El Salvador just accepted a digital currency that it cannot control. So now instead of having autonomy over its own economy, it leaves its economy to be controlled by bitcoin traders and other larger economies that can affect the price of bitcoin with their policies. Nothing new except the currency is digital that saves some paper for El Salvador that way more than compensates for Western Union transfer fees.
Today, McDonalds, Starbucks, Pizza Hut, and others accept bitcoin in El Salvador
- Thread starter johnarb
- Start date
The banking parasites are just being replaced by bitcoin traders and other larger economies that can affect the bitcoin price and cybersecurity firms and insurance companies that need to safeguard and compensate for the security of the currency.
"Parasites" are always going to be there no matter the form of the currency.
Only with the transfer fee replaced by the inflationary cost of bitcoin so still not much more to spend on the local economy.
Why would there be inflation with bitcoin? There's a fixed number of coins that can ever be generated. So inflation should not happen, yes?
Sure it is. The base of the price is still the US dollar, BTC is just an in-betweener.
It would be NOT a gimmick if:
1. Had they used a real crypto, not an obsolete one. They would still have to be their issuer/primary miner.
2. They would give out salaries in that crypto, without fluctuation based on the current market value based on the US dollar.
3. Because of #2, it should be a stable coin, because you can't base an economy on a highly fluctuating asset.
4. The country should be in control of its own currency, or it should be tied to a fairly stable another currency. Again, unless it is a stable coin, it can not work. >>> gimmick
I want to see all those Salvadorians' faces who keep their saving in this super-duper legal tender when the next crash comes. Because you know it is coming eventually....
They are accepting bitcoin, it is legal tender in El Salvador
Please watch the video on my previous post
Read this very carefully: People in El Salvador can choose not to have any bitcoin, they can convert to US $ within 30 minutes if they use the government-issued app to receive the payment. The government will take the counterparty risk during that time
The people in El Salvador can choose to have all of their savings
1. in US $
2. part of it in $ and part of it in bitcoin
3. All of it in bitcoin which is legal tender so can be spent with no lockups or restrictions
If choosing option 1, savings is guaranteed to be debased every year. More so during this "transitory inflationary" period
El OchoCinco mentioned that remittance is a big part of the El Salvador's economy and using bitcoin could save them 10's of millions or even hundreds of millions of $ in Western Union fees over time
The president said on his speech that citizens can still choose to continue using Western Union, line up to get their money, and pay the high fees
Or, they can use the the lightning network in partnership with Strike for $0 fees or if they use a different lightning network wallet app, pay pennies in transaction fees
If you still do not get it, then I guess you'll never get it
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What he meant was that pricing was in Dollars, but settlement CAN be in bitcoin.
Can you imagine stores updating their price lists twice a day because of 5-10% swings in bitcoin? Serious considerations are made when pricing goods or services. You can't have the reference currency moving around. That is a nightmare.
They will price in dollars and use a calculation method for settling the transaction with bitcoin. People in shitty countries are more currency savvy than your average American. Most won't trust bitcoin for major savings and expenditures.
Yeah but the price of the bitcoin in USD changes, no? Bitcoin is just one of the legal tender; it's not the only legal tender. People are still earning in USD and other currencies. So if the price of bitcoin keeps going up, the purchasing power in bitcoin will be getting less each time when you convert.
So basically, it's just Forex. Everything once again is just USD. BTC is being added in as a middleman.
If BTC is going to be used as currency, we have to explore the idea of how deflationary it is. We have all seen the picture of how the US dollar has lost 97% of its purchasing power in the last 100 years or something like this. But consider for one second what would happen if the amount of money didn't increase with increasing population and production. Where would all the extra dollars come from that were needed for the economy to function?
We can of course argue that the too much money has flooded the system, more than necessary. But if you can never increase the money circulating, the economy freezes up from deflation. How you create more money into existence is of course the tricky part, but by starting with a fixed amount, an economy will grind to a halt because nobody will spend it as it will increase in value over time since it will be less abundant. And if nobody spends, nothing is produced, and if nothing is produced, there is no economy.
We can of course argue that the too much money has flooded the system, more than necessary. But if you can never increase the money circulating, the economy freezes up from deflation. How you create more money into existence is of course the tricky part, but by starting with a fixed amount, an economy will grind to a halt because nobody will spend it as it will increase in value over time since it will be less abundant. And if nobody spends, nothing is produced, and if nothing is produced, there is no economy.
Excellent point
They already experienced a >50% crash. I believe they will be fine over the long term. I'm putting a lot of money into that belief
Fiat value is the one that's volatile and you can see this in all the bubbles around us, stock market, real estate, arts, collectibles, commodities, etc
Click the play on the video and watch for 5-10 minutes