Bitcoin Failed in El Salvador. The President Says the Answer Is More Bitcoin

https://foreignpolicy.com/2021/12/06/bitcoin-city-el-salvador-nayib-bukele/

by mgh2 • 5 years ago

130 211 5 years ago

throwaway20875• 5 years ago

Bitcoin isn't the lone currency in the country and the dollar is still widely used there. Expect more of this as the president of El Salvador has invited the ire of the US government by exposing the US's involvement in corruption in his country: https://twitter.com/nayibbukele/status/1469045510442864642

The media is about to go full court press on this guy, BTC is just one angle they'll use.

jessaustin• 5 years ago

Those who control the output of popular media firms are suddenly really nervous about Latin America in general. The right-wing coups in Bolivia and Brazil have failed, the ones planned in Venezuela never got off the ground, NED electoral interference in recent elections throughout the region didn't work, OAS is replaced by CELAC, the Chinese are preparing to dig an "inter-ocean canal" through Nicaragua, etc. Billionaires are nervous, so turn up the skepticism on anything produced by billionaire mouthpieces.

lalaland11254• 5 years ago

This is pure deflection. The use of BTC in El Salvador is a joke. Comments about whatever US corruption don't change that.

el-salvador9• 5 years ago

Many large retailers are accepting Bitcoin here in El Salvador using the Lightning Network or Chivo.

What I've seen is that those who recently bought Bitcoin, didn't want to spend their Bitcoin if they had USD.

At least last month, when Bitcoin price was going up, they preferred to spend USD instead of Bitcoin.

tata712• 5 years ago

So is Bank of America misinformed, or are you?

"El Salvador’s Bitcoin experiment has been a relative success to date – the country became the first in the world to adopt Bitcoin as legal tender; a larger proportion of the population has a Chivo digital asset wallet than a bank account"

CPLX2• 5 years ago

Bukele came onstage to an animation of beaming down from a flying saucer and outlined his plans for Bitcoin City: a new charter city to be built from scratch, centered on bitcoin mining—and powered by a volcano. Bitcoin City would be paid for with the issuance of $1 billion in “volcano bonds,” starting in mid-2022. The 10-year volcano bonds would pay 6.5 percent annual interest. $500 million of the bond revenue would be used to buy bitcoins. The bitcoins would be locked up for five years, then sold to recover the $500 million purchase price; any profit on the sale would be paid out as an additional dividend. Holding $100,000 in volcano bonds for five years would qualify investors for Salvadoran citizenship.

Seems legit.

xwolfi• 5 years ago

Yeah, would vote for the clow...man.

detaro• 5 years ago

Matt Levine had a good take on it: https://www.bloomberg.com/opinion/articles/2021-11-22/be-car... (TL;DR: it's a good marketing play targeting people who want this to be a thing, it's actually better to buy "normal" El Salvador bonds and invest in Bitcoin yourself: the normal bonds give better interest and you'd get the full gains from the bitcoin profit, not just a share)

xiphias24• 5 years ago

How can institutions that have obligations for performance but limitations in what they can buy get exposure to Butcoin?

For normal people this bond doesn't make sense (except for the residence that they get), but regulated institutions may want a piece of it. We'll see.

astoor• 5 years ago

Furthermore "Blockstream first proposed the volcano bonds ... issued as tokenized securities on Blockstream's proprietary Liquid blockchain. Samson Mow of Blockstream assured Bloomberg that all the numbers would work out, under Mow's rosy assumption that the price of one Bitcoin would hit $1 million within five years ... The bonds are set to be issued via Bitfinex Securities, a new unit of iFinex, which runs the Bitfinex cryptocurrency exchange and the Tether stablecoin".

The thing is, when Bitcoin City fails, it won't make cryptocurrency advocates question their assumptions (like basing your planning on your ROI being 2000%, or that it is perfectly fine to entrust the running of major components vital to its success to convicted fraudsters), it'll make them feel more victimised by the "global elite" conspiracy theories and more aggressive in pursuing future schemes, as happened with the The Crypto-Currency Seasteaders (https://news.ycombinator.com/item?id=28441794).

