[jfasi]

I’m about as far from a crypto defender as you can get, but I think this page misses the point. If El Salvador is planning to use Bitcoin as a medium of exchange, which by all accounts they are, their being “up” or “down” must be measured by the size of the economic activity that Bitcoin allowed them to facilitate. That figure is harder to get at.

Viewed this way, the additional purchases which seem foolish and laughable might even be signs of success: perhaps Bitcoin business is booming so hard they need to expand their reserves?

To be clear, I highly doubt that’s the case here, but if we’re going to assess success we should at least try to steelman their position. There’s plenty to mock about this change without taking cheap shots.

[JumpCrisscross]

They're investing FX reserves in Bitcoin. Their imports are not priced in Bitcoin. Bitcoin going down relative to the currencies they import in hurts El Salvador's ability to finance them. Which raises borrowing costs [1]. Which leads to exporters demanding earlier payment [2].

San Salvador has less than three months' imports in reserves [3][4][5]. Their Bitcoin experiment has scared off crisis lenders [6]. There is no good ending for them right now.

[1] https://www.reuters.com/markets/europe/crypto-crash-leaves-e...

[2] https://fred.stlouisfed.org/series/SLVBCAGDPBP6

[3] https://tradingeconomics.com/el-salvador/imports

[4] https://tradingeconomics.com/el-salvador/foreign-exchange-re...

[5] https://data.worldbank.org/indicator/BN.CAB.XOKA.CD?location...

[6] https://www.imf.org/en/News/Articles/2022/02/15/cf-el-salvad...

[aardvarkr]

Thanks for the sources to read further in the topic! I was always curious to know how their “experiment” was going to turn out and it seems like the results so far aren’t good

[lawn]

They're not trying to use Bitcoin as a medium of exchange.

They're trying to funnel people into their own centralized crypto app, where people may (or may not) be allowed to send Bitcoin via the Lightning Netowrk.

[pirate787]

The president of El Salvador is buying Bitcoin on his cellphone. There is no governance over these millions and it isn't going to end well.

[stingraycharles]

Maybe the larger point is that bitcoin is too volatile a currency to be used as a medium of exchange? Surely they must be holding on to a decent amount of BTC and as such lost value, if not the government itself, then at least the country as a whole.

[rmbyrro]

Currently, Bitcoin adds zero value, even if it was used for every single transaction in the country.

Currencies are not money because they don't store value. Bitcoin was a promise to be money in the full sense.

It's ability to store value is questionable, since it became a highly speculative and fraud facilitation asset. And the other aspects of being money are worse than currencies.

[surement]

El Salvador has a trade deficit and can't print USDs; part of the point of adopting BTC was to allow Salvadorans abroad to send money into the country without paying wire fees.

[Alex7845]

the same argument can be said about literally every non-crypto currency. A US dollar doesn't have any "value" other than the small amount of heat you get if you burn your paper bills.

[audessuscest]

How Bitcoin really facilitate anything ?