I am not talking about the inflationary pressure from the fiat currency. I am talking about the inflationary tendency from the bitcoin itself due to the bitcoin being so volatile. If everything is now being paid in bitcoin, if bitcoin increases in value in terms of fiat currencies, then price level of everything in El Salvador would've increased. So El Salvador would've imported inflation through the use of bitcoin.
Today, McDonalds, Starbucks, Pizza Hut, and others accept bitcoin in El Salvador
- Thread starter johnarb
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I am not talking about the inflationary pressure from the fiat currency. I am talking about the inflationary tendency from the bitcoin itself due to the bitcoin being so volatile. If everything is now being paid in bitcoin, if bitcoin increases in value in terms of fiat currencies, then price level of everything in El Salvador would've increased. So El Salvador would've imported inflation through the use of bitcoin.
That is an interesting point. Yes. BTC is importing inflation to El Salvador through the adoption of BTC as a currency, since it is based on a currency which itself it tied to inflation. then those pressures will simply transfer to the consumer.
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I believe Salvadoreans in the U.S. will use Bitcoin to send money to people in El Salvador and those people will then be able to use the government wallet to convert it to USD$. Or they can take the risk and hold it in Bitcoin but the money being sent is not discretionary moeny... it is money they need to buy food and pay bills so it will be spent immediately.
All that is really being accomplished is bypassing Western Union and other means to transfer money that charge like $10 for a $100 transfer. I think most transfers to El S are in the small $100 - $300 range and taking out $15 to $20 at a time for a WU or other courrier really affects the people.
Pricing in crypto at the moment means a continuosly changing price, and not a fix btc tags on items.
The cost of an item should be fixed in a fiat currency for now, and btc price will vary continuosly.
I read somewhere, maybe here, that the government is guaranteeing the fluctuation for 30m when they convert on those wallet.
Although today BTC went rock and roll in less than that.
Maybe a dollar pegged stable coin would have been a safer bet for once.
The cost of an item should be fixed in a fiat currency for now, and btc price will vary continuosly.
I read somewhere, maybe here, that the government is guaranteeing the fluctuation for 30m when they convert on those wallet.
Although today BTC went rock and roll in less than that.
Maybe a dollar pegged stable coin would have been a safer bet for once.
A lot of those people have no way to receive Bitcoin.
https://www.nbcnews.com/news/latino...coin-official-currency-first-country-rcna1910
Some degenerate rebel state in Africa ?
This does not make sense. If bitcoin is being accepted as legal tender in El Salvador, why do people still have to convert it back to USD? Then if bitcoin is appreciated in value, then the price of everything in El Salvador will also rise accordingly thus creating inflation. And very soon El Salvador won't be able to export anything because the price level of everything which will include wages will be so much higher than all the other countries that still use fiat currencies. And El Salvador will become a large importer of everything with bitcoin rising so much in value relative to other currencies even including USD. But without being able to export anything, where is El Salvador going to get the money to import everything? Eventually it's going to become another Greece, having to incur a large amount of debt after joining the EU and being forced to accept the euro which is a more expensive currency that renders it unable to export to earn money but imports everything from other countries. El Salvador will end up in the same situation if it adopts this bitcoin as legal tenter and if bitcoin rises sharply in value. And the opposite will happen if bitcoin drops in value then it will see its wealth dwindle in value if eventually bitcoin is going to be converted back to USD. And if El Salvador is a net importer then it's going to see a rapid decrease in purchasing power.
The Western Union transfer fees should be the least of El Salvador's worries when it comes to deciding whether to use bitcoin as legal tender or not. What it should be more concerned about is the inflationary and deflationary pressure that adopting bitcoin as the legal tender would bring due to the highly volatile nature of bitcoin that is completely beyond El Salvador's control. If El Salvador thinks it has little control over its economy. It will even have less control after adopting bitcoin as the legal tender.
That's all great but how is it faster than contactless? Contactless is always faster as there's no connectivity required on my part.