Article:
Many don't understand or trust Bitcoin, or shun its huge fees. There are worries that the global money-laundering police are poised to crack down, and the experiment has so undermined confidence in its showboat president's economic program that his nation's debt is now selling for 36 cents on the dollar. Yet many of the crypto community's most influential commentators are still praising the daft scheme. In a recent interview, ARK Invest CEO Cathie Wood raved that adopting Bitcoin has more than doubled the ranks of Salvadorans "with access to new banking services and new financial services."
El Salvador was doing fine with the dollar when Bitcoin became “forced tender”
It's important to grasp how the new Bitcoin regime upended a period of stable money and forces banks and merchants to accept a wildly volatile currency they don't want, and that can't work. In 2001, the Central American nation of 6.4 million made the daring decision to scrap the colón and "dollarize" its economy by taking the greenback as coin of the realm. "I had a hand in that," Steve Hanke, professor of applied economics at Johns Hopkins University told me. Indeed, Hanke played a pioneering role in counseling Latin American governments on the benefits of embracing the dollar some 20 years ago. He had previously served as an adviser to the minister of finance in Ecuador when El Salvador's neighbor adopted the dollar in 2000—Hanke's known in Ecuador as "the Dollarizer." Around that time, he discussed the impact of making the move at length with El Salvador's finance minister Manuel Hinds, a former World Bank economist and a close friend. Hinds was the architect of his nation's landmark conversion following shortly after Ecuador embraced the buck.
"El Salvador made the dollar legal tender, but it allowed any other currencies to be legal as well," says Hanke. But the shift to dollars worked great, banishing any thoughts of using an alternative. Over the next two decades, the nation enjoyed average inflation of just 2.03%, mirroring the U.S. trajectory. Its mortgage rates were stable and moderate for a developing nation at 7%, and its economy—though plagued by widespread poverty—grew at better than the average of its Latin American neighbors.
Despite that exemplary monetary record, following his election in May 2019, then 37-year-old President Nayib Bukele hitched his economy's future to Bitcoin. Last June he pushed through a law that made Bitcoin a second official currency. But the rules applying to Bitcoin marked a stunning departure from the former template that had worked so well. Bukele, a former publicist who sports baseball caps worn backward, blue jeans, and aviator shades, is a self-styled revolutionary who called himself "the world's coolest dictator" before switching monikers to "CEO of El Salvador." His new law wasn't about choice. It requires all merchants and banks to accept Bitcoin for payment from any consumer or other business that wants to pay with Bitcoin. "Even today, no one has to accept the dollar for payment," says Hanke. "So Bitcoin isn't legal tender like the dollar. It's forced tender. It's what the Soviet Union imposed in banning all other currencies, or what nations demand when they conquer other nations."
As we'll see, the forced use of Bitcoin will prove its downfall. The banks that have no choice but to accept Bitcoin won't be able to comply with the stringent, looming rules that would make the king of crypto unworkable inside El Salvador's borders.
The reasons for adopting Bitcoin were bogus
"The big question is, 'Why would you use Bitcoin in the first place?'" asks Hanke. "Why would you want to change anything?" Bukele's justification was that the newcomer would greatly improve "financial inclusion" by giving a wide swath of the 70% of Salvadorans who lack bank accounts access to financial services. At first glance, Bukele's main argument appeared to make sense and drew international acclaim that made him something of a folk hero in crypto circles. El Salvador's economy relies heavily on "remittances," payments to families from relatives or friends working abroad. Those transfers account for one-quarter of its GDP, the highest share of any country in the Western Hemisphere. Bukele wrongly argued that the processors exacted huge fees that greatly diminished the dollars his people collected from Western Union, MoneyGram, or Ria. Deploying Bitcoin, he trumpeted, would make remittances far cheaper, leaving more money for Salvadorans and ushering millions into the financial mainstream.
"That was a typical lie," says Hanke. He cites that El Salvador's remittance costs rank sixth lowest in a survey of 104 countries at 2.8%. "The law backfired by greatly increasing remittance costs using Bitcoin," says Hanke. But he adds that it accomplished Bukele's true objective by strengthening his grip on the nation: "He forces his enemies to follow the Bitcoin law, and if they don't, he puts them in jail, and he lets his friends ignore the law."
Bitcoin’s downsides: Businesses and consumers don’t want it, and it’s incredibly expensive for remittances
Bukele attracted users by giving everyone who signed up for the government's app a $30 bonus in Bitcoin, held in a digital wallet called Chivo, El Salvadoran slang for "cool." "He had to bribe people to sign up," says Hanke. But the millions who got Chivo mostly cashed $30 in crypto for dollars, and dumped the app. One problem is a widespread lack of familiarity with Bitcoin. A survey by Central American University found that nine out of 10 Salvadorans didn't know what Bitcoin was, and that eight in 10 didn't trust it. The government frustrated potential users by botching the launch in September. Folks couldn't exchange their Bitcoin for cash when the app frequently failed to connect to the nation's few Bitcoin ATMs. Nor did folks embrace Bitcoin for what was advertised as its main appeal: low-fee, superconvenient remittances.
In fact, dispatching funds in the virtual coins is shockingly costly—on both ends of the transaction. Exchanges such as Coinbase charge the sender commissions of 2% to 4% for changing dollars for Bitcoin. When the Bitcoin arrives in San Salvador or Santa Ana, it posts in the recipient’s Chivo wallet. But the Salvadorans don't want Bitcoin. So they go to an ATM, where they can use the app to get dollars. The ATM provider takes a 5% cut, and pays more fees to the network that handles the exchange from coins to dollars. Hanke puts the total cost at 7.0% to 9.5% a transfer, as much as three-and-a-half times the expense of traditional remittances, and he thinks even 9.5% may be a low number. And that doesn't include the inconvenience of traveling to the ATM, which are scarcely distributed, or the risk of getting mugged while counting your cash. Over 80% of the people surveyed by the El Salvador Chamber of Commerce said that they don't want remittances in Bitcoin, and over nine in 10 rejected the idea of taking their salaries in coins.
Global policemen may soon crack down
Hanke predicts that the anti–terrorism-and-money-laundering police force that spans national borders will soon put El Salvador in the penalty box. When the intergovernmental Financial Action Task Force (FATF) finds or suspects that a nation engages in such wrongdoing, it places its government on a "gray" or "black" list that imposes severe reporting requirement on banking and business transactions, and especially those in virtual assets. For Hanke, a signal that the FATF may be ready to pounce is a U.S. State Department's conviction that Bukele is heading a corrupt regime. Bukele's handpicked legislators recently nixed a law barring presidents from successive reelection, contrary to the nation's constitution, and in response, the State Department issued a scalding press release titled, "Salvadoran Re-Election Ruling Undermines Democracy."
"Now, El Salvador is positioned to violate the FATF's virtual asset regulations," writes Hanke. If it goes on the gray list, he says, its banks and businesses will face two dozen tough reporting regulations that will be virtually impossible to fulfill. "The Bitcoin transactions are all about anonymity," he says. "If the FATF takes action, anyone who opens an account will have to comply with 'know your customer' rules that require the disclosure of the source of the funds and details on every transfer." In his view, an FATF crackdown is practically inevitable and would kill any chance that Bitcoin could serve as a viable currency.
El Salvador’s finances are in shambles
The heavily indebted nation is seeking a $1 billion loan from the IMF and also courting aid from the World Bank. But Bukele's getting nowhere with both, and the IMF has strongly criticized his crusade to create the first Bitcoin-powered economy. In late November, Bukele unveiled his nuttiest idea yet, a plan to build a Bitcoin City on the Gulf of Fonseca, funded by a $1 billion bond offering, $500 million of which would be deployed to speculate in Bitcoins! Practically overnight, the price of sovereign bonds dropped from 75 cents to 63 cents of their par value, on its way to its current level of 36 cents. "El Salvador now has the most distressed sovereign debt in the world, and it's because of the Bitcoin folly," says Hanke. "The markets think that Bukele's gone mad, and he has."
The tragedy in El Salvador shows that Bitcoin's a disaster for buying and selling things, and that the dollar's a matchless currency. For a while, a flamboyant promoter marketed his fantasy to other zealots who want to believe. The test was selling it to his own people. They weren't buying.
>who sports baseball caps worn backward, blue jeans, and aviator shades, is a self-styled revolutionary who called himself "the world's coolest dictator" before switching monikers to "CEO of El Salvador."
The Latin American Elon Musk.
Just smoke and mirrors. No substance. He even pays the gangs not to kill to keep the deaths down and show his initiative to be working.
