I know this forum doesn’t like bitcoin. But the reality is for El Salvador if you step into their shoes it is a smart political move to hold some of their currency in bitcoin.
1. It promotes El Salvador innovation and is free publicity.
2. Documented that between when El Salvador bought bitcoin and today bitcoin appreciated more than the dollar.
3. El Salvador had to replace its currency less than 25 years ago because it collapsed.
With its price volatility, Bitcoin is a terrible store of value. (It's a speculative investment, not a store of value)
It has nearly doubled in the past year. Which is great if you're holding it as a speculative asset. Not great if you simply want a stable price "store of value"
Edit: Feel free to downvote or disagree, although if so I'm curious what your definition of "store of value" is and how price volatility factors in if at all.
Depends for who. There are hundreds of millions of people living in countries where their currencies is way more "volatile" than Bitcoin. Like Turkey and Venezuela these last years, for example.
I put "volatile" between quotes because it's only ever volatile one way: inflating into irrelevancy.
To me it's simple and all that is needed to go is to look at the message Satoshi put in the genesis Bitcoin block:
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"
This makes it clear Bitcoin is first and foremost a political statement.
It's a giant middle finger to governments that do always manage, one way or another, to ever print more money and to grow their public debt ever bigger.
That Bitcoin managed to get in this month of October both the FED and the ECB to synchronize publications saying it's time to think about banning Bitcoin shows Satoshi's middle finger worked.
> It's a giant middle finger to governments that do always manage, one way or another, to ever print more money and to grow their public debt ever bigger.
This is still better than a currency which is deflationary by nature, which BTC is.
Deflationary currency doesn't get spent. What fool would hand his Bitcoin over for some bread now, when he could buy twenty loaves of bread if he just waits until the last BTC is mined?
That might seem like a bad thing if you're a government trying to boost consumer spending so you can keep the economy running.
But from a consumer's perspective, deflation is a feature. I don't want to spend my money! I want to save it, and to be rewarded for saving it, so that by consuming less I can also work less.
Why would I hand over my Bitcoin for some bread? Because I'm hungry and need to eat. Otherwise yes, I'll save my money for later, no need for needless and wasteful spending.
If I have to hand over more and more value over time for the same amount of bread (that is easier and easier to manufacture each decade), then "the economy" isn't doing well.
If I hold the scarcest money in the universe, then the bread will get get cheaper and cheaper to me over time. This is a great economy.
I'm not going be sitting around in my riches starving because food will be cheaper next week :-D :-D
In the world where most of the work is done by robots defamatory nature of the currency might be a desired feature. I would buy bread because I hungry, but otherwise I restrain myself from spending on things I don't need. Saving the planet in the process :)
