Bitcoin Forum

Hello guys, I often read news about poor countries and a new idea came to my mind.
Imagine countries which have budget not more than 10 billion (milliard). Usually these countries import products from other countries and use USD for this. So some of them has national currency and their exchange rate to USD often changes (sometimes on bad side). If their economy fails on some steps, it will affect a lot to people + they depend on nat currency/usd exchange rate. National bank has to sell some usd in order to lower exchange rate and make it a little bit stable but it isn't fix.
I want to say that if they officially invest in bitcoin (they had to do it some months ago).. Imagine price is 2000$, budget is in bitcoin and after some months it rised to 6000$, they get 3x budget.
But no one cares about that.. Bitcoin is a way for them to develope quickly in an ultra fast way.

You can say that since you do able to know bitcoin and do have knowledge about on its benefits and usage but we do know that not all people do have the same knowledge and awareness specially into bitcoin which they didnt even know that this thing do exist.If they do then for sure they will decide to invest without any hesitations because of the opportunity that it gives. This is reality and we cant change the fact that there are people who would really stay on their status quiet for some time.

Who are you pertaining to, the government or every individual? Well, like most of us not all believed in bitcoin in its early years. Everyone was skeptic on its survival so we cannot blame them. I also regret for not believing earlier but it is not too late yet we still have chance.

Governments cannot invest on what they do not understand and there are a lot of politics involved. Doing it in a government scale will be hard (due to politics).
Cryptos is better for individuals.

That is right man, everyone should find a way to hedge their investments with BTC. It is better always of course if you have the private keys meaning the way you transact is in a non-custodial way, but you're going to see a lot of custodial exchanges to make it easier for people to buy and sell crypto. For example, CashApp came out to make it easier for people, but they still don't have control.

I think corporations and big business make profits on a unit basis in terms of net quantity of products sold. They prefer currencies to be devalued to increase the unit of products they can export. While cheaper currency benefit big business they carry a malus of reducing the buying power of consumers.

Adopting bitcoin which could appreciate in value, rather than devalue the way the corporate sector favors, would represent a polar opposite to the economic policies most nations adopt in this day and age.

That’s not a smart way of investing a country’s budget. Bitcoin is a highly volatile investment and your argument only sees one side of the coin: bitcoin price growing. What happens if it goes down? What happens if we have another 2013-2015 period?

Countries budgets, if invested, have to be very diversified and most of it has to be in low risk highly liquid assets. So, your argument looks like building castles in the air to me.

Bitcoin is still very volatile and much riskier than traditional assets like gold - and even though the last year it showed astonishing performance, it would be extremely risky decision to but a whole budget of a country on Bitcoin. Things like public healthcare, education, transport, law enforcement and military and many others are all funded from national budget, so it will go up and down 10-20% in some days it will extremely destabilize the whole nation. The only way to make it work is to put only a small fraction of country's budget into Bitcoin - just 1-2%. This way it will be possible to accumulate some big gains in the upcoming years without taking too big of a risk.

I agree that the concept could be a bit too hard to introduce everyone in the country to it. We may know all about BTC, but for those who don't have access to the internet and all of these bullish and bear runs with bitcoin, they may not know how to keep track of their prices. I'd also assume that countries that have a budget of not more than 10 billion probably have other national issues to tend to, so I don't know if introducing bitcoin right away would be the best idea.

Government wont invest immediately in anything if they know that this might help or not the country. They will first consider the loss and gain if they invest in anything not just the gain. What is the price of the bitcoin will go down? What will happen to the budget? It might not be good enough for the country or worst there wont be no budget at all since it was invested. Since the bitcoin has votality price we don't now when is the best price for the country to sell their investment. Other thing, a government within the country could not decide immediately to sell their investment it would cause chaos. Just to think of it if the a country buy or invest on it would be in a big volume. If they will sell it that will affect the price of the bitcoin. What is the best option there is, let the country invest there people to bitcoin. Let them know about it and earn with it. In that way, economy of a country will develop.

It will take a lot of  time before it happen, just think how the Government oppose Bitcoin. The Point here is Bitcoin is not yet fully accepted by everyone, The idea of using Bitcoin is not yen even fully studied by the Government, regulation is not even fully implemented. This might idea might work if each country finalized the rules about Bitcoin regulation.

You phrased it so simply that it was almost convincing. Really though, when it comes to the economy, things are rarely as simple as they sound. What sounds like a good idea on paper may not work well in practice.