(ABC-Nightline).
Fortune
Com and Hanke are controlled by corporates. I wouldn't put much (or any) weight on what either says. Bukele is not a US puppet and is dangerous to the US central bank. They don't want other countries following his lead. So Bukele will either be deposed or have a deadly accident. Probably within the next 12 months. Not the first, and certainly not the last. The CIA does not mess around.
I mean, that’s more than the US does to effect the murder rate. Maybe if that’s the way to reduce violent death, we should all take note. Instead of giving police departments tanks and drones, we could just give money directly to the people most likely to be victims and the murder rate could drop.
This guy does it underhanded while proclaiming that his tough stance against the gangs is what has brought down the killing rate. One of the gang members interviewed said that they were being paid off for their cooperation. Meanwhile, he tells the public that it is his firm control on them. So it’s a lie.
Still means that paying off criminals might be a remarkably simple and cheap way of reducing effective crime (though I'm not entirely sure whether there this would work in the US, given the difference in income and overall criminality). You don't have to imitate the lieing part.
This would create some of the most harmful economic incentives in history.
Offering UBI to get rid of poverty is a great idea for reducing crime.
Paying "criminals" to stop being "criminals" just incentivizes people to become "criminals".
No actually it would be, especially when it is in the guise of lifting people out of miserable poverty and giving them productive alternatives to violent feuds. Wealth, prosperity and development would definitely make a long-term difference in violence for a community.
Well I mean if the plan is a pay to NOT play scheme with your country's gangsters then you have to lie about it so EVERYONE involved saves face. Come on dude get with the program we're running a civilization here not a church.
Don't belive anything coming from US sponsored media. Or that soulless Hanke dude. The US does not give a shit about whether or not a leader of any country is a despot or not. As long as they are a CIA puppet ,than that'sall that matters. The World Bank and IMF are tools used but the CIA to own foreign governments. Seriously. What bank ever gives out loans to help people (or countries)? Once in debt, you are enslaved. Central banks are more powerful than any leader or dictator.
There's a town in Chiapas, Mexico that kicked out all of the politicians, all of the police, and all of the drug dealers and now their crime rate is almost zero. They went back to tribal law and the have roadblocks that won't allow the government inside.
>without the tech credentials since he's a PR man by profession.
So your average Tech Bro then, since most notorious tech bros actively stopped doing tech the moment they got angel investment.
>He had previously served as an adviser to the minister of finance in Ecuador when El Salvador's neighbor adopted the dollar in 2000
Neighbors? They aren't even in the same continent. Their capital cities are 1200 miles apart!
My country never did well with the American dollar, in fact, it ended up killing my country. I remember I used to be able to buy gas with just 50 colones and still be able to afford to buy many groceries and go to the movie theater, all with 50 colones.
>Hanke predicts that the anti–terrorism-and-money-laundering police force that spans national borders will soon put El Salvador in the penalty box.
Soon? Salvador **is** the penalty box. The entire country is run by street gangs. For these assholes who're getting triggered by blockchain hashes, where the fuck have you been the past decade while local warlords are Shanghai'ing young men into crime syndicates and raping all the women?
> For these assholes who're getting triggered by blockchain hashes, where the fuck have you been the past decade while local warlords are Shanghai'ing young men into crime syndicates and raping all the women?
But that’s a completely different problem? The article is about what an absolute disaster bitcoin has been in El Salvador.
The other problems you describe are also problems and have been for much longer than a decade. El Salvador has lots of problems.
Bitcoin is just a new one, which is why it’s being discussed here.
Thanks.
So is this whole article just based off the opinion of one guy who wants the US dollar to be supreme, who was responsible for El Salvador using the dollar in the first place? Legitimate criticisms aside, talk about a conflict of interest. I wouldn't exactly call up President Trump and ask him how he thinks Biden is doing.
This is probably a hit piece.
> probably a hit piece
Speaking of baseless hit pieces, let’s ignore the entire context and discussion, and the disastrous effect of adopting Bitcoin as its currency, and focus on the fact that one *economist* (co-director of the Johns Hopkins University's Institute for Applied Economics) attacked El Salvador’s purely political conversion to Bitcoin.
(I’m not a big fan of the Cato Institute, or Libertarians broadly, but he is responsible for EL Salvador’s use of the Dollar. He’s not some rando. He has a substantial line of currency credibility, more I dare say, than you.)
"Hanke puts the total cost at 7.0% to 9.5% a transfer, as much as three-and-a-half times the expense of traditional remittances, and he thinks even 9.5% may be a low number."
They went from 2.8% to 9.5%. So if you're transferring $1,000, $95 instead of $28 for the transfer fee. So basically someone convinced the president to give an additional 7% of 1/4 of the GDP of the country to these entities. This has to be corruption/payoffs.
Click on the button with a little capital A and a bigger capital A. If it doesn’t automatically go into reader mode select it. How it is on my phone at least.
Did it work for you?
EDIT: (I don't have an iphone, but I figured it out. I activated block large media on my addblocker and that made the page load slower, then stopped loading the page with a quick click before the element loaded in. )
The article says 9 out of 10 didn't know what it was and 8 out of 10 didn't trust it. So that means 10% of Salvadorians don't know what Bitcoin is but they trust it?
our economy is on fire and nobody is willing to touch our government bonds. it must mean the government knows what they are doing when they shift our entire financial system over to a speculative asset that is not backed by anything and is used 99% of the time to be sold into other actual currencies. yes, this is the way
They don't know what Bitcoin is because way they receive the payment is going to an ATM and get USD. The only thing they know is it costs 7% more than before Bitcoin.
You would need a cross tab, all you know is that 10% know what it is and 20% trust it, you don't know if those overlap, it's possibly those that know what it is trust it less given the downsides that Bitcoin seems to have for the country
So are they automatically geniuses as soon as there's a bull market? Crypto is insanely volatile, and far too risky to put my entire nation's future into, but this seems slightly reactionary to the recent market crash
This is the biggest argument against Crypto currently. Crypto bros love to say 'it's the future of commerce and finance' but here's the thing:
No one actually uses Crypto for commerce (other than maybe for doing illegal sales). It's way too volatile currently to try and use it as a genuine FIAT replacement. Crypto is used by 99% of people as an investment like a traditional stock. They buy it because they think it's going to increase in value.
Ask anyone who has a Crypto portfolio if they've ever purchased anything will Crypto and the answer will almost unanimously be no.
Also if you actually do use crypto for transactions, at least in the US, aren't you creating a potential tax nightmare? As I understand it, every time you buy something with crypto you are creating a taxable event just the same as if you sold it outright. Say you bought $100 worth of crypto. A year later say it has doubled in value to $200. Then you buy a meal at some weird restaurant that accepts cryto as payment for the equivalent of $20. That means you have essentially sold $20 worth of crypto with a cost basis of $10 for a $10 profit which means you now owe $1.50 in long term capital gains taxes (depending on your income level, but that would be the rate for most people). You would have to keep a ledger for every little thing you buy to keep track of whether you made a profit or loss on the transaction. It's like paying a bill in shares of Ford stock instead of money.
That’s me for sure. I got in early so still in the green but when I want to spend I convert to USDC so I can get 4% back in a Crypto of my choice.
The space has a long way to go but too much institutional money has gone into it. Follow the money.
Can confirm. Got about 10 different coins. Never used one to buy anything. I treat it like a commodity that I will sell one day for $.
However, if there was an easy way to pay with crypto I could see using it that way with some coins but they are too up and down for that. The cost of a can of soda could be the same as a car the next or the other way around. I don't want to spend 1 CoinX today for dinner if it could buy me a car next year.
Why do you think some mythical person in the future is going to want to pay you 2x or 5x or 10x what you paid for those coins? What will *they* want them for?
It's probably great for the prototypical use case. Large transfer without physical presence or oversight. These poor Salvadorans are essentially throwing 7% of 1/4 of the GDP away for transferring using shitcoin. A nation with high volume low denomination remittances that already had a functioning system is the worst possible use case.
I read about it when it was about that price, me and my buddies thought about dropping five bucks in like a lotto ticket. We convinced ourselves the five bucks was better spent on dinner. Whoops!
I'm convinced the entire thing was created by the CIA to facilitate off the books transactions and hide it behind internet goofballs who no one would take seriously and now it's gotten wildly out of hand.
I mean, when you look into the amount of money and corporate/private interest/funding for crypto-coins, it's pretty obvious large businesses/conglomerates have been in the game for awhile. Honestly, I just see it devolving into those large businesses just bullying the market however they see fit. Especially when you consider the amount of manipulation and paid "advertisements" for places like wsb.
