El Salvador adopts Bitcoin as official currency, first country to do so(nbcnews.com)
nbcnews.com
El Salvador adopts Bitcoin as official currency, first country to do so
https://www.nbcnews.com/news/latino/el-salvador-adopts-bitcoin-official-currency-first-country-rcna1910
390 comments
The government is going to have to make an official recommendation for which wallet to use, and from their perspective the risk of promoting an existing wallet whose provenance they don't know is pretty high.
The most logical reason is that they want to connect the human identity to the wallet/address, thereby easily removing anonymity and ensuring the government can monitor their population effectively
Normal banks already do that
> Normal banks already do that
70% of El Salvadorians don't have a bank account [1].
[1] https://datacatalog.worldbank.org/dataset/el-salvador-global...
70% of El Salvadorians don't have a bank account [1].
[1] https://datacatalog.worldbank.org/dataset/el-salvador-global...
What you said does not contradict the parent comment. Just because Bitcoin is now a thing in El Salvador it doesn't mean that that missing 70% will now starting using it.
> What you said does not contradict the parent comment. Just because Bitcoin is now a thing in El Salvador it doesn't mean that that missing 70% will now starting using it.
It was alleged this move would let percent "removing anonymity and ensur[e] the government can monitor their population effectively" [1]. Counterargument was that "normal banks already do that" [2].
That is true. But 70% of El Salvadorians don't use "normal banks." They use cash. Cash does not "ensur[e] the government can monitor its population." This Bitcoin rollout does.
So yes, an El Salvadorean using a bank to do business and switching to Bitcoin gives up no privacy. But one using cash does.
[1] https://news.ycombinator.com/item?id=28447197
[2] https://news.ycombinator.com/item?id=28447562
It was alleged this move would let percent "removing anonymity and ensur[e] the government can monitor their population effectively" [1]. Counterargument was that "normal banks already do that" [2].
That is true. But 70% of El Salvadorians don't use "normal banks." They use cash. Cash does not "ensur[e] the government can monitor its population." This Bitcoin rollout does.
So yes, an El Salvadorean using a bank to do business and switching to Bitcoin gives up no privacy. But one using cash does.
[1] https://news.ycombinator.com/item?id=28447197
[2] https://news.ycombinator.com/item?id=28447562
> There are plenty to choose from now, so what features exactly were missing in those?
IIRC, people using that wallet can opt into a government backed BTC to fiat conversion rate that allows all shopkeepers to cash out in fiat. It's to make people feel comfortable being forced to accept bitcoin. For obvious reasons, governments don't want to subsidize non-citizens or risk alternative wallet lending themselves to arbitrage.
IIRC, people using that wallet can opt into a government backed BTC to fiat conversion rate that allows all shopkeepers to cash out in fiat. It's to make people feel comfortable being forced to accept bitcoin. For obvious reasons, governments don't want to subsidize non-citizens or risk alternative wallet lending themselves to arbitrage.
I’d be skeptical about using a government wallet as well, though it could potentially make initial disbursements easier.
This probably eliminates this whole "bitcoin is privacy and independence from government" thing but I think for majority of bitcoin buyers it was not more than just a nice talking point anyway.
> privacy
From the original bitcoin white paper:
> The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous.
Salvadorians can transfer their BTC to a tumbling service then to a an anonymous public key.
> independence from government
As soon as you transfer the BTC out of the wallet, you'll be independent from the government.
You are not required to use the government provided wallet if you don't need the $30 handout.
From the original bitcoin white paper:
> The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous.
Salvadorians can transfer their BTC to a tumbling service then to a an anonymous public key.
> independence from government
As soon as you transfer the BTC out of the wallet, you'll be independent from the government.
You are not required to use the government provided wallet if you don't need the $30 handout.
Ok, good points
The majority of Bitcoin buyers don’t appear to be interested in its use as currency at all from what I’ve seen.
Only when using the government wallet though. I imagine people will have multiple, just like how we already have multiple debit cards, credit cards, online payment apps...
The best argument for Bitcoin is that it’s not created out of thin air and then lent to people with interest, IMO.
Sure, it's created out of hot air and instead of interest you have crazy transaction fees.
Paid to whom? If it was created out of hot air, it would be a hell of a lot cheaper than it is now.
BTC is quite literally made out of hot air. Burning coal to create hot air to spin turbines is the most common energy source for BTC mining. And "hot air" describes most of it's coals replacements as well.
And yet it still costs far less energy to mine Bitcoin than it does to sustain Petrodollars.
Yes, if in your analysis digging up fossil fuels to power the entire world infrastructure is just a side effect of sustaining the currency's core value. Good thing cars, airplanes and shipping have as much intrinsic value as waste heat.
Do you have data for that comparison?
The entire world economy runs on fiat dollars.
100% BULLSHIT. The fees on Bitcoin, on chain, have been less than 75 cents the entire year of 2021. The average tx on chain the past 9 months has been about 10-15 cents. Unless you stand here trying to tell everyone that 10 cents is a crazy transaction fee. Quit lying, or better yet quit spreading FUD purposely.
https://bitinfocharts.com/comparison/bitcoin-transactionfees...
https://ycharts.com/indicators/bitcoin_average_transaction_f...
https://www.blockchain.com/charts/fees-usd-per-transaction
https://ycharts.com/indicators/bitcoin_average_transaction_f...
https://www.blockchain.com/charts/fees-usd-per-transaction
So today, the low priority (and for the past few weeks) has been sitting at 6-7 satoshi per vByte. If you do not understand and watch the blocks to realize you can simply set to around 3-4 sats/vB and get in within 2-3 blocks when a block comes along with merely a few hundred transactions in it, sure you're going to pay about 65-75 cents. But I'll pay 10 cents and still get in, while you pay 75 cents. It's not zealotry to tell the truth about using Bitcoin regularly and those that use Bitcoin all understand the fees have been 10-75 cents max all year long. My own sources don't back me up? Anyone using Bitcoin at least once or twice per week the past solid 9 months can attest that transaction fees have been floating from 3-8 sats/vB and you can comb through ALL the blocks you want to figure it out. Or don't figure it out. You're here to spread FUD quite clearly, anyhow.
The fee was NEVER once $62 per tx in ALL of April, I sent numerous transactions all that month long for mere cents.
The fee was NEVER once $62 per tx in ALL of April, I sent numerous transactions all that month long for mere cents.
https://mempool.space/
https://bitinfocharts.com/comparison/bitcoin-median_transact...
And considering I use Bitcoin frequently, and I'm constantly, on a weekly basis sending on chain for 5 cents, 10 cents max. I'm in within a couple blocks, every single time. You are straight up spreading FUD.
And considering I use Bitcoin frequently, and I'm constantly, on a weekly basis sending on chain for 5 cents, 10 cents max. I'm in within a couple blocks, every single time. You are straight up spreading FUD.
> 100% BULLSHIT. The fees on Bitcoin, on chain, have been less than 75 cents the entire year of 2021. The average tx on chain the past 9 months has been about 10-15 cents.
By your own sources your original claims don't hold up. So much for "100% BULLSHIT". Please stop with the zealotry, it makes the entire space look foolish.
By your own sources your original claims don't hold up. So much for "100% BULLSHIT". Please stop with the zealotry, it makes the entire space look foolish.
Let's look at your claims again:
> The fees on Bitcoin, on chain, have been less than 75 cents the entire year of 2021.
The average transaction fee on April 21st was $62.779. You are wrong.
> The average tx on chain the past 9 months has been about 10-15 cents.
Clearly wrong. The data you cite is the median transaction fee, not the average transaction fee. For the lowest median transaction fee the chart shows 22.9 cents. Even that is above your claimed 10-15 cents.
Good for you that you spent less on your transaction, doesn't change the data though.
> The fees on Bitcoin, on chain, have been less than 75 cents the entire year of 2021.
The average transaction fee on April 21st was $62.779. You are wrong.
> The average tx on chain the past 9 months has been about 10-15 cents.
Clearly wrong. The data you cite is the median transaction fee, not the average transaction fee. For the lowest median transaction fee the chart shows 22.9 cents. Even that is above your claimed 10-15 cents.
Good for you that you spent less on your transaction, doesn't change the data though.
Source?
Bitcoin is created out of thin air. Where do you think bitcoins come from?
I'd be even more skeptical about using a government wallet hosted on an Apple / Google app store.
I've been watching this situation from 50K feet and I think the reason they built their own wallet is for the ability, for merchants, to cash out any bitcoin payment in USD instead of BTC using the government swap system
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You need a DUI (Documento Único de Identidad) or Passport number for the Chivo wallet.
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you think the government doesn't have a list of its citizens? I'm sure they have something like a social security number.
There is a National ID Number for everyone with Salvadoran Nationality 18 and older. And also a Tax ID that anyone can apply for.
As someone from Latin America, it's funny to read about Americans' struggle for a countrywide ID and the sense of government control/ freedom.
Here in Mexico the government has our biometrics, there's a national election ID, SSN and a unique "clave de población " .
Here in Mexico the government has our biometrics, there's a national election ID, SSN and a unique "clave de población " .
Found this interesting deck[1] on El Salvador's digital climate while looking for smart phone adoption statistics. It would appear that there are more than enough smart devices to allow for such a transition successfully. Already on Twitter we're seeing crypto-punks there using Bitcoin to pay for their McDonalds, paying something like 0.000002 Bitcoin. I can't help but wonder what the outcome +1 year / + 5 years will be.
[1] https://datareportal.com/reports/digital-2021-el-salvador
[1] https://datareportal.com/reports/digital-2021-el-salvador
I don't know the exact law in El Salvador, but in general "legal tender" does not imply an obligation to accept as payment in stores, it just means that most debts are discharged if the debtor offers (tenders) to settle the debt using a 'legal tender'.
So, for instance, if your plumber did some work for you and sends you an invoice afterwards then that debt is discharged if you offer to settle it using a 'legal tender'.
However, shopping in a store is usually not the same because payments do not settle an existing debt.
Again, I'm not sure exactly what El Salvador's new law entails.
So, for instance, if your plumber did some work for you and sends you an invoice afterwards then that debt is discharged if you offer to settle it using a 'legal tender'.
However, shopping in a store is usually not the same because payments do not settle an existing debt.
Again, I'm not sure exactly what El Salvador's new law entails.
In El Salvador it means an obligation to accept it. Which is good for bitcoin adoption but does reduce people's freedom to refuse it
I'm envisioning a lot of dirty looks from paper cash-preferring shopkeepers to crypto tourists when the tourists buy up all shop's inventory and leave the shopkeeper with just a few numbers in some app.
EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.
EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.
Didn’t the grandparent comment explain that in such a case, legal tender doesn’t apply? There’s no debt in a normal shopping transaction, the shopkeeper is free to accept whatever they wish or reject the transaction entirely.
That's how it works in the US but it's mandatory in El Salvador. I believe the dictator there has been threatening folks who don't accept Bitcoin with punishment. Needless to say this is good for Bitcoin. [1]
[1] https://u.today/el-salvador-government-to-punish-businesses-...
[1] https://u.today/el-salvador-government-to-punish-businesses-...
El Salvador’s adoption goes beyond making it legal tender, they require acceptance:
> every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service
https://theconversation.com/bitcoin-will-soon-be-legal-tende...
> every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service
https://theconversation.com/bitcoin-will-soon-be-legal-tende...
Bitcoins are at like $45k, if somebody comes in to the local CVS or whatever and buys a stick of gum with a bitcoin, are they expected to have $44,999 in change sitting around? That seems... odd.
The law is here:
https://twitter.com/nayibbukele/status/1402446890466217985
Art. 7 states "Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".
So it goes beyond merely saying it's "legal tender".
https://twitter.com/nayibbukele/status/1402446890466217985
Art. 7 states "Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".
So it goes beyond merely saying it's "legal tender".
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I suspect the number of people who would actually do this sort of thing is quite minuscule. They could probably be handled with something like "Well tourist, the cops here think it is a civil matter so you can spend the rest of your vacation dealing with the local legal system if you really want to buy everything in this random shop for some reason."
I suspect more likely some rich people will find it more convenient to pay their tax bill.
I suspect more likely some rich people will find it more convenient to pay their tax bill.
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I didn't mean one tourist buying everything (which would be problematic no matter what the currency was), I meant in the aggregate. I've added an edit to my comment to clarify.
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Bitcoins are currently at $45k, so I guess this would mostly just be an issue at a luxury car place, which... should probably prepare to handle these types of transactions I guess. But that's not like Grandpa's Little Old General Store, so I bet they can handle it.
I'm actually curious how this will be implemented specifically. I guess (although I'm not well-informed on the ecosystem) that most of the places that let you do small cryptocoin transaction either use some smaller coin, or they must have some way of doing fractions of a bitcoin, right? In which case, the fraction system would have to be proprietary, I guess? I can't imagine the law required shopkeepers to use any particular proprietary exchange...
I'm actually curious how this will be implemented specifically. I guess (although I'm not well-informed on the ecosystem) that most of the places that let you do small cryptocoin transaction either use some smaller coin, or they must have some way of doing fractions of a bitcoin, right? In which case, the fraction system would have to be proprietary, I guess? I can't imagine the law required shopkeepers to use any particular proprietary exchange...
Bitcoin was always designed to allow fractions of 1 coin.
Its fundamental unit it the "Satoshi", of which there are 100 million in a "Bitcoin".
Its fundamental unit it the "Satoshi", of which there are 100 million in a "Bitcoin".
The government made a wallet so they can easily convert to USD
And then they walk down the bank 5 minutes later to cash it out?
The law that forces them to accept it also is what gives BTC value in El Salvador.
what an awful waste of energy. Each bitcoin transaction uses the energy equivalent the entire lifespan of a tree. Effectively, each bitcoin transaction is cutting down of tree... in this case, for a hamburger
I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP. The developed world is responsible for climate change, so I guess the poorest have their right to use their money how they want and not in the way some banks or you consider it.
The impact of the lightning network on energy consumption is even neglible...
The impact of the lightning network on energy consumption is even neglible...
> I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP.
The fees are high because the costs are high.
Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls.
If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.
The fees are high because the costs are high.
Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls.
If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.
> If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose
Major banks in El Salvador accept cheques from US banks, sometimes of them without any fees or very low fees. Main disadvantage is that it is slow.
I haven't seen this used as a mainstream remmitance channel though. But an Salvadoran American relative could give their family a checkbook and they could deposit it here.
This is for cheques though. Different from Panama and Mexico whose ACH systems are connected with the US Fed ACH system in a way El Salvador isn't.
Major banks in El Salvador accept cheques from US banks, sometimes of them without any fees or very low fees. Main disadvantage is that it is slow.
I haven't seen this used as a mainstream remmitance channel though. But an Salvadoran American relative could give their family a checkbook and they could deposit it here.
This is for cheques though. Different from Panama and Mexico whose ACH systems are connected with the US Fed ACH system in a way El Salvador isn't.
El Salvador was the site of Ronald Regan's financing of death squads in the 1980s. The cost of preventing these crimes and terrorism pales in comparison to the official terrorism that was perpetrated on that country.
I'm not sure if there's a direct tie to Iran-Contra, but in Nicaragua Regan directly contravened a congressional funding ban and used Iranian and CIA drug money to fund the death squads there. Similar funding sources were probably at play in El Salvador.
I'm not sure if there's a direct tie to Iran-Contra, but in Nicaragua Regan directly contravened a congressional funding ban and used Iranian and CIA drug money to fund the death squads there. Similar funding sources were probably at play in El Salvador.
And all the other fees taken along the way too
https://www.moneyandbanking.com/commentary/2018/2/18/the-stu...
https://www.moneyandbanking.com/commentary/2018/2/18/the-stu...
The fees are inflated because the block size is artificially limited. The mining reward is likely still enough to incentivize miners without any significant fee market, and difficulty adjustment is part of the protocol anyway.
> fees for remitance make up for a large portion of the el salvadors GDP
Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee.
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee.
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
In most cases, economic transactions are beneficial for both parties. Yes, banks are "earning money with the poorest", but only because banks and literally every business engage in activities which (ideally) earn them money. Right now, the poor have a choice of using a banks service, or to not use it. The bank could, I guess, not offer services to the poor, but that seems like you're removing choices from the poor, not protecting them. They don't hunt down poor people and make them use their services. Yes, the poor and rich alike have the right to use their money how they see fit. But I'm curious - if I have a pile of $20 bills here in Florida, how exactly do I 'use it how I want' by letting my grandmom in El Salvador buy food at the local grocer?
The homo economicus would search for the cheapest way to do so, thats why they start to use bitcoin and tranfer it to tjeir grandmom...
Sure, but when a more cost effective technology comes along, it doesn't mean that it indicates that the old way was a rip off or exploitative, especially when the newer method lacks numerous requirements the government put in place for the old method.
Nope. Bitcoin use and mining power are completely uncorrelated. By mining bitcoins, your earn as much as the computational fraction you are representing. So, indeed, there was a race to more and more mining power in the recent years but it can completely be reversed. For example if electricity prices rises.
Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users.
Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users.
> Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users.
No, that is completely inaccurate.
