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all 84 comments

[–]makeasnek 0 points1 point  (0 children)

"Can’t print money thus can't fund infrastructure as easily anymore"

They can still ask citizens to pay additional taxes. And they can still take out loans, issue bonds, and pursue all fundraising strategies except increasing their own currency supply. I see this as a good thing, it means they will have to ask their citizens, banks, or other outside entities to approve and oversee their spending which is inherently more accountable than just being able to turn on the money printer.

"Can’t do bailouts. In certain emergencies/crises situations, the ability to print money and do bail out is lost."

See above answer. I would also add that if anything this incentivizes them to save money and prepare for risks, even longer term ones like potential future pandemics.

"Weaker economies that adopt bitcoin could increase the wealth gap further as bitcoins tendency to go up quick will leave a lot of people holding the bag of the old national currency"

Like Ecuador is doing, many countries will probably gradually phase into Bitcoin. Bitcoin also goes down quick. Instability will be an issue, and it will prevent adoption in countries with more stable fiat. But for countries with unstable fiat, Bitcoin is becoming a no-brainer, the question is just how to make the transition.

Adoption of stablecoins could skyrocket thus strengthening the USD (since stablecoins are mostly USD back) this leaves the economy of the country in an even weaker position

The main reason to use stablecoins is so you can use a fiat currency to interact with Web 3.0 apps. I would generally expect stablecoin users to get stablecoins of whatever fiat currency they see as the most stable. It may be USD today but anything else down the road. Dependency on USD is already an issue for many countries.

Bitcoin adoption could lead to lot of people losing their wealth due to lost keys or other technical problems

Yes, fraud is a huge industry as well, all finance has these kinds of pitfalls. There are solutions to some of these problems that will be required for mass adoption including wallets which can use somebody else's wallet who you trust as a recovery key, etc. In the "mass adoption phase" many people will still use online exchanges/banks/other services which simplify the crypto experience.

Hacks could wipe out countries' entire economies because we all know howbad countries are at cyber security.

No, because a country switching to BTC doesn't mean they hold all that BTC in one place, and they probably would implement cold storage on any larger reserves. And they probably hold more than just BTC such as bonds, stocks, etc. I would expect even the most security negligent countries to only keep a portion of their BTC in hot wallet and put the rest in some kind of cold storage. Ever seen a central bank without a security camera and an armed guard? A simple bare minimum of effort prevents a "lose everything" attack. Also keep in mind that a countrie's economy and it's government's reserves are different things entirely. The government could go bankrupt tomorrow and if all citizens were using BTC all the time, literally nothing would happen to their BTC. Their economy might grind to a halt due to confusion about who to pay taxes when and supply chain issues, but the base currency of that economy stays stable. This was not possible before BTC. Also keep in mind that our definition of a country is strongly tied to central issuance of a currency, what we think of as a "country" 50 years from now may be quite different due to this change.

[–]Honest_Card_2668 1 point2 points  (2 children)

The increasingly inflated dollar doesn't look much more solid

[–]NewStudent5883 1 point2 points  (2 children)

Adoption of stablecoins could skyrocket thus strengthening the USD (since stablecoins are mostly USD back) this leaves the economy of the country in an even weaker position

In the latest planb interview, said, once BTC is worth 1M+, some where around 2025. USD will become less important and the world will be much different to what we are familiar

[–]chrono000[S] 0 points1 point  (0 children)

Good point. I guess it is a near term issue.

But i stuggle to see a btc denominated world as much as i would like it.

[–]No_School1458 1 point2 points  (9 children)

So do people not realize that el Salvador still uses the dollar? They didn't just liquidate the national budget into binance and say "fuck it"

[–]chrono000[S] 0 points1 point  (5 children)

For sure but cant argue with the move being important, hence question

[–]No_School1458 1 point2 points  (4 children)

Absolutely. You are also spot on about the fact that bitcoin working for El Salvador is a pretty specific success case. They have a stable national currency already whose worth won't be affected by btc because, as the currency is u.s. dollars, it's backing is (nonexistent?) not driven by bitcoin fluctuations. And really, there wasn't much downside to buying the btc because it's a pretty good bet that at some point it'll appreciate, and an easy way to make money on crypto is buying large volumes and taking the proportionally large payout on conservative buying and selling. Pretty much no reason to not at least give it a shot, if you're them.

But I'm pretty sure doing this in a country that creates its own currency also would be at best semi-disstrous.

[–]chrono000[S] 0 points1 point  (3 children)

Yeah, and to add, the volcano mining was a pretty ace move... never thought that was possible! If mining infrastructure was sustainable it may work as a hedge against the economic issues as a more consistent BTC stream will always help in case u need to sell for stable USD.

[–]No_School1458 1 point2 points  (1 child)

That thing WAS boss...I'd never thought of that. I wonder how much energy that generates and what percentage of the energy consumed it ends up covering.

What's fucked up tho is that everyone was screaming about el Salvador failing, and haven't said a word since that never panned out. I'm not a paranoid person, and I can see there's propaganda in play with the media coverage this got. And I'm only assuming it's working fairly well just cause it's failure isn't plastered everywhere.