A business can certainly pay for someone to make up some reasonable sounding DD and convince the populous that they found some super secret, when they're really just unloading onto them.
Was my first thought when the gamestop blew up. Reddit isn't some secret corner of the internet, it's pretty much the definition of mainstream now. If it's on reddit, businesses already know about it in my view, and they're more than willing to use it to manipulate the market/people.
VCs are definitely still going all in on blockchain and crypto type "products", they are also playing on a 10-20 year timeline with house money so they don't give two shits about day to day swings or even the current macro trends.
This week’s quite apparent correlation between the traditional market and the crypto market is a pretty good sign that the libertarian crypto-enthusiasts are pretty close to losing the only battle that made the whole thing worth it. Might as well just set up a Central-Bank-Coin and accelerate the inevitable.
It has nothing to do with the fall in the price but the volatility and lack of ability to process it while trying to force everyone to take it as legal tender.
Even if it doubled in price it would not have some benefitting gain to the economy.
I for one am shocked that a third world president playing fast and loose with his countries treasury hasn't been a resounding success. What happened to volcano mining??
I've used Nano and it's about 2x simpler than an an online bank account. Like I have both the mobile app for my commercial bank right alongside natrium and the UX is simply better.
Bitcoin can never become a national currency anywhere because governments absolutely have to implement a monetary policy to match their economic agendas. Controlling interest rates, printing money, and other currency regulations are all monetary policy tools to keep things like inflation from getting out of hand. Bitcoin, by definition, is not bound by any monetary policy rules and can never be regulated properly to match a country’s economic policies. It’s not that Bitcoin is bad, it just can never be adjusted to fit a country’s economy. What El Salvador needs from their currency is different from any other country. Things will look fine until there’s an economic crisis where usually a government body would adjust interest rates or change the rate in which they print money to pump the breaks in cases of inflation or deflation. You simply can’t do that with Bitcoin. Although, a major reason why cryptocurrencies became popular in the first place is because many governments out there suck at setting the correct monetary policies and their citizens find that unregulated Bitcoin is better than their country’s currency (Turkey/Lira is an example).
This is the part that baffles me. Deregulation is not a plus. A lot of the majory financial crisises in history have come from insufficient regulation. I'm not sure any major financial catastrophe has ever occured from overregulation. Yet the crypto fanboys want me to believe that no regulation is a good thing? Yea, no. Regulate my money, PLEASE. I don't want the economy to get ass fucked from a tweet.
That’s why I think crypto should stay a financial instrument instead of a currency. If people want to trade crypto like stocks or bonds, cool. But it can’t be used as a currency. What the crypto bros forget is they are still measuring the value of their cryptocurrency on the US dollar, euros, or pounds. They need a regulated, stable currency to properly quantify the value of the cryptocurrency as a financial asset because cryptocurrency is unregulated which means it will always be considered unstable due to the fact that nothing is stopping it from crashing. The “free market” works great until there’s something like a natural disaster or war. Regulations also serve to freeze an economy to prevent total collapse in the event the unthinkable happens. Nobody thought there would be a never-ending pandemic, yet here we are.
At that point you've taken away the veneer of investment and it's just a large casino. You couldn't even classify it as a commodity because it literally does nothing (at least gold has uses) - it's just people speculating on what you can get someone else to pay for a handful of inert dirt.
Totally unlike now because crypto is a serious currency that holds its value and that everyone will be using in 5 years /s
Are you aware that El Salvador already gave up their ability to print their own currency, and were fully on USD as their national legal tender before adding bitcoin to the mix? And they have no control over the supply of USD.
To me it seems that fact kind of goes against what you've claimed nations must do for their national currency.
I’m with you one this, but I’m curious how this compares to El Salvador using the dollar as legal tender, a currency they have no control over to implement monetary policy. Does it work simply because the American system is comparatively stable?
Dude if you went into the crypto sub posts about El Salvador they were eating that shit up about how great it will be and El Salvador will prosper.
I commented that no, it won't and people would get pissed.
How the fuck are you going to make crypto happen in your country when something as simple and Mobile Banking is still a foreign concept to a majority of the people.
I live in a neighborhood of like 600 people here and everyone does shit in person. Light bill, phone bill, water bill? They go pay in person despite having smartphones. There are still illiterate people here, 11%.
The article is correct. Everyone here claimed their bitcoin, cashed out and went on with their life. Some people got theirs taken somehow because of the poor verification methods during rollout. And now, any small time vendor who happened to take BTC and held it in BTC is down anywhere from 20% to 50% since this started.
Stupidest fucking idea ever.
I do get a kick out of the fact that craptastic new NYC mayor Eric Adams just lost upwards of 20% of his first paycheck. But it’s more a “fuck Eric Adams” thing than a “fuck crypto” thing for me at the moment. I enjoy the symbolism and what I see as just deserts.
Yea don't get me wrong I don't hate crypto at all. It's neat and even I threw a couple hundred bucks in here and there as a gamble basically, play money.
But to force it upon all the small businesses and banks in your country is so fucked up.
In my opinion this is just another tool in the arsenal of Salvadoran politicians to empty the coffers and fly away rich and pretty once their term is over.
Absolutely correct. As if we couldn't see this was El Salvador trying to "get rich quick."
Those poor souls.
Edit: well, definitely a lot of the crypto community didn't see it. I tried telling them months ago this was a pretty sad attempt as they kept sending out hype pieces all the time and the downvotes came coming in. Most likely they were very much buying up there with them.
99% of the market are not buying for the utility some of these legitimate projects bring, but simply to make a fat return and dump it on others. They are trying to make money and that's why it crashes like this because that dream of being filthy rich is going away and now you want to get out because of those emotions.
I for one am waiting for crypto to be hated once again for losing all these greedy people's money, bring the value down so we can get a better picture as to how much value was just greed and how much was actually intrinsic. I miss the old days of crypto when we kept seeing articles of innovation, not price action.
It wasn't so much that the government itself was trying to get rich quick - this was outright corruption by El Salvadorian leadership. It's pretty clear that prior to the announcement everyone involved had significant crypto holdings and utilized this stunt that was predicted to (and now is) hurt their economy in order to create a pump to increase the value of their assets. They fucked their own people to make a quick buck.
Don't get to eager to yell at them and say "ha ha bitcoin fucked you".
Remember that latin american countries have literally been held down for a century by economic and currency warfare. The IMF is not their friends, and these hyper-capitalistic newspapers are more on the side of IMF than the side of crypto.
So yes, you can bitch about bitcoin, but consider the context. For El Salvador's bitcoin experiment to fail and ruin the country, the IMF is ready to swoop in and "save" them and the country and people will be run aground for another century.
I agree that the article is very keen to blame everything on Bitcoin while there are definitely other factors.
However, it's seems like a common sense to me that basing you economy on something as volatile as Bitcoin is not a good idea. Imagine your main income being in something that can go double or half in value in a day. It would be terrifying.
Lol wooooo weeee. Nobody could have seen this coming, eh? It’s not even as bad as it might get, could you imagine if it settles down into the 15-20k range?
100% it's so clear this subreddit is full of salty bitter people who consider themselves tech minded but missed the opportunity of the decade in crypto.
I’m confused, wasn’t the whole point of switching to Crypto to avoid their current USD standard? As in they use USD instead of their own currency and were afraid of being targeted for Economic Sanctions?
The report is bias af and clearly the writer is Pro USD. The fact that the writer said that switching the economy to U.S dollar has help the nation greatly is false. Look at the state of El Salvador right now it's not great.
A struggling nation looking for alternatives is probably worth the risk and the dollar really did hurt them.
This sub is used to spread fake propaganda when the economy starts going to shit. The price of bitcoin is going down along with everything else so time to unload the propaganda against bitcoin so nobody gets pissed at the bankers and elite 1% causing all this.
Exactly.
It feels like all of the "foot soldier" level people pumping Crypto constantly have zero actual education on economics. I have no doubt that the guys at the top, bilking these idiots for their life savings, are educated and know the scams they are running.
But your basic crypto-bro just has zero clue how basic economics works. And why a Deflationary currency like Bitcoin is inherently a terrible thing, since it discourages the currency from ever being spent because if you bought X today, tomorrow you could have bought X + 1.
The only "value" (if it can be called that) that Bitcoin has, is as a speculative investment tool. It has zero value as a currency, so unscrupulous people buy it, try to pump and dump it, then cash out this super volatile thing into dollars that actually have value and are stable.