First issue I see with this is risk. Can struggling economies really spare money for investments? Bitcoin is already well established, but is still far from a sure thing. Should a dip happen, would they still be well equipped to deal with hungry citizens? Can they protect their economy from collapsing?

Second issue I see is Bitcoin's volatility. If they were to convert their budget to Bitcoins, the price fluctuations could very well cause them to lose money instead of gaining it. It's also going to take a lot of resources to monitor on a minute-by-minute basis.

Lastly, conversion. Just like USD is to other foreign currencies, Bitcoin isn't currently widely accepted as is. They would have to convert to and from fiat whenever they want to move money. This also incurs fees, so it's not better than USD in that regard.

I think if the country poor then how can they start investing in Bitcoin. Already Bitcoin price has increased a lot and moving forward towards another milestone.

I think if the government has enough money to buy and hold then it will be beneficial in terms of their developments and their economic growth can be increased with the increase price of the Bitcoin.

Well you are stating a scenario on the positive side of it sir but what if (hope not) prices of bitcoin will fall? Bankruptcy is imminent and it would be chaotic. Government would not enter into something of high risk and a lot of uncertainties.

With the blocksize debate still going on, I doubt poor countries would use bitcoin.

Maybe in a way it can help.But how about those who have no ideas about bitcoining?How about their gadgets to use?How will they manage to do so?Now is the hard time of buying bitcoins for its value is high.Maybe they cannot take any risk.As far as we know they are poor right?

In 2015, two economists who worked at the Central Bank of Barbados had released a paper titled, Should Cryptocurrencies Be Included In The Portfolio Of International Reserves Held By The Central Bank Of Barbados? This paper examines the potential role of Bitcoin as part of the portfolio of external assets held by a central bank. Using the case of Barbados, the paper also provides a simulation of the effect holding some proportion of their asset base would have had on the stability of the foreign reserves as well as the return on the portfolio of assets.

1. Potential risks, lack of regulation and control over the money supply of Bitcoin would cause price instability, financial instability, and payment system instability.

2. Since Bitcoin reduces the effectiveness of monetary policy at the country level, there should be a greater international cooperation through the International Monetary Fund (IMF) by offering quasi-membership status to Bitcoin and holding reserves of it to counter speculative attacks.

The study employed two approaches to assess the viability of Bitcoin in the international reserves portfolio of the Central Bank of Barbados, counterfactual simulation and a Monte Carlo forecasts.

Counterfactual simulations done over the period 2009 to 2015 suggested that adding Bitcoin to the reserve portfolio of the central bank would not significantly increase volatility but could provide opportunities to offset exchange rate depreciations against
major currencies such as the Pound and the Euro.

If 0.01 percent of reserves were invested in Bitcoin from November 2010 to April 2015, while the volatility of reserves would have been quite similar, the Bitcoin reserves would have been $291,926. This theoretical figure is more than 20 percent greater than any of the other major currencies would have generated.

Bitcoin is still very much in the early stages of adoption. As a result, there are many issues that have to be surpassed. The markets for the sale of Bitcoin are unregulated, unless recognised commercial banking, financial, and central banking entities actively participate in the market, the probability of a nation holding Bitcoins as part of their portfolio of international reserves is minimal.

The study concluded, given that Barbados maintains a peg against the US dollar, it is necessary that the Central Bank of Barbados holds enough of various currencies as a precaution against speculative attacks and if Bitcoin is incorporated into the portfolio of foreign balances of the Central Bank of Barbados, that its share should be relatively small, such as the 0.01% model referred to above, it falls within the acceptable margin of volatility with a likely chance of significant returns.

http://www.centralbank.org.bb/Portals/0/Files/Working_Papers/2015/Should%20Cryptocurrencies%20be%20included%20in%20the%20Portfolio%20of%20International%20Reserves%20held%20by%20the%20Central%20Bank%20of%20Barbados.pdf

You could think of any kind of possible things like bitcoin investment only because the bitcoin value now is very high. But when the bitcoin value 5 years ago was very low, investment is not advisable. There's always a risk in bitcoin investment, you'll never know what will be going to happen next.