Can't see how this can end well for the people of El Salvador, and there do seem to be some parallels with Albania in 1997.

josefrichter3• 5 years ago

Why does he insist on Bitcoin? Their biggest use cases are 1. incoming USD payments from relatives in the States and 2. Retail USD transactions. BTC is really bad for both of these. Why not stablecoins on some cheaper chain?

JohnJamesRambo• 5 years ago

Stablecoins won’t go up and lift up the country in a world of money printing and fiat debasement.

josefrichter3• 5 years ago

it's a country with failed currency and failed leadership. USD printing is far from being their biggest problem.

k__2• 5 years ago

I think the focus on BTC is a bad thing too. But I also don't think stable coins only are the way.

The new economy needs a mix of both.

josefrichter3• 5 years ago

They're not building a new economy really. It's a country with incompetent leadership and failed local currency, they don't seem to be able to pull it off.

And regular folks are just trying to survive - they heavily depend on USD from relatives, but they pay massive fees to corrupt institutions. They are trying to work around that using BTC, but it also has high fees, and brutal volatility on top of that. If your monthly income is $500 and you risk losing 20-30% of that to fees & volatility, you're screwed. No wonder people protest in the streets.

What they really need right now it a stablecoin on cheap network. It's not gonna change the world, but it's gonna solve their biggest problems right now.

relaxatorium• 5 years ago

Because it’s at least partially, if not mostly, a publicity play and “bitcoin” is the word most regular people know when it comes to crypto stuff.

Passthepeas2• 5 years ago

So the key reason for btc adoption in El Salvador is cheaper remittance payments, I find it odd that an article that sets out to criticize btc in El Salvador doesn't even mention the original intended use case.

dundarious2• 5 years ago

Why are retailers forced to support BTC transactions if that is not a key part of the adoption?

el-salvador9• 5 years ago

Based from what I've seen form the rule of law system in El Salvador for the past months...

That the most possible answer is that...

Someone from the government tweeted or said that they had to do it on a tv interview, otherwise they would officially face fines or perhaps closures.

NicoJuicy8• 5 years ago

What would the problem be to use Transferwise?

randomhodler845• 5 years ago

Cost! And speed! I did a transfer wise last week and it cost me $15 in fees. What is this, ethereum?(a joke cos ethereum is too expensive to be useful for the retail user). I could have sent BTC and it would have been quicker and cheaper.

beervirus4• 5 years ago

1. Remittance payments were already feasible and happening before they adopted btc officially.

2. They’re not cheaper than other methods. They’re more expensive.

vernon99• 5 years ago

I think in thia case remittance is more of a way to create organic currency supply for btc. If you have btc from your son and the store owner you buy your fruits from has some btc from his son, why not to use btc for trade?

Currency has a gigantic network effect and this is seeding the network.

It’s not about the remittance per se.

Aunche• 5 years ago

Bitcoin doesn't solve the remittance problem any more than any government subsidized app solves it. People still end up using dollars for buy things with. This means for imported goods, dollars still leaves your country. However, only Bitcoins are coming into your country, so government ends up being a bigger and bigger bagholder.

el-salvador9• 5 years ago

This may work for smaller payments <$10, like when I had to split a restaurant bill with a foreign friend and paid him using the lightning network. (I wasn't carrying cash, and she no longer had a bank account in El Salvador, and other options would have been more expensive).

What I've seen is that Salvadorans in the U.S., that have bought or sent bitcoin using their U.S. credit/cards with the Chivo Wallet App based in El Salvador, is that have been hit by 1%-3% foreign transaction fees or cash advance fees from their U.S. banks.

So for some larger amounts it may end up being more expensive than a normal remittance.

Passthepeas2• 5 years ago

I'm sad to hear that, I have been optimistic about this helping people actually. Good news is that there are other options besides Chivo, so hopefully conditions improve as the market develops.

davidgerard10• 5 years ago

author here. It got dropped for space reasons (it's overlength already), but Chivo didn't get US money transmitter licenses in order as yet, so sending remittances over Chivo is attracting conversion fees from people's banks, even as Chivo doesn't charge them.

I mostly think of Chivo as a real wasted opportunity as a payments system. A government-backed electronic dollar system that worked well, and which subsidised remittances from the US, could have been excellent for El Salvador. Instead they came up with semifunctional rubbish with a massive fraud scandal.

