El Salvador puts the digital money on par with the U.S. dollar for all public and private debts.

WSJ
Central banks around the world have been scrambling to co-opt digital currencies for their own purposes. El Salvador beat them all to the punch by passing a law that makes bitcoin legal tender for all debts public and private.

Through this law, El Salvador’s legislators essentially voted to begin the process of outsourcing the country’s monetary policy to a decentralized network of computers governed by a fixed set of rules. This is an important step toward a world where money is sound, not subject to the vagaries of politics.

Most proposed central-bank digital currencies would be tightly controlled by governments. These currencies would reinforce the status quo, not revolutionize monetary systems. That’s because the overwhelming majority of money in existence issued and controlled by central banks is already digital—only a small share of global money supply exists as paper money and coins. When most people talk about a digital coin issued by the Federal Reserve, they do not have in mind a rules-based, censorship-resistant money like bitcoin, but rather a mechanism for the Fed to control the money supply directly without private banks serving as intermediaries.

One huge concern about granting the Fed this much power is the distinct possibility of weaponizing the money supply. Certain parts of the country could be targeted with lower interest rates to spur economic growth selectively, creating opportunities for partisan conflict.

El Salvador, which doesn’t have its own currency, is avoiding this risk by making bitcoin legal tender alongside the U.S. dollar. The law provides that any economic actor technologically able to accept bitcoin is required to do so for payments of goods and services. It also permits bitcoin to be used to pay taxes and exempts bitcoin transactions themselves from capital-gains taxation.

To deal with bitcoin’s wild price fluctuations, the legislation establishes a free-floating exchange rate determined by the market. If someone immediately transfers his bitcoins to dollars when he receives them, then it shouldn’t matter how volatile the exchange rate is because he’ll always have the equivalent in dollars. Salvadorans are free to hold their savings in either currency; the legislation simply puts bitcoin on par with the U.S. dollar and doesn’t disadvantage the cryptocurrency with higher transaction costs.

There are distinct advantages to this dual-track system. In a recent National Bureau of Economic Research paper, David Yermack, Fahad Saleh and I use an economic model to show that the existence of private digital currencies not controlled by the state has important implications for countries in the emerging market. They discipline the government and encourage local investment. Throughout history, central banks have devalued their currencies or tried to maintain untenable exchange rates to the detriment of investors.

This isn’t the first step El Salvador has taken away from monetary uncertainty. In 2001 the country officially dollarized its economy. The colón was taken out of circulation and all prices, including taxes and wages, became denominated in U.S. dollars. Among other effects, this decision limited the discretion of the Central Reserve Bank of El Salvador to manage monetary policy, essentially outsourcing the function to the Fed.

El Salvador has the right idea here. In “The Denationalization of Money” (1976), F.A. Hayek questioned whether government control over the money supply was necessary and argued that competition in money had the same benefits as competition in goods and services. It disciplines economic actors and gives them incentives to serve consumers better—in this case by acting as a check on governments’ tendency to inflate and forcing innovation in payment systems.

Central banks want the benefits of digital currency, but they also want to control the system and not cede their monetary tools. This makes the concept of a central-bank digital currency inherently contradictory. Bitcoin was created to provide an alternative to a currency managed by the state.[/color]

Sound monetary policy isn’t a magic solution to a country’s every economic woe. El Salvador needs to embrace the rule of law, private property and limited government. But having faith in a sound currency is going to become more and more important as the inflationary costs of monetary stimulus become known.

Interesting but way past my understanding. BGZ, would you please comment/explain?

Oh I'm sure nothing can go awry from an unregulated internet currency being declared legal tender for all purchases in an underdeveloped, over-exploited third world country...

Prolly not much different than if their “government” regulated a currency.

El Salvador doesn't have its own legal tender currency, they've been using the U.S. dollar.
With Bidenflation on the rise, they probably figure they better switch out because getting poorer is not such a good idea.

Buy!!!

Diamond hands that sh*t.

Go full retard and be apeful.

I'm fully in agreement with F.A. Hayek. Gubments and their central banks having a monopoly on money, and especially fiat is a recipe for disaster.
Let the market decide, legalizing competitive currencies, whether crypto, gold & silver, or whatever is the solution to building trust in an economy. Money belongs to the people, not the dicktators.

Governments that produce their own Fiat currency will do everything within their power to stop this from happening around the world.

Cash ain't nothing but trash.

Nine

Translation...

BUY!!!

There is NO way in hell this ends well. Lose your private key and it's bye bye wallet if your hardware dies. Most people can't be bothered to write down passwords. The private key can be a 20 word passphrase or a randomly generated 30 character phrase... it can be anything. If you use an exchange the exchange owns the private key to the wallet. Not you. Exchanges have been hacked quite often. People have lost everything. Somewhere around half a billion dollars were lost in the top 5 hacks of Bitcoin. No insurance. Not backed by any government so no recourse. You're basically getting paid in a virtual stock that can be worth $10 one day and $10k the next or $0 the day after that. You think markets are manipulated now? Pump and dumps happen every single day and there is nothing anyone can do about it. If you do lose access to your wallet (happens all the time) the coins still exist they just can't ever be accessed, ever. But, they are still counted against new coins being created. The list of reasons crypto is a bad idea is long and distinguished...

so you are saying there is a chance.....

You hear that?...

Me either... pretty sure he said BUY!!!!

You really don't think there was a backdoor initially designed in just for your above mentioned reasons CB?

Yeah... a big green buy button guards it.

You know what time it is.

time to buy a new fence?

Man... too many people asking my opinion on the matter... Actually it might take a huge sh*t... might not be time to buy.

Disclaimer: I'm not a financial advisor... I'm just some dumb sh*t with a buy button.

Gonna get that put on some T-shirts. I'll make millions!

I got a million of 'em.

At one Bitcoin a piece, that's a sweet deal.🤑