Steve Hanke has warned that El Salvador’s adoption of Bitcoin (BTC) as legal tender has the potential to “completely collapse the economy.” He said this during an interview yesterday with streaming financial news provider Kitco News.
Backstory
Steve Hanke has previously described BTC as a speculative asset “with a fundamental value of zero” and in April the 78-year-old tweeted “cryptocurrencies are the future of money. Bitcoin is not.”
During the interview, the renowned economist described the elected representatives in El Salvador who voted in favour of President Nayib Bukele’s Bitcoin law as “in a word, stupid” and questioned how BTC could function as a legal tender in day-to-day transactions, in a country where most citizens rely on cash. He had this to say on the matter, “You’re not going to pay for your taxi ride with a Bitcoin. It’s ridiculous […] You’ve got 70% of the people in El Salvador don’t even have bank accounts.”
READ: El Salvador adopts Bitcoin as legal tender, offers permanent residency for 3 Bitcoins
The university professor noted that BTC holders from regions such as Russia and China could now target El Salvador to cash out their holdings, essentially draining the country of its U.S. dollars. He stated, “It has the potential to completely collapse the economy because all the dollars in El Salvador could be vacuumed up and there’d be no money in the country. They don’t have a domestic currency.”
Steve Hanke is a professor of applied economics at Johns Hopkins University. Known for his work as a currency reformer in emerging-market countries such as Albania, Argentina, Bulgaria, Bosnia, and Herzegovina, Ecuador. He has served as an adviser to heads of state in countries throughout Asia, South America, Europe, and the Middle East. Steve Hanke also served as a senior economist under President Ronald Reagan’s administration from 1981 to 1982.
READ: U.S Biggest bank, JP Morgan Chase says Bitcoin might displace gold
JP Morgan had echoed similar sentiments but in a better language, stating that it was difficult to see any “tangible economic benefits associated with adopting Bitcoin as the second form of legal tender, and it may imperil negotiations with the IMF.”
However, The Central American Bank for Economic Integration (CABEI) does not share the view of Steve Hanke and JP Morgan, stating that El Salvador’s adoption of BTC is innovative and “creates many spaces and opportunities.” The multinational bank also revealed that it will be forming a technical advisory group to aid El Salvador in its transition to using Bitcoin as legal tender.
Professor Hanke speculated that “dark forces are clearly behind this in El Salvador, who want to use Bitcoin to get their hands on U.S. dollars.” He described remittances across borders in Bitcoin as “nonsensical,” as he thinks the asset will need to be converted instantly to dollars to be able to use it.
READ: Crypto: WebDollar pumped 185,000% only to crash by 99%
“If grandma is down in El Salvador, waiting for her remittances and you want to send Bitcoin like that, it’s fine, but what does she do? She has to go to the ATM to get dollars because that’s the only way you can buy something.”
Steve Hanke’s opinion of El Salvador’s move is similar to the opinion of David Gerard who wrote an article in Foreign Policy. David Gerard speculated that as El Salvador can’t print U.S. dollars, its adoption of BTC may be part of a move to source U.S. dollar liquidity from its citizens to pay back foreign debts.
Bitcoin is trading at $40,040, up 0.45% for the day, as of the time of writing this report.
Nothing but FUD…..
This guy is spreading lies and he knows it.
You’re not paying for your taxi ride with gold either but doesn’t mean it doesn’t haveYou’re not paying for your taxi ride with gold either but doesn’t mean it doesn’t have value.
Bitcoin is like a property. When people try to say that it has no value because you can’t transact with it they sound like morons.
You can actually transact using gold! Gold, salt, and other minerals have been using as a means of exchange for millennia!
You’re not paying for your taxi ride with gold either but doesn’t mean it doesn’t have value.
Bitcoin is like a property. When people try to say that it has no value because you can’t transact with it they sound like morons.
BTC be a legal tender in El Salvador will help bring cryptopreneurs to the country thereby boosting their economy
El Salvador has accepted Bitcoin payments for 3 years now. The eco system exists and functions well allowing those without bank access to make saying transactions.
Yeah fuck off steve hanke no one gives a shit about you and i hope you choke on your fiat bills becuase thats all you should have left
Lol..??.. another greedy rich person that only wants to maintain their financial and physical control on all World economy therefore controlling its horror citizens.. this is the funniest joke ever talk about being a politician and the comedian at the same time hopefully he makes it to Hollywood greatest fan..lol ???????? Bitcoin is ?????????
Who’s the stupid one? El Salvador is just letting you use it as legal tender if you choose to. If people still want to use cash, of course they can. FUD
FUD
Goomer Steve mad because he didn’t buy the 30k dip. All this FUD only makes me more bullish. They will not stop spreading FUD until they have all the control.
Ha ha. The argument that there will be a need to convert bitcoin to USD is weak.
Intangible assets can have extensions to connect these breaks. A bitcoin card with merchant services in store is the answer.
The new square POS systems would do the job.
Currency is going digital. It’s the future.
He is 78 years. He should go and play with his grandchildren. That is the only thing he is capable of right now.
Despite all the criticisms against Bitcoin by the conservative, it keeps waxing stronger.
Yeah wasn’t the point of it being legal tender mean that she can buy anything with BTC now instead of having to go to an ATM.