The global financial institution said that bitcoin’s use as legal tender posed risks to El Salvador’s financial stability, integrity and consumer protection.
The executive board of the International Monetary Fund recommended that El Salvador discontinue the use of bitcoin as legal tender in in the country due to the financial risks and liabilities created.
- The recommendation came in a report issued on Tuesday following bilateral discussions with El Salvador about its economy.
- IMF directors “stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities,” according to the report.
- Directors also “urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.”
- El Salvador first adopted bitcoin as legal tender in Sept. 2021 and its president Nayib Bukele has become a vocal proponent of the cryptocurrency.
source: coin-desk
The news just dropped : the International Monetary Fund (IMF), just "urged" El Salvadorian authorities to fully drop Bitcoin as legal tender.
As written in this article, the higher-ups at the IMF told the small country that "there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities". The IMF is now witholding a $1.3 billion USD loan to exert pressure on the country.
First, I find this stance pretty rich coming from an institution notorious for hurting countries it claims to help.
But I also think the IMF is starting to realize that Bitcoin indeed have the potential to benefit the unbanked population of the world, and it's something they don't like.
Just think about it. About 70% of El Salvadorians don't even have access to a bank account. For them, Bitcoin is pretty much the only way to send and receive payment. Now, what has the IMF done for those people? Nothing. And the rise of cryptocurrencies is threatening their iron grip on finance, so they bully countries that are trying to help their population.
People everywhere in the world will soon realize that the economic game is rigged against them. Bitcoin, and cryptocurrencies in general, solves part of this problem. The IMF hates that, because it serves the elite, and that explain the news today.
I think in the long run, this effort will backfire. What do you think?
Crypto bro CEO and president of El Salvador, Nayib Bukele has replied to IMF's calls for El Salvador to remove Bitcoin as legal tender.
https://nitter.net/nayibbukele/status/1486162932224479235
The IMF report mentioned some concerns over "the risks associated with issuing bitcoin-backed bonds", referring to the president's plan to raise $1 billion via a Bitcoin Bond. The report also highlighted the added risk posed to the consumers as a result of the price volatility of BTC.
Ironically, Bukele has been trying to secure a $1.3 Billion loan from IMF since early 2021. However, that deal is most likely off the table now.
Is Bukele taking too many liberties with the safety of his citizens and this brash response to the IMF? Either way, he is standing behind his decision to go forward with BTC as legal tender.
Link: http://jolt.law.harvard.edu/articles/pdf/v10/10HarvJLTech321.pdf
Excerpts:
"E-cash systems have proven successful because they provide for nearly instantaneous, inexpensive, on-line transactions of any size."
"...existing schemes, under which private banks issue their own e-cash, are sub-optimal..."
"...the solution of choice for securing of Internet messages is RSA encryption. The genius of RSA encryption is its use of two keys: the user has a single public key that is "published for all to see" and a second private key calculated "from certain arithmetic facts - the facts [the user] keeps to himself - about the published encoding key."
"...public keys must be readily available to all users in a public key "telephone book"..."
"Law-enforcement agencies fear that widespread use of truly anonymous transactions could greatly hamper [...] investigations"
"All the same, privacy is a fundamental value in our society."
"The standard for government access to financial information is quite low. Instead of requiring probable cause, as for physical searches, the government must merely be involved in a "lawful investigation". This standard may not adequately protect the financial information of e-cash users."
"E-cash is the best means for purchasing on-line information efficiently and conveniently."
This is a post about the cryptocurrency situation in El Salvador. I am posting this again because the previous one was removed by a bot. It is not about price, it should not be marked as such.
Twitter post as proof of living in El Salvador: https://nitter.net/samsungsv19/status/1446177713413308428#
A month ago, Bitcoin became another Salvadoran currency. I understand that my previous posts looked like complete FUD, but that's not my intention. I wanted to share how all of this affected Salvadorans, specially for those who barely have money to get a "decent" mobile device.
Adoption is going pretty bad, specially because of identity theft. There have been hundreds of reports about people using the Chivo Wallet to steal money. The government is being quiet about it, and no one is offering a solution to the problem:
>https://diario.elmundo.sv/denuncian-robo-de-datos-personales-para-uso-no-autorizado-de-chequera-chivo/
That is not a case of phishing or people authorizing full access to the Chivo Wallet, this is way worst. The Chivo Wallet "has facial recognition", or so they said however it is just storing a picture, any picture. There is no validation whatsoever, and because of that people are no longer using/trusting Bitcoin:
>https://imgur.com/a/7vRTft8
And yes, I know you are going to say that this does not have anything to do with Bitcoin, but you gotta understand the Salvadoran culture: Once something fails, everything associated to it becomes bad. It doesn't make sense, I know, but that's how things really are here, and it is affecting adoption.
Businesses are reporting low adoption. 93.1% of small/medium business are reporting ZERO Cryptocurrency transactions. The free bitcoin bonus was either converted to FIAT or spent in groceries, after that usage crashed.
What about the protests? Did people finally accept the Bitcoin Law passed by the Salvadoran congress?
Not quite.