First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
Proof of work systems will always require absurd wastes of energy - that is, by definition, the only way they ensure the correctness of the blockchain.
No, that is completely inaccurate.
First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
Proof of work systems will always require absurd wastes of energy - that is, by definition, the only way they ensure the correctness of the blockchain.
So, you're correct, but the previous poster did that thing we so often do where we go too far to make a correct point.
In this case, the correct point is that the waste of energy is to ensure the security of the blockchain (as you correctly pointed out), and not to process transactions. The marginal cost of processing another transaction is completely negligible compared to the cost of securing the blockchain, and so naive comparisons saying that a single transaction uses as much energy as XXX where XXX is the total energy cost divided by the number of transactions is misguided. You could send a million more transactions and the energy cost wouldn't budge.
Of course, the overreach is in the part where they said a single laptop could run all of Bitcoin. Marginal transactions are cheap, but not that cheap, and a single laptop couldn't secure shit. (Again, all as you correctly pointed out. I just wanted to clarify where everyone was coming from for readers who aren't familiar with how Bitcoin works.)
In this case, the correct point is that the waste of energy is to ensure the security of the blockchain (as you correctly pointed out), and not to process transactions. The marginal cost of processing another transaction is completely negligible compared to the cost of securing the blockchain, and so naive comparisons saying that a single transaction uses as much energy as XXX where XXX is the total energy cost divided by the number of transactions is misguided. You could send a million more transactions and the energy cost wouldn't budge.
Of course, the overreach is in the part where they said a single laptop could run all of Bitcoin. Marginal transactions are cheap, but not that cheap, and a single laptop couldn't secure shit. (Again, all as you correctly pointed out. I just wanted to clarify where everyone was coming from for readers who aren't familiar with how Bitcoin works.)
What? Securing the blockchain and processing transactions is the same thing. What do you think "securing the blockchain" entails other than processing transactions?
The point is the number of transactions in a block could vary, and not require additional hashpower.
Obviously it's limited now by the blocksize (let's not go there). But the point is the "per transaction" figure is based on the currently imposed limits.
Obviously it's limited now by the blocksize (let's not go there). But the point is the "per transaction" figure is based on the currently imposed limits.
Okay, but this has nothing to do with the fact that miners do one job, and this job is processing transactions. They don't have another job that consists in "securing the network", in addition to processing transactions. Therefore the entirety of the energy spent by miners is spent processing transactions.
> No, that is completely inaccurate.
> First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
If you settle everything onchain, maybe (I haven't done the math on this, so I honestly don't know), but storing every transaction for a cup of coffee in a datastore that persists across tens of thousands of computers for the rest of time is absurd.
Long term Bitcoin layer 1 (onchain) is likely to be the settlement layer for large transactions, and other layers (lightning network, etc) will be used for every day activities like buying coffee, sending funds to a friend, etc.
> First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
If you settle everything onchain, maybe (I haven't done the math on this, so I honestly don't know), but storing every transaction for a cup of coffee in a datastore that persists across tens of thousands of computers for the rest of time is absurd.
Long term Bitcoin layer 1 (onchain) is likely to be the settlement layer for large transactions, and other layers (lightning network, etc) will be used for every day activities like buying coffee, sending funds to a friend, etc.
But the total amount of data stored in the Lightning network is even more absurd. Not only do we store "A has paid B 1 SAT" for all time, we actually store "A is paying C 1SAT for B; C is paying D 1SAT for B; E is paying F 1SAT for B; F is paying B 1SAT".
The transactions within an open channel are only stored by the two owners of the channel. The entire network does not need to store, nor does it even get to see these transactions. They can even be private. When the channel is closed none of the channel transactions need to be committed to the blockchain, only the final balances of the channel between the two participants.
A lightning channel does require an onchain bitcoin transaction both to be opened and closed, but while open it supports unlimited transactions within the channel while it is open without increasing the onchain storage burden on the network validation nodes further beyond the two transactions to open and close the channel.
A lightning channel does require an onchain bitcoin transaction both to be opened and closed, but while open it supports unlimited transactions within the channel while it is open without increasing the onchain storage burden on the network validation nodes further beyond the two transactions to open and close the channel.
I'm a layman when it comes to this but doesn't that mean the amount of "channels" is still severely limited? Someone mentioned 220million transactions annually. Even if those channels only open and close the balance once a year that's very little it seems.
Or can there be more than 2 owners of a channel?
Or can there be more than 2 owners of a channel?
A laptop is an exaggeration but the general point that if you reduce the hashrate say 10fold you'll still be processing exactly the same amount of transactions (after the difficulty adjusts at least) is true.
>First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
Completely wrong. Go run a testnet yourself and you will see.
>And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
Completely wrong. Go run a testnet yourself and you will see.
>And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
> Completely wrong. Go run a testnet yourself and you will see.
If you imagine that a laptop has enough hashrate to mine all the world's transactions in realtime, then how do you explain to yourself that the actual Bitcoin network is only able to add a few hundred transactions per second to the chain?
> The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
PoW works because miners have to invest significant resources in building and maintaining their mining rigs. As such, no one who wins the race to add a new block will want that block to contain false transactions, as that would bring down the value of the currency and leave them with extremely expensive mining equipment that is useless (once the deception would be noticed by others).
If the bitcoin network was run on 3 laptops, I could buy 100 laptops and start advertising my own blockchain which reverts the entire previous blockchain and replaces it with transactions I like. Since I can mine many more blocks with my 100 laptops, I can create a longer chain, so all clients will accept my chain and discard the old one, reverting all transactions that ever happened.
Instead, if I wanted to mount such an attack on the actual bitcoin network today, I would have to spend billions of dollars on equipment and electricity - ensuring that I wouldn't want to do so.
If you imagine that a laptop has enough hashrate to mine all the world's transactions in realtime, then how do you explain to yourself that the actual Bitcoin network is only able to add a few hundred transactions per second to the chain?
> The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
PoW works because miners have to invest significant resources in building and maintaining their mining rigs. As such, no one who wins the race to add a new block will want that block to contain false transactions, as that would bring down the value of the currency and leave them with extremely expensive mining equipment that is useless (once the deception would be noticed by others).
If the bitcoin network was run on 3 laptops, I could buy 100 laptops and start advertising my own blockchain which reverts the entire previous blockchain and replaces it with transactions I like. Since I can mine many more blocks with my 100 laptops, I can create a longer chain, so all clients will accept my chain and discard the old one, reverting all transactions that ever happened.
Instead, if I wanted to mount such an attack on the actual bitcoin network today, I would have to spend billions of dollars on equipment and electricity - ensuring that I wouldn't want to do so.
I am struggling the follow the argument through the comment chain. Energy is used to secure the chain via mining; a secure network is required to be a payment system, but the energy usage is not from processing transactions.
Originally the discussion is about people "using Bitcoin to pay for their McDonalds". Then the commenter erroneously stated, in response to that, that a "bitcoin transaction uses the energy equivalent the entire lifespan of a tree". El Salvador is using the lightning network. These transactions are done off-chain. So the transaction fees do not even go to miners. There can be thousands of McDonalds transactions that occur off-chain and are eventually settled on-chain in one transaction. Processing and validating transactions is very computationally easy. You can indeed do it on a laptop.
Mining blocks is a separate issue. If you ignore the competitive security race, then the network can indeed function on a laptop. Most the mining race that is currently occurring is because people are fighting to win the block reward - this would happen even if nobody were transacting, and someone doing a lightning network transaction has truly negligible effect on that energy usage.
When you said "bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin" this shows you don't understand the process, because the difficulty would rise until people can no longer produce blocks so rapidly. You're describing a situation where miners are not even on the same network so it doesnt make sense
Originally the discussion is about people "using Bitcoin to pay for their McDonalds". Then the commenter erroneously stated, in response to that, that a "bitcoin transaction uses the energy equivalent the entire lifespan of a tree". El Salvador is using the lightning network. These transactions are done off-chain. So the transaction fees do not even go to miners. There can be thousands of McDonalds transactions that occur off-chain and are eventually settled on-chain in one transaction. Processing and validating transactions is very computationally easy. You can indeed do it on a laptop.
Mining blocks is a separate issue. If you ignore the competitive security race, then the network can indeed function on a laptop. Most the mining race that is currently occurring is because people are fighting to win the block reward - this would happen even if nobody were transacting, and someone doing a lightning network transaction has truly negligible effect on that energy usage.
When you said "bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin" this shows you don't understand the process, because the difficulty would rise until people can no longer produce blocks so rapidly. You're describing a situation where miners are not even on the same network so it doesnt make sense
This is pretty muddled up.
Let's look at it like this: a block on the blockchain has a maximum size. A transaction has a minimum size. So, each block contains a maximum number of transactions. Miners must waste a certain amount of energy hashing a block to ensure the security of the network (through the incentive mechanisms described above).
So, we can compute a practical energy/block, which translates to an energy/typical transaction.
Now, the block size is a kind of free parameter - the blockchain guarantees wouldn't be significantly different with 1GB blocks instead of 1MB. And that, in turn, would reduce the energy cost per transaction dramatically, and allow the network to process more transactions/second.
Similarly, if there were fewer people putting fewer resources into mining bitcoin, the energy cost/block could go down. This would affect the security of the network though, as it also brings down the cost of a 51% attack.
But miners are opposed to such changes, which have been proposed before. So, in practice, the bitcoin network as it is today has a huge energy cost/mined transaction.
Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Let's look at it like this: a block on the blockchain has a maximum size. A transaction has a minimum size. So, each block contains a maximum number of transactions. Miners must waste a certain amount of energy hashing a block to ensure the security of the network (through the incentive mechanisms described above).
So, we can compute a practical energy/block, which translates to an energy/typical transaction.
Now, the block size is a kind of free parameter - the blockchain guarantees wouldn't be significantly different with 1GB blocks instead of 1MB. And that, in turn, would reduce the energy cost per transaction dramatically, and allow the network to process more transactions/second.
Similarly, if there were fewer people putting fewer resources into mining bitcoin, the energy cost/block could go down. This would affect the security of the network though, as it also brings down the cost of a 51% attack.
But miners are opposed to such changes, which have been proposed before. So, in practice, the bitcoin network as it is today has a huge energy cost/mined transaction.
Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Do you know what the lightning network is? It changes all of these relationships, and it is key to what we are talking about, but you didnt mention it in this comment.
Separately to the lightning network, the security (hashrate, energy usage) is still not directly linked to the number of on-chain transactions that are processed. You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions. You can have a less-secure blockchain that does many more transactions than bitcoin with low energy usage (altcoins exist) - if these are low value transactions then people won't even be incentivised to attack it. The relationship is NOT just energy/transaction. Your estimated energy/transaction value will keep changing because that's not the relationship; the new coins in the block reward will eventually drop to zero, the value processed by the network will change, the ASIC development situation will change, etc. It's like finding a runner that eats icecream and computing icecream/kilometre.
>Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
Separately to the lightning network, the security (hashrate, energy usage) is still not directly linked to the number of on-chain transactions that are processed. You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions. You can have a less-secure blockchain that does many more transactions than bitcoin with low energy usage (altcoins exist) - if these are low value transactions then people won't even be incentivised to attack it. The relationship is NOT just energy/transaction. Your estimated energy/transaction value will keep changing because that's not the relationship; the new coins in the block reward will eventually drop to zero, the value processed by the network will change, the ASIC development situation will change, etc. It's like finding a runner that eats icecream and computing icecream/kilometre.
>Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
What do off-chain transactions like Lightning have to do with the transaction costs of the blockchain itself? We can trade bitcoin over HN comments, that doesn't mean that the bitcoin blockchain is involved in our trade.
The whole discussion is about the Bitcoin blockchain itself. Altcoins, lightning, payment apps etc are all entirely irrelevant to this point.
The bitcoin blockchain as it exists today has a pretty well fixed energy cost per transaction. All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc.
But what you are claiming is like saying that it's meaningless to talk about the gas/mile of a diesel Ford Mustang, since you could always change the engine (block size), or change from gas to another fuel (better ASICs), or choose to ship the car by ferry somewhere(use Lightning instead)!
> You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions.
Why does it matter that "it's not caused by " the number of transactions? As long as the block size is fixed, the number of transactions that can be processed by the existing bitcoin network is directly linked to the energy expenditure of the existing bitcoin network. Other hypothetical versions of the bitcoin network could achieve other energy/transaction thresholds. But the one we have today is extremely wasteful.
> Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
The whole discussion is about the Bitcoin blockchain itself. Altcoins, lightning, payment apps etc are all entirely irrelevant to this point.
The bitcoin blockchain as it exists today has a pretty well fixed energy cost per transaction. All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc.
But what you are claiming is like saying that it's meaningless to talk about the gas/mile of a diesel Ford Mustang, since you could always change the engine (block size), or change from gas to another fuel (better ASICs), or choose to ship the car by ferry somewhere(use Lightning instead)!
> You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions.
Why does it matter that "it's not caused by " the number of transactions? As long as the block size is fixed, the number of transactions that can be processed by the existing bitcoin network is directly linked to the energy expenditure of the existing bitcoin network. Other hypothetical versions of the bitcoin network could achieve other energy/transaction thresholds. But the one we have today is extremely wasteful.
> Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
The block reward will continue to repeatedly halve over time until it reaches zero and dramatically decreases the incentive to mine. That requires no changes.
>"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
Going by this analogy, you are commenting on an article about maglev trains. The article is about lightning network transactions. So you've gone completely off-topic? Why even talk about "transaction costs of the blockchain itself" if you think lightning transactions arent bitcoin transactions?
>What do off-chain transactions like Lightning have to do with the transaction costs of the blockchain itself?
Facilitating off-chain transactions lowers demand for on-chain transactions. Off-chain transactions arent possible without the underlying blockchain, yet they can fulfill the use-case of small bitcoin transactions. You can't separate the two.
>All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc. But what you are claiming...
Back up the comment chain you were arguing that changing electricity prices etc would not affect the energy usage... I think you have changed what you are arguing about. Previously you disagreed with this:
"Bitcoin use and mining power are completely uncorrelated. By mining bitcoins, your earn as much as the computational fraction you are representing. So, indeed, there was a race to more and more mining power in the recent years but it can completely be reversed. For example if electricity prices rises."
>"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
Going by this analogy, you are commenting on an article about maglev trains. The article is about lightning network transactions. So you've gone completely off-topic? Why even talk about "transaction costs of the blockchain itself" if you think lightning transactions arent bitcoin transactions?
>What do off-chain transactions like Lightning have to do with the transaction costs of the blockchain itself?
Facilitating off-chain transactions lowers demand for on-chain transactions. Off-chain transactions arent possible without the underlying blockchain, yet they can fulfill the use-case of small bitcoin transactions. You can't separate the two.
>All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc. But what you are claiming...
Back up the comment chain you were arguing that changing electricity prices etc would not affect the energy usage... I think you have changed what you are arguing about. Previously you disagreed with this:
"Bitcoin use and mining power are completely uncorrelated. By mining bitcoins, your earn as much as the computational fraction you are representing. So, indeed, there was a race to more and more mining power in the recent years but it can completely be reversed. For example if electricity prices rises."
I hear where you are coming from.
But changing the blocksize is just a software change. It doesn't require outlay on a "bigger engine", or any new engineering. The "existing bitcoin network" could switch to it with a 1 line change in the code.
So it's not quite the same as some of your examples.
But changing the blocksize is just a software change. It doesn't require outlay on a "bigger engine", or any new engineering. The "existing bitcoin network" could switch to it with a 1 line change in the code.
So it's not quite the same as some of your examples.
> just a software change
It's not "just" a software change. It's a huge political and organizational issue. It has been proposed and agreed and disagreed and fought over for many years, with no plausible change in site.
Turns out, changing fundamental limits of a truly distributed system is actually very hard. True, not entirely for engineering reasons, but that makes it even worse - engineering can in principle be solved, people problems can be forever.
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Bl...
It's not "just" a software change. It's a huge political and organizational issue. It has been proposed and agreed and disagreed and fought over for many years, with no plausible change in site.
Turns out, changing fundamental limits of a truly distributed system is actually very hard. True, not entirely for engineering reasons, but that makes it even worse - engineering can in principle be solved, people problems can be forever.
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Bl...
You are correct! The other person is wrong. Transaction volume has almost zero relationship with mining energy usage (there are some very subtle connections, but those nuances are hardly worth getting into for this discussion).
Please stop you clearly don't understand this at all
Isn't the security of the blockchain fundamentally tied to the mining difficultly?
I don't see how you could significantly reduce the energy usage without sacrificing security (unless you make structural changes such as moving to POS)
I don't see how you could significantly reduce the energy usage without sacrificing security (unless you make structural changes such as moving to POS)
You could reduce the energy use per-transaction if the block size limit was increased.
That's not gonna happen at this stage however.
That's not gonna happen at this stage however.
That's not how either Bitcoin or electricity pricing works.
Bitcoin is secure only under the assumption that a 51% attack is computationally difficult, i.e., that it is not cheaper to acquire more mining capacity than the non-malicious miners collectively have (whether by creating a conspiracy of existing miners, or by becoming new miners) than to actually pay whatever transaction you're trying to get away with not paying.
