A Week of Failing to Pay with Bitcoin in El Salvador

https://reason.com/2024/10/31/a-week-of-failing-to-pay-with-bitcoin-in-el-salvador/

by fortran77 • 2 years ago

58 75 2 years ago

npoc7• 2 years ago

The fact is that bitcoin's current primary use-case is long term store of value. To use bitcoin is to simply hold it for years, protecting yourself from the dilution of value that occurs in any other liquid asset in the world, of which fiat currencies are the worst. Once you stop looking at the world through the fiat lens, things make far more sense. For example, house prices are currently the lowest they've been in 40 years, if you use gold as your unit of account.

mcmcmc3• 2 years ago

Illicit trade and money laundering are the only real use cases for crypto. Full stop.

PCalvanelli• 2 years ago

Cash is primarily used for illegal transactions, tax evasion, and illicit activities. There’s little legitimate reason for people to use it.

Shosty1233• 2 years ago

If you know a way to pay someone across the world in seconds for cents in transaction fees, I’m open for alternatives.

bwestergard• 2 years ago

"house prices are currently the lowest they've been in 40 years, if you use gold as your unit of account."

Houses prices are also very low compared to 40 years ago if you use Grade A Eggs as your unit of account. So what?

Bitcoin seems like a pretty bad store of value because it's more volatile than most index funds.

vdvsvwvwvwvwv4• 2 years ago

Bitcoin is a bad store of value because there is no value.

If you look at Bitcoin as in game tokens, but one where tokens are given away to people who prove they have burned cash, you see it is a negative sum system.

Even Gold as store of value is questionable. It is a commodity. But we are entering naked empiror territory and I will avoid that hill.

Back to Bitcoin: it is basically a bet on mass adoption. If that mass adoption doesn't happen it is a ponzi. If it does the price should stabilize, even then not sure if it is a store of value.

Disclaimer. I actually own some.

scotty797• 2 years ago

So what?

So a dollar is a terrible long term unit of account. So if your salary, as your career progresses doesn't raise at least as much as price of gold (or grade A eggs or whatever) you are getting shafted by the economy.

I'm sure there are some other insights you can draw from simple observation of gold and housing prices.

MuffinFlavored• 2 years ago

I think a lot of people are waiting for this BTC fad to be over, its current round of manipulation to run dry, and for it to fall to obscurity.

wwwlouishinofun• 2 years ago

The biggest problem with this statement is that you forget the rental income. In fact, I think the real "house price" should include the annual rent. This part represents your usage fee

henning• 2 years ago

Considering how Bitcoin's price has been manipulated in the past and how concentrated it is in the hands of a small cabal of whales and miners, this is total bullshit.

p1necone2• 2 years ago

speculation is the primary use case. Nobody is using their Bitcoin wallet like a regular bank, they're using it like an extremely volatile share portfolio hoping it keeps going up.

npoc7• 2 years ago

This is meaningless. You are using a bank speculating that it will not suffer a bail-in/bail-out/hyperinflation.

nkrisc• 2 years ago

I suspect my offer of several pounds of gold will likely need to exceed competing cash offers by a significant degree to be accepted by the seller of the house I’m trying to buy.

carlosjobim• 2 years ago

It's not any different than having your savings in a more reliable foreign currency: you can quickly exchange it to local currency without any such premium. The same for gold or Bitcoin. Any El Salvadorian saving up for a house would be wiser to save in gold or bitcoin, than local fiat.

TaurenHunter• 2 years ago

See Gresham's Law: https://en.wikipedia.org/wiki/Gresham%27s_law

larrysalibra• 2 years ago

This was in line with my experience in El Salvador in June of this year as well…if you don’t specifically seek out a business because you already know it accepts bitcoin, it’s not going to take Bitcoin.

Of the businesses in El Salvador marked on a map as supposedly accepting bitcoin (in bitcoin hotpots like Bitcoin beach), ~1/3 wouldn’t actually accept it for some reason or another.

That said, Bitcoin acceptance in El Salvador was still much better than I expected (perhaps my expectations were too low).

With a bit of planning, patience and persistence it is possible to have an entire trip in El Salvador using only Bitcoin

seltzered_• 2 years ago

" Yet my trip to El Salvador revealed a gap between the promise and the reality. At restaurants, hotels, and shops, my attempts to pay with bitcoin were met with confusion or outright rejection. Despite a 2021 law requiring businesses to accept bitcoin, every establishment I visited turned it down."

There were protests around this back in 2022. See https://moneyontheleft.org/2022/07/16/bitcoin-in-el-salvador...

patrickhogan12• 2 years ago

It’s smart for El Salvador to hold bitcoin. It scares the IMF into handing them concessions and it acts as a great store of value in the meantime.

cj2• 2 years ago

With its price volatility, Bitcoin is a terrible store of value. (It's a speculative investment, not a store of value)

It has nearly doubled in the past year. Which is great if you're holding it as a speculative asset. Not great if you simply want a stable price "store of value"

Edit: Feel free to downvote or disagree, although if so I'm curious what your definition of "store of value" is and how price volatility factors in if at all.