There were two protests:
-
September 15th
-
September 30th
Both protests were massive, huge turnout. People are angry, and mad. Salvadorans do not want The Bitcoin Law:
September 30th Protest against the Bitcoin Law
>https://imgur.com/gallery/izClFXl
A protestor in front of Congress throwing spaguetti. The government has been giving people bags of spaghetti and tuna for months.
>https://imgur.com/gallery/vcSpiOw
More photos of the protests:
>https://imgur.com/gallery/oTBmKXL
>https://imgur.com/gallery/Yflx5gi
>http://imgur.com/gallery/N
... keep reading on reddit ➡
I live in El Salvador, proof of here:
https://imgur.com/gallery/SmC1o9c (banana and mango for scale)
So, what's going on right now in El Salvador? How did we get here?
Since Nayib Bukele announced that Bitcoin will become legal tender in El Salvador, you guys preferred profits over people. Why? Well, Nayib Bukele used his popularity to trick everyone he is a "cool guy", willing to sacrify himself in the name of the people. But, yeah he is just a Trump-wannabe that uses people's ignorance to stay popular. For example, he is blaming George Soros for pretty much eveything:
https://imgur.com/gallery/XGD0o9P
Yeah, everything: https://imgur.com/gallery/yRqyZV1
From accusing Human Rights Watch director ob being financed by George Soros: https://imgur.com/gallery/IyXFeBh
To accuse journalists of being paid by Soros:
https://imgur.com/gallery/1CscRa4
https://imgur.com/gallery/JXUDigc
And even accusing congressmen/congresswomen of being financed by Soros because they supported the Engel List (A list of corrupt politicians in Central America)
https://imgur.com/gallery/XGD0o9P
Bonus track: Nayib Bukele even tried to interfere in a local US election, by asking people not to vote for a Congresswoman:
https://imgur.com/gallery/A9ytFTB
You did it reddit, you are supporting a President who is using the same ultra right-wing tactics that Trump used.
Now, what's going on right now in El Salvador?
Darkness. No really, we are being left on the dark. The Parliament approved the Bitcoin Law in LESS than six hours, and it was done very late at night:
https://diarioelsalvador.com/asamblea-cerca-de-aprobar-el-bitcoin-como-moneda-de-curso-legal/90324/
Some of our congressmen didn't even know what they were voting for, for real:
https://www.elsalvador.com/noticias/nacional/diputado-reynaldo-cardoza-no-entiende-bitcoin-apoyo-salvadorenos/871633/2021/
However, passing the law wasn't enough, since our country is still recovering from the effects of the pandemic. How is the government funding the Bitcoin Law? By reducing the education, and health budget and using that money to built the Bitcoin infraestructure:
https://www.laprensagrafica.com/elsalvador/Restan-fondos-a-Salud-Educacion-y-asignan-a-Ley-Bitcoin-20210830-0081.html
(BTW I thought you guys were against reducing education budgets)
How is that money being used? We don't know. All of the information regarding the construction of Chivo ATMs, purchasing Chivo ATMs, purchasing Bitcoins, and the USD $30 bo
... keep reading on reddit ➡Many kings and monarchs even considered it a threat to their economy (kinda like how current governments consider crypto a threat).
The fact is, revolutionary ideas will ALWAYS face objection and protest. But eventually, if these ideas are more efficient and make life easier for the populous, they’ll win out.
I’m positive that (if we keep up this pace) we’ll eventually reach mainstream adoption at some point even if takes time.
If anything we’re already seeing some wallets like Binance and Coinbade release crypto credit cards and others like CoinOvy working on replacing things like ApplyPay with crypto-fiat bridging.
This will offer crypto more exposure in the mainstream market and will make the transition later on much smoother.
Why doesn't countries like Iran, N Korea, Venezuela etc adopt btc as legal tender? Surely it would put them in a better situation than they are in now. Also do you think the American government and allies would do everything it could to trash btc if they did adopt btc
I am convinced that having low time preference, if scaled, can lead to a new Renaissance, because both individuals and institutions would employ their resources in the most efficient way possible to favour their long-term goals
Having a hard money is a deal breaker in having a society with low time preference, since all economic decisions are taken with the implicit consideration of time-value of money
So, even though what El Salvador has done is already incredible and it’s a good pilot project to test how this plays out, I believe they are still halfway through, and cannot reach the full potential that having a hard money that is not government-owned can have on its people. Basically because people can still decide to use fiat for their daily lives, for their business, etc.
Do you think it is realistic that a country adopts Bitcoin as sole legal tender?
I believe it would be a huge political fight to get this through, so let me put it differently: what would need to happen, for a country to adopt Bitcoin as sole legal tender?
For the sake of the post, it’d be the same if the country was to adopt a real gold standard, I just want to assess how difficult in the current Keynesian world would be to come back to hard money
As the title states, I'm planning to write my thesis on the possibility of cryptocurrency being accepted as a legal tender in the future and the benefits associated therewith. I will, however, also discuss the reasons that reserve banks currently don't/don't want to accept cryptocurrency as a form of legal tender.
The purpose of this post is to request that if any of you know of any credible articles/written pieces regarding this topic that you would please assist me in my research. Apologies for any grammar errors, English is my second language.
