Whatever Happened to El Salvador's Bitcoin Experiment? Two Years Later... (yahoo.com) 62
Agence France-Presse reports that "Two years ago, El Salvador shrugged off a chorus of warnings and adopted Bitcoin as legal tender in a bid to revitalize its economy and improve access to financial services.
"It has not worked... Economist Cesar Villalona told AFP that Bitcoin 'does not exist in the local economy' in any significant way, because in El Salvador 'everything' is paid in dollars: wages, services and goods." Bitcoin has lost more than half its value since then and though President Nayib Bukele is wildly popular for his clampdown on criminal gangs, his currency gamble has not gone down equally well... [T]wo years after El Salvador became the first country in the world to adopt Bitcoin as its currency, alongside the U.S. dollar, "the goals that were pursued... have not been achieved, people hardly use it, they don't have much trust" in crypto, economist and former Reserve Bank governor Carlos Acevedo told AFP. "The experiment has not worked, it is a crypto winter," he said.
There are no figures available on how many Salvadorans have taken up Bitcoin. But a poll conducted in May by the Central American University found that 71 percent believed the cryptocurrency "has in no way helped to improve their family economic situation."
On the streets of San Salvador, the verdict is harsh. "I don't see that money working, it's just propaganda. Where's the benefit? There's no benefit. It's a bad investment," newspaper vendor Juan Antonio Salgado, 65, told AFP. "It's robbery," he added, in reference to the currency's volatility.
Even a video report from Al Jazeera opens by asking "So has the experiment succeeded? The general verdict — not yet, at least."
They report that even though one fifth of El Salvador's GDP comes from remittances, less than 2% of its remittances went through crypto currency and digital wallets so far this year. Building has yet to begin on "Bitcoin City" — and the country has yet to actually issue the "Volcano Bonds" that would fund its creation.
And meanwhile, the government's bitcoin purchases have now lost an estimated $45.4 million.
"It has not worked... Economist Cesar Villalona told AFP that Bitcoin 'does not exist in the local economy' in any significant way, because in El Salvador 'everything' is paid in dollars: wages, services and goods." Bitcoin has lost more than half its value since then and though President Nayib Bukele is wildly popular for his clampdown on criminal gangs, his currency gamble has not gone down equally well... [T]wo years after El Salvador became the first country in the world to adopt Bitcoin as its currency, alongside the U.S. dollar, "the goals that were pursued... have not been achieved, people hardly use it, they don't have much trust" in crypto, economist and former Reserve Bank governor Carlos Acevedo told AFP. "The experiment has not worked, it is a crypto winter," he said.
There are no figures available on how many Salvadorans have taken up Bitcoin. But a poll conducted in May by the Central American University found that 71 percent believed the cryptocurrency "has in no way helped to improve their family economic situation."
On the streets of San Salvador, the verdict is harsh. "I don't see that money working, it's just propaganda. Where's the benefit? There's no benefit. It's a bad investment," newspaper vendor Juan Antonio Salgado, 65, told AFP. "It's robbery," he added, in reference to the currency's volatility.
Even a video report from Al Jazeera opens by asking "So has the experiment succeeded? The general verdict — not yet, at least."
They report that even though one fifth of El Salvador's GDP comes from remittances, less than 2% of its remittances went through crypto currency and digital wallets so far this year. Building has yet to begin on "Bitcoin City" — and the country has yet to actually issue the "Volcano Bonds" that would fund its creation.
And meanwhile, the government's bitcoin purchases have now lost an estimated $45.4 million.
"It has not worked". Such a surprise... (Score:2)
In other news, doing stupid things and expecting miracles has never worked.
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I, and probably all those people sending remittances, continue to wait for some country to start issuing digital cash. Probably won't matter which country, as long as they're stable.
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Unfortunately, sending remittances will probably always have a fairly significant overhead cost. Verifying the legitimacy and safety any “one side of the planet to the other” financial transaction and then executing it is going to take time and effort, which translates into a percentage cost.
No it doesn't take significant cost, do you think most transactions, are manually verified, they automatically validate the other side is trusted, and that is about it. It doesn't translate to a percentage of the transaction, at best it translates percentage of the log of the cost, transferring $1000, does not cost them any more than transferring $10.