This means two things (which are, in a sense, the same thing in two different directions).
First, Bitcoin needs to have a nontrivial fraction of the world's computational power in order to be secure. If mining happens on a laptop, well, I personally own at least two laptops, so I can easily double-spend coins, making the currency worthless. It doesn't have to be 51% of the world's total computational power, but it has to be enough that nobody can easily and cheaply put together enough additional power to mine false chains at a rate that keeps up with the non-malicious miners.
Second, if it were ever the case that secure mining was happening on a single laptop, that would mean that this one laptop represents a huge portion of humanity's computing power, meaning that, first of all, the fair market value of being able to use this laptop would be incredibly high (both because it needs to be high enough that a double-spend attack isn't profitable, and because of simple supply and demand), and second, there would be a separate moral question of why we're using this laptop to mine Bitcoin instead of, say, powering any of the scientific research (like vaccine development) that now has to happen on TI-83s.
It is technically true that Bitcoin could "work" with mining only happening on a laptop (and probably did "work" in this sense when Satoshi was developing it on his personal laptop), but that's like saying that, say, MD5 is a "secure" hash provided the attacker only has pen and paper. True, but that's not what anyone means by "secure."
Bitcoin is secure only under the assumption that a 51% attack is computationally difficult, i.e., that it is not cheaper to acquire more mining capacity than the non-malicious miners collectively have (whether by creating a conspiracy of existing miners, or by becoming new miners) than to actually pay whatever transaction you're trying to get away with not paying.
This means two things (which are, in a sense, the same thing in two different directions).
First, Bitcoin needs to have a nontrivial fraction of the world's computational power in order to be secure. If mining happens on a laptop, well, I personally own at least two laptops, so I can easily double-spend coins, making the currency worthless. It doesn't have to be 51% of the world's total computational power, but it has to be enough that nobody can easily and cheaply put together enough additional power to mine false chains at a rate that keeps up with the non-malicious miners.
Second, if it were ever the case that secure mining was happening on a single laptop, that would mean that this one laptop represents a huge portion of humanity's computing power, meaning that, first of all, the fair market value of being able to use this laptop would be incredibly high (both because it needs to be high enough that a double-spend attack isn't profitable, and because of simple supply and demand), and second, there would be a separate moral question of why we're using this laptop to mine Bitcoin instead of, say, powering any of the scientific research (like vaccine development) that now has to happen on TI-83s.
It is technically true that Bitcoin could "work" with mining only happening on a laptop (and probably did "work" in this sense when Satoshi was developing it on his personal laptop), but that's like saying that, say, MD5 is a "secure" hash provided the attacker only has pen and paper. True, but that's not what anyone means by "secure."
They are using lightning wallets. So no on chain settling. No (extra) trees were harmed for hamburgers (though obviously opening and closing of channels and initial mining it self is energy intensive).
Actually, they are not even using lighning wallets. They are using a centralized payment processor that has personal accounts for users, like any other payment app. This centralized processor happens to use lightning wallets in its backend, but there is no 1:1 mapping of payment_account:lightning_wallet. And since Lightning itself doesn't interact with the blockchain except when you open/close payment channels, there is no actual use of bitcoin in the whole scheme.
Which is of course to be expected, as the bitcoin network is entirely unable to process the transactions of a small rural town.
Basically, people in El Salvador will use a centralized payment app that happens to denominate prices in Bitcoin. It will be interesting to see how much this actually works with the extreme volatility of Bitcoin, but for a country that is apparently desperate to get foreign value into the country it may be the worse option, except for all the others.
Which is of course to be expected, as the bitcoin network is entirely unable to process the transactions of a small rural town.
Basically, people in El Salvador will use a centralized payment app that happens to denominate prices in Bitcoin. It will be interesting to see how much this actually works with the extreme volatility of Bitcoin, but for a country that is apparently desperate to get foreign value into the country it may be the worse option, except for all the others.
I think you are spreading misinformation. Your whole comment is absolutely wrong.
[0]: https://twitter.com/OpenNodeCo/status/1435264127241527306
[0]: https://twitter.com/OpenNodeCo/status/1435264127241527306
Chivo wallet, the official standard and the new national wallet of El Salvador, evidently has an interface with Lightning and the Bitcoin network, and it is an optional way for merchants and consumers in El Salvador to begin accepting payments denominated in Bitcoin or USD.
Nobody is required to use Chivo, but people are required to accept legal tender. There's no reason to expect that Chivo-Chivo transfers will go to the trouble of opening individual lightning channels for each user, which costs non trivial amounts of money for each opened and closed channel.
It would make sense that users of the app can settle with each other and it doesn't so much as escape the four walls of a database at Chivo-HQ. But McDonalds is a multi-national enterprise and won't be trusting Chivo (or any El-Salvador official banking infra, I'd assume) to manage their wallets.
It is really cool to see a (hopefully) successful application of Lightning on Bitcoin in the wild, from a person who has been nay-saying about Lightning. I will be really glad to see it succeed. But I'm dubious about the success of this app.
One should hope the two successes are not tied to each other – it's encouraging that there are other companies. I have no way to judge Chivo and I've never used their software, but I have little trust of governments to implement complex systems well, and if there ever was a case study of a burgeoningly complex system, I think Lightning and Bitcoin is the big one.
Nobody is required to use Chivo, but people are required to accept legal tender. There's no reason to expect that Chivo-Chivo transfers will go to the trouble of opening individual lightning channels for each user, which costs non trivial amounts of money for each opened and closed channel.
It would make sense that users of the app can settle with each other and it doesn't so much as escape the four walls of a database at Chivo-HQ. But McDonalds is a multi-national enterprise and won't be trusting Chivo (or any El-Salvador official banking infra, I'd assume) to manage their wallets.
It is really cool to see a (hopefully) successful application of Lightning on Bitcoin in the wild, from a person who has been nay-saying about Lightning. I will be really glad to see it succeed. But I'm dubious about the success of this app.
One should hope the two successes are not tied to each other – it's encouraging that there are other companies. I have no way to judge Chivo and I've never used their software, but I have little trust of governments to implement complex systems well, and if there ever was a case study of a burgeoningly complex system, I think Lightning and Bitcoin is the big one.
From a screenshot I earlier today, McD El Salvador is using Opennode.com for Bitcoin payments.
I'm hearing reports (unsubstantiated, but reports) that Chivo is built on "a partition" of lightning and that it will be difficult for people who want to get their money out.
I don't know enough about lightning to dispute it, but it would seem these reports about Opennode and McDonalds are in conflict with those reports. Do you have any local color or stories to add? I'm interested in what they actually are technically doing, I didn't know that Lightning could be "partitioned" but my Technical Spanish is rusty.
Are there any controls that would prevent folks from using Chivo to spend their $30 literally anywhere they wanted, in as much as there is a Bitcoin receiving address for them? (If I opened it up to "all lightning-capable nodes" would that change the story? I understand little in spite of knowing lots about Bitcoin and friends, something something, needs to be a route/path from one node to another?)
I don't know enough about lightning to dispute it, but it would seem these reports about Opennode and McDonalds are in conflict with those reports. Do you have any local color or stories to add? I'm interested in what they actually are technically doing, I didn't know that Lightning could be "partitioned" but my Technical Spanish is rusty.
Are there any controls that would prevent folks from using Chivo to spend their $30 literally anywhere they wanted, in as much as there is a Bitcoin receiving address for them? (If I opened it up to "all lightning-capable nodes" would that change the story? I understand little in spite of knowing lots about Bitcoin and friends, something something, needs to be a route/path from one node to another?)
Chivo is a "custodial" wallet, so Chivo is in charge of the funds and can block sending those anywhere if they want.
From the current reports the $30 needs to be send to another Chivo to be able to spend it on whatever. After this initial back and forth, it's spendable anywhere.
Chivo has just usual Lightning node as any other, you can follow it publicly here: https://amboss.space/node/02f72978d40efeffca537139ad6ac9f099... and you can see that they have direct channels with IBEX and others, so payment to many businesses from Chivo can literally be done with 0 sats fee. IBEX then has channel with OpenNode, so when paying to McDonalds there's a chance that IBEX will take some fee.
Chivo has just usual Lightning node as any other, you can follow it publicly here: https://amboss.space/node/02f72978d40efeffca537139ad6ac9f099... and you can see that they have direct channels with IBEX and others, so payment to many businesses from Chivo can literally be done with 0 sats fee. IBEX then has channel with OpenNode, so when paying to McDonalds there's a chance that IBEX will take some fee.
I was a bit too direct - it's true that officially bitcoin transactions must be accepted, and any valid bitcoin app would work - including anything based on Lightning.
But in practice, it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will). Instead, most will use an app that hides all the complexity from them, and since the government is advertising one particular app, that will likely see overwhelming use.
And then, the official app or any other app will likely avoid wasting money on lightning or bitcoin to settle app-app transfers, and instead settle most transactions in their own centralized backend.
But in practice, it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will). Instead, most will use an app that hides all the complexity from them, and since the government is advertising one particular app, that will likely see overwhelming use.
And then, the official app or any other app will likely avoid wasting money on lightning or bitcoin to settle app-app transfers, and instead settle most transactions in their own centralized backend.
> I was a bit too direct
You're just moving the goal posts. Here was your original statement:
> Actually, they are not even using lighning wallets
Here is your updated statement:
> it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will)
You started with what sounded like fact, then revealed that the justification is just the invocation of a thought experiment. There's nothing but speculation here. You're right this may happen, but a hyperbolic angry comment isn't the way to add to the discussion. This is why HN cryptocurrency threads are garbage dumps.
You're just moving the goal posts. Here was your original statement:
> Actually, they are not even using lighning wallets
Here is your updated statement:
> it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will)
You started with what sounded like fact, then revealed that the justification is just the invocation of a thought experiment. There's nothing but speculation here. You're right this may happen, but a hyperbolic angry comment isn't the way to add to the discussion. This is why HN cryptocurrency threads are garbage dumps.
The two parts you quoted aren't as different as you claim, and are still more correct than the one they're responding to:
>They are using lightning wallets.
If your real intent is to improve discussion, maybe you should address that instead of erroneously invoking the "move the goalposts" fallacy. Moreover, I think both comments had substance to them, especially when compared to, again, the original comment about the lightning network.
>They are using lightning wallets.
If your real intent is to improve discussion, maybe you should address that instead of erroneously invoking the "move the goalposts" fallacy. Moreover, I think both comments had substance to them, especially when compared to, again, the original comment about the lightning network.
Do you know the ground truth about which apps, nodes, and Layer 2 protocols are being used by El Salvadorans right now? If not then all of these are just posts in a chain of speculation. I don't, and I'm not going to claim that I know what's happening. But invoking suspicion to make a strong claim isn't the way to have an effective or illuminating conversation.
Yes, my original statement was too direct - I said "they are not using lightning wallets" in response to someone saying "they are using lightning wallets".
The non-hyperbolic statement would have been "they will (99.99% certainly) not be using even lightning wallets".
Still, while this is a forward-looking statement, it is more than idle speculation - the government is encouraging the population to install one specific app, even offering money to anyone that does. In contrast, running your own lightning channels is known to be very difficult to do, so it is a priori extremely unlikely for a large proportion of the population to run their own.
The non-hyperbolic statement would have been "they will (99.99% certainly) not be using even lightning wallets".
Still, while this is a forward-looking statement, it is more than idle speculation - the government is encouraging the population to install one specific app, even offering money to anyone that does. In contrast, running your own lightning channels is known to be very difficult to do, so it is a priori extremely unlikely for a large proportion of the population to run their own.
deactive hn account
pull the plug of your computer
leave the metaverse
pull the plug of your computer
leave the metaverse
The capacity of BTC is so low that if it had universal adoption, every human being could do around one or two transactions in their lifetime.
What's your source on this? Are you figuring in the Lightning Network?
The figures for the bitcoin blockchain are public and monitored by most exchanges. They are at about 11000 transactions/hour[0] - ~3 transactions/second for the entire world.
The lightning network is a separate system for transactions denominated in bitcoin. It does nothing to modify the capacity of the bitcoin network, it creates a way to do transactions WITHOUT using the bitcoin network (except occasionally).
[0] https://bitinfocharts.com/bitcoin/
The lightning network is a separate system for transactions denominated in bitcoin. It does nothing to modify the capacity of the bitcoin network, it creates a way to do transactions WITHOUT using the bitcoin network (except occasionally).
[0] https://bitinfocharts.com/bitcoin/
> What's your source on this?
The well known numbers for BTC transactions per seconds, number of people on the planet, average life expectancy, and maths.
> Are you figuring in the Lightning Network?
No.
> Are you figuring in the Lightning Network?
No.
You can use any lightning wallet in El Salvador. There’s no need to use a particular provider, or even a provider at all. If you want to buy the requisite hardware (I think a raspberry pi and a USB SSD is the budget approach) you can completely self-host.
True, but how many people will use anything other than the officially recommended app? How many businesses even will go to the trouble of looking for an app to use, other than the default?
So centralized frontend -> middle-something, decentralized backend :) - lol
You have the first part right, but to insinuate that lightning is not using the bitcoin blockchain is entirely wrong. In the case of lightning, the bitcoin blockchain is only used in a dispute over funds. This is how you properly scale a decentralized blockchain.
So the way to scale the blockchain is to avoid putting transactions on it. If I promise you that if you give me your burger you'll have 5SAT from me, and later you ask for my water and offer to reduce my debt to 4SAT in exchange, did we use the bitcoin blockchain in our transaction?
With ligthning, you're not using the bitcoin network to process transactions. If we opened a lightning channel for our 2 personal bitcoin wallets, and I paid you 1000SAT over the channel, and then someone checked my bitcoin wallet, they would see that I still have all those SATs (of course, I can't double spend them).
With ligthning, you're not using the bitcoin network to process transactions. If we opened a lightning channel for our 2 personal bitcoin wallets, and I paid you 1000SAT over the channel, and then someone checked my bitcoin wallet, they would see that I still have all those SATs (of course, I can't double spend them).
Jo sends $100 from Bank A to Alice at Bank B, then Bob sends $100 from Bank B to Jo. The banks will have no USD to settle at clearing as a result.
Did Jo and Alice participate in a USD transaction?
Did Jo and Alice participate in a USD transaction?
Yes, they traded in USD. But they did not use the Fed's accounting systems to do so.
Similarly, if I send you 1000SAT through the lightning network, I am trading in bitcoin, but not using the bitcoin blockchain to do so.
Sure, Lightning relies on guarantees offered by the bitcoin blockchain to promise payment security. But it's not the same thing, and the Lightning network could become compromised even if the bitcoin blockchain remain secure For example, if Lightning accidentally started adding an extra 0 to transactions, if I send you 100 SAT over the LN you could see that you are receiving 1000 SAT and send me some products. Later, when the channel is closed, the bitcoin blockchain would refuse the final transfer, but it may be too late.
Similarly, if I send you 1000SAT through the lightning network, I am trading in bitcoin, but not using the bitcoin blockchain to do so.
Sure, Lightning relies on guarantees offered by the bitcoin blockchain to promise payment security. But it's not the same thing, and the Lightning network could become compromised even if the bitcoin blockchain remain secure For example, if Lightning accidentally started adding an extra 0 to transactions, if I send you 100 SAT over the LN you could see that you are receiving 1000 SAT and send me some products. Later, when the channel is closed, the bitcoin blockchain would refuse the final transfer, but it may be too late.
I think that is a great analogy. If you view Bitcoin on the main blockchain as M0 money supply, then side channels like the Lightning Network and other centralized payment processors that have been popping up can be viewed as M1 and more commonly M2.
If Bitcoin's original thesis of truly decentralized P2P cash still holds, then it should be viewed as an M0 money supply. Financial services and products build on top of and separately from the main chain make sense as analogues to reserve banks and payment processors that do not handle the majority of transfers in physical cash.
If Bitcoin's original thesis of truly decentralized P2P cash still holds, then it should be viewed as an M0 money supply. Financial services and products build on top of and separately from the main chain make sense as analogues to reserve banks and payment processors that do not handle the majority of transfers in physical cash.
I don't like that analogy. Unlike M0 and M1, every BTC on the lightning network represents one BTC on the L1 chain. The L1 funds are locked in order to participate in L2.
Unlike current USD, but like USD before Nixon abolished the gold standard, right?
That's a promise that Lightning makes and that you can check in their code today, but it is not a fundamental guarantee the way that the bitcoin blockchain offers guarantees.
Sure, if you changed the code of lightning then it would work differently. If you changed the code of the L1 chain it could work differently too. How are those guarantees different?
Calling it a promise makes it sound like there's counterparty risk and you're relying on them not changing the code. Changing the lightning code would have no effect on your funds locked into lightning using the old code.
Calling it a promise makes it sound like there's counterparty risk and you're relying on them not changing the code. Changing the lightning code would have no effect on your funds locked into lightning using the old code.
How do you reach that number? (CO2/block) / (transactions/block)?
I imagine these transactions are being done over the lightning network or something like that(I could be wrong on this though), in which case that calculation wouldn’t give the right answer.