I believe the previous Chivo developers have been fired and a new team is being hired (based on LinkedIn job ads). Trying to find out more about this.

vimy• 5 years ago

Seems a bit too soon to call it a failure. It hasn’t even been a year.

jononomo4• 5 years ago

Uh... no one is using it...

yosito• 5 years ago

Didn't El Salvador just announce that bitcoin is legal tender a few months ago? Isn't it a bit soon to declare that it failed? Especially considering the state of El Salvador's fiat.

howdydoo3• 5 years ago

The author is also the author of the book "Attack of the 50 Foot Blockchain". It seems more like a hit piece than a news article.

deadalus• 5 years ago

David Gerard has an anti-crypto agenda and is a regular on r/buttcoin. He has publicly trashed crypto multiple times.

[0]https://old.reddit.com/r/Buttcoin/comments/nwblbp/podcast_pr...

[1]https://www.csmonitor.com/Business/2021/0611/In-El-Salvador-...

[2]http://blocktribune.com/david-gerard-can-get-long-way-just-b...

[3] https://old.reddit.com/r/ethereum/comments/6dkc8w/why_do_we_...

NicoJuicy8• 5 years ago

While David Gerard has been very critical of El Salvador ( and mostly Bukele), he is giving information/insights about it, that you won't see elsewhere.

I wouldn't dismiss it as a hit piece. He's obviously spending a lot of time researching what's happening in El Salvador with the Chivo wallet.

As far as i checked/found, all the information he gave, is factually correct. But yes, he is very critical of the usage of Crypto for many use-cases, but that's no reason to dismiss his research. For me personally, i like it as an alternative view of what the crypto/defi proponents are claiming.

Eg. Mentioning that it's nuts to mine BTC while they could have used the geothermal energy to lower electricity costs in the country ( since they import 20%), makes more economic sense for it's citizens.

If you want additional facts about all the hacks that are happening, you should check out https://rekt.news . You'll be surpised about the amount of hacks in Defi/Cryto land.

ABeeSea• 5 years ago

Everything is an anti-crypto conspiracy. Embrace the paranoia.

mmargerum3• 5 years ago

Sure read like a hit piece to me. The bigger issue seems to be the IMF loan sharks.

johnisgood• 5 years ago

What does it mean for Bitcoin to fail? Failed to do what and why? Sure, if you do a BTC <> USD, then BTC is volatile, but if BTC is on its own, then is it?

qeternity• 5 years ago

Especially considering the state of El Salvador's fiat.

What does this mean? They have dollarized, they don't have a currency.

jononomo4• 5 years ago

If the citizens of El Salvador are not using bitcoin, then bitcoin is not the currency in El Salvador -- regardless of what the president announces.

ejanus4• 5 years ago

You nailed it.

eqmvii• 5 years ago

I’m exhausted by cryptocurrency.

There’s a kernel of neat tech innovation and a reasonable argument about monetary policy obliterated by an avalanche of greed, hype, fraud, and magical thinking.

jes• 5 years ago

With respect, do you see currencies just consed up out of thin air as free of the avalanche of negatives you mentioned?

smt885• 5 years ago

No crypto asset is currency or will be currency. They're tradable assets, not unlike Beanie Babies.

And I don't see fiat that way because:

1. I use if every day. It's widely usable as currency, it's inflationary, and its value doesn't fluctuate wildly.

2. Fiat only ever promised to fix the problems with gold, and it did that (in the US and Europe at least). It didn't ride a wave of hype that it couldn't live up to.

3. No one's hobby is talking about fiat. They don't harass me when I say I don't think it's interesting. They don't talk about the world falling apart and fiat plucking us from the ashes.

gjsman-10002• 5 years ago

I remember being shocked that my uncle was doing NFT trading and buying and selling digital land in the metaverse over Thanksgiving (though not his primary job).

I thought I was an early adopter for having 1.4 ETH.

smt885• 5 years ago

Your uncle is gambling, just like every day-trader on the traditional stock market before crypto was ever invented.

LightG• 5 years ago

When you say "metaverse", what do you mean?

