El Salvador Abandons Bitcoin as Legal Tender After Failed Experiment

> The IMF made this a condition for a loan of 1.4 billion US dollars (1.35 billion euros). In December of last year, the IMF reached an agreement with President Nayib Bukele’s government on the loan of the stated amount to strengthen the country’s “fiscal sustainability” and mitigate the “risks associated with Bitcoin,” as it was described.

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I dislike cryptocurrencies as much as the next guy but this was clearly something else than a failure of the currency itself

El Salvador keeps buying the Bitcoin for its strategic reserve. Businesses and citizens can keep using it.

But for getting an IMF loan, IMF (which, to put it mildly, doesn't like Bitcoin) required the end to Bitcoin legal tender status.

Now the businesses are free to accept it or not instead of being required to accept it. That's all. The government plans to keep buying and using it.

Sounds like the term "Failed Experiment" is the writer's assertion and not the government official position.

I love that they are innovating and experimenting and trying their own things, and don't let the stuffy pompous status quo hold them back.

I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.

They even have their own tracker, https://bitcoin.gob.sv/

[1] https://finance.yahoo.com/news/el-salvador-changes-bitcoin-r... [2] https://www.msn.com/en-us/money/financial-regulation/el-salv...

This is why, aside from speculation, purchase of illicit goods and ransom payments, Bitcoin has had little traction as a currency.

Legal tender 1: -15%

Legal tender 2: +115%

Guess which one has been deemed a "Failed experiment".

Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender."

https://reason.com/2025/02/03/el-salvador-walks-back-its-bit...

From day one, I knew it wasn’t going to work.

That’s when I flew back to Miami, went back to the drawing board, and stopped being a Bitcoin maxi.

https://apnews.com/article/bitcoin-elsalvador-bukele-musk-tr...

It even seems that the above is a very minor change that in no way changes the outcome here. El Salvador did well and looks to continue to do well with its bitcoin policies.

Among all the crypto shills I know I'm probably the only one who has used it for trade (0.25ish Bitcoins for a computer on caseking.de in late 2017 and few goodies on local bitcoin in the same year).

https://github.com/theborakompanioni/bitcoin-spring-boot-sta...

https://restofworld.org/2022/el-salvador-chivo-bitcoin-walle...

So I wouldn't call it a "failed experiment" per se - more like a publicity stunt that has achieved publicity.

There were maybe a half a dozen other networks that might have made a more plausible and interesting experiment in testing crypto as a day to day currency.

I hope they can recover from this failed experiment.

El Salvador to scale back Bitcoin dreams to seal $1.3B IMF deal

https://news.ycombinator.com/item?id=42372064

Even when the entire world started selling off their gold to the US in the 30s and 40s it became obvious by the 70s that there wasn’t enough gold mining capacity on earth to sustain a global asset-backed currency.

To me, Bitcoin seems way more like an asset class, rather than a currency. (Despite the name which is a HUGE misnomer for the average layperson.)

Nobody invested in Bitcoin believes you should be ordering pizzas or using it as an actual currency. Bitcoin is a long-term play.

You can't make a currency out of something that's fluctuating by more than 10,000 USD in a 24-hour period.

I don't know much about cryptocurrencies but there seems to be a scaling issue, last thing I read it can only handle 7 transactions/s, is that still valid?

If so, then how would this scale to a country-wide payment system?

The IMF is afraid of Bitcoin because it threatens the Dollar.

The IMF bribes El Salvador to reduce their support for Bitcoin.

El Salvador uses the bribe to buy more Bitcoin.

If Bitcoin catches on around the world and the IMF is fighting it by throwing money at it, that could lead to an accelerated adoption curve.

Therefore during 2024 people having or obtaining it tend to keep it instead of spending it. Is it surprising?

The idea behind BTC is very valid, but they can be more like the old ECU or CFA/CFP not money you normally use for day to day stuff.

Surely, if a government wants the people in the country to use a novel cryptocurrency, it has a lot of levers of control which some distributed libertarian minded community simply doesn't.

Money: Whence It Came, Where It Went. John Kenneth Galbraith. (1975)

He had a very interesting life.

If king for the day with a sovereign wealth fund I wouldn't forbid investment choices like this on risk grounds, I mean you need risk assets as well as boring ones, right? But I have problems with the moral quality: it's like state investing in the casino business. Monaco? works fine. Anywhere else? It's got problems.

Like a lot of people, I probably fall into severe errors which would be bread and butter for "bad economics" reddit groups but truly, I can't see how this wasn't forseen and expected. It was about WHEN, not IF.

When Bitcoin, a currency with a measly transaction throughput of 4 transactions per second max and which consumes more electricity than all of Argentina will be worth $1 billion per coin and every rich person around us will be a complete imbecile and every intelligent person will be broke, people will still not comprehend that the fiat system itself is the scam! Einstein was right, human stupidity is infinite.

Bitcoin has been growing from strength to strength for almost 15 years now and worth almost 2 trillion market cap... Even if you think it's a bubble, then what's to stop everything else from being a bubble too? Nothing, that's what, it is a BUBBLE it is ALL a bubble and nothing but a bubble and a scam.

Consider a system which can support a 2 trillion dollar scam for 15 years straight and ruin an entire generation of young people... What do you call such a system? That's not a sound system. How can you trust such system? What kind of gullible fool you have to be to trust such an obvious scam system?

It's like the system found all the most gullible people on the planet then bribed them to the eyeballs, gave them access to global media platforms, so now they run everything and can force their delusions on everyone else.

Did you people even hear about the recent USAID scandal or did it bounce right off your thick skulls? It's all a scam; whether you realize it or not; you're a scammer, your spouse is a scammer, your mum is a scammer, your dog is a scammer. We're all dealing in counterfeit money.

I've been saying this over and over again for like 10 years straight. Every year what I'm saying is increasingly obvious, but people still don't get it. People's skulls have been getting thicker faster than the information could penetrate it.

Wat

But for the common mortal, cryptocurrencies are not about replacing anything, it's a highly volatile speculative playground, digital gangsters who want to make a quick buck

Nobody cares about the ideology

Bitcon as legal tender? lol

By the way all the comments in a thread like this will look like bots

Wasn’t El Salvador supposed to be Balaji’s first “Network State”? What happened to strike wallet and that whole crypto grifter crew?

Solving real problems is hard. Being distracted by snake oil salesmen, whether they sell digital scarcity or AGI only makes things worse.