In addition, I think I would evaluate the CO2 costs per transaction based on the contributions to the mining reward (because this is the part of transaction which has an influence on how much power people use to mine), which I think for bitcoin is still relatively small compared to the block reward part? Well, there’s also the influence on the price that making transactions has.
I imagine these transactions are being done over the lightning network or something like that(I could be wrong on this though), in which case that calculation wouldn’t give the right answer.
In addition, I think I would evaluate the CO2 costs per transaction based on the contributions to the mining reward (because this is the part of transaction which has an influence on how much power people use to mine), which I think for bitcoin is still relatively small compared to the block reward part? Well, there’s also the influence on the price that making transactions has.
Check the numbers. Bitcoin is just not worth it's ecological footprint: https://digiconomist.net/bitcoin-energy-consumption
That's new to me. It seems the argument hinges on this fact, "Bitcoin could therefore theoretically handle around 220 million transactions annually."
I think the assumption that there will be no innovation in this space, optimizations will never decrease the amount of computing resources required for a bitcoin transaction, and nothing can be done, is probably incorrect.
Some prospects:
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Ef...
I think the assumption that there will be no innovation in this space, optimizations will never decrease the amount of computing resources required for a bitcoin transaction, and nothing can be done, is probably incorrect.
Some prospects:
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Ef...
The pollution is happening right now. You must realize that appealing to a hypothetical future solution doesn't excuse us from our obligation to do things right in the present.
Can you outline how that could have worked for cars, trains, and all other automation, which were all extremely polluting and inefficient, and were slowly refined over a course of XX century?
Not necessarily with the Lightning Network. Strike is actively advising El Salvador in this, they develop a lightning app.
Best part is the President trolling the IMF on Twitter: https://twitter.com/nayibbukele/status/1435263064933285898
Yea, best to troll on Twitter than fix your country that has the literal highest homicide rate in the world.
Murder good for Bitcoin?
Murder good for Bitcoin?
> Yea, best to troll on Twitter than fix your country that has the literal highest homicide rate in the world.
It used to be like that. Now the homicide rate is the lowest in modern history of El Salvador.
It used to be like that. Now the homicide rate is the lowest in modern history of El Salvador.
Fixing crippling poverty a big part of fixing murder. The president thinks that this is their path to leap-frogging into the lead w/ a digital economy and giving people opportunities not linked to drugs and crime.
Is it how I do it? Probably not exactly. But it's disingenuous to say that economic and financial changes are not a piece of fixing social problems like persistent crime.
Is it how I do it? Probably not exactly. But it's disingenuous to say that economic and financial changes are not a piece of fixing social problems like persistent crime.
He fixed the homicide rate already. [0]
[0] https://foreignpolicy.com/2021/03/03/el-salvador-homicide-hi...
[0] https://foreignpolicy.com/2021/03/03/el-salvador-homicide-hi...
... by looking the other way while the cartels operate with impunity. My understanding was there was a handshake deal with the narcos that if they stopped murdering they'd stop checking in on them. [1]
So yes, if you allow the state to become an arm of the cartels then I suppose you can call it a job well done that they're not murdering as many people.
[1] https://www.bbc.com/news/world-latin-america-54192736
So yes, if you allow the state to become an arm of the cartels then I suppose you can call it a job well done that they're not murdering as many people.
[1] https://www.bbc.com/news/world-latin-america-54192736
Seems like a reasonable decision to me. I don't see how else the government could control the cartels. Plus it's got to be decent for their economy.
> I don't see how else the government could control the cartels.
The use of “else” implies that this surrender constitutes the “government” controlling the cartels rather than vice versa. In fact, the cartels are the government, they’ve just outsourced the boring and less-profitable aspects of governing to the entity that calls itself the “government”, as long as it stays in line.
(Which, to be fair, hardly makes El Salvador unique.)
The use of “else” implies that this surrender constitutes the “government” controlling the cartels rather than vice versa. In fact, the cartels are the government, they’ve just outsourced the boring and less-profitable aspects of governing to the entity that calls itself the “government”, as long as it stays in line.
(Which, to be fair, hardly makes El Salvador unique.)
Yes, let's all surrender to the criminals. Embrace the inescapable mad-max future.
Maybe the Sicilians should run for office in Italy?
Maybe the Sicilians should run for office in Italy?
Be the change you want in this world. Why don't you go to El Salvador yourself and "fix" these criminals. I can't wait to see the results.
Is civil war forever really the best policy? At some point it makes sense to realize war is costly, both in terms of lives and the economy. When is it time to just try to make the best peace you can?
Is acquiescing to violent murderers and criminals?
If it stops them from murdering as much, it might be? The options seem to be they murder indiscriminately because they pretty much control the government or they murder less indiscriminately because they came to an agreement on when it's ok to murder with the government. I think option 2 is better, but different normative ethical philosophies certainly disagree.
[deleted]
A middle finger to the IMF sharks is a good start to fix a country.
> A middle finger to the IMF sharks is a good start to fix a country.
On the one hand, I’m no IMF fan and appreciate how that abstractly could be part of the beginning of a better fix than typically comes of working with the IMF.
On the other hand, in practice it seems usually to be part of a flag-waving, nationalist, foreigners-are-the-problem distraction for regime leaders implementing either looting the country or tightening an authoritarian fist around it under the guise of economic/financial reforms not beholden to foreigners (but any of whose bad effects will be blamed on foreign interference.)
On the one hand, I’m no IMF fan and appreciate how that abstractly could be part of the beginning of a better fix than typically comes of working with the IMF.
On the other hand, in practice it seems usually to be part of a flag-waving, nationalist, foreigners-are-the-problem distraction for regime leaders implementing either looting the country or tightening an authoritarian fist around it under the guise of economic/financial reforms not beholden to foreigners (but any of whose bad effects will be blamed on foreign interference.)
Sure but the IMF has been no friend of poorer countries for a while now. And accepting Bitcoin as legal tender is _probably_ not a nationalist/isolationist move.
The UK started the foreigner blame game in 2016. It will probably get worse in other nations.
I don't know about "sharks"... The only reason the IMF gets involved in a country is because the government asked for a loan from the IMF.
[deleted]
I have the feeling you don't really care about El Salvador's homicide rate.
I'm sure most Americans do (along with the country's corruption, poverty, and overall decline) as it's part of the reason El Salvadorians are flooding the USA over the southern border
My god, an actual meme trader is running a country and using its bank as his Robinhood account.
Yes that'll show those checks notes professionals.
The IMF is of course the entity who had to bail out the entire country of Albania when they all got into a massive ponzi scheme, jailed their finance minister and had a civil war over it.
The IMF is of course the entity who had to bail out the entire country of Albania when they all got into a massive ponzi scheme, jailed their finance minister and had a civil war over it.
"Professionals."
That's a funny way to define criminals.
That's a funny way to define criminals.
[citation needed]
Maybe parent is referring to the conviction of Lagarde, former managing director of the IMF: https://en.wikipedia.org/wiki/Christine_Lagarde#Conviction_o...
I read the whitepaper around early 2011 if my memory serves right. I remember finding it rather intriguing but also quite far-fetched for the lack of a better word. A whacky thought experiment on how to reimagine money only just after the GFC. Now 10 years later that whacky thought experiment is an official tender of a country. We truly live in interesting times :)
Can't take you serious if you find it "whacky" or "far-fetched".
As a country where remittances make up roughly 20% of the GDP, and with remittance fees as high as 20% or more, this could boost GDP by 4-5%. Not surprising to see them be the first to do this. Others will likely follow.
> remittance fees as high as 20% or more
Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee.
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee.
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
Allowing BTC to function as currency bypasses the fiat conversion at the ATM; so your statement emboldens the argument for El Salvador making it a legal tender.
Well if you include the fact you have to pay 1-2% to an exchange to move USD->BTC, and your $0.50-60.00 transaction fee then wait a day or so, and deal with astronomical FOREX risk in the meantime (like today's 30% instant drop in BTC) suddenly Western Union doesn't look so bad.
Especially since Western Union actually hands you cash which you have to get out of one of the Bitcoin ATMs that eats 20% of your withdrawal lol.
Remember Strike is a centralized custodial wallet offering so not actually Bitcoin. They only use their own private LN to transfer Bitcoin between their own two custodial accounts (which they could elide entirely by using a spreadsheet lol).
If they really cared about remittances Bukele would make a deal with TransferWise. That's not what this is about, at all.
Especially since Western Union actually hands you cash which you have to get out of one of the Bitcoin ATMs that eats 20% of your withdrawal lol.
Remember Strike is a centralized custodial wallet offering so not actually Bitcoin. They only use their own private LN to transfer Bitcoin between their own two custodial accounts (which they could elide entirely by using a spreadsheet lol).
If they really cared about remittances Bukele would make a deal with TransferWise. That's not what this is about, at all.
What exchange are you using? A major exchange like Kraken charges ~.25% for small traders and lower for bigger ones. You can also buy face to face from someone; if you're lucky someone may need to dump some coin and be willing to trade at par with market.
If I'm an el salvadoran with no documentation in the US I can send my $15k wages for like $40 to any individual in El Salvador (who can now use it as currency once on the appropriate local network) without getting rammed by Uncle Sam's large dong while trying to transfer. It's incomparable to Western Union.
If I'm an el salvadoran with no documentation in the US I can send my $15k wages for like $40 to any individual in El Salvador (who can now use it as currency once on the appropriate local network) without getting rammed by Uncle Sam's large dong while trying to transfer. It's incomparable to Western Union.
Coinbase. Where I suspect most people actually transact.
Can you think of a traditional international transfer service that has better rates for <1k transfer than coinbase (0.5%) ? I could buy LTC or BCH on coinbase and have pennies of transaction fees beyond the exchange fees.
I think the only thing cheaper may be to find some company that allows international wire for very cheap, and that normally requires holding a lot of fiat in the bank.
I think the only thing cheaper may be to find some company that allows international wire for very cheap, and that normally requires holding a lot of fiat in the bank.
0.5% + an on-chain transaction fee, which varies between $0.50 and $60.00, and of course, you have to price in exchange rate slippage over the course of your (a) initial transaction and (b) the hours-long confirmation times of a BTC payment. BTCs top tercile realized volatility is 79% [2]. Then there's the risk your exchange just up and keeps your money (counter-party risk, see Quadriga). Or that the recipients exchange does (counter-party risk, see Quadriga).
Since USD is an official currency of El Salvador, you can just send a USD wire without currency conversion fees, that can be up to $50 -- but Fidelity charges $0. [3]
You could also set up a Wise multi-currency account, which is supported in El Salvador. You'll get banking details in the US (and many other jurisdictions) to which you can ACH money free of charge, or receive a Fedwire for $7. [1]
[edit] If you need to send small amounts of money, Wise is hard to beat. If you need to send big money, InteractiveBrokers Forex trading is the definition of market rate, and their commission is 0.002% (2/10th of a basis point), minimum $2. So, $20 per million.
This has been a solved problem for a very long time.
[1] https://wise.com/multi-currency-account/
[2] https://www.nasdaq.com/articles/the-best-way-to-understand-b...
[3] https://www.nerdwallet.com/article/banking/wire-transfers-wh...
Since USD is an official currency of El Salvador, you can just send a USD wire without currency conversion fees, that can be up to $50 -- but Fidelity charges $0. [3]
You could also set up a Wise multi-currency account, which is supported in El Salvador. You'll get banking details in the US (and many other jurisdictions) to which you can ACH money free of charge, or receive a Fedwire for $7. [1]
[edit] If you need to send small amounts of money, Wise is hard to beat. If you need to send big money, InteractiveBrokers Forex trading is the definition of market rate, and their commission is 0.002% (2/10th of a basis point), minimum $2. So, $20 per million.
This has been a solved problem for a very long time.
[1] https://wise.com/multi-currency-account/
[2] https://www.nasdaq.com/articles/the-best-way-to-understand-b...
[3] https://www.nerdwallet.com/article/banking/wire-transfers-wh...
How many even middle class Americans have a fidelity account? Do you think the average El Salvadoran sending remittance AND their counterpart are banked with low cost access to international wire transfer?
Transferring crypto, without KYC (which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US), for $~3 in transfer fees plus whatever rate they can get face-to-face (which could be near 0% exchange fee) is damn good. I doubt most of these marginalized workers in the US (not all El Salvadorans, I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and travelling to El Salvador on a plane.
Transferring crypto, without KYC (which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US), for $~3 in transfer fees plus whatever rate they can get face-to-face (which could be near 0% exchange fee) is damn good. I doubt most of these marginalized workers in the US (not all El Salvadorans, I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and travelling to El Salvador on a plane.
I think I actually addressed your point.
Anyone can sign up with a Fidelity account just as easily as they can sign up with an exchange, to send free USD denominated wires. As for whether counter-parties in ES charge for wire receipts, I don't know! Receiving is generally far less expensive than sending.
You appear to have completely skipped over Wise, which I pointed out to you is better in ... every way, and completely free of charge?
> Transferring crypto, without KYC...
Transferring crypto, without KYC, is a real concern to every developed country on earth. And I believe the Salvadoran sanctioned wallet KYCs ya too.
> ...which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US
I'm sorry, why are we building a system to make being an illegal immigrant easier again? I'm pro-immigration, and an immigrant myself. However, this is a country of laws is it not? Generally speaking I think we should open up immigration much more broadly. However, I also don't think it's a stretch to say if you're here illegally that's a bad thing and we shouldn't make it easier to do that?
> I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and traveling to El Salvador on a plane.
Crypto is always available for money launders and criminals, yes.
Anyone can sign up with a Fidelity account just as easily as they can sign up with an exchange, to send free USD denominated wires. As for whether counter-parties in ES charge for wire receipts, I don't know! Receiving is generally far less expensive than sending.
You appear to have completely skipped over Wise, which I pointed out to you is better in ... every way, and completely free of charge?
> Transferring crypto, without KYC...
Transferring crypto, without KYC, is a real concern to every developed country on earth. And I believe the Salvadoran sanctioned wallet KYCs ya too.
> ...which is a real concern for persons from central america who may not have documentation for a bank account or legal status in the US
I'm sorry, why are we building a system to make being an illegal immigrant easier again? I'm pro-immigration, and an immigrant myself. However, this is a country of laws is it not? Generally speaking I think we should open up immigration much more broadly. However, I also don't think it's a stretch to say if you're here illegally that's a bad thing and we shouldn't make it easier to do that?
> I'm sure there are plenty of rich ones with Fidelity accounts who haven't been the utilitarian use case for crypto transfer) could do better without packing up a bundle of cash and traveling to El Salvador on a plane.
Crypto is always available for money launders and criminals, yes.
I still don't buy your thesis that there aren't huge swaths of unbanked El Salvadorans who could benefit from low fee crypto transfers, especially now that it is a recognized currency in El Salvador. To use Wise without any fees would require both parties to be banked.
I know it isn't fruitful here to discuss whether illegal immigrants should exist (maybe we should block all their access to money supply so they and their family can starve). But they do exist, and they will seek out the lowest cost non-KYC options, and crypto looks to be a decent bet. There are other people as well without documents, such as homeless who have long lost them and people born in weird situation where their parents never sought legal documents for their existence.
>Crypto is always available for money launders and criminals, yes.
As are banks and fiat.
I know it isn't fruitful here to discuss whether illegal immigrants should exist (maybe we should block all their access to money supply so they and their family can starve). But they do exist, and they will seek out the lowest cost non-KYC options, and crypto looks to be a decent bet. There are other people as well without documents, such as homeless who have long lost them and people born in weird situation where their parents never sought legal documents for their existence.
>Crypto is always available for money launders and criminals, yes.
As are banks and fiat.
> ...maybe we should block all their access to money supply so they and their family can starve.
Well, no, remember that asylum is legal immigration and asylees and claimants are free to use the banking system. A properly and fairly executed asylum system actually threads the needle here nicely.
Of course they shouldn't exist, we both agree.
Given the system is imperfect what should we do, is the question you're asking I think.
My answer is not "build circumvention tools" but instead "advocate for reform." In the same way I think drugs should be legal, but instead of building a darknet marketplace - which solves zero existing problems and creates 10 more new ones - I instead advocate for drug decriminalization and prison reform. And safe injection sites. This makes the world a better place.
> As are banks and fiat.
Of course, but that system tries to stop them with the things you rail against, like AML and KYC rules - whereas crypto welcomes them with open arms.
That's a fundamental difference. Whatever is built upon it is fruit of the poison tree, rife with adverse selection.
I maintain that building tools to circumvent constitutional laws you happen not to like is a bad thing. I think that energy is better expended advocating for better legislation. It's hard, but it's infinitely better.
Well, no, remember that asylum is legal immigration and asylees and claimants are free to use the banking system. A properly and fairly executed asylum system actually threads the needle here nicely.
Of course they shouldn't exist, we both agree.
Given the system is imperfect what should we do, is the question you're asking I think.
My answer is not "build circumvention tools" but instead "advocate for reform." In the same way I think drugs should be legal, but instead of building a darknet marketplace - which solves zero existing problems and creates 10 more new ones - I instead advocate for drug decriminalization and prison reform. And safe injection sites. This makes the world a better place.