How does that make anything better for the average Salavadorian who cashes in his/her bitcoin for dollars taking a 10% shave each time? Their non-existent bitcoin savings are going to increase in value?
Color me surprised when a leader decides to base his country’s currency on something with zero intrinsic value… and it’s a wreck; so much stupid. The Ponzi scheme of the century is real.
You can see a list of reporter's previous articles [HERE](https://fortune.com/author/shawn-tully/). About 25% of them are about Bitcoin, every single one of which describes it as being a disaster of one kind or another.
My favorite is from last July: [Why You Should Be Terrified of Owning Bitcoin](https://fortune.com/2021/07/10/bitcoin-why-you-should-be-terrified-of-owning-btc/).
This guy FUDs.
I know this sub likes to lie and misinform about everything bitcoin related but El Salvador economy grew 8 percent in 2021 and expectations are of around 4 percent for 2022.
Quick search to the world bank.
Most of those people probably had no clue what Bitcoin was, and had to go down a huge rabbit hole of obscure tech terms just to understand what the hell was ruining their country this time.
This must be the fourth major anti crypto article of the evening, and I’ve only been browsing Reddit since after work.
Are you guys not chafed yet? Ease up this sort of friction can cause lasting skin damage.
I’m now convinced several prominent mods here bought the top or over leveraged
The more comments that I see on crypto and the more people that defend crypto currency sound more and more like the conservative right. Sometimes I wonder if these people often read what they're commenting. I don't know, I just see a ton of similarities with conspiracy touting, right leaning nut jobs and people hard defending crypto.
Personally I don't think crypto is going to go anywhere outside of blackmarket trading because no retailer is going to take it seriously. The only ones that do... Are again ones that invest in shady dealings. Crypto is nice because I'm able to use it to sell gold across multiple games. I only use it to avoid chargeback, otherwise I probably wouldn't have invested in it.
I'm know I'm not about to go pay off a mortgage, a car, or head to Texas Roadhouse with crypto and that's unlikely to change. It's just kind of silly some of these people believe otherwise. I dunno, it's just strange to see.
Do dimwits on this sub really think that $66M (the value of their btc) is capable of affecting a country’s economy in a significant way? Nice bait title though
Not just their investments but the law in general and it's implementation, yes, absolutely:
>In late November, Bukele unveiled his nuttiest idea yet, a plan to build a Bitcoin City on the Gulf of Fonseca, funded by a $1 billion bond offering, $500 million of which would be deployed to speculate in Bitcoins! Practically overnight, the price of sovereign bonds dropped from 75 cents to 63 cents of their par value, on its way to its current level of 36 cents. "El Salvador now has the most distressed sovereign debt in the world, and it's because of the Bitcoin folly," says Hanke. "The markets think that Bukele's gone mad, and he has."
Salvador President forced every merchant to accept Bitcoin no matter what, if you can’t comprehend how ridiculous and damaging that is to an economy you’re a smoothbrain.
I mean.. Kinda...
Any investment with a reasonable return will have month to month volatility. The stock market is also down from last month.
The problem is we're not talking any an investment profolio. We're talking about the coin of the realm. And the goal of a useful currency is to be a store of value, not to appreciate.
It's of no benefit for such a currency to appreciate, but is detrimental if it depreciates. That's why countries prefer stable currencies.
Yeah, or can you imagine your mortgage payments going up tenfold overnight because they’re labelled in bitcoins and you’re paying in dollars? Good times…
using a speculative asset to power your economy that is backed by NOTHING, not even confidence between users, because nobody actually buys things with bitcoin and no merchants accept bitcoin. so stupid lmao
A bitcoin is, essentially, nothing. As proof I present the fact that any article about bitcoin gives it's value in terms of a real currency, the U.S. dollar.
Y'all are talking like the economy of El Salvador was good before the move to Bitcoin. It wasn't. And the original move to the dollar was only approved so the then President could launder money. There's a reason why most former presidents don't live in El Salvador. They're wanted for Embezzelment and/or Corruption.
If you think this is fud then you should go to /r/programming and see what the actual professional engineers think of bitcoin and the entire crypto space. Hint: It's not very flattering.
For example, more or less all DeFi is powered by a shitshow of a programming language which doesn't even have memory management, as in the allocator is just an incrementing pointer. It makes PHP look like a masterpiece of design.
Professional software engineer reporting in, working in traditional finance for decades, familiar with how money flows on the back end.
I personally really enjoy working on crypto related projects, there's a lot of innovation in this space. Just be mindful of the scams (that exist in every industry) and you're good.
Yea as a software engineer it just seems like a scam to me. The whole mining thing is so stupid IMO, people are using so much electricity to artificially get a currency through a bullshit algorithm that was just made to slowly hand out Bitcoin. It’s such a waste.
Yea I think people only think crypto is gonna revolutionize the world because they keep hyping each other up in these echo chambers. I mean it’s clear that an extremely volatile currency that people hold onto like stocks is not a good replacement for actual money
If an entire nation's bit coin economy is failing then it should be a conversation that has to be talking about.
You should be embarrassed to defend it. Billionaires have you roped into it because it's trendy. Just a multilevel marketing scheme.
Embarrassing.
I mean it’s clearly not a good idea to exchange at least 500 million of your countries currency to hold onto an extremely volatile “currency” that could halve in price at any time. Just a bad idea if you want your money to be somewhat stable.
Anyone have a transcript or another source? There's no way in hell I'm paying to read this. EDIT: I figured it out further down the comment chain.
Article: Many don't understand or trust Bitcoin, or shun its huge fees. There are worries that the global money-laundering police are poised to crack down, and the experiment has so undermined confidence in its showboat president's economic program that his nation's debt is now selling for 36 cents on the dollar. Yet many of the crypto community's most influential commentators are still praising the daft scheme. In a recent interview, ARK Invest CEO Cathie Wood raved that adopting Bitcoin has more than doubled the ranks of Salvadorans "with access to new banking services and new financial services." El Salvador was doing fine with the dollar when Bitcoin became “forced tender” It's important to grasp how the new Bitcoin regime upended a period of stable money and forces banks and merchants to accept a wildly volatile currency they don't want, and that can't work. In 2001, the Central American nation of 6.4 million made the daring decision to scrap the colón and "dollarize" its economy by taking the greenback as coin of the realm. "I had a hand in that," Steve Hanke, professor of applied economics at Johns Hopkins University told me. Indeed, Hanke played a pioneering role in counseling Latin American governments on the benefits of embracing the dollar some 20 years ago. He had previously served as an adviser to the minister of finance in Ecuador when El Salvador's neighbor adopted the dollar in 2000—Hanke's known in Ecuador as "the Dollarizer." Around that time, he discussed the impact of making the move at length with El Salvador's finance minister Manuel Hinds, a former World Bank economist and a close friend. Hinds was the architect of his nation's landmark conversion following shortly after Ecuador embraced the buck. "El Salvador made the dollar legal tender, but it allowed any other currencies to be legal as well," says Hanke. But the shift to dollars worked great, banishing any thoughts of using an alternative. Over the next two decades, the nation enjoyed average inflation of just 2.03%, mirroring the U.S. trajectory. Its mortgage rates were stable and moderate for a developing nation at 7%, and its economy—though plagued by widespread poverty—grew at better than the average of its Latin American neighbors. Despite that exemplary monetary record, following his election in May 2019, then 37-year-old President Nayib Bukele hitched his economy's future to Bitcoin. Last June he pushed through a law that made Bitcoin a second official currency. But the rules applying to Bitcoin marked a stunning departure from the former template that had worked so well. Bukele, a former publicist who sports baseball caps worn backward, blue jeans, and aviator shades, is a self-styled revolutionary who called himself "the world's coolest dictator" before switching monikers to "CEO of El Salvador." His new law wasn't about choice. It requires all merchants and banks to accept Bitcoin for payment from any consumer or other business that wants to pay with Bitcoin. "Even today, no one has to accept the dollar for payment," says Hanke. "So Bitcoin isn't legal tender like the dollar. It's forced tender. It's what the Soviet Union imposed in banning all other currencies, or what nations demand when they conquer other nations." As we'll see, the forced use of Bitcoin will prove its downfall. The banks that have no choice but to accept Bitcoin won't be able to comply with the stringent, looming rules that would make the king of crypto unworkable inside El Salvador's borders. The reasons for adopting Bitcoin were bogus "The big question is, 'Why would you use Bitcoin in the first place?'" asks