TacticalCoder• 2 years ago

Depends for who. There are hundreds of millions of people living in countries where their currencies is way more "volatile" than Bitcoin. Like Turkey and Venezuela these last years, for example.

I put "volatile" between quotes because it's only ever volatile one way: inflating into irrelevancy.

To me it's simple and all that is needed to go is to look at the message Satoshi put in the genesis Bitcoin block:

    "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

This makes it clear Bitcoin is first and foremost a political statement.

It's a giant middle finger to governments that do always manage, one way or another, to ever print more money and to grow their public debt ever bigger.

That Bitcoin managed to get in this month of October both the FED and the ECB to synchronize publications saying it's time to think about banning Bitcoin shows Satoshi's middle finger worked.

patrickhogan12• 2 years ago

I know this forum doesn’t like bitcoin. But the reality is for El Salvador if you step into their shoes it is a smart political move to hold some of their currency in bitcoin.

1. It promotes El Salvador innovation and is free publicity.

2. Documented that between when El Salvador bought bitcoin and today bitcoin appreciated more than the dollar.

3. El Salvador had to replace its currency less than 25 years ago because it collapsed.

4. The IMF is clearly including bitcoin into its talks with El Salvador https://www.reuters.com/technology/imf-says-bitcoin-remains-...

catlikesshrimp2• 2 years ago

It has to be noticed that technological implementations in Central America are very poor. I don't mean cheap - inexpensive. I mean terribly executed.

There is usually an "international company" selling the "core technology" at a very inflated price, then there is the required middleman who is THE friend of the government and is in practice the one anointing the "tech company", and finally a government which has No Idea what problem they want to solve.

Remember since launch Chivo had high downtime, bugs and even easy system abuse like stealing people's entry bonuses. And the local Chivo network was an already more reliable than its integration with bitcoin.

The main feature for the target population was to streamline receiving money from their relatives who worked abroad.

fijiaarone• 2 years ago

I believe everything the media tells me.

So I'm going to dismiss this "anecdote" because the plural of reality is not data.

senectus1• 2 years ago

one of the promises of bitcoin was lower to no fees.

The few transactions I've used BTC for have had some hefty transaction fees.. and order of magnitude higher than CC/EFTPOS etc and yes I tend to choose the slowest transaction speed to lower the costs.

For online service.. a $80 purchase costs at least $2.00

For a online purchase for computer hardware I paid over $45 for a $2k purchase.

BTC fails hard in the real world as far as I'm concerned. The little I have left from mining while the sun was up, I'll use for just silly purchases online.

hackernudes• 2 years ago

How about the second layer lightning network? There are trade-offs but fees are low and payments are much more anonymous.

janalsncm• 2 years ago

If we’re going to centralize transactions why not just use Visa? Instantaneous, fairly low transaction fees, non-public. It’s also reversible and doesn't have a fluctuating exchange rate with local currency.

Yizahi• 2 years ago

The tradeoff is centralization. Basically you now have the worst parts of tokens and money combined together with none of the benefits. Using Lightning is like using an unregulated and uninsured private bank. BTC at least have some semblance of decentralization, unlike Lightning IOUs.

Another issue is that it takes millenias to even onboard every adult to the L2, because every such transaction needs to be done on L1. So ti will take between 15 to 20 years just to onboard everyone on L2 without even doing any other transaction. Same 15 to 20 years to move back to L1 if needed.

Next issue is idiotic architecture of Lighting. It requires people to open a bidirectional tunnel from their L2 wallet to every single peer they will transact with and and lock inside the channel the amount of tokens in excess of all transactions with this peer. You want to buy a coffee - go open a tunnel with a cafe and lock 5$ in it until transaction is completed. You want to buy 50$/m subscription? Open 600/1200/1800$ tunnel to the provider in advance, or open a tunnel for every transaction. And every tunnel creation and every destruction is an L1 transaction, which is limited to 5-6 tps for the whole world.

Then L2 need to solve NP=hard problem for every transaction, and the difficulty will scale exponentially with the number channels.

All this, plus atrocious technical implementation, where a lot of transactions just fail due to bugs and instability leads to the worst monetary system I have ever heard about.

lolinder2• 2 years ago

To be fair, $2/$80 is 2.5%, which is on par with the fees a lot of places in the US charge for using cards. $45/$2k is even lower.

what• 2 years ago

Merchant pays the fees though.

npoc7• 2 years ago

What you're missing is that it costs the same $2.00 to transfer $1T-worth of bitcoin. Try that with anything else that offers final settlement.

The base Bitcoin layer/network is optimised for storing large amounts of value for long periods of time.

The price doesn't care if you're using it to buy a $5 coffee. It cares that businesses and countries use it as their reserve asset.

davidgerard• 2 years ago

you and I make $1T transactions daily, it's true

A Week of Failing to Pay with Bitcoin in El Salvador

Related Stories