Does El Salvador’s Bitcoin Law violate the ideals of freedom in the crypto space?

On June 9, 2021, the Salvadoran Congress voted to approve the proposal of Bitcoin as legal tender submitted by the President , and El Salvador became the first country in the world to recognize Bitcoin as legal currency. September 7, 2021 is the first day that Bitcoin officially becomes the legal tender of El Salvador.

In fact, the President of El Salvador, Nayib Bukele, announced the acceptance of Bitcoin as legal tender for the first time at the Miami Bitcoin Conference in June, which won him praise from some well-known members of the crypto community. At the same time, some members of the crypto community believe that El Salvador’s Bitcoin law violates the ideals of freedom in the crypto field. It can be said that on the one hand, the President of El Salvador, who is actively embracing Bitcoin, on the other hand, is a mixture of public opinion with different opinions.

Earlier, Golden Finance compiled “Through these dozens of questions and answers to truly understand the views of local people in El Salvador on BTC” , the article preliminarily showed the views of the Salvadoran people on Bitcoin and the real progress of related bills.

In fact, since El Salvador recognized Bitcoin as a legal currency, the crypto community, rating agencies, and financial organizations have all spoken out from different angles. This article further organizes and compiles related views.

Ethernet Square co-founder of V God (Vitalik Buterin): contrary to the ideal of freedom

Ethereum co-founder Vitalik Buterin recently made a comment on the Reddit forum, criticizing El Salvador for the mandatory adoption of Bitcoin. In a forum titled “Unpopular Opinion: The President of El Salvador should not be praised by the crypto community”, V God stated that there is nothing unwelcome about this view, and pointed out that “it makes businesses have to accept specific cryptocurrencies.” This runs counter to the ideal of freedom that should have been so important in the field of encryption.”

God V added: “The strategy of pushing BTC to the millions of people in Salva is reckless, and a large number of innocent people are at risk of being hacked or deceived. Shame on everyone who praises him uncritically ( Mainly Bitcoin extremists).” co-founder Nicolas Cary: Promoting Bitcoin with an iron fist goes against the spirit of encryption co-founder Nicolas Cary said: I think from a top-down perspective, there are some contradictions and problems in the way the plan was launched in El Salvador. One of them is that the main spirit of cryptocurrency should be that people do it voluntarily. One of the main spirits of cryptocurrency is grassroots promotion, and people should adopt cryptocurrency voluntarily. In addition, some natives in El Salvador also pointed out that relevant laws and regulations run counter to the values ​​advocated by Bitcoin supremacists.

Nevertheless, Cary also believes that El Salvador is setting an example, and other countries will soon follow suit. Because using Bitcoin has many benefits, including lowering the cost of remittances.

Xiong Yue: Defending El Salvador’s Bitcoin Act

Xiong Yue pointed out in the circle of friends: Since El Salvador recognized Bitcoin as a legal currency, there have been constant voices criticizing the relevant laws as mandatory in the liberal circle. In this regard, my opinion is that liberals do not need to be so dogmatic.

Indeed, El Salvador announced that Bitcoin is their legal currency-tied with the U.S. dollar-and merchants cannot refuse to accept Bitcoin payments.

However, it did not create an El Salvador coin out of thin air, and then let everyone use it at a specified price, and those who did not use it would grab it. Similarly, it cannot be printed at any time according to its own wishes, thereby diluting the wealth of the people. These two points are the most criticized areas of legal currency.

What El Salvador did was to accept a currency that already existed. Its issuance was not controlled by the government and central bank of the country, and its price was derived from free exchange in the previous market.

Professor Joseph T. Salerno, a representative of contemporary Austrian economics and sound currency theorists, wrote in his book “Money: Sound and Unsound”: “The third part is an article on the gold standard. In this part, “Gold” The term should be interpreted as representing any commodity selected by the free market as a general medium of exchange.”

After more than ten years of development, Bitcoin should be worthy of being a commodity “chosen by the free market as a general medium of exchange”. In this way, the decree of the country should be regarded as a return to the gold standard and a sound currency in economic analysis. Try.

In addition, if you refuse to use US dollars in the United States, you will either be arrested by the authorities or you will be extinct from human society. And what if you refuse to use Bitcoin in El Salvador? If you are just a consumer, it has no effect on you; if you are a merchant, you will receive US dollars. This is completely different from the refusal to use the U.S. dollar in the United States!

There is not even a problem that some people say that coercion will push up social costs, because the government of Samoa is not a “live Leifeng”, and the cost is actually paid by people who are willing to pay in Bitcoin.

