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The Almighty Buck Government

El Salvador's Government Buys More Bitcoin as Its Price Drops to $35,149 (thestreet.com) 85

Posted by EditorDavid from the drop-or-dip dept.
As the price of bitcoin drops to $35,149, "The entire country of El Salvador is riding the cryptocurrency wave," reports The Street, "even in its choppiest waters." The first country in the world to adopt bitcoin as legal tender, the Central American nation just "bought the dip" once again and acquired 410 bitcoin (roughly $14.8 million USD), its president tweeted Friday....

Bitcoin, which nearly topped $70,000 in November, has now lost more than 40% of its value... El Salvador had previously "bought the dip" when, last September, its worth fell by more than 10%... "150 new coins!" Bukele wrote on Twitter. He said that, at the time, the country had a total of 700 bitcoin.
The Street also shares an interesting detail on how the bitcoin is purchased: It is not clear what type of funds, be they state or private, were used to secure the bitcoin for El Salvador, but the country's 40-year-old President Nayib Bukele is said to buy the country's bitcoin using his phone. The nation's embassy did not immediately respond to TheStreet's request for clarification.
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El Salvador's Government Buys More Bitcoin as Its Price Drops to $35,149 More

El Salvador's Government Buys More Bitcoin as Its Price Drops to $35,149

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  • but the country's 40-year-old President Nayib Bukele is said to buy the country's bitcoin using his phone

    I would use more than one "wallet" to store that stuff, because if you get hacked, the money is not coming back.

    • Re: (Score:2)

      by gweihir ( 88907 )

      Well, it is a kleptocracy, so that would be fitting...

      • Well, it is a kleptocracy

        Nah, you're getting confused. Nicaragua and Venezuela are kleptocracies, but El Salvador is not.

        • you are the one that is getting confused, down there pretty much we ALL are...there is a reason why we have bars on the windows

          • That is a point, make sure when you put flowers on a grave, that you sit there and guard them, otherwise someone will steal them.

    • Re:Transaction not reversible (Score:5, Insightful)

      by AleRunner ( 4556245 ) on Sunday January 23, 2022 @04:26AM (#62198963)

      I would use more than one "wallet" to store that stuff, because if you get hacked, the money is not coming back.

      Security means different things to different people. Maybe, when he skips the country, he doesn't want the money to be able to go back. Before offering advice it's better to find out your clients real needs.

      • Ok, but does anyone know the credentials of his SIM card? Asking for a friend.

      • Great comment. Hits many nails!

      • Re: (Score:2)

        by Kisai ( 213879 )

        I'm willing to bet that, "the government of El Salvador" ends up the loser at the end when bitcoin goes bust. They'll end up with like 40% of the bitcoins ever made before they try to sell it all at a loss, but find no takers. Remember, crypto is not very liquid, and if you amass enough of it that you can't sell it all in one shot, you'll be selling it at a heavy loss, if you can sell it at all.

        The writing has been on the wall for crypto currencies ever since the beginning of 2019, but the pandemic and logi

        • I'm willing to bet that, "the government of El Salvador" ends up the loser at the end when bitcoin goes bust.

          That's one way it could go. Another way is that the government gets hacked - or, just as likely in the crypto world, diverted by themselves but they will blame a hack.

          or regulate in a way that makes crypto a solution to a problem that doesn't exist.

          It's already that, with no regulation required.

        • The mining rate is built into the algorithm to vary. The less people mine, the easier it gets to create a coin in term of effort. Even if every government in the world banned it, it would be black market mined even easier. You have to remember not to mix up the mining inflationary aspect with the distributed ledger aspect. The mining is really separate from the absurd speculation that goes on with so many people buying bitcoin⦠just to sell them, instead of using them for actual day to day tran

    • but the country's 40-year-old President Nayib Bukele is said to buy the country's bitcoin using his phone

      I would use more than one "wallet" to store that stuff, because if you get hacked, the money is not coming back.

      If the transaction is not reversible, how does having more than one wallet help? That would imply anyone could do a transaction and then use the backup one to still have the coins.

      Airgapping with a hardware wallet would seem more reliable as long as you remember the password and don't throw it in the rubbish bin.

      • If the transaction is not reversible, how does having more than one wallet help?

        If you distribute your coins between 12 "wallets" and one of them gets hacked, then you only lose 1/12 of your coins.