> As are banks and fiat.
Of course, but that system tries to stop them with the things you rail against, like AML and KYC rules - whereas crypto welcomes them with open arms.
That's a fundamental difference. Whatever is built upon it is fruit of the poison tree, rife with adverse selection.
I maintain that building tools to circumvent constitutional laws you happen not to like is a bad thing. I think that energy is better expended advocating for better legislation. It's hard, but it's infinitely better.
There's no KYC for holding fiat, and transactions above 10k are on the honor system for cash purchases. Cash "welcomes them with open arms." There's also minimal checking of those that leave our borders; someone could easily cross into Mexico with 100k in a breifcase of Swiss Francs and no one would be the wiser. Virtually anyone that lives near the border understands this.
> Whatever is built upon it is fruit of the poison tree
To you; to me it's built on the tree of liberty.
>building a darknet marketplace - which solves zero existing problems
The existing problem was that people would show up in cash in person, and often without either parties being vetted. The darkmarket did not totally solve this problem but it did help it, by creating a rating system and allowing people to buy items without needing to put themselves in the vicinity of a potentially dangerous drug den.
Sometimes direct action is more empowering to the common man than legislation. As Cody Wilson said when he made the 3d gun popular, it was a political act that the world just has to deal with. Bringing crypto into this world "legislated" into reality a way to move funds in a way the legislature failed to by blocking the path of those who are conventionally blocked by KYC and AML. I don't know that every El Salvadoran can just wait indefinitely for legislation to pass for their money to come in from their family members working in the US. Every dollar taken away from them from the likes of Western Union et al is money straight out of the mouth of possibly impoverished family members, and we shouldn't begrudge these people the tools to fund their unbanked families at a fair rate.
> Whatever is built upon it is fruit of the poison tree
To you; to me it's built on the tree of liberty.
>building a darknet marketplace - which solves zero existing problems
The existing problem was that people would show up in cash in person, and often without either parties being vetted. The darkmarket did not totally solve this problem but it did help it, by creating a rating system and allowing people to buy items without needing to put themselves in the vicinity of a potentially dangerous drug den.
Sometimes direct action is more empowering to the common man than legislation. As Cody Wilson said when he made the 3d gun popular, it was a political act that the world just has to deal with. Bringing crypto into this world "legislated" into reality a way to move funds in a way the legislature failed to by blocking the path of those who are conventionally blocked by KYC and AML. I don't know that every El Salvadoran can just wait indefinitely for legislation to pass for their money to come in from their family members working in the US. Every dollar taken away from them from the likes of Western Union et al is money straight out of the mouth of possibly impoverished family members, and we shouldn't begrudge these people the tools to fund their unbanked families at a fair rate.
> There's no KYC for holding fiat...
Woah. Hold up. There's no KYC for holding anything. There's always been KYC for obtaining fiat. For withdrawing fiat. For depositing fiat. For getting paid in fiat. For paying other people in fiat. It's not the holding at issue, it's the transacting.
> ...and transactions above 10k are on the honor system for cash purchases.
No, they certainly are not. Any withdrawals or deposits of over 10K USD at a bank will require an ID and get you a CTR or SAR filed. If you tried to get 100K in fiat you will almost certainly get a CTR or SAR filed on you. You'll probably get a call from a bank manager, a compliance officer and/or someone from FinCEN. Ditto on the deposit.
In fact, transactions under 10K also often get CTRs filed. [1]
If you aren't withdrawing it the person who did will get the filings.
> There's also minimal checking of those that leave our borders; someone could easily cross into Mexico with 100k in a breifcase of Swiss Francs and no one would be the wiser.
Potentially, but unlikely. You cannot get 100K of cash lawfully without presenting ID. If you did, you committed a crime to get it, it was probably laundered, and you probably paid 2-10X that amount to launder it. You're probably a criminal.
To wind up with an undocumented, untraceable 100K in a briefcase, either you or someone else committed a crime.
This is part of the reason people do not cross borders with 100K in cash. It's a crime to do so without reporting it, so if found it'll be seized. It's trivial to find $100K in cash strapped to someone or on an Xray.
They tend to instead obtain gift cards and move portfolios of that.
> To you; to me it's built on the tree of liberty.
No, crime is not liberty. It's crime. Crime is the violation of my liberties and the code of civil society because you think rights you don't have are more important than rights I do have.
Again you completely ignore Wise as a much better, less volatile solution to the problem.
The problem you're describing, and the world you're describing, feels a bit like finance fanfic.
> The existing problem was that people would show up in cash in person, and often without either parties being vetted. The darkmarket did not totally solve this problem but it did help it, by creating a rating system and allowing people to buy items without needing to put themselves in the vicinity of a potentially dangerous drug den.
No the issue with drug legislation is it impinges on the freedoms of average citizens and directly harms them via prison. A darknet market does nothing to alleviate the issue at hand.
[1] https://www.investopedia.com/terms/c/ctr.asp
Woah. Hold up. There's no KYC for holding anything. There's always been KYC for obtaining fiat. For withdrawing fiat. For depositing fiat. For getting paid in fiat. For paying other people in fiat. It's not the holding at issue, it's the transacting.
> ...and transactions above 10k are on the honor system for cash purchases.
No, they certainly are not. Any withdrawals or deposits of over 10K USD at a bank will require an ID and get you a CTR or SAR filed. If you tried to get 100K in fiat you will almost certainly get a CTR or SAR filed on you. You'll probably get a call from a bank manager, a compliance officer and/or someone from FinCEN. Ditto on the deposit.
In fact, transactions under 10K also often get CTRs filed. [1]
If you aren't withdrawing it the person who did will get the filings.
> There's also minimal checking of those that leave our borders; someone could easily cross into Mexico with 100k in a breifcase of Swiss Francs and no one would be the wiser.
Potentially, but unlikely. You cannot get 100K of cash lawfully without presenting ID. If you did, you committed a crime to get it, it was probably laundered, and you probably paid 2-10X that amount to launder it. You're probably a criminal.
To wind up with an undocumented, untraceable 100K in a briefcase, either you or someone else committed a crime.
This is part of the reason people do not cross borders with 100K in cash. It's a crime to do so without reporting it, so if found it'll be seized. It's trivial to find $100K in cash strapped to someone or on an Xray.
They tend to instead obtain gift cards and move portfolios of that.
> To you; to me it's built on the tree of liberty.
No, crime is not liberty. It's crime. Crime is the violation of my liberties and the code of civil society because you think rights you don't have are more important than rights I do have.
Again you completely ignore Wise as a much better, less volatile solution to the problem.
The problem you're describing, and the world you're describing, feels a bit like finance fanfic.
> The existing problem was that people would show up in cash in person, and often without either parties being vetted. The darkmarket did not totally solve this problem but it did help it, by creating a rating system and allowing people to buy items without needing to put themselves in the vicinity of a potentially dangerous drug den.
No the issue with drug legislation is it impinges on the freedoms of average citizens and directly harms them via prison. A darknet market does nothing to alleviate the issue at hand.
[1] https://www.investopedia.com/terms/c/ctr.asp
Do people actually use high fee and slow regulated remittance services? Or do they use low fee unregulated traditional informal systems?
https://en.wikipedia.org/wiki/Informal_value_transfer_system
https://en.wikipedia.org/wiki/Informal_value_transfer_system
How are they getting around the very long wait times and large fees for transaction confirmations? I'm guessing the "government digital wallet" is just an account on a government service that changes values in a (centralized) database while holding a bunch of btc under the hood? Or maybe there are private bank options that do the same?
Credit card transactions take 3 days to clear the visa network, but swiping your card to pay for something is still instant. These things have already been solved in the application layer.
This is one of the reasons that many Uber drivers in El Salvador cancel rides paid with credit cards. They prefer to be paid in cash.
The mempool is relatively empty to fees are pretty minimal at the moment. But you are mostly right about holding balances on the app on a centralized database. However they are partnered with large lightning payment providers like Strike to make bitcoin transactions over the lightning network to non-government wallets.
They use lightning network.
Lightning Network. [0]
[0] https://lightning.network
[0] https://lightning.network
They use layer 2 lightning network.
Let's ignore that Bitcoin is climate arson, and that its only used for money laundering and buying drugs.
Bitcoin has a max throughput of 7 transactions per second. It's utter lunacy to suggest that it could function as a currency for a country.
This will only end in tears.
Bitcoin has a max throughput of 7 transactions per second. It's utter lunacy to suggest that it could function as a currency for a country.
This will only end in tears.
They’re using the 2nd layer lightning network which has more tps.
https://en.wikipedia.org/wiki/Lightning_Network#2021_adoptio...
https://en.wikipedia.org/wiki/Lightning_Network#2021_adoptio...
Lightning network still requires you to have on chain transactions to open your connections though, it's not nearly the fix that people pretend it is.
Sure, and to close them. But now one on-chain transaction maps to N actual economic transactions happening, which is great for scaling. Not to say on-chain transactions don't also need to scale, but layer 2 will always be important.
It's down though.
https://twitter.com/nayibbukele/status/1435197879795212291?r...
https://twitter.com/nayibbukele/status/1435197879795212291?r...
The lightning network? Or the government's node?
https://explorer.acinq.co/
https://explorer.acinq.co/
The Chivo Wallet nodes, which is the required one in El Salvador.
> that its only used for money laundering and buying drugs
I am not surprised to see hyperbole like this, but i'm disappointed that they are so routinely upvoted. I've personally used bitcoin for sending money across borders (for legitimate purposes) and never for drugs or money laundering.
Apologies for my reactivity, but i think highly of the HN community and get deeply frustrated that this sort of ignorant hyperbole is peddled and supported.
I am not surprised to see hyperbole like this, but i'm disappointed that they are so routinely upvoted. I've personally used bitcoin for sending money across borders (for legitimate purposes) and never for drugs or money laundering.
Apologies for my reactivity, but i think highly of the HN community and get deeply frustrated that this sort of ignorant hyperbole is peddled and supported.
On one hand I agree with your assessment. On the other you argue with a personal anecdote -- not much better, is it?
Actually it is because we are dealing with an factual data point (I), rather than someone using hyperbole by saying something is ONLY used for x. one data point proves that wrong
I think parent correctly identified it as hyperbole, a figure of speech, not a syllogism.
One data point disproves that it can't be used for purposes other than tax evasion and money laundering, it doesn't disprove that is commonly used for this purpose and little else.
so you'd accept one anecdotal comment about a transaction without any details as a fact, versus the well known numerous transactions bitcoin has gained infamy from in the darknet markets- which supposedly is evidential enough for the FBI?
[deleted]
El salvador payment system is built on the lighting network. A layer 2 scaling solution for bitcoin (up to 25 million transactions per second)
https://en.m.wikipedia.org/wiki/Lightning_Network
edit: typos
https://en.m.wikipedia.org/wiki/Lightning_Network
edit: typos
0 currently.
https://twitter.com/nayibbukele/status/1435197879795212291?r...
Also. Lightning network can give unreliable transaction costs ( eg. When sending to an unknown wallet)
It's weird that everyone is supporting an off chain solution. It kinda defeats the purpose of Bitcoin in general.
https://twitter.com/nayibbukele/status/1435197879795212291?r...
Also. Lightning network can give unreliable transaction costs ( eg. When sending to an unknown wallet)
It's weird that everyone is supporting an off chain solution. It kinda defeats the purpose of Bitcoin in general.
It depends on what you think the purpose of Bitcoin is. In my mind Bitcoin is digital gold. It's not really convenient to pay for McDo in gold, so I would hold my gold in a bank and pay with fractions of my gold certificates. If I want, I can go to the bank and exchange my certificates for the actual bullions.
I look at it as the first implementation of the Blockchain.
While Blockchain can be valuable, Bitcoin is not.
Note : i did hold btc until late 2017.
While Blockchain can be valuable, Bitcoin is not.
Note : i did hold btc until late 2017.
Energy use is not energy source. There's been no full accounting of the carbon footprint of bitcoin mining, only its use. Much of it is done using geothermal or other renewable sources. (edit, incorrect)
That El Salvador is adopting it refutes your second claim.
Then there's the lightning network which increases the transaction throughput.
Everything is going to be okay.
That El Salvador is adopting it refutes your second claim.
Then there's the lightning network which increases the transaction throughput.
Everything is going to be okay.
Bitcoin and cryptocurrency in its current form is environmental lunacy. I don't know what problem digital currency solves when the planet can no longer sustain human life due to climate change.
100 corporations are responsible for 71% of global emissions.
https://www.theguardian.com/sustainable-business/2017/jul/10...
I struggle to find hand wringing about bitcoin's energy consumption as anything but naive or sour grapes.
Society is never going to voluntarily reverse total energy consumption. Either price bitcoin mining out of the market, or focus on voting with your wallet and regulating carbon emissions at the energy production level. Arguing about how people should spend their money on energy is a waste of political energy.
Millions of people believe that bitcoin is worth the energy costs. "Too much" energy usage is entirely subjective.
https://www.theguardian.com/sustainable-business/2017/jul/10...
I struggle to find hand wringing about bitcoin's energy consumption as anything but naive or sour grapes.
Society is never going to voluntarily reverse total energy consumption. Either price bitcoin mining out of the market, or focus on voting with your wallet and regulating carbon emissions at the energy production level. Arguing about how people should spend their money on energy is a waste of political energy.
Millions of people believe that bitcoin is worth the energy costs. "Too much" energy usage is entirely subjective.
Using renewable energy still takes that opportunity away from other users who end up stuck with X% of their energy use provided by non-renewables, so the real carbon footprint is still similar.
> Using renewable energy still takes that opportunity away from other users […]
This would be true only if electrical capacity were completely inelastic. It is not. Electrical capacity is relatively slow to respond to changes in demand, sure, but it does respond.
Consider the scale of the increase in electrical capacity that will be needed to fully move the US alone to EVs. That change will not have a hard cost cap, either - people are willing to pay quite a bit to operate their automobiles, and the current cost to operate an EV is substantially less than the cost of operating a similar ICE vehicle. Bitcoin mining does have a hard cost cap: ([Bitcoin price] * 6.25 + [Bitcoin price] * [~10 minutes of transaction fees]). In about 2024, that 6.25 will drop to 3.125.
Ultimately Bitcoin mining is driven by economic forces, and those same forces are the same that control the scale of power generation worldwide.
You can see Bitcoin’s energy use as being used only to secure the network; I see it as securing the network and driving incentives for the development and expansion of electrical infrastructure.
This would be true only if electrical capacity were completely inelastic. It is not. Electrical capacity is relatively slow to respond to changes in demand, sure, but it does respond.
Consider the scale of the increase in electrical capacity that will be needed to fully move the US alone to EVs. That change will not have a hard cost cap, either - people are willing to pay quite a bit to operate their automobiles, and the current cost to operate an EV is substantially less than the cost of operating a similar ICE vehicle. Bitcoin mining does have a hard cost cap: ([Bitcoin price] * 6.25 + [Bitcoin price] * [~10 minutes of transaction fees]). In about 2024, that 6.25 will drop to 3.125.
Ultimately Bitcoin mining is driven by economic forces, and those same forces are the same that control the scale of power generation worldwide.
You can see Bitcoin’s energy use as being used only to secure the network; I see it as securing the network and driving incentives for the development and expansion of electrical infrastructure.
Not necessarily. That would only be true if storing and/or transporting energy was cheap or easy.
Yes, that is a factor. Other factors include abandoned coal fire plants being restarted for mining.
The question is not if there is a factor that is positive, but whether the positives outweigh the negatives. Every source I have seen is confident they do not.
The question is not if there is a factor that is positive, but whether the positives outweigh the negatives. Every source I have seen is confident they do not.
That's a pretty different claim from the one I replied to, but yes I agree additional consumption of fossil fuels is an important factor.
The claim that consumption of renewable energy is equivalent to consumption of fossil fuels, because that renewable energy would have otherwise offset fossil fuel consumption I don't agree with though.
The claim that consumption of renewable energy is equivalent to consumption of fossil fuels, because that renewable energy would have otherwise offset fossil fuel consumption I don't agree with though.
Maybe we should focus regulations on coal fire plants instead of cryptocurrency?
We can and should focus on both.
Here are some estimates: https://digiconomist.net/bitcoin-energy-consumption
Do you think they are wrong? By how much?
Do you think they are wrong? By how much?
> Energy use is not energy source
I’ll go a step further - Bitcoin’s energy use is centralized around the cheapest sources due to economic forces. If renewables are cheaper at scale than fossil fuels, Bitcoin’s energy use could in fact become a net positive for the world.
To put it another way, the profitability of mining is directly proportional to the cost of electricity compared to the global average. This should drive the development of less expensive forms of energy over time. Even if fossil fuels are cheapest today (and I’m not certain that’s true), there is an ongoing cost floor due to it relying upon extraction, processing, transportation, and burning. Solar, for example, has a higher capital cost but presumably a lower ongoing $/kWh.
