privacysavvy: [New post] More on El Salvador

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More on El Salvador

by robertmcgrath

El Salvador's experiment with Bitcoin had a rocky start, though not necessarily worse than might be expected. It remains to be seen what will happen in the long run, but the first few weeks have seen a rush to cash out the free Bitcoin handed out to everyone. This run on Bitcoin has coincided with a crash in exchange rates triggered by Chinese ban on cryptocurrency, which has only increased the impetus to get out fast.

Even true believers in Bitcoin admit that this is not the desired outcome.

This week true believer Michael J. Casey discussed developments [1]. He identifies many faults in the rollout, including the unfortunate fallout from China, as well as the perfectly normal problems with the software.

But Casey also complains about the "tone deaf" messaging from fellow crypto enthusiasts, who hype Bitcoin as a way to make easy money. He points out that people in El Salvador have plenty of history with volatile local currency, and many view the US dollar as a stable, secure currency. There isn't necessarily a lot of enthusiasm for a new, less stable currency, even if everything else worked fine.

Which, of course it isn't. The app and software are buggy and hard to use, especially compared to a conventional ATM.

"the danger is that expectations formed around a "to the moon" narrative have been dashed by a combination of market declines and technical problems"

(From [1])

Casey outlines what he would do.

The real benefit of Bitcoin, he believes, is use in everyday life. But even more, he would like to see crypto mining tied to distributed power generation such as small scale solar, wind, and geothermal.

"not only provide a steady source of bitcoin for rural communities but also provide them with affordable, sustainable power upon which to develop their local economies"

(From [1])

As he notes, this takes a lot more than an app. This takes a lot of work and investment, not least "sorting out security issues with gangs" and other hard political action. The fact is, this kind of decentralized rural development project is a good idea, with or without Bitcoin. And it's just as hard to do, with or without Bitcoin.

In fact, I would ask just what value Bitcoin brings to this proposed project. I assume the Bitcoin is supposed to be a simple mechanism for (micro-)monetizing the micro power generation. Maybe. Neither the technical nor the economic picture is very clear here, and the politics is very, very murky. (E.g., just exactly who owns the Bitcoins generated by such a village power grid?)

In any case, I don't see that having Bitcoin as legal tender either helps or hurts the prospects of such decentralized development.