoins, as well as DeFi platforms to actually use those assets on.

If all you care about are transaction speeds then use the lightning network. Instant settlement of bitcoin and much lower fees. There are protocols like Cashu [1] that allow you to transact offline anonymously for no fees and settle on the lightning network.

Why do you need "diversity of assets to transact with"? Go to any store in almost any country and they usually accept a single currency. Maybe in some they take local + USD. You're arguing for something the market doesn't seem to care about outside of speculative trading for fiat gains.

And even if you really want stablecoins they've been added to bitcoin via the lightning network and taproot assets. Tether for example can be used via bitcoin [2]. There's a reason Bitcoin makes up well over 50% of the total crypto market.

----

1. https://cashu.space/

2. https://www.coindesk.com/business/2025/01/30/tether-brings-i...


You "can" do all these things on BTC. Almost nobody does. All of Tether & USDC usage takes place on other blockchains. The lightning network is notoriously tricky to use and isn't trustless. A diversity of assets enables things like PAXG, an ERC-20 token backed fully by real-world gold, as well as things like tokenized stocks, bonds, and t-bills, the last already existing, and the former surely coming in the near future.

Additionally BTC isn't "over 50% of the market", it's over 50% of the market capitalization, which is a huge difference. BTC doesn't have the raw TX speed to make up 50% of actual market activity.


When most people hear daily usage, they think groceries, bills and paycheck, not day trading on an exchange, defi or centralized.

In this regard, crypto currency is not really a currency that people can use for their daily lives without worry and risk from volatility


yes it is, just use stables. frankly it is a much more convenient way to move money if the other person has it as well

e: and i’m no crypto obsessive really, i don’t think it was usable even 3 years ago but it’s pretty handy now, can easily send $20 in usdc on base or use it to purchase carbon offsets or use it on election/sports betting or use it to purchase deepseek r1 credits…


I was emailing rent to my roommate 6+ years ago for zero fees with GPay, it's hard to see it being easier than that.

well, it is. for instance, for my rent rebalancing i have to pay more than $2500 and gpay doesn’t allow that. the fees would be fractional cents.

in fact short of wiring i have not found any service allowing me to send more than that in a day and certainly not with instant deposit

gpay takes 1-5 days to appear in account, i can spend the money i transfer here immediately


Too many malicious actors in crypto for it to become mainstream, sorry, not sorry

The community needs to self police and remove this problem if they ever want me to give it a third chance. There are several other fundamental issues in crypto, so not sure this will be enough on its own to reach mainstream adoption

For example, I don't want my transaction history on a public ledger, encrypted or not


"Crypto needs to self-police and remove malicious actors" and "Crypto needs to stop having a public ledger" are two contradictory actions where achieving one would make the other impossible.

How so? Plenty of private system are fully capable of removing bad actors, if anything they become easier together

I already have stable digital dollars in my bank account, why do I need another one that costs me more money to use?

Proof of Stake etc are a bit irrelevant for daily use. If you want to do something like make a bet on polymarket the newer chains are faster, easier and cheaper than bitcoin or ethereum on the whole. Polymarket uses polygon for example which is a fork off ethereum but it doesn't matter much which such network you use and the bets are denominated in US$. Bitcoin lightning is ok but more awkward to use than polygon et al.

Proof of Stake and no ceiling to supply are important if you are going to hold the thing for decades which is a different issue.


You don't really believe that do you? The market disagrees as well

Yes, some Bitcoin people still hold on to the idea that somehow layer 2 or layer 3 systems will somehow make Bitcoin practical for regular payments again.

But largely that's been abandoned for the "store of value"/"number go up" speculative use-case which is easily 99.99% of the point of Bitcoin today.


I literally use USDT daily. Use it to pay for food delivery, for a massage or a manicure, or exchange it for cash delivered to my home. Literally 90% of my spending goes through it.

USDT isn't Bitcoin.

That's true. The claim that Bitcoin is useless for everyday transactions is obviously correct. It's more like digital gold.

However, I find time and time again that HN crows is absolutely unaware of how useful crypto can be in everyday life, so I offer my perspective.


I do.

Yea we do, but continue to bury your head in the sand for the next 15 years you'll be just fine

Yeah the rest of us can continue geeking out over layered network protocol design and technologies like Lightning or Liquid. There is so much going on under the hood but it is so much easier to take the piss and learn nothing. That is no surprise, with the current state of the world.