IMF gave them 1.4 billion to abandon the “experiment”:
> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros).
In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.
—-
I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself
If you need to go to the IMF for a loan of ~3% of your GDP to mitigate the risks associated with Bitcoin, well, that's a pretty good sign that adopting Bitcoin as legal tender was a pretty disastrous failure.
What do you mean "gave" them 1.4 Billion? It's a loan so it has to be repaid. Usually, this is unsaid but with crypto people you sometimes have to explain basic financial conditions. Also, the loan was to bail them from risks of Bitcoin.
> IMF gave them 1.4 billion to abandon the “experiment”
No, that is not what the quote says. It says it was a condition on a loan.
There is a huge difference between unsolicitedly saying “hey, I’ll give you money for you to stop betting on horses” or being asked for money and replying “OK, but if I do lend you the money you have to promise me you won’t spend it on horse betting; I want it back”.
There is a book called "Talking to your daughter about Economics", where the author explains one of the problems with bitcoin is, you cant print more of it in a crisis. Maybe thats what happened here.
Or maybe the IMF doesn't want the money they "give" to El Salvador to be dissipated into a synthetic commodity masquerading as a deflationary currency.
I'm not going to defend the IMF here... they're sort of like sharks swimming in the national currency markets (look up "Our Brand is Crisis" and "Life and Debt" for more info, and then read Summers' "The Payment System" for the IMF's take on things.)
But... I think my point is... I don't think there's any more conspiracy going on here than normal IMF conspiracy. But the IMF is sort of open about it, so is it still a conspiracy? I don't think the IMF or WB care one whit about cryptocurrencies, they just don't even register.
EDIT: Oh, and "Confessions of an Economic Hit-Man" is also nice and conspiratorial. If half of the author's assertions are truthful, there's WAY more happening in Latin America vis a vis international banking cabals.
The very first IMF loan ever given was to France for reconstruction. One of the terms for the condition was to remove the only elected communist in their government from their position.
No country with its own money ever needs to get the IMF involved.
Largely because the only place the IMF can get your money is from you.
Currencies are public monopolies.
The problems always arise when a state starts issuing state backed liabilities in other denominations - as there is no way for a state to absolve itself of that debt without paying it back. It becomes a debtors prison.
If the IMF was loaning them 1.4B to do economic development then its reasonable that the country not keep a massive liability on its balance sheets.
Imagine I wanted to loan your car company 100M to build out a factory because I believe in the product. I'm told that your company keeps all its reserves in bitcoin and its possible that even if the factory is successful that the loan wont be repaid if bitcoin falls.
I think if you are obsessed with bitcoin its easy to see this as conspiratorial, but the reality is no bank is going to loan a (company, person, country) money in cash if they are told the loan may default if bitcoin falls.
Of course it was an utter failure. Why else would they need 1.4 B USD from the IMF when BTC has run up what... 6x or so since they started with this "experiment"?
This wasn't a vendetta or a political maneuver. The IMF is intending to enforce stability on loan recipients but insisting on sensible policy. Per the article, the program was already unsuccessful and they wanted it removed as a risk factor.
> this was clearly something else than a failure of the currency itself
They needed the loan. The original thesis was taxes on crypto bros’ business and tourism would increase revenues while crypto-based lending would provide an alternative to the IMF. Neither panned out. This was a failure of Bitcoin to provide any of the international benefits of the dollar financial system.
They gave it to them, with a contingency that they need to stop reckless financially dangerous policies, like allowing a wildly volatile cryptocurrency to be legal tender backed by the government at various levels of society.
IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies
"I dislike crypto as much as the next guy but this was clearly something else than a failure of the currency itself."
Zeke Faux who wrote the book "Number Go Up", a George Plimpton-styled account which was released last year, went to El Salvador and tried to use crypto as currency.
BECKER: ... But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year's Bitcoin conference with a lot of cheers from crypto enthusiasts about his government's use of Bitcoin.
Let's listen.
NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).
BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you
find out there?