Finally, ~5% (2.2-13.3%) of electricity generated in the US is lost due to transmission from the point of generation to the point of consumption. India loses 20-30%. [0] Bitcoin mining, given its high power consumption, should specifically drive decentralized power generation. This in turn could help make such technology available for other uses, resulting in a less centralized, more robust power grid.
0: http://insideenergy.org/2015/11/06/lost-in-transmission-how-...
1: https://www.eia.gov/todayinenergy/detail.php?id=23452
I’ll go a step further - Bitcoin’s energy use is centralized around the cheapest sources due to economic forces. If renewables are cheaper at scale than fossil fuels, Bitcoin’s energy use could in fact become a net positive for the world.
To put it another way, the profitability of mining is directly proportional to the cost of electricity compared to the global average. This should drive the development of less expensive forms of energy over time. Even if fossil fuels are cheapest today (and I’m not certain that’s true), there is an ongoing cost floor due to it relying upon extraction, processing, transportation, and burning. Solar, for example, has a higher capital cost but presumably a lower ongoing $/kWh.
Finally, ~5% (2.2-13.3%) of electricity generated in the US is lost due to transmission from the point of generation to the point of consumption. India loses 20-30%. [0] Bitcoin mining, given its high power consumption, should specifically drive decentralized power generation. This in turn could help make such technology available for other uses, resulting in a less centralized, more robust power grid.
0: http://insideenergy.org/2015/11/06/lost-in-transmission-how-...
1: https://www.eia.gov/todayinenergy/detail.php?id=23452
Using renewables to do something that doesn't need to be done is not a win.
I divested from all PoW coins except ETH in expectation that PoS will be completed soon.
I divested from all PoW coins except ETH in expectation that PoS will be completed soon.
> Using renewables to do something that doesn't need to be done is not a win.
It is if it spurs development of the underlying tech.
Pornography isn’t necessary, but because it was consumed in volume we ended up with ubiquitous household VCRs in the 80s and 90s.
It is if it spurs development of the underlying tech.
Pornography isn’t necessary, but because it was consumed in volume we ended up with ubiquitous household VCRs in the 80s and 90s.
> It is if it spurs development of the underlying tech.
How does that work? For example, if leave a lightbulb on all day long, does that spur adoption or development of renewable energy sources?
How does that work? For example, if leave a lightbulb on all day long, does that spur adoption or development of renewable energy sources?
And breaking windows spurs the local economy because people will pay to get them fixed.
You’re confusing economic activity with technological progress.
Breaking a window isn’t going to be a net positive. If everyone breaks a window and replaces it, every week, at some point it’s highly likely that a more efficient process for window replacement will be developed.
Breaking a window isn’t going to be a net positive. If everyone breaks a window and replaces it, every week, at some point it’s highly likely that a more efficient process for window replacement will be developed.
I've never heard the rejoiner to the broken window fallacy that they just aren't breaking enough windows lol.
That is the fallacy, lol.
Again, though - we’re not talking about increasing the overall economic output. We’re talking about spending resources to incentivize technological progress.
I’m also not saying it’s a good idea to start doing it because it’ll surely work. I’m only saying that it may well end up having positive effects outside of the primary use case.
Again, though - we’re not talking about increasing the overall economic output. We’re talking about spending resources to incentivize technological progress.
I’m also not saying it’s a good idea to start doing it because it’ll surely work. I’m only saying that it may well end up having positive effects outside of the primary use case.
Absolute rubbish. You talk like there's something magical about Bitcoin, when in fact every profit-maximising firm will always use the cheapest energy available. Seriously what kind of pathetic argument is this, or am I missing something?
You're missing that economic theory doesn't align with the practical realities: it's expensive and wasteful to move most energy consumption around, you can't easily move an aluminum foundry or a city to the other side of the world to rapidly respond to market discrepancies.
Yes, and I assume bitcoin magically fixes this somehow?
I'm just pointing out your statement "every profit-maximising firm will always use the cheapest energy available" is not true or practically feasible.
Bitcoin miners can respond to energy price in minutes, where most industry is hours, sometimes days (for capacity that already exists - months to years for capacity that does not). Stop/start costs are very low, so its easy to run only in profitable energy conditions.
Bitcoin miners can respond to energy price in minutes, where most industry is hours, sometimes days (for capacity that already exists - months to years for capacity that does not). Stop/start costs are very low, so its easy to run only in profitable energy conditions.
A Bitcoin miner cannot relocate to a different part of the country where electricity costs are momentarily cheaper in a matter of minutes. And they are not gonna buy a whole lot of computing equipment and then let it idle for long periods of time because of fluctuations in the price of electricity. None of this makes any sense.
Seems you have really outdated info about Bitcoin, Bitcoin being not fungible is a great tool for analysing/tracking transactions. Money laundering and drugs use FIAT or Monero.
Such an ignorant comment. There are hundreds of millions Bitcoin users globally, and only a very small fraction of them are criminals of any kind.
And let's ignore the actual criminals who legally counterfeit US dollars to finance war all around the world.
And let's ignore the actual criminals who legally counterfeit US dollars to finance war all around the world.
I agree that that half of the comment was ignorant.
The rest still stands.
The rest still stands.
> And let's ignore the actual criminals who legally counterfeit US dollars to finance war all around the world.
I've not heard of a legal counterfeiter. How's that work?
I've not heard of a legal counterfeiter. How's that work?
The Federal Reserve has a legalized monopoly on counterfeiting US dollars. [0]
[0] https://mises.org/library/fed-giant-counterfeiter
[0] https://mises.org/library/fed-giant-counterfeiter
Ah—you arrived there by redefining the word. Got it.
google always has a moving goalpost you can link to
USD is the currency of choice for criminals.
Hundreds of millions in possession of bitcoin maybe, but the number using it for any legitimate purpose is a miniscule fraction of that. The vast majority are in it under the assumption that bigger rubes will come along later to buy it off them.
Possession is a legitimate purpose. The primary function of money is to be a store of wealth. Medium of exchange and unit of account are secondary.
Even if we pretend that's true for the moment, it's also a shitty store of wealth, being propped up by a never ending supply of totally-backed-by-USD tether.
[deleted]
yep, That's why protests are taking place in El Salvador.
We have also uncovered some security holes.
https://twitter.com/Rchr2M/status/1435236141112905732 https://twitter.com/david_a_garcia/status/143525911196544614...
Protests:
https://twitter.com/OscarMachon/status/1435272669189087236
https://twitter.com/Rchr2M/status/1435236141112905732 https://twitter.com/david_a_garcia/status/143525911196544614...
Protests:
https://twitter.com/OscarMachon/status/1435272669189087236
>We have also uncovered some security holes.
What security holes? The first tweet seems to be some sort of some sort of app saying it's a virus, and the second seems to say that it collects IMEI information. Neither constitute good evidence of "security holes".
What security holes? The first tweet seems to be some sort of some sort of app saying it's a virus, and the second seems to say that it collects IMEI information. Neither constitute good evidence of "security holes".
And sends contacts to a server and ask for the microphone permission as well (claimed by the tweet)
My mistake, I should have not said security holes. It's leaking and collecting private information. Did you look into the Android Manifest for the virus tweet link?
Merci beaucoup for correcting my mistake.
It's leaking and collecting private information.
Not much.
Because they have both Dollar and Bitcoin as legal tender, the result is unclear. In theory, because USD is still cheaper (if Bitcoin is supplied constrained as it is promised), people will trade with USD and hoard Bitcoin. However, when crossing borders, USD is more cumbersome to move around, that may deter people to import products with "cheap" USD.
It would be very interesting to observe, whether they will eventually move to Bitcoin only (if the bull market keeps going) based on Economics history (because domestic market will hoard Bitcoin, causing outflow of USD). And if that happens, would be interesting to observe the other factors (wage and services) deflate as the theory predicts.
It would be very interesting to observe, whether they will eventually move to Bitcoin only (if the bull market keeps going) based on Economics history (because domestic market will hoard Bitcoin, causing outflow of USD). And if that happens, would be interesting to observe the other factors (wage and services) deflate as the theory predicts.
In what sense do you mean that the dollar is cheaper than bitcoin? Surely it doesn't mean anything to say that one currency is cheaper than another, since the exchange rate is what it is.
I would predict that people prefer dollars to bitcoins, since they are less volatile.
I would predict that people prefer dollars to bitcoins, since they are less volatile.
The dollar is getting cheaper every year through inflation. Hoarding USD is impossible over the long term.
Meanwhile Bitcoin has an entire community centered around hoarding. The price they charge you keeps going up. The amount they spend keeps going down.
> dollar is getting cheaper every year through inflation. Hoarding USD is impossible over the long term.
The U.S. dollar is a transactional currency. It's very good at that. If you're holding value over longer terms and want cash-like liquidity and security, you hold Treasuries, which are inflation resistant.
The U.S. dollar is a transactional currency. It's very good at that. If you're holding value over longer terms and want cash-like liquidity and security, you hold Treasuries, which are inflation resistant.
> interesting to observe the other factors (wage and services) deflate as the theory predicts
The theory doesn't predict deflation. Any trade imbalance must be balanced out with an equivalent flow of money in the opposite direction. This means the quantity of money, and by extension the price level, will change according to the balance of trade. Therefore the theory predicts inflation in countries that have a trade surplus, and deflation in those that have trade deficit.
The theory doesn't predict deflation. Any trade imbalance must be balanced out with an equivalent flow of money in the opposite direction. This means the quantity of money, and by extension the price level, will change according to the balance of trade. Therefore the theory predicts inflation in countries that have a trade surplus, and deflation in those that have trade deficit.
> if Bitcoin is supplied constrained as it is promised
To my knowledge, this could only be changed through unanimous consensus across the entire Bitcoin network. That’s possible, but practically speaking this would nearly certainly result in a fork.
Is there another way that the 21m Bitcoin constraint could be broken that I’m unaware of?
To my knowledge, this could only be changed through unanimous consensus across the entire Bitcoin network. That’s possible, but practically speaking this would nearly certainly result in a fork.
Is there another way that the 21m Bitcoin constraint could be broken that I’m unaware of?
Gresham’s law [1] would (EDIT: loosely) predict Bitcoin gets hoarded while U.S. dollars trade.
[1] https://en.m.wikipedia.org/wiki/Gresham%27s_law
[1] https://en.m.wikipedia.org/wiki/Gresham%27s_law
I'm not sure that Gresham’s law would strictly apply since people can instantly exchange one for the other. Definitely an interesting situation to keep an eye on.
> not sure that Gresham’s law would strictly apply
You're correct, it's a loose analogy.
> people can instantly exchange one for the other
"El Salvadorans without a bank account (70% of the population) can only convert bitcoin to greenbacks at a bitcoin ATM. At present, El Salvador only has two active bitcoin ATMs" [1].
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
You're correct, it's a loose analogy.
> people can instantly exchange one for the other
"El Salvadorans without a bank account (70% of the population) can only convert bitcoin to greenbacks at a bitcoin ATM. At present, El Salvador only has two active bitcoin ATMs" [1].
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...
You're joking right? The "bad currency" here is clearly Bitcoin, which cannot actually be used to buy things in 99.999% of global market situations. If El Salvadorian businesses want to buy computers, trucks, fertilizer, food, whatever, BTC is meaningless and will need to get converted to USD.
Salvadorians in USA convert their USD in BTC and Salvadorians in El Salvador convert it back to USD. They aren't trying to invest or hold onto Bitcoin.
You’re agreeing with me. You wouldn’t want to hold onto Bitcoin because it’s the inferior currency option.
What are the US tax implications of Bitcoin being an official foreign currency?
This is also my question. This blurs all sorts of lines.
Monetary Policy.
Can someone explain how a country plans to implement a monetary policy (e.g. inject new currency during a recession to fund expansion) when they don’t control their national currency (Bitcoin).
Can someone explain how a country plans to implement a monetary policy (e.g. inject new currency during a recession to fund expansion) when they don’t control their national currency (Bitcoin).
El Salvador already does not control its own currency; it has been using USD since 2001. Adding BTC doesn't change anything in that regard.
BTW Panama has been on USD since 1903.
BTW Panama has been on USD since 1903.
> Adding BTC doesn't change anything in that regard.
I’d argue that while it remains outside their control, it does change things substantially. USD has effective tools to impact monetary policy; using USD puts El Salvador at the mercy of the US. Bitcoin does NOT have effective tools to impact monetary policy - that’s part of the reason for its existence. That puts El Salvador at the mercy of the Bitcoin network as a whole.
Moving from USD to BTC would be equivalent to saying “it’s better to have no monetary policy than to have a monetary policy controlled by the US”. That’s not what they’re doing here - they’re adding BTC as an option. Doing that means that they have the ability to react (relatively) quickly if they ever reach the point where they no longer trust the US to perform that function.
I’d argue that while it remains outside their control, it does change things substantially. USD has effective tools to impact monetary policy; using USD puts El Salvador at the mercy of the US. Bitcoin does NOT have effective tools to impact monetary policy - that’s part of the reason for its existence. That puts El Salvador at the mercy of the Bitcoin network as a whole.
Moving from USD to BTC would be equivalent to saying “it’s better to have no monetary policy than to have a monetary policy controlled by the US”. That’s not what they’re doing here - they’re adding BTC as an option. Doing that means that they have the ability to react (relatively) quickly if they ever reach the point where they no longer trust the US to perform that function.
El Salvador might be ahead of the curve here on learning to deal with (a lack of) control over their monetary policy in this situation because prior to the addition of this second legal tender the country was already fully dollarized[1]. They switched from the Salvadoran colón to the US Dollar in 2001[2].
[1] https://en.wikipedia.org/wiki/Currency_substitution
[2] https://en.wikipedia.org/wiki/Salvadoran_col%C3%B3n
[1] https://en.wikipedia.org/wiki/Currency_substitution
[2] https://en.wikipedia.org/wiki/Salvadoran_col%C3%B3n
It seems their monetary policy is remittances.
My guess is ppl will quickly cash out to dollars. But how will the dollars get back to the local exchanges unless people are buying bitcoin there?
This seems like a disaster in the making.
My guess is ppl will quickly cash out to dollars. But how will the dollars get back to the local exchanges unless people are buying bitcoin there?
This seems like a disaster in the making.
My guess is that this will dramatically drop the value of Bitcoin, as has happened many times before when a government tries to introduce a new currency.
Scenario: I want to send my mom $1,000. That would cost me $200 with a remittance, but it's only $20 with Bitcoin. Success! I send her the $9980. Now my mom has $9980 equivalent in Bitcoin. So she goes to the store. The local grocery store has to accept Bitcoin, so she buys up stuff. Success!
Suddenly the grocery store needs to pay its bills. It pays its suppliers in Bitcoin. Success!
The suppliers' suppliers, who are importing many of these goods from abroad, say FUCK NO and don't accept Bitcoin, they need hard cash. Or perhaps the farmers who grow the crops need to purchase fertilizer from abroad, same story. Okay, the suppliers need to convert their Bitcoin to dollars, piece of cake, right? Suddenly there's a problem: Bitcoin is converted to dollars only when dollars are going to be sent out of the country, and suddenly all of those Bitcoin transactions need to be backed up by USD. USD which never flowed into the country in the first place, because I sent BTC and not USD. Suddenly USD is much more scarce than BTC. That sinks the exchange rate.
Scenario: I want to send my mom $1,000. That would cost me $200 with a remittance, but it's only $20 with Bitcoin. Success! I send her the $9980. Now my mom has $9980 equivalent in Bitcoin. So she goes to the store. The local grocery store has to accept Bitcoin, so she buys up stuff. Success!
Suddenly the grocery store needs to pay its bills. It pays its suppliers in Bitcoin. Success!
The suppliers' suppliers, who are importing many of these goods from abroad, say FUCK NO and don't accept Bitcoin, they need hard cash. Or perhaps the farmers who grow the crops need to purchase fertilizer from abroad, same story. Okay, the suppliers need to convert their Bitcoin to dollars, piece of cake, right? Suddenly there's a problem: Bitcoin is converted to dollars only when dollars are going to be sent out of the country, and suddenly all of those Bitcoin transactions need to be backed up by USD. USD which never flowed into the country in the first place, because I sent BTC and not USD. Suddenly USD is much more scarce than BTC. That sinks the exchange rate.
Indeed, but it’s still a natural experiment to observe.
On a very poor population where even a 1% swing in valuation can make a huge difference in someone’s life. There’s also no recourse for fraud here — the industry has all kinds of scrupulous players and isn’t as locked down as traditional banking.
To me, it seems like El Salvador should have created a MoneyGram competitor and left it at that. They could remove/reduce commission without all the rest of the risks.
To me, it seems like El Salvador should have created a MoneyGram competitor and left it at that. They could remove/reduce commission without all the rest of the risks.
To your point, they could've partnered with TransferWise/Wise.com or OFX to build a white label app that allowed for frictionless remittance and fiat management for their citizens and "wallet management" (ie deposit accounts), and your usual fintech wallet accounts. This would be no different than the UK's Faster Payment's service being a managed service by Vocalink [1]. Some have proposed the US Fed issuing FedAccounts, deposit accounts held at the Fed with no fees, to sidestep inequity and predatory behavior from commercial banks. This would be very similar, except the El Salvador government outsourcing these functions (as they rely primarily on the US dollar as their currency) and the cross border exchange. Onboard citizens using their DUI (Documento Único de Identidad) or Passport number, voilà, they're banked and can store or transfer monetary value. Subsidize physical hardware for those who can't afford a smart phone.