The only proportional cost increase to them that I can see is risk, however you try and get them to give your money back if its goes to an account overseas. Yo
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Basically no EUR transaction is "manually verified" either. Transfer costs are now so low that they do not get charged. A number I saw a few years back was 0.02 EUR for an interbank-transaction of any amount. Oh, and they are moving to transactions that get confirmed within 30 seconds or so, so now so that you can use bank-transfers for online-shopping. All in the Euro-Zone, of course, but it shows nicely where the state-of-the-art actually is.
Crapcoins, on the other hand, are slow, expensive and insecure.
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According to the rulebook, validation time is maximum 10 seconds, timeout maximum 20 seconds, positive or negative confirmation must reach the originator at most at the 5th second after the timeout. https://www.europeanpaymentsco... [europeanpa...council.eu]
Re: "It has not worked". Such a surprise... (Score:2)
What about freedom? Do you think people in places that hate you donâ(TM)t. Intros the money and every a transaction? If something depends on having the âoeright guyâ in charge, itâ(TM)s a bad idea because eventually a bad guy will rise to power. This has been discussed for millennia and in book form since over 2000 years.
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We've had instant bank transfers for about a decade here in Argentina. I can send money from one of my accounts in bank A to bank B and in the time it takes me to switch browser tabs and refresh, the money is already there.
"Bank transfer to pay for groceries" is a thing here.
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We've had instant bank transfers for about a decade here in Argentina. I can send money from one of my accounts in bank A to bank B and in the time it takes me to switch browser tabs and refresh, the money is already there.
"Bank transfer to pay for groceries" is a thing here.
Yes but in this time, your grocery bill increased by 20%
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Basically no EUR transaction is "manually verified" either. Transfer costs are now so low that they do not get charged. A number I saw a few years back was 0.02 EUR for an interbank-transaction of any amount. Oh, and they are moving to transactions that get confirmed within 30 seconds or so, so now so that you can use bank-transfers for online-shopping. All in the Euro-Zone, of course, but it shows nicely where the state-of-the-art actually is.
Ah, the bank transfer. Much as I hate the Australian banking cartel, we have had this for decades. Having a small number of banks has all sorts of DISadvantages, but the one perk has been that when online banking became A Thing, the banks sat down and worked out how to seamlessly transfer funds between personal accounts at different banks for free. So I, as a Westpac bank customer, could buy something online from a person with a Commonwealth bank acount, and the fund would show up in their account minutes l
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Yes lots of transactions are measured in USD, and most of them, including all of the methods available to the average person, are mediated by banks and other private payment providers. All of whom take a cut. Despite what you say, it doesn't have to be this way.
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Yes lots of transactions are measured in USD, and most of them, including all of the methods available to the average person, are mediated by banks and other private payment providers. All of whom take a cut. Despite what you say, it doesn't have to be this way.
It doesn't, my bank doesn't charge me anything for transfers.
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The world already has functional electronic currency/ digital cash. Several of them. One is called the US dollar. How many USD transactions are done in cash nowadays? The whole remittance structure only works cause money is already basically electronic. Unfortunately, sending remittances will probably always have a fairly significant overhead cost. Verifying the legitimacy and safety any “one side of the planet to the other” financial transaction and then executing it is going to take time and effort, which translates into a percentage cost.
Ohhh you want something more like BTC. Feel free to keep waiting for perfectly efficient, 100% safe money movement. You’ll be waiting for approximately forever. Or you could give BTC a try. No? Smart man. You know damn well that USD remmittances are pretty well guaranteed to get 90-95% of your money into the pocket of your relative, while BTC is basically russian roulette.
The problem with using another countries currency is not just that you become victim to whatever that country is doing affecting your exchange rate and buying power but they can also use that to screw you over by playing with your supply of currency. Whilst you have the same instability with BTC, you don't have to worry about the latter. If you adopt the USD as your currency, you're giving the US tacit control over your economy (the same can be said for the AUD (Australia), EUR (EU), GBP (UK) et al. it's ju
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Bukele offered US$30 in Bitcoin to every citizen who opened a digital wallet using the government app. A bunch of them did, then promptly sold the amount they got, pocketed the proceeds, and never touched the wallet again.
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Same thing anybody sane would have done.
Man oh man (Score:2)
I am really glad I was sitting down before I read this shocking news.
