It's not a failure because Bitcoin tanked (relatively), it's a failure because Bitcoin tanking was and will always be a significant risk. People who got rich from Bitcoin weren't savvy, they won the lottery. It's not a sound investment decision based on outcome. Investments are sound based on probability and risk beforehand.<p>El Salvador gambled which is stupid. Whether they won or lost at the lottery is inconsequential to its stupidity.
The policy only ever made a little sense. What El Salvador desperately wants is a currency it can inflate to pay for the stuff it can not afford. In this regard, it is no different than any other country.<p>What it had was a currency it does not print (US dollar) and for which there is an ongoing international shortage.<p>What El Salvador got with Bitcoin was yet another currency it does not print and for which there is currently an international surplus.<p>The thing the article does not mention, and the only reason the policy made any sense, is that ~50% of Salvadorans live abroad. So there is a substantial remittance market in El Salvador relative to GDP. Allowing remittances to flow through bitcoin cuts out companies like Western Union who scoop from the top.<p>Even so, this scheme only makes a little sense. A better approach might have been for the government to have set up a USD-based remittance program of its own.
I principly agree on all criticisms, especially the seemingly reckless investment.<p>However, the presupposed lack of adoption of Bitcoin as a means of payment is not supported by the source bar chart. The numbers are actually pretty impressive compared to card: ~25% of businesses accept card and 20% accept Bitcoin as payment. That is impressive adoption after 1 year by any standard in a country that primarily uses cash.
Ja that is crazy... one wonder if they pick a different time (read long term market-regime) if the results would be any different for better or worse.<p>The <i>best</i> alternative payment system I have seen myself is M-Pesa in Kenya [0]<p>It's THE payment system in Kenya everything runs of it in terms of commence for the "ordinary man". It has a somewhat unique starting point, since Kenya (Africa) (I'm from there myself), was not "modern enough" for the everyday man to make use of traditional banking services. But even the "low tech man" had a cellphone.<p>I hope to see more examples like this in the future, and I'm sure many a BigCorp is doing just that, I do wish the next-gen version of these services will be more community-driven and less bigcorp. Oh gosh I <i>almost</i> described the <i>original vision</i> of bitcoin :)<p>[0]<a href="https://en.wikipedia.org/wiki/M-Pesa" rel="nofollow">https://en.wikipedia.org/wiki/M-Pesa</a>
Prediction: El Salvador will look genius in the next Bitcoin cycle. Other emerging market central banks will proceed to copy their model creating the next cycle’s peak. Once they stop buying, the market will crash again creating either a global depression or a bailout of the btc economy by USG, causing a repeat of the bank bailout that spawned btc in the first place.
This was implemented poorly (and bitcoin was a poor choice), but it's not crazy to want a currency that is decoupled from the US government. Especially in Central America where the US government has a pretty shady track record.
I want to wake up one day and cryptocurrency and anything related to it just doesn’t exist. Man that’d be a great day.<p>Remove grifters, acquire actual progress.
What I don't like about this article is it is almost entirely focused on price. If bitcoin would have went up, it would have been a wise move according to the premise of the article. I think a longer timescale is needed.<p>I'd like to see an analysis of the situation, assuming that the value goes neither up or down, but simply holds a constant value in an inflation indexed manner. Would it still be a bad idea in that situation?
After so many cycles, Bitcoin has become one of the most respectable pyramid schemes available to the general public (only behind real estate speculation maybe).<p>I think we'll see another even worse cycle unfortunately within the next 10 years.
My theory behind this is there are many BTC holders with cap gains (or assets acquired through illegal methods) that can't easily cash out, and El Salvador's BTC support was a grab at capturing tourist revenue through state sponsored money laundering.<p>Through that lens, it would be interesting to see if there was any anomaly in GDP, luxury goods sold, real estate sales, or tourism in the country.
Many people buy Bitcoin to "hodl", not to use, giving it some gold-like characteristic.<p>If there was some crypto without any incentives of hodling long term, I'm sure the adoption would be higher. People don't spend Bitcoin the same way they don't spend gold in daily life: to own it as a long-term value reserve.
I asked a group of visiting college students from El Salvador about the situation with the Chivo wallet. They all uniformly believed the U.S. had put sanctions against the country's official exchange, making it hard to send money between the two countries. I could not find any evidence that such sanctions had actually occurred, but they all believed it was true. I wonder how they got this idea, how common it is, and whether it's had any effect.
Bram Cohen had an interesting twitter thread on this<p><a href="https://twitter.com/bramcohen/status/1567173122289442824" rel="nofollow">https://twitter.com/bramcohen/status/1567173122289442824</a>
If he had invested in a corrupt opaque investment that by design lost $50M into the pocket of a wealthy supporter, everyone would've shrugged and said "business as usual".
In what multiverse is achieving 20% adoption among customers and sellers in only a year a "failure"? Also, no shit the IMF is going to rattle off dire-sounding warnings; the IMF has a vested interest in keeping countries like El Salvador dependent on the legacy financial system.<p>It's <i>way</i> too early to declare El Salvador's Bitcoin experiment a failure (or, for that matter, a success). Adopting a new currency (let alone an entire alternative financial system) doesn't happen overnight.
Why would anyone adopt a deflationary asset that people hog as a currency?<p>You want a currency that encourages usage in the economy, not one being buried in vaults.
I value the insight of many that post here, so I would like to ask: isn't there any valuable application for blockchain tech? I realize BTC is imperfect, but blockchain itself is just a technology.<p>Being pretty young, everyone I know is involved in crypto in one way or another. I'm personally waiting on the sidelines, but there should be some beneficial middle ground between going all-in and completely discarding the tech.
While I'm certainly not on the Bitcoin train but I would argue it's too early to say it's a failure from an investment standpoint, and there's too little evidence to say it's a failure from a policy standpoint. I would presume the goal was to become less dependent on foreign currency/other nations, which seems successfull
FIAT has proven time and time again to fail. Dollar world trade is unfair and benefits the USA unfairly.<p>I would prefer a neutral crypto currency to be the new world reserve instead of a competing currency like the YUAN. Government should not have the power to print money out of thin air.<p>The technology of blockchains is improving, for the example lightning network should make it very well possible. Just like with the invention of 'real' money there is a lot of failure in the crypto space.<p>The subject of money and currencies is a much more complex issue. A government giving its "printing power" or in the case of Elsalvador, no longer wanting to be the victim of the printing power of the USA, is a very good thing.