I'm not interested in the trade itself, I just don't see the metaverse as really properly established yet so where is this taking place? Maybe I'm out of touch.

lalaland11254• 5 years ago

The most innovative part of crypto is how it encourages "normal" people to become personally financially invested in promoting it.

ohgodplsno• 5 years ago

Decentralised MLMs. That and nobody wants to be the bag holder.

k__2• 5 years ago

Too many grass-roots movements failed, or at least struggled, because money was an after thought.

BrianOnHN• 5 years ago

"Mary Kay for men."

Rexxar• 5 years ago

Let's call it "Scamtech"

mmargerum3• 5 years ago

There's a lot of hype but there's also a lot of potential to revolutionize commerce. imagine if you could pay 10 cents to read an article or tip a web site. How badly does this torpedo googles ad biz?

pc862• 5 years ago

Not to be flippant but I would still just wait for someone to post the archive link.

UnlockedSecrets• 5 years ago

And what feature of cryptocurrency allows and or benefits this whereas traditional finance systems cannot?

pjc504• 5 years ago

imagine if you could pay 10 cents to read an article or tip a web site.

1) nobody actually wants to pay this, though; the whole set of pre-existing arguments against micropayments apply, too many to list here. My fave one is "micropayments enable microfraud", though. And if you think cookie banners are annoying wait until you see the cryptobanners.

2) you definitely can't scale this on a blockchain, and any scalable system you build to do it will be Not A Blockchain. How many web pages does the world view in the time of a single bitcoin block? Would you say it was more or less than ten million?

swarnie2• 5 years ago

10c tip, $31 gas fee.

manigandham3• 5 years ago

Crypto is not necessary for micropayments and they have been tried several times already including by Google as well. It’s not a technical problem.

mostly_harmless• 5 years ago

imagine if you could pay 10 cents to read an article or tip a web site.

This doesn't need crypto. This can be done with something like Paypal.

How badly does this torpedo googles ad biz?

A solution based on spite is a bad solution.

vrc• 5 years ago

Look at Google Contributor. Users didn’t want to pay even $0.01/page, and publishers didn’t want to sign up to receive those payments. More non specifically, pubs people would pay for didn’t want to dilute their existing revenue streams with micropayments, and not enough users paid for the pubs on board. The program shut down twice.

There was also a product called TipJar that they similarly launched and killed that solve the first and second opportunity.

In both cases, Google had a huge structural advantage of already having so many cards on file and publishers with their banks hooked up and still couldn’t cross the chasm.

Somebody would need to solve these issues — not sure it’s a question of centralization

jrm42• 5 years ago

We did. It didn't work. Probably will never. Instead you should consider what you want. You want good writing content that's easily available and persistent? Okay, Wikipedia 100% has done this, amazingly. What can we learn from THEIR model?

300bps• 5 years ago

How does this scheme address the concept of decision fatigue?

I’ve heard that various cryptocurrencies are going to revolutionize the web economy and even replace AWS. Maybe I’m dumb. But it sounds like profound nonsense.

And I mined Bitcoin when you could still do it profitably with a GPU. I bought a new computer in March 2021 for $1,900 and used it to mine over $2,300 in ETH so far. I understand cryptocurrency fairly well but I just don’t get it.

UncleMeat2• 5 years ago

How badly does this torpedo googles ad biz?

Google itself offered this very product. A system for micropayments that would eliminate all of the ads. Nobody used it.

seaourfreed• 5 years ago

* 3% taken by credit card companies from merchants shows a rigged economy. It must get fixed

* 3% interest should be paid on savings accounts (like 1900 - 1980). ~0% today is a rigged economy

* Many other examples of the financial system being the root of the rigged economy (2008 Mortgage crisis, Libor rigged, front running trades, etc.).

Crypto brings the freedom to compete. We need to fix the rigged financial system by using competition.

pjc504• 5 years ago

https://ec.europa.eu/commission/presscorner/detail/hr/IP_15_... : "As a general rule, the Regulation will cap interchange fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards." Problem solved.

3% interest should be paid on savings accounts

By whom? I'm quite happy with my 1.2% mortgage, why do you want to impoverish me by driving that up? What's the interest rate on a 25 year mortgage in Bitcoin again?

lowkey17• 5 years ago

I’m exhausted by the fiat money scam

2% annual inflation over a 40 year career amounts to 40% less earnings. Inflation is theft. Bitcoin fixes this. No one has ever explained a better solution to inflation than Bitcoin.