Where's the value in crypto-currency? (Score:4, Interesting)
We like money not because of what it is but because of what it can get us. People put work and materials into getting money because it can be exchanged into someone else that put work and resources into things like food and clothing. People put work and materials into crypto-currency but is there real value in that? I can't make Bitcoin without work and materials so that means the value doesn't immediately go to zero, if it took nothing to make then everyone could make a Bitcoin instead of buying it with dollars or carrots.
I can put work and materials into growing carrots in my own garden, and if I bring those carrots to some market then I could get dollars in exchange for them. With that money I could buy something like a leather belt or a pocket knife from someone else at the market. I could also cut out the money part of the exchange and just trade carrots for a knife. Belts and knives wear out so they are in ways a consumable item like carrots. We trade with gold and silver because this is a material that we know takes work and material to produce so it has a store of value. Part of what makes gold and silver have value is that it has industrial uses, we make things out of them. We make practical things from gold and silver, things like knives and forks. A silver dinner fork will eventually wear but we can take worn and broken silver things to be melted down and forged into new silver things. We lose some of the silver in the process but that's acceptable because there's greater value in the new silver item than the old broken bits it came from.
Where's the value in Bitcoin? Or rather, how does Bitcoin contain tradeable value in a way that I can't get from carrots or silver? I can't eat Bitcoin. I can't sharpen Bitcoin alloy into something I can use to cut leather into belts. It sounds to me like Bitcoin and all crypto-currency has value based on the "greater fool theory".
Building a power plant with the intention to use that power to mine Bitcoin does not sound wise to me. Someone could instead use that energy to pump potable water out of the ground, make fertilizers, or produce any of a number of consumable or durable goods for trade. People will trade these goods for dollars and cents but only because there was something physical behind that dollar at some point and it can knowingly be traded for something physical again. That dollar might have come from petroleum, silver, gold, wood, carrots, leather belts, dinner forks, or whatever at some point in the past. Turn work and material into Bitcoin and it's a question on if there's trading it for any kind of physical item that took work and material to produce.
Perhaps this is a distinction without a difference if we carry the dollar to Bitcoin comparison back far enough. It's possible the dollar has value only because of some greater fool willing to trade it for physical items like carrots or knives. There's a much longer history though of the dollar holding value so if by chance there is some collapse in value of the dollar over the lack of fools then the government that printed those dollars can still keep it from going to zero by backing it up with reserves of gold, silver, petroleum, or whatever the government holds that people value. Who is going to make that kind of guarantee for Bitcoin? Without that guarantee there's no bottom to the value of Bitcoin.
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Quit focusing on the merit of Bitcoin as its tradable value to US dollars.
I'm not focused on converting Bitcoin into dollars, I'm focused on converting Bitcoin into carrots.
I remember on a flight back to the USA from Europe that the airline was selling beer on the flight for five dollars or five euros. I thought that was bullshit at the time because one euro was worth about $1.25 so a beer should have been four euro or five dollars. At some point I realized the logic in this. First it avoided a very basic argument with passengers on exchange rates, it was just that the euro to
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Your basic premise is wrong. Tankering fuel only works for short range flights. Airlines that fly transatlantic refuel both ways, hence they have to use the Euro when they refuel in the eurozone,
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I'm pretty certain that all international airlines pay for their fuel in US dollars regardless of where the airport they are buying fuel is located. An airline out of Africa will be paying for fuel at European airports to get home with US dollars. This is perhaps an artifact of petroleum crude being bought and sold internationally with US dollars. The international market for petroleum has been in US dollars since the 1970s or so. I suspect that recent events in the world is changing how some airlines b
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But how many restaurant managers are confident that they can distinguish b
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But how many restaurant managers are confident that they can distinguish between a silver coin, a coin in a cheaper shiny grey metal, or a coin in a cheaper metal plated with silver? I would expect a lot of them to be sufficiently risk-averse that they won't accept it.
Silver has some unique properties that discourage counterfeits, all basically making it too expensive to bother.
First is that silver has a unique density. Anything as dense as silver is going to be high purity silver or some alloy made of metals more valuable than silver. If a coin is too light for the volume it contains then it's made of something less valuable like zinc, aluminum, steel, or so on. Someone could make an alloy that has the same density as silver but if there's no silver in it then it lik
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I don't deny any of that, but I don't see why it's relevant. The question isn't whether a jeweller or numismatist can confidently distinguish silver from fake silver, but whether a randomly selected restauranteur who has almost certainly never handled a true silver coin (as opposed to a cupronickel one) in their life would be confident.