In other words, if an item is originally sold for US$100, then the merchant will receive US$100 anyway, and the redemption friction can only be borne by the payer (for example, paying US$100.5). And the fact that he is willing to pay with Bitcoin shows that he is willing to bear the additional cost of 0.5 US dollars.

Therefore, as far as the situation can be observed at present, if there is any compulsion in the reform of the State of Saskatchewan, it is more like forcing the removal of the big stone weighing on Bitcoin.

It is certainly not the goal that Bitcoiners are pursuing to make Bitcoin the legal currency of various countries . However, as long as such a bill does not substantially violate the freedom of citizens, there is absolutely no need for us to oppose countries accepting Bitcoin as legal currency.

Fidelity Investment Director: The importance of El Salvador’s Bitcoin initiative is overstated

Fidelity Investment Director Jurrien Timmer stated that the importance of El Salvador’s Bitcoin initiative has been overstated. This is not to say that it switched from the U.S. dollar to Bitcoin as its currency peg.

Cardano founder: More countries will follow the example of El Salvador’s Bitcoin initiative

Cardano founder Charles Hoskinson predicts that more countries will follow El Salvador’s Bitcoin initiatives. Hoskinson said in his “Congratulations Bitcoin” YouTube video that the acceptance of Bitcoin in El Salvador further enables people to control their money. Legalization of beliefs.

The founder of Cardano said that he believes that cryptocurrencies like Bitcoin are the future of money, because the younger generation will inevitably trigger the large-scale adoption of cryptocurrencies. “Most people under the age of 25 have a positive attitude towards cryptocurrencies, and many of them own cryptocurrencies. This is the future. Their children will grow up in these values ​​and beliefs about the nature of money.” Hoskinson further predicted, through acceptance As part of a diversified government structure, more countries in the world will enter the cryptocurrency industry.

Legendary fund manager Mark Mobius : El Salvador’s move to adopt Bitcoin is unlikely to find many imitators

On September 7, emerging market veteran and legendary fund manager Mark Mobius said in an interview with Bloomberg that El Salvador’s bold move to adopt Bitcoin is unlikely to find many imitators. The move exposed the shortcomings of Bitcoin as a payment mechanism and stifled the possibility of wider adoption. He said: “When you can use your mobile phone to pay, it doesn’t make sense to use Bitcoin’s payment system.”

Mobius said that El Salvador is in a difficult situation, so it needs Bitcoin. Several other countries with weak financial systems, such as Cuba, can also adopt Bitcoin, but apart from that, he does not expect widespread adoption elsewhere. In addition, Mobius stated that if the US government allows Bitcoin to be used for tax payments, it can make it an internationally recognized currency and push cryptocurrency into the mainstream. But judging from the current situation, he doesn’t think this will happen anytime soon.

BB: El Salvador uses Bitcoin to pave a path of financial independence and prosperity for their people

Previously, CEO Brendan Blumer tweeted that today the Presidents of El Salvador and El Salvador have made history by using Bitcoin to pave the way for their people to be financially independent, inclusive and prosperous.

President of Argentina: El Salvador may be a good way to set Bitcoin as legal tender

Argentine President Alberto Fernandez showed an open attitude towards Bitcoin when he accepted’ interview. When answering whether he would follow the example of El Salvador and set Bitcoin as a legal currency, he said: “I don’t want to go too far, but there is no reason to say “no”. Maybe this is a good way. They said the advantage of doing so is okay. Significantly eliminate the effect of inflation.” But the president also said: “This is a global discussion, and I must admit that this is a topic that needs to be treated with caution. Many people in the world have concerns, which is why this project or system has not yet been popularized. The reason for opening. But this is something that needs to be considered.” Earlier, Argentine Central Bank Governor Miguel Pesce said that he believed that Bitcoin “is not a real financial asset and will not generate lasting profitability”.

Bank of America: The potential benefits of El Salvador’s Bitcoin strategy cannot be completely denied

On August 2, according to foreign media reports, Bank of America believes that El Salvador may gain many benefits through its Bitcoin strategy. In a report, a bank analyst stated that El Salvador’s decision to recognize Bitcoin as legal tender can simplify remittances, promote financial digitization, provide consumers with more choices, and open it to many American companies and digital currency miners. The report pointed out that remittances account for as much as 24% of El Salvador’s GDP, but a considerable part of it is used to pay for transaction costs, and the use of Bitcoin for remittances may reduce transaction costs. The bank believes that Bitcoin can be used as an intermediary for cross-border transfers, so that U.S. dollars can be converted into Bitcoin by the sender, and then converted into U.S. dollars by the receiver in the country.