FAUX: ... And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it's the future, it's going to help the poor, they're all using Bitcoin. And the listeners are probably asking themselves, "What does this even mean, how does this make sense?" And it doesn't make sense. I got there, and one of the first places I went to was this little roadside store.
And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country's main currency is the dollar, and they didn't abandon that. But they're supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.
And the clerk gave it to me, so I'm holding the water. And then in my terrible gringo Spanish, I said, "Puedo pagar con Bitcoin, por favor?" And the clerk just said, "Basura!" Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don't want to use your Bitcoin.
And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.
They're very slow on there and people complained. "Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?" So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I
became one of."
It's interesting and nice to see how progressive and creative El Salvador has been. Some failures are perfectly understandable when one is willing to try new things. Their approach to crime is another thing that comes to mind that was lambasted and ridiculed by the "international community" and "experts". Yet in the space of a single decade they went from murder capital of the world to safer than New Zealand (in terms of homicide rate), which is just staggering.
I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.
I don't particularly like BTC (as it senselessly burns huge amounts of energy, thereby actively contributing to the destruction of our biosphere), but this news post is intentionally misleading. As reported by many other outlets (e.g. [1,2]), El Salvador abandons BTC to qualify for an IMF loan - so the IMF is pressuring them towards this move (presumably for political reasons).
Structurally, Bitcoin is a lousy idea for a currency as it is intrinsically deflationary (i.e., even without the speculative inflating of the cost of a Bitcoin, the structure of the coin is such that coins become increasingly scarce and expensive as time goes by). You do not want this in your currency. The ideal is a low-level of inflation which provides an incentive to spend sooner rather than later. With a deflationary currency, the incentive is to put off purchases as long as possible as your currency will buy more tomorrow than it does today. Deflation ends up being economically disastrous, as Japan’s battles with deflation over most of the twenty-first century have shown.
This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
It even seems that the above is a very minor change that in no way changes the outcome here. El Salvador did well and looks to continue to do well with its bitcoin policies.
While it is true that adoption remained relatively low, the reason why they abandoned it is that the IMF made it a condition for the Salvadorian government to be able to receive a 1.4B loan.
Nobody wants to spend it anyway, just hoard or sell it to the next sucker willing to shell more $.
Among all the crypto shills I know I'm probably the only one who has used it for trade (0.25ish Bitcoins for a computer on caseking.de in late 2017 and few goodies on local bitcoin in the same year).
Hmm, sounds more like an IMF requirement than something the government wanted to do. It's not news that the IMF is opposed to the use of Bitcoin as legal tender.
The writing was on the wall way back in 2022. The launch was a dud. People were more likely to use the national wallets for stable-dollar coins then Bitcoin.
By branding itself as "crypto-friendly", El Salvador managed to get Tether to relocate there. That seems like a pretty big deal for a country that otherwise would never attract any sort of tech company.
So I wouldn't call it a "failed experiment" per se - more like a publicity stunt that has achieved publicity.
Bitcoin (BTC) was hijacked and oriented away from use as cash. It was quite obvious BTC was no longer capable of functioning this way and that the LN wouldn't help.
There were maybe a half a dozen other networks that might have made a more plausible and interesting experiment in testing crypto as a day to day currency.
[+] [-] portaouflop|1 year ago|reply
> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros). In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.
—-
I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself
[+] [-] dragonwriter|1 year ago|reply
[+] [-] stephen_g|1 year ago|reply
[+] [-] kristjansson|1 year ago|reply
[+] [-] npalli|1 year ago|reply
[+] [-] awnird|1 year ago|reply
[+] [-] patrickaljord|1 year ago|reply
Is this really the general sentiment on HN?
[+] [-] latexr|1 year ago|reply
No, that is not what the quote says. It says it was a condition on a loan.
There is a huge difference between unsolicitedly saying “hey, I’ll give you money for you to stop betting on horses” or being asked for money and replying “OK, but if I do lend you the money you have to promise me you won’t spend it on horse betting; I want it back”.