Fiat money printing is a scam that lets politicians spend more money without directly raising taxes. Bitcoin is honest sound money with a fixed inflation policy forever that cannot be manipulated by any central actors.

It is an idea who’s time has come, given the inflationary realities of today.

hiq• 5 years ago

Bitcoin fixes this. No one has ever explained a better solution to inflation than Bitcoin.

Does anyone seriously claim that Bitcoin is currently solving inflation? I've heard some claims that it will eventually be the case, but claiming it is already a "solution to inflation" sounds like a stretch even for bitcoin supporters.

Bitcoin was apparently at 30kUSD some time in July this year after reaching 60kUSD in June, while it is now at 48kUSD. I don't see how this indicates that bitcoin is any protection against inflation. Or if it is and you're fine with this kind of volatility, I wonder why you discarded other investments such as stocks.

chaostheory• 5 years ago

You’d have a better point if transactions were fast AND cheap. Until crypto gets there, it won’t be viable as an actual currency yet. I’m not saying it’s impossible like this hit piece, but it’s not there yet.

UncleMeat2• 5 years ago

Inflation is not caused directly and only by printing.

But imagine it was. We'd see inflation apply evenly everywhere. So wages would rise too. Inflation would not eat into your earnings in any compounding fashion.

jononomo4• 5 years ago

If you make 2% more money every year than you did the year before, then how does that lead to 40% less earnings over 40 years?

nicbou3• 5 years ago

Isn't fiat money much more reliable than cryptocurrencies? We frequently cite the failures that led to hyperinflation, but nobody bats an eye when a cryptocoin fluctuates by a double digit amount in a single day.

The central authority that controls the money supply might not be perfect, but I trust it vastly more than a currency with no brakes that's mostly used for speculation.

That, and I can buy a hotdog with money. Peer to peer, without it being logged into a permanent record tied to my pseudonym.

KarlKemp2• 5 years ago

Have you heard of asking for a raise?

Also, last I checked, the price of essential good in Bitcoin, assuming the contra-factual that it were possible to buy such things with Bitcoin, hasn’t exactly been constant for 40 years.

md_9• 5 years ago

I’m always a bit surprised when people seem to imply that there’s a fundamental human right to perfectly stable stores of value (if you could even define such a quality), and that the absence of that—inflation, price fluctuation, etc—is somehow unfair.

Gold bugs like to say that “value” is what gold is worth, but if you look at the real value of gold over time—in terms of its ability to be exchanged for things that you might, you know, want—it’s anything but: https://www.macrotrends.net/1333/historical-gold-prices-100-.... Over a number of multi-decade ranges in the last century, a purchase of gold at the start of the period would leave the buyer the poorer at the end of it.

In reality, there just isn’t such a thing as a single “real” definition of “value.” Prices—of commodities, of securities, and, yes, of both fiat and cryptocurrencies fluctuate. A saver who wants to put money away to spend in the future must, unfortunately, make some sort of bet. (Even if such a magical instrument existed, savers who bought it would still be making a bet that the opportunity cost of avoiding growth investments does not outweigh the value of stability!)

Keeping all your savings in crypto—or in fiat, or in gold, or in your employer’s stock—isn’t a fantastic idea. But that’s not because someone is scamming you; it’s because there just isn’t such a thing as “the one true value”, and no asset that allows you to safely track it. That’s life.

twelve402• 5 years ago

Inflation is not some unfortunate built-in side effect of fiat but a deliberate policy choice by specific organizations and people. Why would they all of a sudden give up those policies and embrace the crypto-land?

throw0101a3• 5 years ago

2% annual inflation over a 40 year career amounts to 40% less earnings. Inflation is theft. Bitcoin fixes this.

Try living with deflation. To paraphrase Churchill: an inflationary regime is the worst monetary system, except for all the others that have been tried.

Bitcoin is honest sound money with a fixed inflation policy forever that cannot be manipulated by any central actors.

Not being able to manipulate the money system is bad thing, as the Great Depression showed. Bitcoin is basically a digital form of gold, which was moved away from for good reasons:

* https://www.theatlantic.com/business/archive/2012/08/why-the...

