Both seem like issues to me? Either your paychecks are being adjusted for inflation (in which case they could be adjusted to the Bitcoin price) or they are not adjusted for inflation and each check is smaller than the last.
Then you swap it instantly to USD, which is part of the implementation.
So citizens can chose. Conservative ones pick USD for its stability, others may pick BTC. Which has appreciated by 200% for 12 years straight, but hey, who's counting.
Or, mix it up. 75% USD, 25% BTC. So...what is the problem again?
The problem is it is only advantageous to hold BTC for those that can assume that risk. It's not being "conservative", they have no choice. If you're living paycheck-to-paycheck and the price collapses while you're sleeping, how do you eat the next day?
This ultimately means the rich get richer and the poor get poorer.
Pretty much any fledging currency will be volatile. So you might as well be asking why anyone would adopt any new currency?
As a currency gains adoption and value, its volatility naturally goes down.
As far as what advantages bitcoin has over traditional existing currency? Numerous. Immutable, unseizable, uncensorable, fixed supply/non-inflationary/store of value, digitally transferrable without a 3rd party.
Bitcoins have been seized, and stolen. Bitcoins have been banned in China. Not at all transferable without a majority of nodes on the network agreeing - unless you mean you can hand a flash drive to someone, and that’s not an advantage to a currency you can hand notes to someone.
Why is “non inflationary” an advantage? It means less incentive to spend, more incentive to hoard, and anyone who comes later is necessarily poorer. It’s terrible, population increases and younger people fight for the scraps of the few bitcents left, so the pyramid early adopters can take advantage. That isn’t going to hold as a stable system.
The same way it seizes anything else; have people with guns show up [0] to the person with control over it, and inform them they must turn it over or face dire consequences. Seizing money held in a personal wallet means doing that to the owner (whether its a physical or digital wallet), seizing money held in a third-party service (often the case with Bitcoin) means doing it to the service operator.
> Stealing Bitcoin is not the same as seizing.
True, in that “stealing” is what is called when someone seizes property from another without legal authority. But false in the senae that seems intended, in that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
[0] Or people without guns with the implicit backing of people with guns. Or just messages from an agency known to be backed by people with guns.
> have people with guns show up [0] to the person with control over it
It is much easier to physically confiscate cash, than it is to confiscate a wallet that you don't have the keys to.
Sorry, but it just is. Yes, an arresting authority can always threaten people, with violence, but that has problem and roadblocks to it. People get mad. Courts come into the picture. And although yes it is possible it is still more difficult to do, with greater negative consequences to doing so.
The point of censorship "resistance" is not to be completely immune from a mind reading mecha-hitler, who will nuke the universe if you don't give up the password to your crypto wallet.
Instead, the point is to make it more difficult to confiscate assets, in more situations, such that it significantly reduces but does not stop completely, the times that assets are confiscated, as opposed to the absurd super hitler with nukes hypothetical.
> that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
Nope. The mechanics that are used and available to the government, in real life actual examples, of how actual governments work, make it easier for those existing governments to confiscate cash as opposed to crypto.
This is not about absurd hypotheticals. This is about existing government laws and implementations of those laws.
Once all the governments in the world, actually change their laws such that they can now threaten to nuke the universe, if you don't give up your keys, then you can start talking about how technical solutions have zero effect on getting around existing government policies.
Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement. So it is stupid to bring that up, as some gotcha counter example, for why you think technical solutions are worthless, when talking about actual real life, as opposed to your sci-fri fantasy novel.
> Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement.
No, it doesn't. Its literally what every government seizure of anything uses. It’s force or the threat thereof top to bottom. Sure, a lot of it is invisible because it is routine, but it is routine because society is adapted to the reality of the threat.
Even to the extent that you might be right, does “bitcoin disproportionately reduces the effectiveness of governments that have a strong evidentiary threshold for the application of force against those within their power” make it a good thing, likely to benefit the world by broad adoption?
> No, it doesn't. Its literally what every government seizure of anything uses.
Yes it does. Walk across the border of the USA and mexico with 20k in cash, and try it again by memorizing a crypto password.
Once you do that, see how both go.
The proveable fact, is that the actual examples that we have, of real life laws and governments, shows that the cash would be confiscated, and the crypto password would be more difficult to do so.