[+] [-] purist33|1 year ago|reply
[+] [-] OhMeadhbh|1 year ago|reply
I'm not going to defend the IMF here... they're sort of like sharks swimming in the national currency markets (look up "Our Brand is Crisis" and "Life and Debt" for more info, and then read Summers' "The Payment System" for the IMF's take on things.)
But... I think my point is... I don't think there's any more conspiracy going on here than normal IMF conspiracy. But the IMF is sort of open about it, so is it still a conspiracy? I don't think the IMF or WB care one whit about cryptocurrencies, they just don't even register.
EDIT: Oh, and "Confessions of an Economic Hit-Man" is also nice and conspiratorial. If half of the author's assertions are truthful, there's WAY more happening in Latin America vis a vis international banking cabals.
[+] [-] culi|1 year ago|reply
IMF loans have ALWAYS been political
[+] [-] neilwilson|1 year ago|reply
Largely because the only place the IMF can get your money is from you.
Currencies are public monopolies.
The problems always arise when a state starts issuing state backed liabilities in other denominations - as there is no way for a state to absolve itself of that debt without paying it back. It becomes a debtors prison.
[+] [-] marinmania|1 year ago|reply
Imagine I wanted to loan your car company 100M to build out a factory because I believe in the product. I'm told that your company keeps all its reserves in bitcoin and its possible that even if the factory is successful that the loan wont be repaid if bitcoin falls.
I think if you are obsessed with bitcoin its easy to see this as conspiratorial, but the reality is no bank is going to loan a (company, person, country) money in cash if they are told the loan may default if bitcoin falls.
[+] [-] throwaway519|1 year ago|reply
[+] [-] ulfw|1 year ago|reply
[+] [-] unknown|1 year ago|reply
[deleted]
[+] [-] tootie|1 year ago|reply
[+] [-] baq|1 year ago|reply
[+] [-] JumpCrisscross|1 year ago|reply
They needed the loan. The original thesis was taxes on crypto bros’ business and tourism would increase revenues while crypto-based lending would provide an alternative to the IMF. Neither panned out. This was a failure of Bitcoin to provide any of the international benefits of the dollar financial system.
[+] [-] fsckboy|1 year ago|reply
this is a really ambiguous phrasing. Is bitcoin a "currency"? is el Salvador adopting bitcoin as a ___?____ a currency?
[+] [-] topranks|1 year ago|reply
[+] [-] nprateem|1 year ago|reply
The bank would be pretty reckless not to stipulate these things.
[+] [-] NicoJuicy|1 year ago|reply
[+] [-] aprilthird2021|1 year ago|reply
IMF loans often come with the stipulation that you need to reign in wild and speculative financial policies
[+] [-] travisgriggs|1 year ago|reply
[+] [-] taurknaut|1 year ago|reply
[+] [-] zombiwoof|1 year ago|reply
[+] [-] enaaem|1 year ago|reply
[+] [-] taurknaut|1 year ago|reply
[+] [-] 1vuio0pswjnm7|1 year ago|reply
Zeke Faux who wrote the book "Number Go Up", a George Plimpton-styled account which was released last year, went to El Salvador and tried to use crypto as currency.
https://www.wwno.org/2023-09-19/tales-from-the-world-of-cryp...
BECKER: ... But also, I just want to point out that in 2021, the president of El Salvador, Nayib Bukele, announced that his government was going to be betting on Bitcoin. And we actually have a bit of tape from him at that year's Bitcoin conference with a lot of cheers from crypto enthusiasts about his government's use of Bitcoin.
Let's listen.
NAYIB BUKELE: Next week, I will send to Congress a bill that will make Bitcoin a legal tender in El Salvador. In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy. And in the medium and long term, we hope that this small decision can help us push forward (CHEERS).
BECKER: And following that announcement, the government of El Salvador encouraged businesses to use Bitcoin. Zeke Faux, you traveled to El Salvador. What did you find out there?
