Do you know why El Salvador adopted BitCoin? Previously they used the US dollar as their currency, because no one had any faith in a Salvadoran currency, even their own citizens. But doing this is basically meant that ES was paying tribute to the US, since the dollar continually loses value as more are created. US citizens at least get some benefit when the government prints trillions of dollars, in the form of government handouts; ES residents just get screwed.

On a Bitcoin standard, instead of sponsoring the US, wouldn't El Salvador just sponsor early/current Bitcoin holders instead?

Replacing one currency not under the government's control with another doesn't seem to achieve all that much, and arguably, picking a deflationary currency at that might be much worse.

> Replacing one currency not under the government's control with another doesn't seem to achieve all that much

Slight correction: They are replacing one currency that is not under their government's control, with one that is not under any government's control.

> Previously they used the US dollar as their currency, because no one had any faith in a Salvadoran currency, even their own citizens.

El Salvador didn't dollarize due to inflation, as other countries have done (Ecuador or Zimbabwe).

The Salvadoran Colón was never an unstable currency.

One of the main advantages we had after dollarization was the lowering of loan interest rates.

I was too young to have loans at that time, but I recall my parents mentioning the repaid their mortgage in a shorter time because of that.

Also no foreign exchange risk with the major trading partner and the country where 2 million Salvadorans live: The U.S.

Serious question, why don't people have faith in the El Salvadoran currency? Why don't they try to fix the problems that are causing that lack of faith?

Notice that the same government that apparently can't be trusted to manage a currency is also in charge of the police and the military. So the government can't be trusted when it comes to currency, but it can be trusted with administering state violence... makes a lot of sense.

"Serious question, why does the third world remain poor even if it's got lots of human potential and natural resources?"

El Salvador replaced its currency with the US Dollar in 2001.

Government handouts are decided by Congress. Monetary policy is set by the Fed. Fed issuing more currency doesn't change the number on your unemployment check.

The downside of using the USD as a local currency is that the local central bank cannot set its own lending rates (markets will set rates at what the larger dollarized economy in the US is at) and has less control over monetary policy.

> The downside of using the USD as a local currency is that the local central bank cannot set its own lending rates

Salvadoran here

After dollarization happened in 2001, all loan interest rates went down. My parents paid their mortgage in a shorter time because of that.

It was less risky for the banks to lend in USD than in Salvadoran Colones. So lower interest rates.

That was true even when the Salvadoran Colon was stable for most of its history. It's been very close to 8.75 for the past 30 years.

And how many El Salvadorans see the benefits of new bitcoins being created?

At least those mining, which is more than participate in the USD consensus.

I think El Salvador adopted Bitcoin because their president believes it's going to the moon and adopting it will make everyone rich. He's repeatedly talked about "buying the dip", for example, but there's no obvious reason why El Salvador would want or need to buy the dip if they weren't hoping to benefit from future price increases.

If it was only druggies, that'd be great, cuz it'd be relatively confined, really. But I don't think that can explain the ridiculous valuations on its own. It's clear there are far larger parties than just drug trafficking and hobbyists and crypto-promoters and "retail investors".

My guess is large movements of capital out of places like Iran, China, and Russia.

My hypothesis is that people in the drug trade and other illicit industries (hacking for hire, etc.) are the ones who initially gave Bitcoin its early value - much lower than it is today, but above close-to-zero. Then, the general public noticed this new class of appreciating asset, and that’s when the price really started to go up.

Perhaps players are using it as a "exchange", as in a book / record. Ultimately, its just numbers on a piece of hard-disk.

Yes you're exactly right. Wealthy Chinese can purchase mining hardware and electricity using the local funny money, then sell the resulting Bitcoins for actual hard currency. The Chinese authorities have been cracking down but it's hard to stop completely.

I think it's more than they're leaving it in bitcoin. For now this is more secure than leaving it in local accounts where the predatory State has access to it, or where it can be confined by sanctions, etc.

Later... someday or sooner... throw it through few a mixers, pass it around a few times, and, sure, it could become capital again, or convert to another currency, or stick it in real estate. But there's no need for that at this point. In some places the risk of losing 80% of it to the fluctuations of kleptocoins is actually better than the political risk, or the potential taxation burden.

Yea, except compare the ease, cost, and time of bank wiring your family $5000 to get out of a country where a war started and sending BTC. Something crypto nay-sayers conveniently ignore.

And the crypto bros conveniently ignore that you can’t easily exchange your BTC for actual cash to buy real things without an exchange or a bank account.

Except for conveniently using one of the ~40,000 crytpo ATMs that are already installed globally.

https://coinatmradar.com/

40,000 is a microscopic number and 95% of them are in USA and Canada.

The countries that could make most use of these crypto ATMs have no access to them.

El Salvador has more than 2000 of them. If people want to cash out BTC, they can. No network access or exchange needed.

https://coinatmradar.com/country/64/bitcoin-atm-el-salvador/

How much do they charge for this service? How quickly do they perform the transaction vs. a typical ATM?

A lot! I tried them a couple of times just for fun, the exchange rates were horrible.

Is that actually realistic? I clicked through Ukraine and couldn't find an ATM to sell BTC. Crypto requires the same assumptions of stability once you want to turn it into something real.

You are not wiring $5000, you adding a new event to a globally-replicated Event Store database, while other people and entities are speculating on theses events using real money, money surrogates, and/or electricity.

Sending 15K within the EU is free - https://brussels-express.eu/bank-transfers-will-immediate-fr...

Sending with Wise over multiple currencies is going to be much cheaper than sending currency to currency over BTC...

Banks are also safer and covered against fraud. Eg. the other article about Coinbase and it's depositors today.

Multiple things crypto "yes-claimers" ignore. But yeah, they "like" the volatility. Except when it drops ofc.

Exactly. I understand the value of the Blockchain, as a distributed, albeit inefficient, ledger of transactions that are anonymous and hard to destroy.

But here we have a country, millions of peoples hard work and assets being converted to bitcoin. How exactly does demonstrate critical thinking, planning or heck, even a plan?

Monero is better for that, and the price hasn't crashed

1 BTC = 1 BTC, so how long does it take to convert it to $5000?

Baudrillard strikes again. The entirety of Bitcoin's value is prestige - it has value by being associated with people who are trusted when they say it has value.

This sounds like a comment straight up from reddit