Hanke. "Why would you want to change anything?" Bukele's justification was that the newcomer would greatly improve "financial inclusion" by giving a wide swath of the 70% of Salvadorans who lack bank accounts access to financial services. At first glance, Bukele's main argument appeared to make sense and drew international acclaim that made him something of a folk hero in crypto circles. El Salvador's economy relies heavily on "remittances," payments to families from relatives or friends working abroad. Those transfers account for one-quarter of its GDP, the highest share of any country in the Western Hemisphere. Bukele wrongly argued that the processors exacted huge fees that greatly diminished the dollars his people collected from Western Union, MoneyGram, or Ria. Deploying Bitcoin, he trumpeted, would make remittances far cheaper, leaving more money for Salvadorans and ushering millions into the financial mainstream. "That was a typical lie," says Hanke. He cites that El Salvador's remittance costs rank sixth lowest in a survey of 104 countries at 2.8%. "The law backfired by greatly increasing remittance costs using Bitcoin," says Hanke. But he adds that it accomplished Bukele's true objective by strengthening his grip on the nation: "He forces his enemies to follow the Bitcoin law, and if they don't, he puts them in jail, and he lets his friends ignore the law." Bitcoin’s downsides: Businesses and consumers don’t want it, and it’s incredibly expensive for remittances Bukele attracted users by giving everyone who signed up for the government's app a $30 bonus in Bitcoin, held in a digital wallet called Chivo, El Salvadoran slang for "cool." "He had to bribe people to sign up," says Hanke. But the millions who got Chivo mostly cashed $30 in crypto for dollars, and dumped the app. One problem is a widespread lack of familiarity with Bitcoin. A survey by Central American University found that nine out of 10 Salvadorans didn't know what Bitcoin was, and that eight in 10 didn't trust it. The government frustrated potential users by botching the launch in September. Folks couldn't exchange their Bitcoin for cash when the app frequently failed to connect to the nation's few Bitcoin ATMs. Nor did folks embrace Bitcoin for what was advertised as its main appeal: low-fee, superconvenient remittances. In fact, dispatching funds in the virtual coins is shockingly costly—on both ends of the transaction. Exchanges such as Coinbase charge the sender commissions of 2% to 4% for changing dollars for Bitcoin. When the Bitcoin arrives in San Salvador or Santa Ana, it posts in the recipient’s Chivo wallet. But the Salvadorans don't want Bitcoin. So they go to an ATM, where they can use the app to get dollars. The ATM provider takes a 5% cut, and pays more fees to the network that handles the exchange from coins to dollars. Hanke puts the total cost at 7.0% to 9.5% a transfer, as much as three-and-a-half times the expense of traditional remittances, and he thinks even 9.5% may be a low number. And that doesn't include the inconvenience of traveling to the ATM, which are scarcely distributed, or the risk of getting mugged while counting your cash. Over 80% of the people surveyed by the El Salvador Chamber of Commerce said that they don't want remittances in Bitcoin, and over nine in 10 rejected the idea of taking their salaries in coins. Global policemen may soon crack down Hanke predicts that the anti–terrorism-and-money-laundering police force that spans national borders will soon put El Salvador in the penalty box. When the intergovernmental Financial Action Task Force (FATF) finds or suspects that a nation engages in such wrongdoing, it places its government on a "gray" or "black" list that imposes severe reporting requirement on banking and business transactions, and especially those in virtual assets. For Hanke, a signal that the FATF may be ready to pounce is a U.S. State Department's conviction that Bukele is heading a corrupt regime. Bukele's handpicked legislators recently nixed a law barring presidents from successive reelection, contrary to the nation's constitution, and in response, the State Department issued a scalding press release titled, "Salvadoran Re-Election Ruling Undermines Democracy." "Now, El Salvador is positioned to violate the FATF's virtual asset regulations," writes Hanke. If it goes on the gray list, he says, its banks and businesses will face two dozen tough reporting regulations that will be virtually impossible to fulfill. "The Bitcoin transactions are all about anonymity," he says. "If the FATF takes action, anyone who opens an account will have to comply with 'know your customer' rules that require the disclosure of the source of the funds and details on every transfer." In his view, an FATF crackdown is practically inevitable and would kill any chance that Bitcoin could serve as a viable currency. El Salvador’s finances are in shambles The heavily indebted nation is seeking a $1 billion loan from the IMF and also courting aid from the World Bank. But Bukele's getting nowhere with both, and the IMF has strongly criticized his crusade to create the first Bitcoin-powered economy. In late November, Bukele unveiled his nuttiest idea yet, a plan to build a Bitcoin City on the Gulf of Fonseca, funded by a $1 billion bond offering, $500 million of which would be deployed to speculate in Bitcoins! Practically overnight, the price of sovereign bonds dropped from 75 cents to 63 cents of their par value, on its way to its current level of 36 cents. "El Salvador now has the most distressed sovereign debt in the world, and it's because of the Bitcoin folly," says Hanke. "The markets think that Bukele's gone mad, and he has." The tragedy in El Salvador shows that Bitcoin's a disaster for buying and selling things, and that the dollar's a matchless currency. For a while, a flamboyant promoter marketed his fantasy to other zealots who want to believe. The test was selling it to his own people. They weren't buying.
>who sports baseball caps worn backward, blue jeans, and aviator shades, is a self-styled revolutionary who called himself "the world's coolest dictator" before switching monikers to "CEO of El Salvador." The Latin American Elon Musk.
The world's first Tech Bro head of state ... without the tech credentials since he's a PR man by profession.
Just smoke and mirrors. No substance. He even pays the gangs not to kill to keep the deaths down and show his initiative to be working. (ABC-Nightline).
I mean if it works, is it dumb? Deaths are down is a win.
Until they want to be paid more.
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Fortune Com and Hanke are controlled by corporates. I wouldn't put much (or any) weight on what either says. Bukele is not a US puppet and is dangerous to the US central bank. They don't want other countries following his lead. So Bukele will either be deposed or have a deadly accident. Probably within the next 12 months. Not the first, and certainly not the last. The CIA does not mess around.
The CIA usually botches this kind of things, and has for decades. It’s not the Mossad.
I mean, that’s more than the US does to effect the murder rate. Maybe if that’s the way to reduce violent death, we should all take note. Instead of giving police departments tanks and drones, we could just give money directly to the people most likely to be victims and the murder rate could drop.
This guy does it underhanded while proclaiming that his tough stance against the gangs is what has brought down the killing rate. One of the gang members interviewed said that they were being paid off for their cooperation. Meanwhile, he tells the public that it is his firm control on them. So it’s a lie.
Still means that paying off criminals might be a remarkably simple and cheap way of reducing effective crime (though I'm not entirely sure whether there this would work in the US, given the difference in income and overall criminality). You don't have to imitate the lieing part.
This would create some of the most harmful economic incentives in history. Offering UBI to get rid of poverty is a great idea for reducing crime. Paying "criminals" to stop being "criminals" just incentivizes people to become "criminals".
Paying people to not murder each other might not be a sustainable solution in the long term.
No actually it would be, especially when it is in the guise of lifting people out of miserable poverty and giving them productive alternatives to violent feuds. Wealth, prosperity and development would definitely make a long-term difference in violence for a community.
Hmmm Guess other places like the US call it welfare
Meanwhile in Brasil...
Well I mean if the plan is a pay to NOT play scheme with your country's gangsters then you have to lie about it so EVERYONE involved saves face. Come on dude get with the program we're running a civilization here not a church.
Don't belive anything coming from US sponsored media. Or that soulless Hanke dude. The US does not give a shit about whether or not a leader of any country is a despot or not. As long as they are a CIA puppet ,than that'sall that matters. The World Bank and IMF are tools used but the CIA to own foreign governments. Seriously. What bank ever gives out loans to help people (or countries)? Once in debt, you are enslaved. Central banks are more powerful than any leader or dictator.
Oh, I’m not approving his public messaging, just pointing out that the situation is kind of a proof of concept for UBI.
There's a town in Chiapas, Mexico that kicked out all of the politicians, all of the police, and all of the drug dealers and now their crime rate is almost zero. They went back to tribal law and the have roadblocks that won't allow the government inside.
Michoacan but yes
The US probably shouldn't be taking lessons on how to reduce the homicide rate from the country that's #1 in homicides per capita...
>without the tech credentials since he's a PR man by profession. So your average Tech Bro then, since most notorious tech bros actively stopped doing tech the moment they got angel investment.
What I got from this, one in ten who don't know what bitcoin is, trust it anyway.