FAUX: ... And people were literally, I was at this conference. People were, it was one of the first ones I went to, people were in tears, and I just, I was like, what is this weird world, and they all said, you got to go to El Salvador, you got to see, it's the future, it's going to help the poor, they're all using Bitcoin. And the listeners are probably asking themselves, "What does this even mean, how does this make sense?" And it doesn't make sense. I got there, and one of the first places I went to was this little roadside store.
And the president had passed this Bitcoin law, which meant that all businesses were supposed to accept Bitcoin as payment. The country's main currency is the dollar, and they didn't abandon that. But they're supposed to also use Bitcoin. And I went to the store, and I pulled, I grabbed, I asked for a bottle of water.
And the clerk gave it to me, so I'm holding the water. And then in my terrible gringo Spanish, I said, "Puedo pagar con Bitcoin, por favor?" And the clerk just said, "Basura!" Trash! And grabbed the water out of my hand, and just walked away. Get out of here, you dumb tourist. I don't want to use your Bitcoin.
And that was the attitude I got all over the place. Despite this huge push from the president, the currency was totally rejected by the people. Stores would only use it begrudgingly. And what using Bitcoin means is that they would have a special payment terminal and I could use an app on my phone to send my Bitcoins to them instead of using my credit card or my dollars, but the terminals never worked right.
They're very slow on there and people complained. "Hey, the price of Bitcoin goes up and down a lot. Why would I want to accept that for my surf lesson or to sell you a beer? How about you just give me some dollars?" So the ones that did accept that it was just as like a courtesy for the annoying Bitcoin tourists, which I became one of."
[+] [-] napierzaza|1 year ago|reply
[deleted]
[+] [-] ptero|1 year ago|reply
El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it.
But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status.
Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.
[+] [-] Mengkudulangsat|1 year ago|reply
Sounds like the term "Failed Experiment" is the writer's assertion and not the government official position.
[+] [-] starspangled|1 year ago|reply
I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.
[+] [-] ks2048|1 year ago|reply
I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.
[+] [-] wyck|1 year ago|reply
They even have their own tracker, https://bitcoin.gob.sv/
[+] [-] twothreeone|1 year ago|reply
[1] https://finance.yahoo.com/news/el-salvador-changes-bitcoin-r... [2] https://www.msn.com/en-us/money/financial-regulation/el-salv...
[+] [-] mkoubaa|1 year ago|reply
[+] [-] josu|1 year ago|reply
Legal tender 1: -15%
Legal tender 2: +115%
Guess which one has been deemed a "Failed experiment".
[+] [-] dhosek|1 year ago|reply
This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.
[+] [-] sarcasmatwork|1 year ago|reply
Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender."
https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...
[+] [-] fode|1 year ago|reply
From day one, I knew it wasn’t going to work.
That’s when I flew back to Miami, went back to the drawing board, and stopped being a Bitcoin maxi.
[+] [-] AnotherGoodName|1 year ago|reply
https://apnews.com/article/bitcoin-elsalvador-bukele-musk-tr...
It even seems that the above is a very minor change that in no way changes the outcome here. El Salvador did well and looks to continue to do well with its bitcoin policies.
[+] [-] josu|1 year ago|reply
[+] [-] epolanski|1 year ago|reply
Among all the crypto shills I know I'm probably the only one who has used it for trade (0.25ish Bitcoins for a computer on caseking.de in late 2017 and few goodies on local bitcoin in the same year).
[+] [-] modeless|1 year ago|reply
[+] [-] riknos314|1 year ago|reply
https://github.com/theborakompanioni/bitcoin-spring-boot-sta...
[+] [-] donohoe|1 year ago|reply
https://restofworld.org/2022/el-salvador-chivo-bitcoin-walle...
[+] [-] lacker|1 year ago|reply
So I wouldn't call it a "failed experiment" per se - more like a publicity stunt that has achieved publicity.
[+] [-] FreeTrade|1 year ago|reply
There were maybe a half a dozen other networks that might have made a more plausible and interesting experiment in testing crypto as a day to day currency.