        • If you distribute your coins between 12 "wallets" and one of them gets hacked, then you only lose 1/12 of your coins.

          Sounds like you are 12 times more likely to get hacked with 12 wallets. Did you not actually think about things before posting, again?

      • Re: (Score:1, Flamebait)

        by DarkOx ( 621550 )

        More than one wallet helps because launding the coins will be needed. Unlike that pallet of cash that nobody has the serial numbers records of or the records also get destroyed during the chaos of a coup or whatever the block chain is immutable.

        It will always be possible to trace coins and partial coins back to the wallets that were/should be the property of the nation they were purloined from. There would be tremendous pressure not to transact or blacklist those coins so anything to help obfuscate them ma

    • when you get hacked, not if
    • Double down on those tulip bulbs. Some call it cost averaging. If it rebounds works . LiveDoor never rebounded. Not even a dead cat bounce.
    • Nayib Bukele is said to buy the country's bitcoin using his phone as Chillax as it gets, so is it MS13 or 18th street ?
      whatever it is ... i think maybe i need to ask for political asylum since the place here gets crowded with african and afghan refugees while the turqs are taking over the government and property markets and brussels, already an Al-Qaeda base, is the hotspot for protesting, someone in Israel shoots a palestine ? burn brussels, someone in america shoots a black guy ? burn brussels, someone

    • I would use more than one "wallet" to store that stuff

      Perhaps it would be prudent to make a wallet for each bitcoin? You could even take the long view and put some in cold storage, storing those in government vaults so you could really be sure they would be safe...

  • My guess (Score:5, Insightful)

    by enriquevagu ( 1026480 ) on Sunday January 23, 2022 @04:38AM (#62198981)

    My guess is that "somehow" the account will be "hacked" and all of their bitcoins will disappear in the blockchain. It will be impossible to distinguish a real hack from an inside job (from the very people holding the keys, in a carefully crafted plan). No one will be held responsible because "hackers", and El Salvador will have been robbed at large scale.

    • Re:My guess (Score:4, Funny)

      by h33t l4x0r ( 4107715 ) on Sunday January 23, 2022 @04:54AM (#62198993)

      all of their bitcoins will disappear in the blockchain

      Mom! Please hang up the phone and stop embarassing me!

    • The fact that they were bought on a phone is concerning.

      If I had to use a phone rather than a dedicated hardware wallet, I'd use something like airgap.it's implementation where the vault is on one device, like an iPod Touch or something offline, and the wallet app is on another device. At the minimum. However, with 700 BTC in a wallet, they need to secure that like they would $25 million in gold, and there are not that many trustworthy wallet apps, or even hardware wallets.

      If I had that much currency in o

      • Just because they are using a phone doesn't mean they aren't using a hardware wallet. though El President sounds like a retard so probably is just using a phone.
      • That's great. But it's a developing country. You'd need to visit for a while to understand. The fact that you mentioned 'iPhone' shows how out of touch you are with how things work there. Most people in those countries are using old chinese phones to access the internet, and if they are fortunate enough to have a single computer in their home it will have pirated windows on it. Security isn't really a thing there.
    • Having lived in a neigbouring Central American country I can almost guarantee that the polticians or their families will be responsible for said 'hack'.

  • Learn the lesson kids (Score:3, Informative)

    by thegarbz ( 1787294 ) on Sunday January 23, 2022 @04:53AM (#62198991)

    When times are tough and you're facing economic problems the correct choice is to gamble. Ideally you want to gamble on something volatile and unpredictable. Remember when you make losses the best way to counter those losses is to invest more. /s

    • Comment removed based on user account deletion

      • Succeed, and he will be living as a billionaire for the rest of his life somewhere far away. Fail, and, well....

        If El Salvador goes bankrupt on Bitcoin speculation . . . they will go to the IMF and the World Bank for a bailout.

        This will happen in rich countries, as well. If Bitcoin speculation causes another Sub Prime Mortgage type banking crisis . . . a tax-payer financed bailout will come.

        So ordinary folks who had nothing to do with Bitcoin speculation will end up paying to clean up the mess left behind.

        • You're funny, "rich countries" have no stake of any import in the crypto gambling tokens. Bitcoin could crash to zero and "rich countries" would be fine.