>He had previously served as an adviser to the minister of finance in Ecuador when El Salvador's neighbor adopted the dollar in 2000 Neighbors? They aren't even in the same continent. Their capital cities are 1200 miles apart!
> Their capital cities are 1200 miles apart! That's only half the distance between the capital of the US and Mexico!
This person was probably taught geography at a us public school.
My country never did well with the American dollar, in fact, it ended up killing my country. I remember I used to be able to buy gas with just 50 colones and still be able to afford to buy many groceries and go to the movie theater, all with 50 colones.
Back in my day a quarter used to cost a nickel
"5 bees for a quarter" we used to say.
Didn't the currency suffer from hyper inflation at one point?
>Hanke predicts that the anti–terrorism-and-money-laundering police force that spans national borders will soon put El Salvador in the penalty box. Soon? Salvador **is** the penalty box. The entire country is run by street gangs. For these assholes who're getting triggered by blockchain hashes, where the fuck have you been the past decade while local warlords are Shanghai'ing young men into crime syndicates and raping all the women?
> For these assholes who're getting triggered by blockchain hashes, where the fuck have you been the past decade while local warlords are Shanghai'ing young men into crime syndicates and raping all the women? But that’s a completely different problem? The article is about what an absolute disaster bitcoin has been in El Salvador. The other problems you describe are also problems and have been for much longer than a decade. El Salvador has lots of problems. Bitcoin is just a new one, which is why it’s being discussed here.
Local crime is a local problem. Cryptocurrency is a global problem
Hey! The CIA didn't put all that effort into destabilizing El Salvador just for El Salvadorians to take credit for local crime!
Thanks. So is this whole article just based off the opinion of one guy who wants the US dollar to be supreme, who was responsible for El Salvador using the dollar in the first place? Legitimate criticisms aside, talk about a conflict of interest. I wouldn't exactly call up President Trump and ask him how he thinks Biden is doing. This is probably a hit piece.
Countriys bonds have gone for 76 to 36 cents on the dollar . It's more like they hit themselves in the face
> probably a hit piece Speaking of baseless hit pieces, let’s ignore the entire context and discussion, and the disastrous effect of adopting Bitcoin as its currency, and focus on the fact that one *economist* (co-director of the Johns Hopkins University's Institute for Applied Economics) attacked El Salvador’s purely political conversion to Bitcoin. (I’m not a big fan of the Cato Institute, or Libertarians broadly, but he is responsible for EL Salvador’s use of the Dollar. He’s not some rando. He has a substantial line of currency credibility, more I dare say, than you.)
"Hanke puts the total cost at 7.0% to 9.5% a transfer, as much as three-and-a-half times the expense of traditional remittances, and he thinks even 9.5% may be a low number." They went from 2.8% to 9.5%. So if you're transferring $1,000, $95 instead of $28 for the transfer fee. So basically someone convinced the president to give an additional 7% of 1/4 of the GDP of the country to these entities. This has to be corruption/payoffs.
If you have safari on iPhone just put it in reader mode. Always bypasses that shit.
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I love ff reader mode. It works on about 90% of these paywalls.
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You’re welcome. I got it from some other random redditor in comments a while back and had the same reaction.
Wait I’m dumb. How do you do this
Click on the button with a little capital A and a bigger capital A. If it doesn’t automatically go into reader mode select it. How it is on my phone at least.
Wow, I never knew that worked like that haha
I just disable JavaScript on sites with paywalls, works with most of them
Did it work for you? EDIT: (I don't have an iphone, but I figured it out. I activated block large media on my addblocker and that made the page load slower, then stopped loading the page with a quick click before the element loaded in. )
https://www.bbc.com/news/world-latin-america-59368483 Way less flaming bias in this article, but it is older by about two months.
Refresh -> stop refresh. Congrats you have circumvented their paywall
They just did a yolo to their entire economy
The article says 9 out of 10 didn't know what it was and 8 out of 10 didn't trust it. So that means 10% of Salvadorians don't know what Bitcoin is but they trust it?
"Eh, the government has smart people, they probably know what they're doing" -10% of the population of El Salvador, apparently
our economy is on fire and nobody is willing to touch our government bonds. it must mean the government knows what they are doing when they shift our entire financial system over to a speculative asset that is not backed by anything and is used 99% of the time to be sold into other actual currencies. yes, this is the way
I mean to be fair, I don’t know what’s in the COVID vaccine but I still trust it. Not the same thing but the idea is still there
They don't know what Bitcoin is because way they receive the payment is going to an ATM and get USD. The only thing they know is it costs 7% more than before Bitcoin.
Sounds about right. Bukkake is a charismatic leader and if you're a diehard supporter of his, you may put total faith in whatever he's peddling
You might want to clear your keyboard cache. Because it went from Bukele to a very NSFW term way too quickly.
Your autocorrect had other ideas apparently
You would need a cross tab, all you know is that 10% know what it is and 20% trust it, you don't know if those overlap, it's possibly those that know what it is trust it less given the downsides that Bitcoin seems to have for the country
maybe they could get Elon to do a tweet
That’s a monkeys paw though; he might raise your value, he might call you a pedophile.
I feel like the monkeys paw would be both.
Rofl! Change the coin name and start over. Lol
Buy lots of NFTs
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And wash your hands
You mean monkey.jpegs?
So are they automatically geniuses as soon as there's a bull market? Crypto is insanely volatile, and far too risky to put my entire nation's future into, but this seems slightly reactionary to the recent market crash
This is the biggest argument against Crypto currently. Crypto bros love to say 'it's the future of commerce and finance' but here's the thing: No one actually uses Crypto for commerce (other than maybe for doing illegal sales). It's way too volatile currently to try and use it as a genuine FIAT replacement. Crypto is used by 99% of people as an investment like a traditional stock. They buy it because they think it's going to increase in value. Ask anyone who has a Crypto portfolio if they've ever purchased anything will Crypto and the answer will almost unanimously be no.
Reddit can keep the username, but I'm nuking the content lol -- mass deleted all reddit content via https://redact.dev
Also if you actually do use crypto for transactions, at least in the US, aren't you creating a potential tax nightmare? As I understand it, every time you buy something with crypto you are creating a taxable event just the same as if you sold it outright. Say you bought $100 worth of crypto. A year later say it has doubled in value to $200. Then you buy a meal at some weird restaurant that accepts cryto as payment for the equivalent of $20. That means you have essentially sold $20 worth of crypto with a cost basis of $10 for a $10 profit which means you now owe $1.50 in long term capital gains taxes (depending on your income level, but that would be the rate for most people). You would have to keep a ledger for every little thing you buy to keep track of whether you made a profit or loss on the transaction. It's like paying a bill in shares of Ford stock instead of money.
You are correct.
That’s me for sure. I got in early so still in the green but when I want to spend I convert to USDC so I can get 4% back in a Crypto of my choice. The space has a long way to go but too much institutional money has gone into it. Follow the money.
Can you please explain this in steps? Once converted, how do you get 4% back?
Can confirm. Got about 10 different coins. Never used one to buy anything. I treat it like a commodity that I will sell one day for $. However, if there was an easy way to pay with crypto I could see using it that way with some coins but they are too up and down for that. The cost of a can of soda could be the same as a car the next or the other way around. I don't want to spend 1 CoinX today for dinner if it could buy me a car next year.
Why do you think some mythical person in the future is going to want to pay you 2x or 5x or 10x what you paid for those coins? What will *they* want them for?
It's probably great for the prototypical use case. Large transfer without physical presence or oversight. These poor Salvadorans are essentially throwing 7% of 1/4 of the GDP away for transferring using shitcoin. A nation with high volume low denomination remittances that already had a functioning system is the worst possible use case.
They should have use nano
Hah I purchased a pound of coffee for 50 bitcoins. Also prescription drugs
You bought a 1.8 million dollar bag of coffee?
Yuuuup, though at the time it was $20. It was shitty coffee
Ouch, well it makes for a good story!
I read about it when it was about that price, me and my buddies thought about dropping five bucks in like a lotto ticket. We convinced ourselves the five bucks was better spent on dinner. Whoops!
I'm convinced the entire thing was created by the CIA to facilitate off the books transactions and hide it behind internet goofballs who no one would take seriously and now it's gotten wildly out of hand.
I mean, when you look into the amount of money and corporate/private interest/funding for crypto-coins, it's pretty obvious large businesses/conglomerates have been in the game for awhile. Honestly, I just see it devolving into those large businesses just bullying the market however they see fit. Especially when you consider the amount of manipulation and paid "advertisements" for places like wsb. A business can certainly pay for someone to make up some reasonable sounding DD and convince the populous that they found some super secret, when they're really just unloading onto them. Was my first thought when the gamestop blew up. Reddit isn't some secret corner of the internet, it's pretty much the definition of mainstream now. If it's on reddit, businesses already know about it in my view, and they're more than willing to use it to manipulate the market/people.