Does El Salvador need a blockchain or crypto? No, of course not. They need inexpensive facilitation of domestic financial services and cross border remittance to reduce currency import drag.
Instead, inept politicians (for various reasons out of scope for this thread) are going to cause a lot of suffering, but it will be helpful to have a case study to point to in order to demonstrate the nation state policy failure. This is worse than being reliant on another country's monetary policy and central bank. You're tying your economy to a speculative asset with few governance mechanisms. C'est la vie.
[1] https://www.vocalink.com/payment-processing/real-time-paymen...
Does El Salvador need a blockchain or crypto? No, of course not. They need inexpensive facilitation of domestic financial services and cross border remittance to reduce currency import drag.
Instead, inept politicians (for various reasons out of scope for this thread) are going to cause a lot of suffering, but it will be helpful to have a case study to point to in order to demonstrate the nation state policy failure. This is worse than being reliant on another country's monetary policy and central bank. You're tying your economy to a speculative asset with few governance mechanisms. C'est la vie.
[1] https://www.vocalink.com/payment-processing/real-time-paymen...
They can still do this. It's not like BTC is the only legal tender here. They still continue to use USD as legal tender.
It isn't exactly natural though.
Plenty of countries already don't control their own currency.
Ability to implement monetary policy comes from monetary sovereignty.
Monetary sovereignty is a spectrum, with countries having high degrees of MS and low degrees of MS. Since El Salvador pegs its currency to the US dollar it has a low degree of monetary sovereignty.
Having a low degree of monetary sovereignty is the reason countries like Greece ran into so much trouble after the 2008 financial crisis. Greece doesn't control its currency. Where as the US does and it did much better.
Monetary sovereignty is a spectrum, with countries having high degrees of MS and low degrees of MS. Since El Salvador pegs its currency to the US dollar it has a low degree of monetary sovereignty.
Having a low degree of monetary sovereignty is the reason countries like Greece ran into so much trouble after the 2008 financial crisis. Greece doesn't control its currency. Where as the US does and it did much better.
Our currency is the USD. The former local currency only exists in collectors hands or old laws.
Thanks for the correction. Do you know how remittances to El Salvador work in practice?
Do people use regulated money transfer services (Western Union) or do they use informal trust based money transfer services?
https://en.wikipedia.org/wiki/Informal_value_transfer_system
Do people use regulated money transfer services (Western Union) or do they use informal trust based money transfer services?
https://en.wikipedia.org/wiki/Informal_value_transfer_system
> inject new currency during a recession to fund expansion
that's a relatively new concept that hasn't exactly worked out so well for anyone that's ever done it
that's a relatively new concept that hasn't exactly worked out so well for anyone that's ever done it
What if I told you that injecting currency not only "helps" in a recession but also causes the next recession? Or so Austrian economic theory goes.
Similarly, there is not really a reason that interest rates should be fixed by a central banks. Markets can do that as well.
Similarly, there is not really a reason that interest rates should be fixed by a central banks. Markets can do that as well.
On one hand, the 'digital gold' aspect of bitcoin make it attractive for countries that want access to a non-US-dollar currency. However, it seems like the most sane version of such a system would basically use a private blockchain (or even a basic centralized tabulation service) run by the central bank. Having your central bank run a centralized system through bitcoin isn't much different than running a centralized system through some other currency.
On the other hand, the power requirements of Bitcoin seem like they make it a very poor choice - both from an ethical point of view and a practical point of view. In the same way that using a foreign currency exposes you to the ups and downs of that currency, El Salvador now has to deal with the operational realities of bitcoin. This seems potentially worse than simply adopting another fiat currency because you've handed over control of how transactions work.
On the other hand, the power requirements of Bitcoin seem like they make it a very poor choice - both from an ethical point of view and a practical point of view. In the same way that using a foreign currency exposes you to the ups and downs of that currency, El Salvador now has to deal with the operational realities of bitcoin. This seems potentially worse than simply adopting another fiat currency because you've handed over control of how transactions work.
I'm really interested that they chose BTC as opposed to making their own, which as I understand it isn't super hard to do?
Tying to an already-established commodity, and an exceptionally volatile one at that, seems wildly irresponsible to me, but I'm very VERY under-educated in this area
Tying to an already-established commodity, and an exceptionally volatile one at that, seems wildly irresponsible to me, but I'm very VERY under-educated in this area
Considering only “Bitcoin-like” proof of work blockchains, starting an independent chain subjects you to security risks. If the computing resources of the entire country of El Salvador were devoted to mining their Bitcoin fork 24/7365, it would still likely be possible for a richer country to temporarily allocate more computing resources and “undoing” transactions, effectively destroying the validity of the transaction history.
They gave up on having their own currency a long time ago. Basically El Salvadorans decided that they aren't competent enough to manage a currency of their own, and adopted someone else's currency instead.
El Salvador's currency is pegged to the US dollar.
They have a low degree of monetary sovereignty. I don't know the pros and cons of a country like that adopting bitcoin. But their willingness to take the high risk road to do the experiment will benefit all of us.
A country the like US who has a high degree of monetary sovereignty has a lot to loose and very little go gain by adopting bitcoin. If you believe in Modern Monetary Theory. Given the way things have gone since 2008 financial crisis i believe MMT is the best model available.
Any discussion surrounding adoption of bitcoin should focus on what you gain and what you loose. Because there are always tradeoffs.
They have a low degree of monetary sovereignty. I don't know the pros and cons of a country like that adopting bitcoin. But their willingness to take the high risk road to do the experiment will benefit all of us.
A country the like US who has a high degree of monetary sovereignty has a lot to loose and very little go gain by adopting bitcoin. If you believe in Modern Monetary Theory. Given the way things have gone since 2008 financial crisis i believe MMT is the best model available.
Any discussion surrounding adoption of bitcoin should focus on what you gain and what you loose. Because there are always tradeoffs.
> A country the like US who has a high degree of monetary sovereignty has a lot to loose and very little go gain by adopting bitcoin. If you believe in Modern Monetary Theory. Given the way things have gone since 2008 financial crisis i believe MMT is the best model available.
I’m a huge proponent of the free market, and opponent of Keynesian economics - but even I freely admit that the US moving to a fully free market system would have disastrous consequences. That doesn’t mean a “fully floating” currency is better; it means that there is a barrier to exit.
There are lots of things in life that are easier to adopt than to abandon :)
I’m a huge proponent of the free market, and opponent of Keynesian economics - but even I freely admit that the US moving to a fully free market system would have disastrous consequences. That doesn’t mean a “fully floating” currency is better; it means that there is a barrier to exit.
There are lots of things in life that are easier to adopt than to abandon :)
Down 1.6 million the first day. Good luck
400 coins
BTC-USD
Bitcoin USD 47,256.78 -4,285.39 -8.31%
What fraction of their reserves are and will be held in Bitcoin? Would a Bitcoin crash prompt a balance of payments crisis?
In Jan 2020, the USD monetary base (= the other legal tender in El Salvador) was 15.3 trillions, in Jan 2021 it was 19.
That's a drop of 24% in purchasing power.
https://fred.stlouisfed.org/series/M2
That's a drop of 24% in purchasing power.
https://fred.stlouisfed.org/series/M2
[deleted]
> That's a drop of 24% in purchasing power.
No, it's not, because purchasing power doesn't scale linearly with M2 money supply.
No, it's not, because purchasing power doesn't scale linearly with M2 money supply.
It's a drop relative to what it would be if the money supply had not increased accordingly, not versus what the purchasing power was at that point in time.
No, again that's simply not correct. We can empirically observe purchasing power and money supply, so there's no need to speculate. One-time changes to M2 of that magnitude have been shown to have small to no effect on inflation [0].
[0] https://www.commonfund.org/blog/chart-of-the-month-money-sup...
[0] https://www.commonfund.org/blog/chart-of-the-month-money-sup...
The post talks about inflation but doesn't mention which measure it uses. Hmmm...
Also, the correlation coefficient 0.15 and an R^2 of 0.02. It means it doesn't explain all variance in the inflation but it clearly influences it.
Finally, your last comments sounds like we actually can have a free lunch.
Also, the correlation coefficient 0.15 and an R^2 of 0.02. It means it doesn't explain all variance in the inflation but it clearly influences it.
Finally, your last comments sounds like we actually can have a free lunch.
"It doesn't explain all the variance" is very a generous way to say "it explains one seventh of the variance".
And re: free lunch-- keep in mind that empirical reality isn't affected by our internal sense of fairness. It is possible that we will find free lunches in our existence. Nuclear energy is arguably a kind of free lunch.
That said, my last comment was specifically contrasting more sustained M2 expansion, or an expansion of a higher order of magnitude. We don't know exactly what would happen then, but there's a decent possibility of high inflation in that case.
And re: free lunch-- keep in mind that empirical reality isn't affected by our internal sense of fairness. It is possible that we will find free lunches in our existence. Nuclear energy is arguably a kind of free lunch.
That said, my last comment was specifically contrasting more sustained M2 expansion, or an expansion of a higher order of magnitude. We don't know exactly what would happen then, but there's a decent possibility of high inflation in that case.
Oh and it's plain CPI btw. I agree Ivo should have mentioned that.
Your own article admits that the lack of inflation is due to other factors such as reduced lending and velocity of money. All else equal if there were 40 rubles in the economy yesterday and 80 tomorrow, your rubles have half the purchasing power they had before. The printing of the money prevented a deflationary effect that would have enrichened those who held onto dollars under a period of anemic lending and lowered velocity of money. So yeah, it really is a drop relative to what the value would have been if new money had not been printed.
"For excess liquidity to create inflation, it needs to lead to a sustained increase in spending and loan growth. So far, bank lending has been anemic while the global velocity of money and the money multiplier (the ratio of broad money to base money) has fallen more than during the Great Financial Crisis. "
"the secular trends of automation and robotization, declining labor force participation, aging population and high debt levels will continue to suppress inflation over the long-term"
"For excess liquidity to create inflation, it needs to lead to a sustained increase in spending and loan growth. So far, bank lending has been anemic while the global velocity of money and the money multiplier (the ratio of broad money to base money) has fallen more than during the Great Financial Crisis. "
"the secular trends of automation and robotization, declining labor force participation, aging population and high debt levels will continue to suppress inflation over the long-term"
Sorry, but "all else equal" doesn't, and can never, exist. Any way to expand M2 itself changes the velocity of money, inflation expectations, and (probably most importantly) the expected future value of the US economy.
Your claim was:
> It's a drop relative to what it would be if the money supply had not increased accordingly
If the money supply hadn't increased, those secondary effects would not have happened, so any idea that M2 maps linearly to inflation net unrelated climate effects is just incorrect. If you still believe it's true after that explanation, please back the claim with some actual information.
Your claim was:
> It's a drop relative to what it would be if the money supply had not increased accordingly
If the money supply hadn't increased, those secondary effects would not have happened, so any idea that M2 maps linearly to inflation net unrelated climate effects is just incorrect. If you still believe it's true after that explanation, please back the claim with some actual information.
>If the money supply hadn't increased, those secondary effects would not have happened
I can't tell if this is supposed to be sarcasm, humor, or merely a hilariously misinformed view of the effect of the pandemic on spending and lending behavior (which apparently you think happened instead due to the change in money supply).
>Sorry, but "all else equal" doesn't, and can never, exist.
Which is my point! As your paper explains, these secondary effects from pandemic and other causes help explain the expression of inflation beyond the money supply effects.
I can't tell if this is supposed to be sarcasm, humor, or merely a hilariously misinformed view of the effect of the pandemic on spending and lending behavior (which apparently you think happened instead due to the change in money supply).
>Sorry, but "all else equal" doesn't, and can never, exist.
Which is my point! As your paper explains, these secondary effects from pandemic and other causes help explain the expression of inflation beyond the money supply effects.
[deleted]
back to 47519 now but yes there's a >50% chance there'll be more downward pressure tomorrow
What could possibly go wrong with moving a non-trivial fraction of a countries economy to an account that can be controlled by a single bureaucrat with absolute power to transfer the funds as they see fit with no possibility of appeal?
I honestly don't get it. I sent BTC from one wallet to another, and it took like 90 minutes. And $20 fees.
I cannot imagine paying for anything with this. How can user experience be compared to paying with VISA, PayPal or anything else?
I cannot imagine paying for anything with this. How can user experience be compared to paying with VISA, PayPal or anything else?
This comes up in every thread about Bitcoin, and in every thread there are numerous responses stating "lightning network is the solution to the fees". And.. that's exactly what El Salvador is using. Instant settlement, with basically 0 fees.
I tried sending XRP from one wallet to another, and it took a little more than a minute. Much much better than BTC, but still not credit cards...
It takes days for a credit card transaction to settle, and the buyer could file a chargeback and erase not only your profits but your cost basis. That (many cryptos) is a hell of a lot faster and more secure for a merchant.
Could someone explain me the intuition behind the BTC drop? Why changing the owners of a small fraction of an asset that is not affected by any policy should reflect this? Is it just the feeling from some investors that BTC can not be taken seriously?
It is hard for me to understand the logic of it and the only reason that could come to my mind is that some investors don't understand what they are buying.
It is hard for me to understand the logic of it and the only reason that could come to my mind is that some investors don't understand what they are buying.
Maybe it was someone protesting, or sending a message. It was a big trader(s) selling or shorting a lot of bitcoin and causing a cascade of liquidations on leveraged trades (over $1B). However, when the margin traders have been liquidated, the price has a better support for continued upside.
Insofar as I can tell I think it's the opposite. They know exactly what they're investing in, and acting accordingly. Investment activity around cryptocurrency doesn't look at all like the incredibly boring world of currency swaps.
The tinfoil hatters all believe it is the global banking cartel trying to punish El Salvador for fighting dollar hegemony.
Seems a bit farfetched, but maybe.
Seems a bit farfetched, but maybe.
Why go with Bitcoin specifically? Why not use the Celo blockchain or Algorand instead and create their own stable coins on there? Both these networks are proof of work, transactions are very fast and cheap as well.
Bitcoin is slow to validate transactions, is environmentally costly, and its value fluctuate, so I'm not sure what they were thinking. I wonder what the 30$ they receive from the gov is worth today after the dip.
Bitcoin is slow to validate transactions, is environmentally costly, and its value fluctuate, so I'm not sure what they were thinking. I wonder what the 30$ they receive from the gov is worth today after the dip.
The "problems" you've listed have been very clearly debated for the past 5 years. You can find answers. Youre just repeating talking points.
Please point me to good answers on why proof of work is a reasonable way to run a currency
Well, it's the only way to run a trustless currency that has been tested at scale. I dislike energy waste as much as anyone else, but that's the current state of things. We will eventually move past this phase with PoS or something, but all the approaches are still in their infancy.
Security
Downvoted for snark that doesn't contribute to the discussion. I would like to see less of this on HN.
I understand how it works thanks, i'm looking for an explanation as to why this waste of energy is a good way to run a currency
Because the president has fallen prey to the 1% fallacy.
He’s on record at a Bitcoin conference saying “BTC is worth x billion dollars, if we can attract just 1% of that to El Salavador as investment…”
He’s on record at a Bitcoin conference saying “BTC is worth x billion dollars, if we can attract just 1% of that to El Salavador as investment…”
They will be using Algorand for much of their blockchain infrastructure:
https://www.coindesk.com/events/2021/08/31/el-salvador-to-la...
What's likely is they'll end up with wrapped Bitcoin on the Algorand chain and using all the Algo tools.
https://www.coindesk.com/events/2021/08/31/el-salvador-to-la...
What's likely is they'll end up with wrapped Bitcoin on the Algorand chain and using all the Algo tools.
Algorand is not proof of work. Its a variation of PoS with very interesting use of VRF functions.
More than a year after its smart contract introduction devs have still failed to create a single DEX (let alone something more complex) there despite trying. The one Algo were hyping about having a dex last October (idex i believe) have quietly removed mentions of Algo on their site after failing despite all the PR.
This should tell you how good of a choice Algo is for anything. There's plenty other promising POS chains on which devs are actually successfully managing to build stuff on to be focusing on Algo.
This should tell you how good of a choice Algo is for anything. There's plenty other promising POS chains on which devs are actually successfully managing to build stuff on to be focusing on Algo.
Is AlgoDex not working? What would be the purpose of rushing out tools and smart contracts that need to be verified and routinely cause irreparable damage due to security and bugs?
There are already two HN startups using Algorand: 1) Lofty.AI, which has been a smash hit for tokenizing real estate and making daily income and 2) Algofi, which is S21 and intended for lending.
There's also ANote + Opulous for owning tokenized music royalties, and AlgoGems for NFTs + Yieldly for NLLs, etc. With the recent news that El Salvador will use Algorand for their infra and the $100M+ ArringtonXRP investment fund, Algorand is only getting started. Devs are flocking to Algorand for how easy it is to use the wallet and create unique tokens on a fast and scalable network.