Moody’s: downgrades El Salvador, expects its Bitcoin law to have a negative impact

The rating agency Moody’s previously announced that it had downgraded El Salvador’s rating and continued to hold a negative view of the country’s economy, partly because the government passed a law that made Bitcoin the country’s legal tender. Moody’s downgraded El Salvador’s long-term foreign currency issuer and senior unsecured bond rating from B3 to Caa1. The agency noted the “deterioration of the quality of decision-making”, stating that the Bitcoin law and other measures reflect “the weakening of El Salvador’s governance, which has increased tensions with international partners, including the United States, and endangered relations with the International Monetary Fund (IMF). Progress towards an agreement.”

JPMorgan Chase: Bitcoin as a legal tender may bring multiple challenges to El Salvador and cryptocurrencies

According to a team from JPMorgan Chase, El Salvador’s declaration of Bitcoin as legal tender may pose challenges for both the country and the cryptocurrency. Bitcoin’s daily trading volume usually exceeds US$40 billion to US$50 billion, but most of it comes from large exchanges. They added that a large portion of bitcoins are locked in illiquid entities, and more than 90% of bitcoins have not changed hands in more than a year.

The report stated: “El Salvador’s daily payment activities account for only about 4% of recent on-chain transactions. Lack of liquidity and transaction volume may severely limit the potential of Bitcoin as a medium of exchange.” JPMorgan Chase believes that other challenges faced by El Salvador in adopting Bitcoin as legal tender include: 1. Recent surveys show that people are generally skeptical and hesitant about Bitcoin as a medium of exchange; 2. Bitcoin’s high volatility The dual currency system with the US dollar poses a great challenge; 3. The US demand for Bitcoin continues to be unbalanced, and the US dollar exchange on the government platform may “cannibalize the liquidity of the onshore US dollar” and ultimately bring about fiscal and international revenue. Support risk.

Nobel laureate Steve Hanke: El Salvador’s Bitcoin law is destined to fall into the FATF’s regulatory network

Steve Hanke, professor of economics at Johns Hopkins University and Nobel Prize winner, previously tweeted that for Bitcoin transactions in El Salvador, it is almost impossible for both parties to provide complete KYC (KYC) information as envisaged by the Bitcoin law. . The red flag of the US Financial Action Task Force is imminent. In addition, Hanke attached his co-authored study on “El Salvador’s Bitcoin Law Is Destined to Fall into FATF’s Regulatory Network”, stating that if the Bitcoin Law is really implemented, El Salvador’s banks, merchants and their customers will be involved in anti-money laundering Financial Action Task Force (FATF) regulatory agencies clashed and fell into FATF’s regulatory network. Earlier news, Steve Hanke once said that Bitcoin may completely destroy El Salvador’s economy.

Japanese Government: Even if El Salvador recognizes Bitcoin as legal tender, Bitcoin is still not equivalent to foreign currency

The Japanese government responded to the questions raised by Senator Koga nokoshi on June 25. Although El Salvador passed the new “Bitcoin Law”, the Japanese government still considers Bitcoin as an encrypted asset. Earlier, Mr. Koga asked whether El Salvador would deviate from the legal definition of encrypted assets related to fund settlement if Bitcoin were to be used as legal tender.

Fitch: El Salvador has certain difficulties in implementing the Bitcoin plan

On June 25, Fitch Ratings stated that the Bank of El Salvador lacked the correct positioning for the correct implementation or integration of the proposed Bitcoin legal tender terms, and expressed doubts about it: “It is not yet clear how this will work in practice. The hasty implementation of China’s alternative payment system will affect the financial institutions’ management framework for operational, network or ransomware, currency and liquidity risks, and will have additional impact on banks’ underwriting standards.”

International Monetary Fund: The macroeconomic and legal issues of El Salvador’s use of Bitcoin as legal tender still exist

The International Monetary Fund (IMF) stated that discussions with El Salvador continue, and that the macroeconomic and legal issues of using Bitcoin as legal tender still exist. Earlier news, the International Monetary Fund (IMF) spokesperson Gerry Rice said at the press conference that the use of Bitcoin as legal tender will trigger a series of macroeconomic, financial and legal issues that require very careful analysis. We are closely monitoring developments and we will continue to consult with the authorities. The International Monetary Fund will meet with El Salvador’s President Nayib Bukele at a later date to discuss Bitcoin laws. El Salvador is in discussions with the International Monetary Fund (IMF) to seek a nearly $1 billion plan.

Posted by:CoinYuppie,Reprinted with attribution to:
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