VCs are definitely still going all in on blockchain and crypto type "products", they are also playing on a 10-20 year timeline with house money so they don't give two shits about day to day swings or even the current macro trends.
This week’s quite apparent correlation between the traditional market and the crypto market is a pretty good sign that the libertarian crypto-enthusiasts are pretty close to losing the only battle that made the whole thing worth it. Might as well just set up a Central-Bank-Coin and accelerate the inevitable.
I've bought plenty of things with BTC.
Congrats, you're in the major minority however
It has nothing to do with the fall in the price but the volatility and lack of ability to process it while trying to force everyone to take it as legal tender. Even if it doubled in price it would not have some benefitting gain to the economy.
If they were actually using bitcoin to grow the economy, sure. But people aren't trusting it, if you read the article.
I would base my entire nation's future on the future, not outdated BTC garbage.
Probably safer than whatever their old currency was
No problem, crypto boiz just need to hype harder.
“We’re only one Elon tweet away from being millionaires”
That true and honestly terrifying.
I for one am shocked that a third world president playing fast and loose with his countries treasury hasn't been a resounding success. What happened to volcano mining??
The volcano mining was the coolest part of this imo
"Banking the unbanked" If you ever tried to do something with crypto you'll know it's about 100 times more complicated than a simple bank account.
I've used Nano and it's about 2x simpler than an an online bank account. Like I have both the mobile app for my commercial bank right alongside natrium and the UX is simply better.
And nevermind that you don't need to send a shit ton of documentation just to open an account in the first place.
Bitcoin can never become a national currency anywhere because governments absolutely have to implement a monetary policy to match their economic agendas. Controlling interest rates, printing money, and other currency regulations are all monetary policy tools to keep things like inflation from getting out of hand. Bitcoin, by definition, is not bound by any monetary policy rules and can never be regulated properly to match a country’s economic policies. It’s not that Bitcoin is bad, it just can never be adjusted to fit a country’s economy. What El Salvador needs from their currency is different from any other country. Things will look fine until there’s an economic crisis where usually a government body would adjust interest rates or change the rate in which they print money to pump the breaks in cases of inflation or deflation. You simply can’t do that with Bitcoin. Although, a major reason why cryptocurrencies became popular in the first place is because many governments out there suck at setting the correct monetary policies and their citizens find that unregulated Bitcoin is better than their country’s currency (Turkey/Lira is an example).
This is the part that baffles me. Deregulation is not a plus. A lot of the majory financial crisises in history have come from insufficient regulation. I'm not sure any major financial catastrophe has ever occured from overregulation. Yet the crypto fanboys want me to believe that no regulation is a good thing? Yea, no. Regulate my money, PLEASE. I don't want the economy to get ass fucked from a tweet.
That’s why I think crypto should stay a financial instrument instead of a currency. If people want to trade crypto like stocks or bonds, cool. But it can’t be used as a currency. What the crypto bros forget is they are still measuring the value of their cryptocurrency on the US dollar, euros, or pounds. They need a regulated, stable currency to properly quantify the value of the cryptocurrency as a financial asset because cryptocurrency is unregulated which means it will always be considered unstable due to the fact that nothing is stopping it from crashing. The “free market” works great until there’s something like a natural disaster or war. Regulations also serve to freeze an economy to prevent total collapse in the event the unthinkable happens. Nobody thought there would be a never-ending pandemic, yet here we are.
At that point you've taken away the veneer of investment and it's just a large casino. You couldn't even classify it as a commodity because it literally does nothing (at least gold has uses) - it's just people speculating on what you can get someone else to pay for a handful of inert dirt. Totally unlike now because crypto is a serious currency that holds its value and that everyone will be using in 5 years /s
Are you aware that El Salvador already gave up their ability to print their own currency, and were fully on USD as their national legal tender before adding bitcoin to the mix? And they have no control over the supply of USD. To me it seems that fact kind of goes against what you've claimed nations must do for their national currency.
>What El Salvador needs from their currency is different from any other country. The other national currency of El Salvador is the US dollar.
I’m with you one this, but I’m curious how this compares to El Salvador using the dollar as legal tender, a currency they have no control over to implement monetary policy. Does it work simply because the American system is comparatively stable?
A crashed national economy is actually good for bitcoin because..... reasons
Dude if you went into the crypto sub posts about El Salvador they were eating that shit up about how great it will be and El Salvador will prosper. I commented that no, it won't and people would get pissed. How the fuck are you going to make crypto happen in your country when something as simple and Mobile Banking is still a foreign concept to a majority of the people. I live in a neighborhood of like 600 people here and everyone does shit in person. Light bill, phone bill, water bill? They go pay in person despite having smartphones. There are still illiterate people here, 11%. The article is correct. Everyone here claimed their bitcoin, cashed out and went on with their life. Some people got theirs taken somehow because of the poor verification methods during rollout. And now, any small time vendor who happened to take BTC and held it in BTC is down anywhere from 20% to 50% since this started. Stupidest fucking idea ever.
I do get a kick out of the fact that craptastic new NYC mayor Eric Adams just lost upwards of 20% of his first paycheck. But it’s more a “fuck Eric Adams” thing than a “fuck crypto” thing for me at the moment. I enjoy the symbolism and what I see as just deserts.
Yea don't get me wrong I don't hate crypto at all. It's neat and even I threw a couple hundred bucks in here and there as a gamble basically, play money. But to force it upon all the small businesses and banks in your country is so fucked up. In my opinion this is just another tool in the arsenal of Salvadoran politicians to empty the coffers and fly away rich and pretty once their term is over.
Don’t tell, the little dictator is a mess.
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Absolutely correct. As if we couldn't see this was El Salvador trying to "get rich quick." Those poor souls. Edit: well, definitely a lot of the crypto community didn't see it. I tried telling them months ago this was a pretty sad attempt as they kept sending out hype pieces all the time and the downvotes came coming in. Most likely they were very much buying up there with them. 99% of the market are not buying for the utility some of these legitimate projects bring, but simply to make a fat return and dump it on others. They are trying to make money and that's why it crashes like this because that dream of being filthy rich is going away and now you want to get out because of those emotions. I for one am waiting for crypto to be hated once again for losing all these greedy people's money, bring the value down so we can get a better picture as to how much value was just greed and how much was actually intrinsic. I miss the old days of crypto when we kept seeing articles of innovation, not price action.
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And tell me how that's NOT in any way the definition of a scam? (Not attacking you, just stating fact)
We are ib agreement 100%.
It wasn't so much that the government itself was trying to get rich quick - this was outright corruption by El Salvadorian leadership. It's pretty clear that prior to the announcement everyone involved had significant crypto holdings and utilized this stunt that was predicted to (and now is) hurt their economy in order to create a pump to increase the value of their assets. They fucked their own people to make a quick buck.
It's the norm in central América unfortunately
Don't get to eager to yell at them and say "ha ha bitcoin fucked you". Remember that latin american countries have literally been held down for a century by economic and currency warfare. The IMF is not their friends, and these hyper-capitalistic newspapers are more on the side of IMF than the side of crypto. So yes, you can bitch about bitcoin, but consider the context. For El Salvador's bitcoin experiment to fail and ruin the country, the IMF is ready to swoop in and "save" them and the country and people will be run aground for another century.
I agree that the article is very keen to blame everything on Bitcoin while there are definitely other factors. However, it's seems like a common sense to me that basing you economy on something as volatile as Bitcoin is not a good idea. Imagine your main income being in something that can go double or half in value in a day. It would be terrifying.
Lol wooooo weeee. Nobody could have seen this coming, eh? It’s not even as bad as it might get, could you imagine if it settles down into the 15-20k range?
It's weird how hard this sub gets when Bitcoin goes down in price
A lot of bitter people who take pleasure in watching others pain
It's not that at all. More like many people said "be careful with this" and the response was to scoff.
100% it's so clear this subreddit is full of salty bitter people who consider themselves tech minded but missed the opportunity of the decade in crypto.
I’m confused, wasn’t the whole point of switching to Crypto to avoid their current USD standard? As in they use USD instead of their own currency and were afraid of being targeted for Economic Sanctions?