There are already two HN startups using Algorand: 1) Lofty.AI, which has been a smash hit for tokenizing real estate and making daily income and 2) Algofi, which is S21 and intended for lending.
There's also ANote + Opulous for owning tokenized music royalties, and AlgoGems for NFTs + Yieldly for NLLs, etc. With the recent news that El Salvador will use Algorand for their infra and the $100M+ ArringtonXRP investment fund, Algorand is only getting started. Devs are flocking to Algorand for how easy it is to use the wallet and create unique tokens on a fast and scalable network.
>Is AlgoDex not working?
According to their site[0] no, but now they do have a testnet demo. Looking at the demo it's Order Book, not AMM which further makes me think that AMMs are still impossible there while Order Book-style can always be done with some centralization. The docs are sadly one tiny page that has no technical details so I won't dig further.
>What would be the purpose of rushing out tools and smart contracts that need to be verified and routinely cause irreparable damage due to security and bugs?
But they did publish smart contracts. More than a year ago. They also hyped them up, and hyped up a DEX which was supposed to come last October. Some random PR articles from 2020[1,2,3]. This clearly failed quietly despite supposedly smart contracts already being functional then.
>There are already two HN startups using Algorand: 1) Lofty.AI, which has been a smash hit for tokenizing real estate and making daily income and 2) Algofi, which is S21 and intended for lending.
Cool, if I see them working how I see similar dapps working on so many other chains maybe I'll change my mind.
>Devs are flocking to Algorand for how easy it is to use the wallet and create unique tokens on a fast and scalable network.
Are they? I see devs that try and fail to build there, and less devs discussing it than other chains. I see a lot of PR. That's it. Maybe it has a future but it seems much further behind, despite claiming it was already there in respect to smart contract last year. At this point if they catch up I'll give it another look but for now their PR seems to just make claims that don't reflect reality.
0. https://about.algodex.com/
1. https://blockonomi.com/idex-complete-rebuild-ethereum-scalin...
2. https://coinpedia.org/press-release/algorand-crypto-hidden-g...
3. https://www.coindesk.com/markets/2020/08/06/idex-raises-25m-...
According to their site[0] no, but now they do have a testnet demo. Looking at the demo it's Order Book, not AMM which further makes me think that AMMs are still impossible there while Order Book-style can always be done with some centralization. The docs are sadly one tiny page that has no technical details so I won't dig further.
>What would be the purpose of rushing out tools and smart contracts that need to be verified and routinely cause irreparable damage due to security and bugs?
But they did publish smart contracts. More than a year ago. They also hyped them up, and hyped up a DEX which was supposed to come last October. Some random PR articles from 2020[1,2,3]. This clearly failed quietly despite supposedly smart contracts already being functional then.
>There are already two HN startups using Algorand: 1) Lofty.AI, which has been a smash hit for tokenizing real estate and making daily income and 2) Algofi, which is S21 and intended for lending.
Cool, if I see them working how I see similar dapps working on so many other chains maybe I'll change my mind.
>Devs are flocking to Algorand for how easy it is to use the wallet and create unique tokens on a fast and scalable network.
Are they? I see devs that try and fail to build there, and less devs discussing it than other chains. I see a lot of PR. That's it. Maybe it has a future but it seems much further behind, despite claiming it was already there in respect to smart contract last year. At this point if they catch up I'll give it another look but for now their PR seems to just make claims that don't reflect reality.
0. https://about.algodex.com/
1. https://blockonomi.com/idex-complete-rebuild-ethereum-scalin...
2. https://coinpedia.org/press-release/algorand-crypto-hidden-g...
3. https://www.coindesk.com/markets/2020/08/06/idex-raises-25m-...
>Cool, if I see them working how I see similar dapps working
As if installing a custom browser plugin and managing a wallet thru the browser is convenient for any average user. Lofty.AI is far better than the current crap-dapps workflow. Add the token to your Algo wallet, buy them on Lofty with CC or bank account. Done.
>Are they? I see devs that try and fail to build there
I literally just provided two HN startups that are using it now, including one that pivoted to use it. There's also $50M+ in assets on Yieldly and there is still no simpler crypto wallet to use than the Algorand branded wallet.
As if installing a custom browser plugin and managing a wallet thru the browser is convenient for any average user. Lofty.AI is far better than the current crap-dapps workflow. Add the token to your Algo wallet, buy them on Lofty with CC or bank account. Done.
>Are they? I see devs that try and fail to build there
I literally just provided two HN startups that are using it now, including one that pivoted to use it. There's also $50M+ in assets on Yieldly and there is still no simpler crypto wallet to use than the Algorand branded wallet.
By see them working I mean have a working dapp on the mainnet I can use. Not a few static pages and a waitlist.
It is on MainNet, I already own property tokens that are paying me rental cash daily.
https://www.lofty.ai/account/register
https://www.lofty.ai/account/register
Ok cool. That is something. I'm not going to give them my ID to try it out but looking at it it seems like they just use basic tokens and then pay to holders, rather than any complex smart contracts. Maybe something like yieldly but with property? At any rate, fair enough that looks like a real business on it which people are at least using, even if I doubt they're leveraging much smart contracts or that there's anything about Algo that helps here.
True. They never had any good growth strategy anyway. Also there is no good plan to keep the ledger size sane. Like I mentioned, their consensus algo is innovative the execution beyond that is lacking because there wasn't any organic growth happening.
Solana would be a much better choice IMO. They already have Saber and Serum.
And raydium which is the 4th biggest DEX in crypto[0].
Yes, from those I follow Solana would also be my choice if I had to bet because they are already at/close to the point where they can have high tps, low fees, POS, and still be decentralized (more work on that end is needed but now they are nearing 1k validators). They also have built their chain in 2 years which is barely enough time to implement minor changes for competitors. Additionally, they just got the hype/huge investments so they have the users and attention, too.
0. https://www.coingecko.com/en/dex
Yes, from those I follow Solana would also be my choice if I had to bet because they are already at/close to the point where they can have high tps, low fees, POS, and still be decentralized (more work on that end is needed but now they are nearing 1k validators). They also have built their chain in 2 years which is barely enough time to implement minor changes for competitors. Additionally, they just got the hype/huge investments so they have the users and attention, too.
0. https://www.coingecko.com/en/dex
is it because of programming difficulties with their runtime (non-turing complete?), bugs in their runtime, or just no one interested in programming on their platform?
I believe the first (incomplete implementation). There's definitely plenty that tried (with money behind them). I hear that with some changes to the chain it might be feasible soon (there are some demos on their testnet, none on mainnet) but I've stopped following them much.
Celo is a proof-of-stake blockchain.
You're right. I made a mistake and now it's too late to edit my comment.
algorand is proof of stake and is still essentially centralized. they've created and gifted coins to themselves since the start (the early distribution was awful). imo PoS is only viable and "fair" if its bootstrapped by PoW. need to put something in to get something out, at least until there are a lot of stakeholders.
Shill those coins. Let me guess you have no idea about the technical tradeoffs involved in bitcoin
Lazer eyes
Because bitcoin is by far the most scalable decentralized censorship resistant cryptocurrency. That isn’t a popular opinion here but it’s true. Improvements to the protocol are slow and often boring. The kind of thing that countries want in a cryptocurrency.
It is weird that they decided to use Bitcoin instead of another currency.
El Salvador (and Panama) already use USD as a currency. Which other currency do you have in mind?
Ethereum or another crypto.
Now, we all know where to wash our bitcoins.
Congratulations El Salvador on replacing the Federal Reserve with Paolo Ardoino's unlimited Bahamian money printer (note that all executives at Tether received DOJ target letters for bank fraud recently [1] - and are banned from doing business in New York [2]), and letting your exchange rate be managed by Alameda Research and Cumberland/DRW [3].
I can't imagine this going poorly in any way what so ever.
So join me and Bukele in raising a big ol' middle finger to the IMF. [4]
Maybe next they can move to Bitfinex Securities, a Kazakstan corporation, to manage their stock exchange! [5]
[edit] I mean, holy shit, what did I even write? This truly is the dumbest timeline. Well, second dumbest - after all the entire country of Albania got swept up in Ponzi schemes, jailed their finance minister and had a civil war over it. You know what they say about history rhyming. [6]
[1] https://fortune.com/2021/07/26/tether-crypto-bank-fraud-doj-...
[2] https://ag.ny.gov/press-release/2021/attorney-general-james-...
[3] https://protos.com/tether-minted-usdt-stablecoin-crypto-two-...
[4] https://www.france24.com/en/live-news/20210610-imf-warns-of-...
[5] https://cointelegraph.com/news/bitfinex-launches-security-to...
[6] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
I can't imagine this going poorly in any way what so ever.
So join me and Bukele in raising a big ol' middle finger to the IMF. [4]
Maybe next they can move to Bitfinex Securities, a Kazakstan corporation, to manage their stock exchange! [5]
[edit] I mean, holy shit, what did I even write? This truly is the dumbest timeline. Well, second dumbest - after all the entire country of Albania got swept up in Ponzi schemes, jailed their finance minister and had a civil war over it. You know what they say about history rhyming. [6]
[1] https://fortune.com/2021/07/26/tether-crypto-bank-fraud-doj-...
[2] https://ag.ny.gov/press-release/2021/attorney-general-james-...
[3] https://protos.com/tether-minted-usdt-stablecoin-crypto-two-...
[4] https://www.france24.com/en/live-news/20210610-imf-warns-of-...
[5] https://cointelegraph.com/news/bitfinex-launches-security-to...
[6] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht...
[deleted]
Why not use a stablecoin? Or are they dealing with Bitcoin volatility in another way?
What advantage would a stablecoin have over using the underlying currency directly?
It has the significant disadvantage of adding an additional trust entity (the backing bank) which could prove untrustworthy.
Over a long enough timescale, I would argue that all backing banks have proven to be untrustworthy.
It has the significant disadvantage of adding an additional trust entity (the backing bank) which could prove untrustworthy.
Over a long enough timescale, I would argue that all backing banks have proven to be untrustworthy.
Doesn’t it seem concerning to tie a countries currency to something so volatile that it could literally halve over night? Not trying to argue. Just trying to understand.
Fiat currencies can go to zero in an instant via political changes. (Ex, see indian demonitization in 2016).
All forms of money have risks. I think the diversification of supporting BOTH USD and BTC seems to get a bit of the best of both worlds.
All forms of money have risks. I think the diversification of supporting BOTH USD and BTC seems to get a bit of the best of both worlds.
Right so why not USD coin instead of Bitcoin?
USD-pegged stablecoins kind of have the worst of both worlds - the risks of crypto AND the risks of fed monetary policy. Stablecoins shouldn't be used as a store of value, only as a medium of exchange.
Shame it’s a terrible currency.
An authoritarian banana republic is pretty much the only place where something like this would happen : https://www.hrw.org/news/2021/05/21/us-can-stop-el-salvadors...
Generally speaking banana republic is an offensive term to those living the states you’re referring to.
The phrase is meant to be insulting to the leader not the people of the country
Only if you like said country.
I wonder if this will prompt the USA to import more products from El Salvador to reduce the size of the remittances sector and thereby lessen the reason people use Bitcoin in the first place.
Before anyone tells the Salvadorians to export more products... they do... and they do it by working in a country that exports to El Salvador.
Before anyone tells the Salvadorians to export more products... they do... and they do it by working in a country that exports to El Salvador.
I doubt the US government cares enough about this to do much of anything, and I'm not sure how importing more products would even work. Would Congress just buy a bunch of Salvadoran coffee beans?
Traditionally, when people in the US want to reduce remittances, they just campaign to expel the immigrants making the remittances.
That will just lead to a debt crisis down the road.
> will just lead to a debt crisis down the road
Reduced El Salvadorian immigration will lead to a debt crisis?
Reduced El Salvadorian immigration will lead to a debt crisis?
USA exports $2.8 billion to El Salvador.
El Salvador exports $2 billion to USA.
Where do they get the money to do that? By working in the US. By sending remittances through Bitcoin or conventional means.
El Salvador exports $2 billion to USA.
Where do they get the money to do that? By working in the US. By sending remittances through Bitcoin or conventional means.
Oh, it would lead to a debt crisis for El Salvador. Sure. But why is that something the U.S. would want?
The original claim was the U.S. would want to “lessen the reason people use Bitcoin.” I’m pushing back on there being political will for that end.
The original claim was the U.S. would want to “lessen the reason people use Bitcoin.” I’m pushing back on there being political will for that end.
I dont think governments work that way
It's true they don't work that way because developed nations want to exploit developing nations rather than cooperate with them to maximize well being in the entire world.
Over the long term it is quite foolish because a debt claim against a weaker country will turn out to be worthless.
Over the long term it is quite foolish because a debt claim against a weaker country will turn out to be worthless.
> prompt the USA to import more products from El Salvador to reduce the size of the remittances sector and thereby lessen the reason people use Bitcoin
Who in America would benefit from fighting this? Crypto is a real industry. It’s more profitable for the financial sector than similar activity in U.S. dollars. And the Fed doesn’t thoroughly love that it has to take international factors into account when its political mandate is purely domestic.
There is the interventionist foreign policy elite, but they aren’t on strong footing right now. The claim that the U.S. is hellbent on preserving the primacy of the U.S. dollar is largely a myth.
Who in America would benefit from fighting this? Crypto is a real industry. It’s more profitable for the financial sector than similar activity in U.S. dollars. And the Fed doesn’t thoroughly love that it has to take international factors into account when its political mandate is purely domestic.
There is the interventionist foreign policy elite, but they aren’t on strong footing right now. The claim that the U.S. is hellbent on preserving the primacy of the U.S. dollar is largely a myth.
> Crypto is a real industry.
Not really. An industry produces goods and services. What does crypto produce?
Not really. An industry produces goods and services. What does crypto produce?
Ransomware and money laundering.
Financial sovereignty
What does the banking industry produce?
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Jobs.
> What does crypto produce?
Money. Jobs. Aficionados. “Real” as in it has political heft.
Money. Jobs. Aficionados. “Real” as in it has political heft.
Mining is an industry that processes transactions and prevents double spend
Exchanges are industry that allows people to trade assets
Exchanges are industry that allows people to trade assets
> The claim that the U.S. is hellbent on preserving the primacy of the U.S. dollar is largely a myth.
Could you elaborate, please? It was my understanding (perhaps mistakenly) that because so many foreign entities, be they countries, corporations etc, depend on the USD and it functions both as a reserve and for international trading, the U.S. Federal Reserve can be more aggressive with "dovish" policy.
Or stated another way, if fewer people/institutions held USD abroad, the risk of inflation would be much greater.
Could you elaborate, please? It was my understanding (perhaps mistakenly) that because so many foreign entities, be they countries, corporations etc, depend on the USD and it functions both as a reserve and for international trading, the U.S. Federal Reserve can be more aggressive with "dovish" policy.
Or stated another way, if fewer people/institutions held USD abroad, the risk of inflation would be much greater.
>Who in America would benefit from this?
Well, there would be less immigration from Salvador to the USA so basically people concerned about economic refugees. I don't mean this in a xenophobic way. Balanced trade will improve the conditions in El Salvador and thereby let people stay in their home country voluntarily rather than be forced out for economic reasons.
Well, there would be less immigration from Salvador to the USA so basically people concerned about economic refugees. I don't mean this in a xenophobic way. Balanced trade will improve the conditions in El Salvador and thereby let people stay in their home country voluntarily rather than be forced out for economic reasons.
It’s amazing how countries are wholeheartedly adopting this thing as an official currency that we have no idea who invented and for what purpose. I mean sure, there’s a white paper that says why it was invented, but why should anyone believe it?
If it does turn out to be malicious it’s going to make for one hell of a cautionary tale.
If it does turn out to be malicious it’s going to make for one hell of a cautionary tale.
Actually it's far more transparent and verifiable by anyone than you would think. I highly encourage you to read more about it. I have no doubt the more understand the more you appreciate it.
Is there any fiat currency with better transparency properties than Bitcoin? I don't think so... certainly not to non-banker members of the public.
Malicious in what way? Do you mean the software? The software has been developed in the public for 10+ years.
The software isn't malicious but the decision to use it could be driven by malicious intent . Wonder what the presidents investment portfolio looks like
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You don't have to "believe" anything. The "why" doesn't matter. The code is completely open and auditable.
> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
https://en.bitcoin.it/wiki/Genesis_block
https://en.bitcoin.it/wiki/Genesis_block
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> In the early hours of Tuesday the wallet had not appeared on Apple Inc., Google and Huawei’s app download platforms, however, prompting a series of tweets from Bukele, including one with a red-faced “angry” emoticon.
The involvement of a government-issued wallet gives this story an even stranger dimension. First, it's not clear how the government will identify those eligible to receive the $30 bitcoin deposit. Second, why would the government be involved at all in developing a wallet? There are plenty to choose from now, so what features exactly were missing in those? Finally, what government in its right mind would hitch its fortunes to the vagaries of a walled-garden App Store based in the US, a country clearly hostile to the Salvadoran experiment?