    • When times are tough and you're facing economic problems the correct choice is to gamble. Ideally you want to gamble on something volatile and unpredictable. Remember when you make losses the best way to counter those losses is to invest more. /s

      Yes, if I ever get a deadly disease that costs 1M to treat while I got only 100k, you sure as hell can bet I'm headed straight to casino. You'd prefer to just die?

    • A big problem with developing countries is there is no mechanism to facilitate gambles. If my relatives want to build a factory they need cash. In the US I can get a loan and declare bankruptcy if the gamble does not pay off. The more we teach this entrepreneurship the better off we will be in the US. We donâ(TM)t need more peasants who accept scraps.
      • This is true. A lot of the white middle class kids on here don't know what it's like to live in Central America. People dont have the same protections that they have in the developed world. Investing state money into cryptocurrency makes it untraceable, and easy to make disappear.

  • Cryptomoney is handy for dictators (Score:3, Interesting)

    by colordev ( 1764040 ) on Sunday January 23, 2022 @06:13AM (#62199101) Homepage
    Looking back, ousted leaders prefer to flee with lots of money.

    In 2021 Afghanistan the president fled with 4 cars and a chopper full of money [nypost.com]

    in 2019 Gambia's ex-president stole almost $1bn before fleeing [theguardian.com] country

    in 2003 In Iraq Saddam instructed his son Qusay to withdrew approximately [wikipedia.org] $1bn from the central bank in Baghdad. Qusay arrived at the bank in Baghdad at 4am (hours before the first US strikes) seized around $900m in $100 bills and a further $100m in euros, loaded them into three tractor-trailers and left.

    in 1997 Ecuadoran president Abdala Bucaram fled the capital [chicagotribune.com] with $3 million in cash into getaway cars

    in 1986 in Philippines Ferdinand and Imelda Marcos flew into exile [theguardian.com] with $15 million, 24 gold bricks and Imelda's drive-in closet

    Bitcoins would have been easier to flee with...

    Yes, put all money to my cellphone

    • You just linked Russian propaganda, worrying about how much money the former government of Afghanistan left to the Taliban, wowsers, that is something to truly not GAF about.

      • It's true that the source to the first link was Russia's embassy in Kabul. Therefore, I'm sorry that I can't point you to independent sworn in witnesses, who could verify the details of the story. On the other hand: The same information is still being broadcasted by Reuters [reuters.com],YahooNews [yahoo.com], New York Post [nypost.com], MSN [msn.com], ABCnews [go.com] and 10 thousand other news services. Maybe you should ask them to stop spreading that Russian propaganda.

        Anow about the motives. Must the news be not true because the witnesses were in contact wi

    • Yep, run away with your country's assets, that's the name of the game.

      Don't even think about one of the peasant women who supported you during your reign, who is now getting her jaw smashed in with a rifle butt as she watches her children get slaughtered right before her, and she herself waits to be raped and killed. Instead, sit back, relax, and enjoy sipping wine while laying back on your ill gotten gains on your way to your remote refuge.

      This happens over and over again, and people still

  • Just keep doubling your bet every time you lose and you'll eventually break even. Or eventually just break.

  • https://futurism.com/el-salvad... [futurism.com]

    The country’s president Nayib Bukele made waves last year when he announced that the nation would accept the token for use at stores and banks. The self-described “CEO of El Salvador” even announced plans to build a “Bitcoin City“ to turn the country into “the financial center of the world.”

    However, it turns out that forcing your nation’s banks and stores to accept a currency large swaths of the population are unfamiliar with

  • ...'investment.' Looks like the bubble is about to burst? The response? Buy more Bitcoin of course! Gotta make it back, gotta make it back...

    • Re: (Score:3)

      by quall ( 1441799 )

      When you look at how much the US printed over the last 2 years, we lost nearly 80% of its perceived value. As-in the US printed 80% more money than there was in existence.

      Amazing that inflation has only risen 7% in the US. The only reason it's low is because the country runs on debt. As long as there are people who have to work to pay off debt, the economic value of currency won't dip as much. This is why it's important for the US to try and get people working again after telling them not to for a year.

      So w

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        These financial analyses are always pretty entertaining. "Perceived value" hey? I guess that would be your personal perception?