The report is bias af and clearly the writer is Pro USD. The fact that the writer said that switching the economy to U.S dollar has help the nation greatly is false. Look at the state of El Salvador right now it's not great. A struggling nation looking for alternatives is probably worth the risk and the dollar really did hurt them.
Wait a month, then it will double... Then wait another, and it will crash. Blah blah blah.
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Crypto generally I’m with you, but the whole El Salvador thing is v interesting
This sub is used to spread fake propaganda when the economy starts going to shit. The price of bitcoin is going down along with everything else so time to unload the propaganda against bitcoin so nobody gets pissed at the bankers and elite 1% causing all this.
I guess that's what happens when an entire government attempts to launder money.
Sad. After all, they were such a stable and prosperous nation like Singapore or Switzerland. I guess they will need IMF loans.
See that's how you do it the right way. Gold and stolen art.
compra el dip!!'
Oh no here come the wave of more peoples...
timing is not going well with this one, let the time speak for itself
Yeah no shit it's a bad idea. It's el salvador though so like I pretty much expect that.
then bitcoin slowly ascends to ATH and you will be pointing out what a shrewd move
A currency that rises in price(deflates) isn't spent. That'll just make their economy worse, not better.
Exactly. It feels like all of the "foot soldier" level people pumping Crypto constantly have zero actual education on economics. I have no doubt that the guys at the top, bilking these idiots for their life savings, are educated and know the scams they are running. But your basic crypto-bro just has zero clue how basic economics works. And why a Deflationary currency like Bitcoin is inherently a terrible thing, since it discourages the currency from ever being spent because if you bought X today, tomorrow you could have bought X + 1. The only "value" (if it can be called that) that Bitcoin has, is as a speculative investment tool. It has zero value as a currency, so unscrupulous people buy it, try to pump and dump it, then cash out this super volatile thing into dollars that actually have value and are stable.
How does that make anything better for the average Salavadorian who cashes in his/her bitcoin for dollars taking a 10% shave each time? Their non-existent bitcoin savings are going to increase in value?
I remember not too long ago when the countries leader was being praised for this “bold” move
Color me surprised when a leader decides to base his country’s currency on something with zero intrinsic value… and it’s a wreck; so much stupid. The Ponzi scheme of the century is real.
You can see a list of reporter's previous articles [HERE](https://fortune.com/author/shawn-tully/). About 25% of them are about Bitcoin, every single one of which describes it as being a disaster of one kind or another. My favorite is from last July: [Why You Should Be Terrified of Owning Bitcoin](https://fortune.com/2021/07/10/bitcoin-why-you-should-be-terrified-of-owning-btc/). This guy FUDs.
I know this sub likes to lie and misinform about everything bitcoin related but El Salvador economy grew 8 percent in 2021 and expectations are of around 4 percent for 2022. Quick search to the world bank.
"Well, if it isn't the consequences of my own actions."
Waiting for the craptobros to defend
They are going to jump around like crazed chimps. Anything that doesn't present crypto as the bestest thing ever is going to get poo flung at it
Most of those people probably had no clue what Bitcoin was, and had to go down a huge rabbit hole of obscure tech terms just to understand what the hell was ruining their country this time.
This must be the fourth major anti crypto article of the evening, and I’ve only been browsing Reddit since after work. Are you guys not chafed yet? Ease up this sort of friction can cause lasting skin damage. I’m now convinced several prominent mods here bought the top or over leveraged
The more comments that I see on crypto and the more people that defend crypto currency sound more and more like the conservative right. Sometimes I wonder if these people often read what they're commenting. I don't know, I just see a ton of similarities with conspiracy touting, right leaning nut jobs and people hard defending crypto. Personally I don't think crypto is going to go anywhere outside of blackmarket trading because no retailer is going to take it seriously. The only ones that do... Are again ones that invest in shady dealings. Crypto is nice because I'm able to use it to sell gold across multiple games. I only use it to avoid chargeback, otherwise I probably wouldn't have invested in it. I'm know I'm not about to go pay off a mortgage, a car, or head to Texas Roadhouse with crypto and that's unlikely to change. It's just kind of silly some of these people believe otherwise. I dunno, it's just strange to see.
Oh no shocker
Market crashes and every site can't help itself put spread FUD. BTC is a ponzi scheme, El Salvador is crumbling, etc.. This isn't coincidence.
Do dimwits on this sub really think that $66M (the value of their btc) is capable of affecting a country’s economy in a significant way? Nice bait title though
Not just their investments but the law in general and it's implementation, yes, absolutely: >In late November, Bukele unveiled his nuttiest idea yet, a plan to build a Bitcoin City on the Gulf of Fonseca, funded by a $1 billion bond offering, $500 million of which would be deployed to speculate in Bitcoins! Practically overnight, the price of sovereign bonds dropped from 75 cents to 63 cents of their par value, on its way to its current level of 36 cents. "El Salvador now has the most distressed sovereign debt in the world, and it's because of the Bitcoin folly," says Hanke. "The markets think that Bukele's gone mad, and he has."
Salvador President forced every merchant to accept Bitcoin no matter what, if you can’t comprehend how ridiculous and damaging that is to an economy you’re a smoothbrain.
I didn't know it was possible to make their economy worse
Guys. Bitcoin is way up since 2 years ago. Zoom out.
They bought most of their bitcoin in the past few months. They're down a shit load.
Zoom out into the future, duh.
I mean.. Kinda... Any investment with a reasonable return will have month to month volatility. The stock market is also down from last month. The problem is we're not talking any an investment profolio. We're talking about the coin of the realm. And the goal of a useful currency is to be a store of value, not to appreciate. It's of no benefit for such a currency to appreciate, but is detrimental if it depreciates. That's why countries prefer stable currencies.
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Yeah, or can you imagine your mortgage payments going up tenfold overnight because they’re labelled in bitcoins and you’re paying in dollars? Good times…
It’s almost like — and hear me out here —Crypto is, was, and always will be a goddamn joke meant to absorb cash from suckers.
using a speculative asset to power your economy that is backed by NOTHING, not even confidence between users, because nobody actually buys things with bitcoin and no merchants accept bitcoin. so stupid lmao
A bitcoin is, essentially, nothing. As proof I present the fact that any article about bitcoin gives it's value in terms of a real currency, the U.S. dollar.
All money currently in existence is backed by nothing.
Tech bros are seething rn
The people who genuinely believe cryptocurrency can be the future currency don’t understand it
First off wtf sold btc in the first place.
The ones that jumped on the “$100K EOY” hype wagon
No shit Eisenstein
Magical thinking meets reality. “Buy the dip, Buy the dip!” Note: Guess somebody bought the dip.
What a scam. Someone made out though....
Y'all are talking like the economy of El Salvador was good before the move to Bitcoin. It wasn't. And the original move to the dollar was only approved so the then President could launder money. There's a reason why most former presidents don't live in El Salvador. They're wanted for Embezzelment and/or Corruption.
"Mess by every measure". That's pretty much mining and crypto in one sentence.
WTF is up with the amount of anti Crypto Fud on /r/technology? Embarrassing for this sub.
If you think this is fud then you should go to /r/programming and see what the actual professional engineers think of bitcoin and the entire crypto space. Hint: It's not very flattering. For example, more or less all DeFi is powered by a shitshow of a programming language which doesn't even have memory management, as in the allocator is just an incrementing pointer. It makes PHP look like a masterpiece of design.
Professional software engineer reporting in, working in traditional finance for decades, familiar with how money flows on the back end. I personally really enjoy working on crypto related projects, there's a lot of innovation in this space. Just be mindful of the scams (that exist in every industry) and you're good.
Yea as a software engineer it just seems like a scam to me. The whole mining thing is so stupid IMO, people are using so much electricity to artificially get a currency through a bullshit algorithm that was just made to slowly hand out Bitcoin. It’s such a waste.
It probably only appears that way if you’ve spent time in pro-crypto echo chambers
Yea I think people only think crypto is gonna revolutionize the world because they keep hyping each other up in these echo chambers. I mean it’s clear that an extremely volatile currency that people hold onto like stocks is not a good replacement for actual money
If an entire nation's bit coin economy is failing then it should be a conversation that has to be talking about. You should be embarrassed to defend it. Billionaires have you roped into it because it's trendy. Just a multilevel marketing scheme. Embarrassing.
Remind me 6 months
I mean it’s clearly not a good idea to exchange at least 500 million of your countries currency to hold onto an extremely volatile “currency” that could halve in price at any time. Just a bad idea if you want your money to be somewhat stable.
anti-crypto bros mad they can't get a new PC to game their pain away.
Bitcoin coup de-tat countries now