That is a falsifiable experiment that people can do. And the experiment goes my way. That actual, real life example, proves me right, in that specific circumstance.
I don't care about hypotheticals that don't exist in the real world right now. The only thing that I will accept, is real life proof, of crypto passwords being as easy to confiscate, as cash, in the real world.
As in, show me, specifically, how a random border patrol agent, in the US right now, would just as easily figure out that I memorized a crypto password, as opposed to figure out that I am physically carrying 20k in cash, as I go on vacation to mexico, tomorrow.
In the real world, right now, if you cross the US border to mexico your cash would be more easily confiscated than a crypto password, by the random border guard that you talk to.
> It’s force or the threat thereof top to bottom.
Then show me the government mind reading machines, that the border patrol, on the current US border, uses to scan my brain for crypto passwords. Because I can show you how they will confiscate cash. Because I have examples of them confiscating cash. There are no examples of the government turning on their mind reading devices, and stealing my crypto password.
> that have a strong evidentiary threshold
Oh but technical solutions change the evidentiary threshold! A person with a suitcase full of money, has much more evidence of them carrying money (because the suitcase can just be opened), than in the situation of a random, poorly paid border patrol agent, interrogating someone for their crypto password, that the border patrol agent doesn't even know exists!
That is one way how it makes it much more difficult to apply force.
Trezor [1] and Ledger [2] are both hardware wallets that can have a passphrase which would generate any number of wallets, each derived from the user's private key, but each generating a different public key. If someone has say 20 different passphrases, how would the people with guns know which wallet they are getting? There can be wallets without the entirety of funds stored in them, i.e. give away some to save the rest, and the people with guns think they got it all.
Even not considering passphrases, anytime you set up a crypto wallet there is a 12 or 24 word mnemonic seed which could be memorized and not written down anywhere, and which could be used to restore a wallet at a later time. So, how exactly does seizing work in this case?
Yes, with any form of money you can try to convince the authorities that a different, incomplete, or empty cache of funds is the thing they are trying to seize, or that you simply don't have what they are trying to seize.
Whether the authorities believe you and whether they decide to inflict the alternative consequences implicitly or explicitly threatened as part of the seizure mechanism ... depends on the information that forms the basis of the seizure, the personality and nature of the individuals involved and the regime they serve, and other factors.
Features that make it harder for authorities to be certain you are lying when you are also make it harder for the authorities to be certain you are telling the truth when you are. This is not universally beneficial.
Personally, I don't think I'll ever need to hide crypto from the government and I pay my taxes. However, I figure that it could be regular thieves with guns, too. I get that this thread was going in the direction of government, but I think people with guns can be pretty general. What I think is cool is that technology like this has never existed. Banks were the only way to have this level of security. You don't get that with physical gold or physical cash. How do people not see how innovative this is? It's a way to store money outside of the traditional financial system, just like gold, except it's much harder to seize, much easier to transfer, is much more divisible, etc. You can literally store a million dollars in your head by memorizing a 12 word mnemonic seed, or hand a million dollars to someone via a paper or hardware wallet. How do people not think that is cool?
Apparently, a fairly high percentage of El Salvador's economy is based on people outside the country sending currency in, so I think the idea was to use a currency that makes it relatively cheap and easy to send money from the US to El Salvador.
That said, since they're on the US Dollar anyway, I think it might have made more sense to use a stablecoin like GUSD or DAI or something.
I think at some point I read that given the amount of the GDP that remittances are in El Salvador, and the % that Western Union and similar services charge for each transfer, they calculated that a good chunk of the GDP was being left in these transfer services.
In the case of Mexico, remittances would be 3.8% of the GDP, and the WU fee is 8% [1], which means that 0.3% of the GDP is being left in the table. In El Salvador I think it is about 20%, which would mean that 1.6% of the GDP is being left in the WU and similar services.
If its USD to USD in this case, why not mail a check? I wonder if you could even just scan a check and email it and use a mobile bank app to deposit a printed copy. Or even have the US relative log into the Salvadoran relatives bank account and do it all within the U.S.
Checks are not common outside of US and a few other countries. Checks from another country especially can be a hassle to cash, may take a long time (as in weeks!), and may require paying a percentage fee to the bank.