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People that run restaurants are going to train themselves on spotting fake coins. They do this because people will try to pass of counterfeit money all the time so they are going to develop a "feel" for detecting fakes fairly soon in their career, either by having been a young employee trained by their employer in detecting fake money or by being told by their bank that they detected fake money in their last deposit and offering some kind of training so it is less likely to happen again.
A silver coin has a
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If any of those points were true in any meaningful sense, then people would be using Bitcoin.
They aren't. And when they say they are, and you look closer, you find out that they in fact aren't.
It has no value. It gets traded a bit, mostly by algorithms, and it hasn't died out because there are still a bunch of machines that nobody has turned off yet. They're wasting a ton of electricity, of course, but then so are cat videos stored in datacentres.
But it was this bit that I liked the most in your reply.
Quit focusing on the merit of Bitcoin as its tradable value to US dollars.
Fant
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David Pumpkins....
Could I interest you in some David Pumpkins? They're not actually pumpkins, they're just SHA256 hashes, that when arranged in a grid roughly approximate ASCII art of pumpkins. Each takes several thousand hours of hash crunching to find, along with even more time for a Deep Neural Net to determine the extent to which they resemble a pumpkin.
If that's not "non-traditional value", then I don't know what is.
Or is "non-traditional value" just doublespeak for useless?
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And for good measure
"Tangentially, the rules of Bitcoin can't be changed by the rich and powerful. The system has rules and they can't be changed without a majority of the network agreeing on those changes. That is valuable."
Who the hell do you think runs the network, if not the Rich and Powerful? This isn't a bunch of dudes running it on their gamming machine in their basement anymore.
Re:Where's the value in crypto-currency? (Score:4, Insightful)
> It's possible the dollar has value only because of some greater fool willing to trade it for physical items like carrots or knives.
National currency has value because a government says you have to pay taxes with it and merchants must accept it to settle debts. Beyond that, it's because the government is ultimately responsible for the nation's GDP and its stability, on which the value of a currency is generally based.
Crypto generally has the value of being better for committing crimes and gambling. It's utterly useless as a day-to-day currency at any scale (hence the early goalpost-shifting to 'a store of value'). My first thought on hearing a questionable government deciding some form of crypto should be a national currency is that corrupt members of that government were trying to funnel wealth out of the economy. My second is that the government is run by corrupt and inept populist idiots, though I'm not going to bet heavily on which end of the political spectrum they're on.
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Re: Where's the value in crypto-currency? (Score:1)
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Where's the value in Bitcoin? Or rather, how does Bitcoin contain tradeable value in a way that I can't get from carrots or silver? I can't eat Bitcoin. I can't sharpen Bitcoin alloy into something I can use to cut leather into belts. It sounds to me like Bitcoin and all crypto-currency has value based on the "greater fool theory".
Let me rephrase this section:
"Where's the value in US dollars (USD)? Or rather, how does USD contain tradeable value in a way that I can't get from carrots or silver? I can't eat USD. I can't sharpen USD alloy into something I can use to cut leather into belts. It sounds to me like USD and all fiat currency has value based on the "greater fool theory"."
This is a feature/bug of fiat currency: It has value because (a) the issuing authority accepts it as a measure of account, and (b) lots of people accept
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Except that rates in dollars or Euros or whatever aren't a part of the Bitcoin blockchain, or that of another common cryptocurrency for that matter, as far as I know. About all that's recorded there is address FOO sent X Bitcoins to address BAR at such-and-such date and time.
Even then, that's only if the transaction actually involves the blockchain.
I mean, if you buy some c
Remittances prove BTC is a failure (Score:2, Insightful)
There's a lot of debate about what cryptocurrencies really are. They're called currencies, but they clearly aren't that because no one uses them as currencies. In practice, they're mostly treated as speculative assets, unbacked securities. But they aren't great for that, either, since if that's all they are their value will eventually fall to the value of what backs them, nothing.
Where cryptocurrencies have always held the greatest promise was as a means of monetary transfer. They allow purely-digital and
Re: Remittances prove BTC is a failure (Score:2)
Do you think EVs are and will be a failure?
So the 2% of remittances that TFA quotes is meaningless without the accompanying growth rate. TFA unfortunately doesn't give it, so we can't make a judgement either way.