* https://archive.md/FWKcL

ufo• 5 years ago

For me, one of the saddest things about the El-Salvador Bitcoin saga is seeing people here turn a blind eye to Bukele's power grabbing, because he plays into the narrative of their crypto greed.

GracefullyBlind3• 5 years ago

I love this sentence. Might steal it. Thanks

sebow• 5 years ago

I don't think bitcoin "Failed" necessarily there.People should keep the distinction between "politican" promises of hype.In the case of political talk+ crypto talk, the hype is squared and one should take the square root to take a wild guess of where things will probably be.

And i'm no fan of bitcoin by any stretch, but what exactly is the problem?Still better than hyping up and industry and then becoming broke, like venezuela; though i recognize that particular example(which is relevant given the geopolitics here) triggers many.I've personally heard a lot of common people(think shop owners) that at least think this move was a good idea.

thepasswordis• 5 years ago

This article is weird. It doesn’t seem to explain why bitcoin “failed”, just seems to suggest that El Salvador is not yet an economic paradise after 8 months.

I like what this guy is doing. Sure it could fail. But obviously the SOP has already failed. Good for him and good for the people of El Salvador.

lalaland11254• 5 years ago

From the article:

More than 91 percent of Salvadorans want dollars, not bitcoins. The official Chivo payment system was unreliable at launch in September—the kiss of death for a new system. Users joined for the $30 signup bonus, spent it or cashed it out, then didn’t use Chivo again.

nkuttler• 5 years ago

9% of the population of an entire country wanting bitcoin sounds like a decent win to me. It's not clear to me where that optimistic number comes from though.

xiphias24• 5 years ago

9% adoption rate in 2 months for something optional is amazing. It takes time for people to learn to use it, as it's very different from the traditional banking system.

emteycz• 5 years ago

Lol it has just started, like Bitcoin itself.

temp8964• 5 years ago

The official Chivo payment system was unreliable at launch in September—the kiss of death for a new system. Users joined for the $30 signup bonus, spent it or cashed it out, then didn’t use Chivo again. The system completely failed to check new users’ photos, relying solely on their national identity card number and date of birth; massive identity fraud to steal signup bonuses ensued.

Is this Bitcoin's fault?

specialist• 5 years ago

I'm so glad cryptocurrency finally has a real world use case.

https://en.wikipedia.org/wiki/Wag_the_Dog

https://en.wikipedia.org/wiki/Nayib_Bukele

I applaud Pres Bukele's ingenuity. Lacking the resources for any military adventures, or illicit cash (narco, petro) to fund terrorism, or a readily available ethnic minority to persecute (pogroms), Bukele cleverly seized and weaponized some fancy jargon.

Huh. I wonder if Bukele's next gig will be on Sand Hill Road. He's gotta do something with his pilfered wealth. There are worse options.

politician• 5 years ago

The El Salvadorian experiment is most likely on the receiving end of the same strategy used by the West to counter Chile’s Cybersyn project.

TLDR: Chile attempts to escape economic slavery from the US, is subjected to manufactured dissent and ultimately overthrown by a military coup that is funded by and supports the West. 100,000 die from Pinochet’s subsequent war crimes.

https://en.m.wikipedia.org/wiki/Project_Cybersyn

jkhdigital3• 5 years ago

I’d love to see El Salvador successfully leave the USD plantation, but there are far too many hucksters and opportunists lurking in their orbit to have any confidence that they’ll make it. Case in point: choosing a Bitfinex-affiliated underwriter for the volcano bonds is either astonishingly poor judgment or willful ignorance.

el-salvador9• 5 years ago

That would be very hard for El Salvador. The number one import and export partner is the U.S.

https://wits.worldbank.org/CountrySnapshot/en/SLV

motohagiography5• 5 years ago

These are interesting ideas. I like the idea that coin mining's so-called waste of electricity is creating demand for geothermal energy plants that wasn't there previously.

There is an argument to be made that the reason we don't have pervasive green energy is that a) we don't need (demand) enough of power to force investment in renewables, and b) energy prices are too low to drive green tech innovation in the sector. These two points are essentially the same argument, but nobody is building geothermal plants on volcanos in El Salvador to run smelters, so you need real demand to make those plants happen. Cryptocurrencies create demand for cost efficient power generation that just wasn't there before.

