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Comment by yuan43 | Hacker News Reader

The policy only ever made a little sense. What El Salvador desperately wants is a currency it can inflate to pay for the stuff it can not afford. In this regard, it is no different than any other country.

What it had was a currency it does not print (US dollar) and for which there is an ongoing international shortage.

What El Salvador got with Bitcoin was yet another currency it does not print and for which there is currently an international surplus.

The thing the article does not mention, and the only reason the policy made any sense, is that ~50% of Salvadorans live abroad. So there is a substantial remittance market in El Salvador relative to GDP. Allowing remittances to flow through bitcoin cuts out companies like Western Union who scoop from the top.

Even so, this scheme only makes a little sense. A better approach might have been for the government to have set up a USD-based remittance program of its own.

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> Even so, this scheme only makes a little sense. A better approach might have been for the government to have set up a USD-based remittance program of its own.

This is just not true. Crypto as foreign remittance has been proven and is working quite well in Argentina.

What you really don't want as a layperson in Latin America, is for really any third party -- but especially government third parties, to have control of your money in any capacity during remittance.

you also, however, don't want your government to utterly collapse

True, but that’s a completely separate concern. Frankly that’s likely going to happen anyway. El Salvadorians suddenly trusting the government with large amounts of their cash isn’t going to make that government any more fiscally competent. Better not to go down with them.

It's not a separate concern if you're arguing the government should not be able to print its own currency.

I didn’t say any such thing and I don’t see how that’s relevant as remittances from the US are generally in Dollars, not local currency.

Sure, whatever. I didn't mean you specifically. My point is merely that crypto enthusiasts and radical individiaulists often praise the concept of the government not being able to inflate their money with printing. Which, yeah, has downsides. But there's also downsides to your government going broke. Like your society falling apart, which increases the cost of local goods, and then bam, suddenly you've got inflation anyway even if the value of the coin remains the same on an FX level.

That's a depressing statement about Argentina and Bitcoin. I would be much more interested if Bitcoin were useful for legal transactions in countries with stable currencies and banking.

Bitcoin enthusiasts can be so anti-government that they seem to think ever government will turn into a basket case like Argentina. Perhaps every government gets into trouble eventually. But you could wait a couple lifetimes for it in some countries.

Ok, but it hasn't been so long since presidents in El Salvador were siphoning public funds. https://en.wikipedia.org/wiki/History_of_El_Salvador#Corrupt...

Bitcoin as currency-of-last-resort makes quite some sense to me. More than any other usage for Bitcoin I've seen people selling, anyway.

> > Even so, this scheme only makes a little sense. A better approach might have been for the government to have set up a USD-based remittance program of its own.

I agree with that. For example linking the U.S. banking system via ACH/Fedglobal with the El Salvador one as Panama and Mexico have done to bring down transactions costs.

https://www.frbservices.org/financial-services/ach/fedglobal

> This is just not true. Crypto as foreign remittance has been proven and is working quite well in Argentina.

But El Salvador is not Argentina though. El Salvador had never been affected by unstable currencies or unfavorable exchange rates set by their governments.

Bitcoin on the other hand, has been the first experience for Salvadorans, of having a currency that loses 50% of its value.

I'm just judging from their accents in Youtube videos, but part of the Salvadoran bitcoin wallet developers were from South American countries, so it seems to me that they were trying to solve a problem that existed in their countries, but not in El Salvador.

> But El Salvador is not Argentina though. El Salvador had never been affected by unstable currencies or unfavorable exchange rates set by their governments.

You're conflating two things. Inflation has little do with how well a remittance system functions. You wouldn't say that Western Union's system functions better or worse because of the currency it is denominated in.

> so it seems to me that they were trying to solve a problem that existed in their countries, but not in El Salvador.

While not inflation, El Salvador doesn't have a great history of fiduciary responsibility either. [1] 1 - https://en.wikipedia.org/wiki/History_of_El_Salvador#Corrupt...

> Western Union's system functions better or worse because of the currency it is denominated in.