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The difference is that cryptocurrency-based remittances are not growing -- and that in spite of basically zero transition costs. If it cost nothing to swap your ICEV for a BEV, a large percentage of drivers who are better-served by EVs (which is basically everyone who doesn't live in an apartment and who doesn't frequently drive long distances) would already have switched. But switching to an EV isn't free, in fact it's rather expensive. But switching to cryptocurrencies costs nothing more than a little tim
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I think we're discovering that Crypto is more like a commodity than a currency. The primary difference is that it is a commodity can be rapidly transferred, which makes it more accommodating to today's style of trade.
Most of the world got off the gold standard for currency when it discovered that it needed to be able to expand its currency faster than gold could be mined and retained as a backing commodity. Also, you can only go so far with fractional backing of a currency with something like gold, which ha
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I think we're discovering that Crypto is more like a commodity than a currency.
Except that commodities have intrinsic value, but cryptocurrencies don't. Even gold, although most of its present value is speculative, has real-world utility.
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Time is a commodity, so is patience.
Bitcoins intrinsic values are : Garantee limited quantity, Unhackable, Decentralised, Uncensorable.
It is designed for the specific purpose of being money.
- Store of value
- Through time
- Through space
- Unit of account
- The entire blockchain (of all historical transactions) is audited every 10 minutes
- Trustless (because its verifie
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Please define "intrinsic value", since you seem to think I have redefined it?
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But...it still is a commodity in that it is a finite resource that anyone can "mine", for now.
The value of anything comes from it's utility as something. Most commodities have inherent value, such as gold which has properties essential in industrial process. Some commodities have value backed by something else, such as currencies backed by recognition from the national authority and used as a tool for trade.
Bitcoin could be used as a tool for trade, if that trade was possible for a fixed price at a speed that prevents the price from changing. It's not. And as such it has low trade volumes. Things wi
Not even Bitcoin (Score:3)
The gist is they chose the Bilderberg-associated BTC which doesn't have enough blockspace for transactions, much less onboarding that many LN wallets for all of its citizens (in less than a few years), so they created a database and app with a promise that the app's currency was backed by BTC. And the app was reportedly rough.
"OK, whatever," was almost unanimous among the citizens.
However the important part is that they did some commerce with Japan in BTC which is a fun story that econ nerds might enjoy chasing down.
They could have just used BCH so everybody could "be their own bank" but they didn't because the cross-border trades were the real goal.
And the dude took on the cartels and lives, so he sure ain't dumb.
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What do you mean its expensive?
Its infinitly divisible.
As the value of BTC goes up, we wont be talking about the price of 1 BTC anymore, we'll be talking about the price of 1 SAT (Satoshi).
1 SAT = $0.00026315 (USD) currently
Its 1 BTC / 100 million
The only issue is volatility which makes it impracticle at the moment as a currency, maybe for ever. But as a store of value nothing has outperformed BTC over 1 year, 5 years, 10 years and never will because of its absolute scarcity.
Is anyone anywhere using Bitcoin... (Score:2)
Did he put all his customers in jail? (Score:2)
Is jailing ppl without trial really excusable now? Does the Constituional idea of equal justice for all, and the Declaration's unalienable individual rights contradict utilitarianism?
I'm sure it worked just fine (Score:4, Insightful)
This was always about money laundering. Like everything in crypto except for the pyramid schemes.
1/5 of the GDP is remittances? (Score:3)
Thatâ(TM)s really the only interesting figure in this story. What this means is that 1 out of every 5 dollar of GDP in that country is due to a migrant worker in a different country sending money back into the El Salvadorean economy, most likely to family that remains in El Salvador.
This, in combination with the fact that the official currency of El Salvador is US Dollars, tells me that El Salvador is a huge supply of labor for the USA.
I wonâ(TM)t get into the thorny topic of undocumented immigration in the US, but the fact that H-2A and H-2B Visas are distributed the way they are is evidence that one of El Salvadorâ(TM)s main exports is labor.
Given this, I suspect that bitcoin use in El Salvador was probably meant as a way of trying to create another method of transferring money back into El Salvador from migrant labor. I am not sure what aspects of bitcoin make it attractive for remittances, but there must be something.
So called "journalists" and bitcoin (Score:2)
When it comes to crypto, it seems that there is no such thing as "independent" reporting.