      • Ah, yet another 'fiscal conservative' conflating macro & micro economics & misunderstanding what money & debt are.
      • The UK hasn't paid off the debt since it invented the concept of a Central Bank over 300 years ago. The idea is pretty simple, borrow at very low cost from you Central Bank, most of those borrowing costs are eaten up by inflation making costs even smaller and have GDP growth lower the debt load percentage so you can borrow more. ad-infinitum

      • Amazing that inflation has only risen 7% in the US.

        Yes, amazing. Or, possible other explanation, there could be something about inflation and currency that you haven't got quite right.

  • ...do we have any proof of ES buying Bitcoin other than a few meme-worthy tweets? The guy says a lot of dumb shit.

  • Odds? Timeline? I say 90% chance the entire nation folds within 6 months.

    As a former Goldman Sachs fellow explained it to me, crypto has become an accepted commodity class for large fund managers, and the orthodoxy that 15% of large funds should be in commodities led to a large flow of cash into crypto. Well, now interest rates are rising, and much of this cash will likely flow out. El Salvador has no way of generating crypto. Thus, it cannot pump cash into its economy the way a central bank can. Disaster i

    • Why don't you monitor the situation and gloat about how right you are six months from now?

      • Does that mean you're not taking the bet?

        • Doesn't matter what "bet" I'm taking. This is Slashdot. It's been around for years. Six months from now, most of the people reading it will still be reading it. And you can submit all the stories you want about Bukele fleeing the country as it slides into insolvency.

    • Ehhh, it's all in your mind (actually God's mind, since nothing material really exists, according to Berkeley) %^) %^)

      • That is correct, sir, though Berkeley was concerned with existence itself, not matters of economics. Even Russell recanted pacifism when confronted with the Nazis. When faced with a debt, Berkeley would likely pay it.

      • And, thank you for this very thoughtful and funny reply.

  • Bitcoin may not yet have found its floor. Finding the bottom/catching a falling knife is not easy to do. Anyone who bought in Nov 2018 (or thereabouts) can tell you, just when you've finally found the bottom, things can keep going down. Which, for some projects, they did, and others, they didn't.

    BTC's last floor was around $3000-$4000 depending on which day you bought. That was after a peak of ~$20k, and the previous floor before THAT was maybe $900? So it will be interesting to see where BTC stalls out

  • their gov't is corrupt as hell. They're using it to shift money overseas so when they eventually need to flee in disgrace they can live off their ill gotten gains.
    • Not really laundering, there will be no illusion that it is legitimate. It will just be outright theft but in a way that is very difficult (or potentially impossible) to recover.

  • I wonder how much Bitcoin is MicroStrategy buying now...if they continue to buy the dip on the way down, I can't image what's going to be like when it turns around...

    • > I can't image what's going to be like when it turns around...

      Long term, the dollar is always devalued. Thats why bitcoin, in terms of dollar value, always rebounds from devastating drops like this.

      The only question in this case is whether or not bukele can wait for it.

      These deflationary periods can last months or sometimes years. Eventually, "stimulus" happens, lots of new dollars flood into markets, and assets shoot up again, typically to all new highs.

      So long as they are priced in dollars, stocks, re

      • Eventually, "stimulus" happens, lots of new dollars flood into markets, and assets shoot up again, typically to all new highs.

        The fed is set to taper+bump rates by March, so one would expect another wave of stimulus after the ensuing crash in Mar-May.

  • This will end very badly. Crypto is effectively a ponzi scheme.

  • In theory, this means now is a good time to take a vacation in El Salvador, or buy their exports. In practice you might have misgivings about traveling there for safety reasons, but it's not Afghanistan. People *do* go there, you just have to be careful. A quick googling revealed that clothing accounts for 25% of their exports. So the theory there is that now would be a good time to buy that poncho or whatever you've been eyeing that's made there. In theory your dollars now buy more Salvadoran goods; b

  • If this is part of a regular dynamic DCA strategy it might be forgivable, but I don't think it is... Otherwise it really seems like they are buying in a rapidly falling market. Not smart. Better off waiting for stabilisation and even an upturn of the market and taking 90% of the gains for much less risk.

  • Could it be that El Presidente and his closest chums see El Salvador spiraling out of control and on the brink of another civil war, and he hopes that the bitcoins will ne real valuable when it comes time to hop into the escape jet.

      Bitcoins are much easier to carry than suitcases filled with money when it comes time to bug out, and even Swiss bank accounts can be frozen.

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