[jkhdigital]

The legal tender point is the most important, as to whether or not Bitcoin will become a global reserve currency. The tipping point comes when entire chains of real economic activity can be settled in Bitcoin, and the friction of using Bitcoin for working capital fades away.

[cwkoss]

Yeah, if this move plays out in El Salvador's favor, other countries are going to try to emulate it, and we'll start seeing significant trade flows settled in Bitcoin. That's when things will start getting really exciting.

That seems like a bright future to me, but my cynical tinfoil hat worries that the US will find some pretext to invade El Salvador to 'root out terrorists' or whatever so that dollar hegemony is not threatened.

[imtringued]

Countries that want to run a budget surplus without taking the surplus from their domestic economy must take it from another country. No government wants to take money out of their domestic economy in a way that harms it.

What happens is that these countries buy the safest bonds possible and those are issued by governments. You are relying on the ability of the government to collect taxes to pay the debt and that ability correlates with military power as having a weak military would be a risk vector. A destroyed government is unlikely to honor its debts as seen with the Weimar Republic.

The rhetoric that the US is going around the world with guns to force people to buy their bonds (and therefore USD) doesn't make sense because countries are voluntarily selling products for USD and then buy US treasuries with the USD. They actually want the military protection.