Recently, Nayib Bukele, president of El Salvador, has announced that he recognizes bitcoin as the second official currency, in addition to the US dollar, which has been so since 2001, generating several reactions.
In this post I would like to offer another contribution from the point of view of social currencies.
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It is true that the news from San Salvador made the bearers and other supporters of the world's best-known cryptocurrency happy, because it increases its reliability before the tax authorities. However, bitcoin's price instability casts doubt on its viability as a medium of exchange. For example: Today a bitcoin is worth US $ 40,000, your clients in the restaurant pay you 0.01 (US $ 400) for the organized dinner, and tomorrow it goes down to US $ 25,000, that is, 0.01 bitcoin is worth US $ 150 less. Would you like to accept a coin with this type of risk?
As an advocate of social currencies, I have to admit that it is not included in the list of those that I promote. It does not seem to me compatible with the objectives of social currencies or their creation (global competition between computers, consuming too much energy) or their management (the monetary mass is set at 21 million, regardless of the number of users, and lacks sanctioning measures when is used for illicit purposes, such as drug trafficking) or the massive participation of speculators with the intention of selling this “medium of exchange” at a higher price.
There is a very interesting concept to understand the nature of it: the so-called "Beauty Contest", coined by Keynes in his masterpiece General Theory (1936) - although today it sounds a bit macho.
It consists of comparing the behavior of investors with that of the voters of the beauty pageant, as long as they win when they correctly guess which contestant wins the most votes.
There the voters (investors) do not vote for the participant (the share) that they themselves want, but for the one that they themselves think that others want.
In other words, you buy shares in a Serrano ham company, even though you are vegan, because you know that many people will want to buy products from it.
If Salvadorans want a more sovereign life, I would suggest they seek other measures to regain monetary sovereignty
This theory explains why bitcoin, without any backing, is worth much more than petro, issued by the Venezuelan government with oil as backing. People prefer it, simply because the currency created by Satoshi Nakamoto has more buyers than the one created by Nicolás Maduro, and the price of bitcoin is reflected in the dollars (and other official currencies) that those buyers are willing to pay to obtain it, although it still runs the risk of losing its value when buyers disappear. In fact, it fell in price when a stronger restriction was announced by the Chinese Government, and there may be more falls as a result of other unfavorable news to this FIAT cryptocurrency.
But what seems more serious to me is the lack of will on the part of the Salvadoran government to regain its monetary sovereignty. The Central Reserve Bank of El Salvador can neither create nor control the dollar (controlled by the Federal Reserve of the United States) nor bitcoin (controlled by a series of computer protocols without human intervention) and the acceptance of this is a further step. so that El Salvador surrenders to the maneuvers of international neoliberalism. If Salvadorans want a more sovereign life, I would suggest they seek other measures to regain monetary sovereignty. The current situation in which a sovereign state like El Salvador lacks any means of exchange that it can control by itself does not seem healthy to me.
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