They're not terribly common even within the US. I refinanced my house recently, and and I had to order a new checkbook from my bank to do it, because I couldn't find the one they gave me four years ago. Every time I do have to write a check, I always have to "figure it out" again, which isn't exactly rocket science, but is a testament to how little I write checks.
Like most of the world, I use credit cards or debit cards or a cash sending app.
They're common enough for banks to universally support them. E.g. if you get compensation from some company (due to overpaid bill, legal settlement etc), it'll usually come as a check by default - and sometimes that's the only available option. I've also dealt with landlords and home repair providers that would only accept checks.
Well, I mean, mailing a check takes a long time, certainly longer than sending some bitcoin would take, even if it was free. Emailing a scan could work, but wouldn't that be completely trivial to abuse? If someone gets a Gmail password, they could just photoshop a the check to empty out your relative's account with very low effort.
I think blockchain kind of solves these two particular problems; the money transfers are relatively quick (around 20 minutes for bitcoin), and you have all this cryptographic goodness to minimize the potential for fraud.
It shouldn't matter how long it takes to mail after the first check is mailed, right? If the relative in the US is sending money every biweekly pay check and it takes 9 days or whatever to mail a check, the relative in El Salvador is still getting a check every two weeks, just nine days later on the calendar than payday.
Ostensibly, the purpose of adopting Bitcoin is to make possible remittances with lower fees.
This immediately raises the question of why not establish or partner with another bank that would allow lower fee remittances, and instead partner with a shadow bank to do so. And the most reasonable answer, to me at least, is that by using a shadow banking mechanism, they'd evade (international) inspection, which would allow them to potentially skim money out of ordinary El Salvadoran bank accounts.
In that case maybe their strategy might be to convert as much USD within the country into bitcoin as possible, wait for the inevitable next huge surge, sell at the peak and increase their central bank holdings of USD by a massive amount.
Admittedly, they are the first, but there's little to be surprised about.
Bitcoin is the best performing asset with a 200% average YoY return for 12 years straight. Whilst still volatile, there's enough trust in long term value for institutional adaption, which is the phase we're in the middle of.
1 in 6 Americans own Bitcoin. Companies are holding it. Clearly, it no longer is an internet joke. It's accepted as an asset.
They can continue to price things in US dollars without letting American elites steal from them through the Cantillon effect. If you didn't know, they were using US dollars before.
Just my two cents.
The real reason is probably so the El Salvador political powers can enrich themselves, either through simply holding bitcoin, or some form of corruption.
In theory as you earn bitcoin, you can exchange it in a marketplace for other currencies if various risk levels, including stablecoins for low risk, or even for a few fiat currencies.
In practice, I assume most El Salvadorians aren't on Binance or Coinbase Pro.
It was also sold to the President of El Salvador by some rather savvy salesmen who may or may not have had a prior long position in bitcoin before the announcement was made.
Step 2: Convince/bribe the President of El Salvador to make bitcoin the legal tender.
Step 3: Bitcoin goes up because "OMG legal tender status" even though it is in a super minor country that was de facto using the USD as currency anyway.
Step 4: Sell your bitcoin at a profit due to the events of step 3.
Step 5: Who cares about what happens after step 4.
The El Salvador plan has done absolutely nothing for Bitcoin's price, so I guess the plan (which you made up) failed.
BTC price swings occurs due to institutional buying (or selling) which are generally triggered by macro conditions. Nothing else triggers it because the market cap is too large to move on minor news.
Finally, an opportunistic Bitcoin trader wants Bitcoin to go down, not up. So that they can buy more.
From what I have read, this is actually not the case. Remittances account for 1/5 of El Salvador's GDP, which is one of the highest ratios in the world. The companies that facilitate these remittances often charge pretty high fees, so the idea behind using bitcoin is to increase the amount of money that makes it home to El Salvador by reducing the cost incurred from transfer fees.
How are cryptocurrencies even "encrypted" and more anonymous than hard cash if all transactions are recorded in a ledger, the ledger that is the very basis of the currency? Isn't that the very antithesis of anonymity?
Afaik that claim to fame originally came from the fact how it's really difficult to track down the real owner of a wallet.
With traditional bank accounts there's usually a whole circus of verifying your real identity involved that's directly tied to the account.
While getting a BC wallet involves none of that, heck, it can probably be automated to such a degree that asking the question "Who actually owns the wallet created by a bot?" could become an interesting legal conundrum.