All the above mentioned statements can be done,given that the people in those countries should be literate enough to figure out on how bitcoin works if not the whole crypto market. There should be enough resources and updated technology which again leads to massive expenditure. So the government will have to spend for the devolopement and welfare first and those poor people will have to invest ,and it'll take time for them to get a good return,considering all these facts that country would have to borrow more loans which is a death trap and it becomes a vicious cycle.

many businessmen from Latin America are actively engaged in crypto currency and develop it! for example, the Argentine entrepreneur Wences Caceres spoke a lot about this topic! he himself created a very successful product for the storage of Haro's biktoins

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I remember reading years ago about the united states government devoting a small portion of its budget towards turning a profit to generate funding for certain programs. States may already engage in speculation to a degree. It is known that the US federal reserve made a profit of billions from the TARP bill (troubled asset relief program aka bank bailout). Banks like JP Morgan turn a profit from running food stamps and I wouldn't be surprised if other taxpayer funded welfare programs were run by private institutions which profited financially by running them.

One neglected aspect of this may be, governments owning or running machines which literally print money. Building on that type of financial platform, a team with good leadership could potentially achieve all types of incredible feats which might benefit humanity. For whatever reason that never seems to happen.

I think that a lot of governments will hold bitcoin confiscated from criminals. There is a news story about bulgaria holding billions of bitcoins seized from criminal raids. Governments will likely hold and sell billions of bitcoins, although it wont be because they invested in it.

Not only that, it will be irresponsible for a government to do that, we must not forget that the money the governments levy through taxes is not their money, they cannot do as they wish, if they invested in bitcoin their taxes and bitcoin crashed the government will face bankruptcy and all the politicians that approved that plan will probably be put in jail immediately.

It is very risk to put budget in a country into bitcoin. Dont you think only it price up but think the other side. How if the price down in more than 50% less? They loss 50% of budget and what will happen with their built? Think about it.

We could not blame them as this early age of bitcoin most people did not know what is bitcoin or crypto currencies, even me when i was first heard this bitcoin i don't believed already but when i was read and understand it's more profitable then i pursue my self to learned of this.
There are some people can't afford internet connection in their own still they did not know bitcoin what it is.
And about government why against bitcoin because they did not controlled bitcoin or maybe criminal crimes abused bitcoin and they did not traced it.

I think sir you just saying that because you just researched it. You are not in the place of the people in poor countries like me. I am one of the testimony that poor country is hardly to develop specially when it comes in cryptocurrency. I was embarrassed but that is reality. We can't be developed because lots of people don't have educational attainment. Yes, bitcoin helps to improve the way of living but how? Did you think almost people can hold gadgets? No, of course. Our government is corrupt, I never trust if they will integrate bitcoin in our economy.

It's an advantage for those countries, but how about the United States would it be advantageous to them? If then in what way? Since USD is the means of exchange for them to be able to receive imported goods. The leaders of the poor countries can't just stick their nose to Bitcoin easily, they hold the countries future, if so they failed with Bitcoins fall, then they have invested more than half of their wealth then it would be very impossible to them to get back on their knees. It's not an easy decision to make, they would put the lives of their citizen at risk (Poverty).

First, let me just say that not only the "poor" countries could do that.

But taking your point, that is one interesting idea honestly. If the government would set aside a budget for bitcoin, then the initial value would be multiplied  making the budget increase; meaning more budget for the country. That would be the case assuming that the government allows for bitcoin and the bitcoin market is in a favorable circumstance. Otherwise, the initial obstacle would be whether or not the government supports bitcoin.

So let's take one country for example, under ideal setup their budget would increase. The first concern is how the government would then trace or account for the amount of increase in the budget. If corruption happens (hopefully not) a large chunk could also be taken aside and the total amount would not be truthfully reported. The good motivation would then end up in the pockets of the greedy. For the government to prevent this and be transparent with their people, laws and regulations should be created and governing bodies should be strict in the implementation. Next, the country would then be a whale in bitcoin, if the country would then withdraws all of their bitcoin, a huge huge dip would then affect all other individuals partaking in bitcoin.

Taking this in a larger perspective, if all (or most) countries would do this in their budget, one country suddenly withdrawing would also affect one another. Thus, they should come with terms and agreement in this matter.

This is not a wise choice because the value of bitcoin is constantly changing and it is not a good choice for poor countries.

Well, maybe so, only how about recognizing him in such countries. Indeed, few are aware of the crypto-currencies and their influence, the more it is unknown how he can improve people's well-being and worsen. Therefore, it must be taken only in emergency cases, when there is simply no other way out.