Environmentalists should be happy about the increased demand for electricity instead of complaining about its carbon and climate effects, as the only thing that is going to drive the real technological change and the innovation required to reduce carbon is demand for existing resources at higher levels and prices.

Cryptocurrencies are a big part of solving the environmental problems activists identify. People for whom climate is really just a proxy for arbitrary narrative and for progress toward total centralization probably aren't happy about having the problem they're leveraging solved, but making geothermal and renewables viable by connecting their production directly to infinite demand from the velocity of money itself is how we can drive technology changes that shift us to renewables in a single lifetime.

Necessity is the mother of invention, and if I had to bet on people responding to a crisis narrative vs. having clear incentives to innovate on renewables, I would bet huge on the latter.

acdha4• 5 years ago

Cryptocurrencies are a big part of solving the environmental problems activists identify

No, they’re not and it’s shameful to try to promote proof-of-waste under the guise of environmentalism rather than just acknowledging that you are trying to find buyers.

There’s no shortage of useful applications for green power. Having constant competition to waste that power has incentivized keeping dirty power online and delays conversion by keeping the prices artificially high. Cryptocurrency mining operations can move quickly so they’ll soak up the cheapest green power which might otherwise encourage industrial users to relocate or accelerate personal electrification by people in the area.

Since cryptocurrency expensively doesn’t solve any real problems, that’s pure waste and obstruction at a time we cannot afford it.

motohagiography5• 5 years ago

You can't afford not to. The only way we reduce our impact on the planet is by managing its resources effectively, and genuine incentives that drive that efficiency are the only way to achieve that. Poverty is what you get when you don't value what you have, and it's practically the definition of inefficient use of resources.

Making geothermal plants economical by leveraging demand from crypto mining that scales directly in real time to respond to real economic transactions is probably the most elegant and efficient economic system ever conceived of.

The challenge with energy is economic transmission and storage, but by tying currency to it, you don't store or transmit energy, you store and transmit demand for energy in the currency, and this facilitates efficient economic energy production on demand at the time of a transaction for any business conducted in it.

If the ideas in these comments are indeed new, someone should inform the Nobel committee. I don't think they are, but a geothermal energy currency solves a lot of problems.

md_9• 5 years ago

Hmm. By this logic, aren't power-efficient appliances a bad thing because they reduce demand for energy and thus reduce incentives to generate greener power?

It's not clear to me that this is how supply and demand work. While increasing demand may increase investment in new capacity, it also should drive up the price of electricity. And since in some markets renewables are cheaper than carbon sources, one would expect that increasing the price per KWH will increase the production of the costlier, more polluting carbon sources.

More speculatively, due to the high volatility of cryptocurrency, I'm skeptical that major power infrastructure investments would be driven by the (presumably) extremely elastic demand of cryptocurrency mining. If I'm investing in energy infra, I'm going to invest in markets of increased consumer and industrial demand, which have fairly inelastic demand curves. Investing more to supply electricity to Bitcoin miners requires me to effectively take a bet on the future price of Bitcoin.

I think there is a solid argument that cryptocurrency mining provides high demand for excess capacity, and thus might provide a sort of credible floor for infrastructure investment returns, but that only makes sense if traditional demand are unreliable.

motohagiography5• 5 years ago

I'm saying that power-efficient appliances were an innovation that responded to high energy prices, and with the reduced rate of growth in energy demand has come reduced innovation, which has had the effect of enabling the economics of dirty and inefficient energy generation.

Energy production plants aren't public infrastructure, they're productive capital that has been mismanaged as infrastructure for the last 100 years. When you build a geothermal plant to mine coins, you are making it economically viable at every price, and you can collect or divert surplus electricity to use it to power a city. Governments could even compel power generators mining coins to send a percentage of their electricity usage into the grid as a "tax." I'm suddenly optimistic about this.

nicbou3• 5 years ago

That's a very interesting variation of the broken window fallacy

doopy1• 5 years ago

"Let's critique Bitcoin instead of El Salvador's insane dictator."

jononomo4• 5 years ago

A few million men and a few dozen women really really REALLY think bitcoin is Jesus Christ. I think it will be another twenty years before this whole thing blows over just because these dudes are so pot-committed and need religion, basically.

Bitcoin Failed in El Salvador. The President Says the Answer Is More Bitcoin

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