When funds are sent on the same currency there is no exchange rate markup on the Western Union transaction, so it's cheaper.

> El Salvador doesn't have a great history of fiduciary responsibility either.

The judicial system was able to sentence former ex-president. In Saca's case all his assets and companies were seized by the National Commission of Property Administration. Unfortunately Funes was able to leave before being sentenced, and obtained nationality in another country to prevent extradition.

Not really. Argentina is explicitly all about using crypto to get access to US Dollars. And they're all going through intermediaries, some who don't even control their own wallets and are just using available crypto exchanges. So that's a lot of 3rd parties, just not the Argentinian government.

https://www.freethink.com/technology/crypto-argentina-black-...

> Argentina is explicitly all about using crypto to get access to US Dollars.

Kind of. It is very complex and I could write an essay, but to put it short, if you receive let's say a SWIFT transfer in USD, EUR, whatever, it will be forcibly converted to ARS (local currency) at an unfair rate: if you tried to buy back USD with the ARS you received, you could only get half of the original amount. It's almost like a 50% tax on any international wire.

Anyway people use crypto for much more than bypassing that. Some are interested in holding crypto, some are interested in holding stable coins, some to arbitrage, and so on. To be clear crypto is not used in day to day transactions (buying coffee) in any shape or form.

> And they're all going through intermediaries

I'm not sure what you mean by this? People here use both Binance/CeXes and hardware wallets the same way it's used in any other country. And unlike other countries, here (because there was already a massive black market for physical US bills) you can very easily trade face to face relatively large amounts (1k-100k USD) of US bills for USDT/USDC. Which is cool because it's the true decentralized way to on-ramp/off-ramp crypto.

Not daily, but since crypto (mostly stables) is a much safer value storage than the local currency, I've seen plenty of people selling say USDT for ARS once or twice a month and living off of that. In major cities you can likely find someone willing to buy in every neighborhood.

The fiscal aspect of it is just magical though. Everyone and their cousin either becomes an expert in tax law, or blatantly and unknowingly breaks it every day with no major consequences. So many, many, many people live outside the law that enforcing it equally would mean instant violent riots and protests.

If you have a choice, it's great to be a country that has a currency that the country itself can print (reserve currency).

Second best is a currency that no country can print.

Third best is a currency that another country prints (since that country can easily devalue your holdings).

Is sending Bitcoin really any cheaper than using something like Western Union? More convenient maybe.. but also more dangerous

Yes

About 1.50 USD bitcoin fee transfer[1][2], no fees for deposits or withdrawals on FTX for both BTC and USD (for > 0.01BTC, around 200 USD)[3]. And 0.07% taker, 0.02% maker fees for trades [4]

[1] https://ycharts.com/indicators/bitcoin_average_transaction_f...

[2] Could be avoided or greatly reduced if using other cheaper cryptos

[3] https://help.ftx.com/hc/en-us/articles/360034865571-Blockcha...

[4] https://help.ftx.com/hc/en-us/articles/360024479432-Fees

Compared to what?

I was going to calculate it on WU but their webserver banned me for some reason [1]. So there goes the centralized experience lol.

[1] Access Denied You don't have permission to access "http://www.westernunion.com/us/en/send-money/app/price-estim..." on this server.

Western Union.

https://www.westernunion.com/us/en/send-money/app/price-esti...

I just tried it myself and it says they will charge $60 to send $1000 to the US.

Also, they add this disclaimer:

2 In addition to the transfer fee, Western Union also makes money from currency exchange. When choosing a money transmitter, carefully compare both transfer fees and exchange rates. Fees, foreign exchange rates and taxes may vary by brand, channel, and location based on a number of factors. Fees and rates subject to change without notice.

Xoom (Paypal) says $8 to send $200 so 4%. Percentage goes down as the transaction increases in size. At $1,000 it's $16.

The bigger problem is KYC laws. Kind of hard to satisfy them as an illegal immigrant. Suspect that they're getting screwed by the additional middle man willing to break the KYC laws.

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