Its really hard for that to happens since the awareness of the community specially in poor countries is limited only. Besides, bitcoin is not a survival kit which can be useful in times of crisis. The only thing could be possible to happen with that scenario is to gradually embrace and cultivate their knowledge towards bitcoin for them to have enough knowledge and boost their courage to participate this new kind of technology.

They couldn't afford bitcoin, maybe some but not a good idea at all. This could make them lost profit when its volatility is too much. Additionally, it is hard for them to learn bitcoin because of limited resources.

Most likely it will make things worse than using their own traditional fiat, it also strikes my mind that why not let the 3rd world countries make bitcoin as their budget or official currency so that for the time it is doubled, the economy of that country will also expand, positive volatility of bitcoin never fails us that's for sure but still this coin is still running some major problems that need to solve first before engaging in other adaptation, that is a huge gamble and risks.

Very good idea. but the policies will be taken by a country should be based on applicable law in that country, and also in relation to the economic policy it is necessary to regulate by law set by the government of that country.

Reserves are usually kept in USD, EUR and several other currencies including domestic currency. Most governments also keep part of their funds in gold. Probably sometime in future also cryptocoins will come into play as an asset used to store budgetary means. At the moment i don't think that they see the bitcoin as a good asset for this mainly because of it's volatility. But this might change in the future.

True but they could also lose a bunch this way and because it is a fixed budget they can't afford to do so. I don't agree with the state doing that with the taxpayer's money because that is incorrect on a bunch of levels. However, I do think the citizens in those countries should invest in cryptos because that is likely their ticket out of the gutter. That is the blessing in disguise here with cryptocurrencies lets not lose sight of it now.

as i know, central bank is not allowed to do something that put high risk to the portofolio of people money
crypto still have alot of trouble for government
if they invest in it, they can not said to the people not to buy it in first place
they are the role of common bank and investor
much country still not allowed to use cryptocurrency in legal transaction
there is so many thread that discuss about it
in the near future... i hope it can be happening

shield132 only saw the gains but failed to see the failure when there are losses, and there will always be losses. What if the price of BTC fell by 2x? That is the national budget cut in half.

Face it, BTC is not stable enough to be a regular currency.

I agree with KwiatzHaderach. We all know how advantageous Bitcoin can be which is why we have the tendency to jump into conclusions on how it can truly improve (based on what you wrote) a state of being; in your case the economy. Although the intentions are there, I would have to say that having the government involved with Bitcoino or any other cryptocurrency would not result to what you might have expected. I think Bitcoin and the government just don't go together. Experiencing how a governing unit can be so corrupt, incorporating their works with Bitcoin, something that is so highly volatile, can just boost their greed and worsen the situation of the whole country.

Economic welfare is to be governed by traditional ways of education and active contributory citizenship. This essentially is first a leadership initiative. There can be no shortcuts for development. The governments that face financial crunch can try investing in bitcoins or utilize cryptocurrency to ease the economic burden by providing an alternative to its citizens, but this should not be a direct form of investment.

It may be one of the schemes temporarily in the budget for investment. Further, generating ICOs should be targeted. Betterment comes through overall improvement in living rather than just an economic growth. Education, character, morality, responsibility, discipline and economic progress will have to go together.

True, but while the volatility of bitcoin is an issue right now that is no longer to be the case when bitcoin is adopted by a significant amount of people in the future, and when that happens the economy of the world is going to enter an era of stability similar to what happened with the gold standard, we are far away to reach that point in time but at some point we are going to reach it.

I have no objection to the idea but just hoping alone that the government will encourage they’re people to this investment is the big question. As long the mainstream adaptation and without the support in legal side by the same public officials that is totally or mostly corrupt and puppets of our financial banking system is an hopeful statement.

I agree with you. It's possible that right when you get this decentralized currency you end up with people having more power which a government might be opposed to. With stronger centralized governments in places like China etc. We've already seen some opposition to the idea of crypto currency and power to the people. If people are able to convince their governments that Bitcoin can do good for the country, it's possible that it'll be accepted, but I think we're pretty far from there right now.

Understood. China is the biggest example of this scenario and the only solution is the people’s revolution toward this kind of oppression but that is more than impossible as they’re citizens are bound to follow most of the time to this strong government. But I stilll believe that soon it would be realized by them as it always be for what is best for individual financial freedom that might also help the economy of one country.