Thread by @GeorgeSelgin

Thread: Bukele's Bitcoin legislation is certainly a win for Bitcoin. But is it a win for freedom?

https://twitter.com/nayibbukele/status/1402446890466217985

As a long-time proponent of free choice in currency, who also favors private-market alternatives to official currencies, I'm inclined to favor any legislation that serves to promote either.

Many of the provisions of the new law serve these laudable ends, by making it easier for Salvadorans to employ Bitcoin as a medium of exchange without incurring any penalties by doing so.

If the new law did nothing more, I'd be joining others in celebrating it.

Alas, that is not all the law does.

Instead, two of its articles--the ones that qualify as "legal tender" provisions in the strict meaning of that term--go further, and in so doing, undermine free choice in currency instead of promoting it. These are articles 7 and 13.

Article 13 provides that "All obligations in money expressed in USD, existing before the effective date of this law, may be paid in bitcoin." This provision contravenes the rule of "specific performance."

As such, it is no less at odds with both free choice in currency and freedom of contract as past legal tender laws that allowed contracts for payment in specie to be settled using fiat money. blog.bettermoney.com/2015/10/legal-…

Article 7 is even worse. Far worse in fact. It provides "that every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service."

This is a (relatively) rare instance of something being made compulsory tender not just in settling outstanding debts but in _spot_ exchanges. As such it is even more contrary to the principle of choice in currency.

Instead of merely _allowing_ merchants to accept BTC in payment, article 7 compels them to do so even if they'd prefer to be paid in USD (or something else). Very few countries have such Draconian legal tender laws, which in the past were a last-resort of desperate governments.

Thing "assignats" and "continentals"!

Some have suggested that Salvadoran merchants will be free to charge a premium when offered BTC. But I doubt that will be the case, for to allow them to do so would be to render the law nugatory.

Instead, I assume they will be compelled to accept BTC at the going BTC:USD exchange rate.

In _Choice in Currency_, the path-breaking pamphlet that helped to inspire Bitcoin, F.A. Hayek asked, "Why should we not let people choose freely what money they want to use?" cdn.mises.org/Choice%20in%20…

Until now, few Bitcoiners would have answered other than by saying, "Why not indeed!"

Yet now we find many celebrating a law that actually _deprives_ a nation of that choice, only because it happens to do so by compelling people to accept their own preferred currency!

Personally, I find the spectacle abhorrent. And I sincerely hope some of those now celebrating will reconsider, and that upon having done so, they will instead _publicly condemn_ articles 7 and 13 of Bukele's new law.

So, how about it, my friends? @gladstein @CaitlinLong_ @nic__carter @naomibrockwell @allenf32 @jackmallers @ryanallis.
Att'n: @lawrencehwhite1 @WilliamJLuther @norbertjmichel @DavidBeckworth @BobMurphyEcon @Frances_Coppola @sghorwitz @TheStalwart

Sorry: "Think."