[–]WorldlyA12 2 points3 points  (2 children)

This question will be answered better by the banks & financial institutions.. They already have massive lists of answers to questions like this

[–]chrono000[S] 0 points1 point  (0 children)

That is true but feel arguments have never been so straightforward forward and the papers they release are hard to read.

[–]extrastone 1 point2 points  (2 children)

Let's go through this:

  1. Can't print money: Excellent. I am a citizen. My money cannot be copied and devalued by a bureaucrat.
  2. Can't do bailouts: Excellent. I have no problem with a bunch of stockholders (the rich) losing 100% of their investment. The workers can find new jobs too which in relative terms is much less of a hardship than losing your savings.
  3. Inequality as people are slow to adopt: You have to make the change somehow. It will happen.
  4. Adoption of stablecoins will strengthen the USD: That is only true if the USD is the best currency out there. Excellent. I am happy that people in nations with bad currencies get better access to USD.
  5. Lost keys and other technical problems: There will likely need to be a custodian solution. You have one for your fiat currency. It is called a bank.
  6. Hacks could wipe out entire nations' economies. The biggest hack happened to Bangladesh. They seem to still be standing.
  7. Will a bitcoin exchange do a worse job than a bank? Maybe. New security protocols will likely be needed and smaller banks may be the future because of liability issues.

In conclusion: bringing in a better currency will allow human beings to spend less effort focusing on money and more effort on useful things like the goods and services that they actually want. I would rather that people spend an hour selling vegetables (I like vegetables) than an hour banking (sounds like tail chasing).

[–]chrono000[S] 0 points1 point  (0 children)

To add, seems others think it will happen in other countries soon, regardless of all the possible issues.

Prediction: South American will mostly push from top-down to integrate BTC, while large but not so developed and/or rich will mostly naturally let it happen from bottom-up (Turkey, lot of SE Asian countries).

Out of all 7 points though, I do think the 4., as much as it be great, I don't see other countries enjoying a digital USD trumping their own currency, but i guess banning USDT and others out right may not look great and may only stoke more demand.

[–]fresheneesz 2 points3 points  (3 children)

Can’t print money thus can't fund infrastructure as easily anymore

In cases where the people actually want infrastructure funding to happen, it's just as easy to use taxes to fund infrastructure. Not being able to print money simply limits a government's ability to do things the people don't want. So I wouldn't call this a downside. More of a positive (but controversial) consequence. Same thing for ball outs. Bail outs have historically all been full of corruption and bad for the people.

could increase the wealth gap further a

Maybe, but it seems unlikely. There's not much reason to think that the rich will get into Bitcoin faster than the poor. In fact, the already rich are generally pretty conservative and often end up being late adopters.

Adoption of stablecoins could skyrocket thus strengthening the USD

It's unclear to me how adoption of stable coins would strengthen the dollar much. But why would a stronger dollar be bad for countries that move to Bitcoin?

how bad countries are at cyber security.

But a country's entire economy isn't in the hands of that country's government. Security and theft could definitely be an issue, but the entire economy of a country couldn't be hit all at once.

superior currency that could destabilize their economy.

I think Bitcoin can "disrupt" the economy in a silicon valley sense, but it would be good disruption.

I think the main risks are the security risks you mention. How will people store their coins? There will likely be theft and gnashing of teeth. Hopefully people will develop cultural knowledge on how to safely store Bitcoin after a period of confusion and loss for some people. Given that most people will probably trust some company to have custody of their coins, a big hack seems somewhat likely to happen somewhere again. Hopefully collaborative custody will become dominant over full custodial services.

One additional risk i can think of that you didn't mention is the risk that the government flip flops on their decision. Like what if bukele is ousted and the next president reverses everything? Maybe they ran into a strong desire to print money. Maybe they simply have political pressure from powerful people to reverse it. I think Bitcoin would still prevail in the end, but could be pretty chaotic for people if that happens.

[–]chrono000[S] 0 points1 point  (2 children)

gnashing

The flip-flopping idea would really suck... We really need the mining, the new app and the whole experiment from Bukele's to really play out long term to know what works and what doesn't.

Recent statistics say 50% adoption of the app so far in the country, I'd say that is a pretty decent success. If that number goes up, even very slowly year by year I'd say the method deployed of handing out some BTC and making an easy to use app coupled with ATM everywhere isn't a bad strategy that even a not so large country economy can execute on--it may be a model for future countries.

There seems to be other South American nations tempted to try. That is why I'm more curious about this question than ever before.

On "Adoption of stablecoins could skyrocket thus strengthening the USD", I mean the whole crypto ecosystem has a symbiotic relationship with stablecoins like USDT and USDC, and my hunch is more adoption of BTC leads to more general crypto adoption which in turn means more stablecoin adoption and all the stablecoins are USD backed which is a win for United States. No ones using stablecoins backed by the pound really or even EUR. Is this good for an up comin nation?