El Salvador Congress Approves Bitcoin As Legal Currency(twitter.com)
twitter.com
El Salvador Congress Approves Bitcoin As Legal Currency
https://twitter.com/elsalvador/status/1402506629690576897
55 comments
What does this mean? Will the government accept BTC for, say, taxes? Will businesses have to/be encouraged to accept BTC?
Yup, exactly that. We also use the US Dollar as main currency since 2001.
If debts are denominated in dollars, do you know how it will be determined how many Bitcoin would suffice for repayment (and vice versa)?
They're going to have a reserve fund of BTC / USD to make exchanging easy, and I'd assume that will have a rate that most merchants use.
Will $150million USD be a big enough reserve? Assuming anyone can exchange against that, I can imagine that being wiped out in just a few hours of a bitcoin whale deciding they want to cash out...
They can control the spread on exchanging against their reserve
We have not received much information, but from what I understand, the accounting currency would continue to be the USD.
Was just listening to the Twitter call with the President. To clarify questions from the last thread (https://news.ycombinator.com/item?id=27408683):
- https://twitter.com/nayibbukele/status/1402442597235310596 Is the full text of the bill in Spanish and English
- You can pay your taxes in Bitcoin.
- All merchants must accept Bitcoin. Merchants can instantly convert to USD at time of payment if they wish.
- Citizens can use any software they like to transfer Bitcoin, they are not required to use the Strike app.
- They are creating a $150M USD / BTC Reserve fund to allow citizens to easily convert between the two currencies.
- https://twitter.com/nayibbukele/status/1402442597235310596 Is the full text of the bill in Spanish and English
- You can pay your taxes in Bitcoin.
- All merchants must accept Bitcoin. Merchants can instantly convert to USD at time of payment if they wish.
- Citizens can use any software they like to transfer Bitcoin, they are not required to use the Strike app.
- They are creating a $150M USD / BTC Reserve fund to allow citizens to easily convert between the two currencies.
Salvadoran here...
I'm kind of losing track of all the changes that have been happening recently here recently.
When most of the country wakes in about five hours, they will wake up with a new law that adds a new legal tender in 90 days.
The most detailed explanation of the plan, has been in a foreign language - English -, in a twitter space this midnight and a Bitcoin conference in Miami last Saturday.
I'm kind of losing track of all the changes that have been happening recently here recently.
When most of the country wakes in about five hours, they will wake up with a new law that adds a new legal tender in 90 days.
The most detailed explanation of the plan, has been in a foreign language - English -, in a twitter space this midnight and a Bitcoin conference in Miami last Saturday.
Thank you. I was looking for a salvadorian to explain the situation. How is your president perceived by the general population ? He seems to have an interesting personality
I'll try to be neutral:
A recent poll by the UCA University shows that he is perceived as a positive change[1] by 87.5% of the sample / general population. [2]
[1] The previous government was unpopular.
[2] https://m.dw.com/es/uca-el-salvador-mayor%C3%ADa-aprueba-ges...
The government's most popular measures so far are the vaccine roll out plan (best in Central America), the food packages distributed during the pandemic and gifting a laptop to every high school student. Stimulus checks came some months but were available for many businesses and employees.
Part of his popularity comes from a well planned media strategy that includes multiple traditional and social media channels.
Radio, tv, government owned media, government controlled media, twitter, tiktok, facebook, instagram, official government social media, new state owned newspaper, new state owned news program, social media influencers, youtubers, memes. [4] I would say that 2/3 of every trending topic I see is government related. [3]
Criticism comes from many organizations which are concerned about authoritarian tendencies.
A summary of the opposition point of view would be https://elfaro.net/en/202105/columns/25464/This-Is-How-a-Rep...
[3] Sample video of pro government twitter feed generated by twitter's default suggestions https://mobile.twitter.com/mxgxw_alpha/status/13984404587333...
[4] https://www.washingtonpost.com/outlook/2021/05/25/bukele-aut...
A recent poll by the UCA University shows that he is perceived as a positive change[1] by 87.5% of the sample / general population. [2]
[1] The previous government was unpopular.
[2] https://m.dw.com/es/uca-el-salvador-mayor%C3%ADa-aprueba-ges...
The government's most popular measures so far are the vaccine roll out plan (best in Central America), the food packages distributed during the pandemic and gifting a laptop to every high school student. Stimulus checks came some months but were available for many businesses and employees.
Part of his popularity comes from a well planned media strategy that includes multiple traditional and social media channels.
Radio, tv, government owned media, government controlled media, twitter, tiktok, facebook, instagram, official government social media, new state owned newspaper, new state owned news program, social media influencers, youtubers, memes. [4] I would say that 2/3 of every trending topic I see is government related. [3]
Criticism comes from many organizations which are concerned about authoritarian tendencies.
A summary of the opposition point of view would be https://elfaro.net/en/202105/columns/25464/This-Is-How-a-Rep...
[3] Sample video of pro government twitter feed generated by twitter's default suggestions https://mobile.twitter.com/mxgxw_alpha/status/13984404587333...
[4] https://www.washingtonpost.com/outlook/2021/05/25/bukele-aut...
Another explanation from a salvadorian: https://www.reddit.com/r/Bitcoin/comments/nt8hi6/im_from_el_...
Haha, meanwhile we're all jealous that your country can go from proposal to passed bill in 3 days. Imagine how much the USA could accomplish if congress worked that fast..
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That's possible in the USA also, you just have to do that at the State and Local levels (which are comparable in population and ideological homogeneity with El Salvador anyway).
The USA isn't a unitary state, so it won't move as quickly as unitary states. It's a federal state that shares sovereignty with its constituent States, and the Federal government is necessarily slower than the State and local governments.
This is true of all federations, including Canada, Australia, Switzerland, Argentina, and Mexico.
The USA isn't a unitary state, so it won't move as quickly as unitary states. It's a federal state that shares sovereignty with its constituent States, and the Federal government is necessarily slower than the State and local governments.
This is true of all federations, including Canada, Australia, Switzerland, Argentina, and Mexico.
Yes, what we need more than anything else is more laws - generated at a rapid rate.
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OP posted a reply about why that might not be the best thing. Wonder why they deleted it.
[deleted]
Passing bills quickly is not typically a good sign. Look at North Korea for an extreme example.
Requiring merchants to accept it must be a boon for salesmen selling PoS devices... I'm sure they'll take this opportunity to extort as much as they can out of retailers.
So cash based merchants must accept bitcoin? Who decides the going rate for conversion between bitcoin and USD? The merchant? The government?
Sigh. Bitcoin BTC, at 3 transactions per second, doesn't have the capacity to support El Salvador's economy. Even if Lightning worked (it doesn't), BTC doesn't have enough capacity to open channels for users at a reasonable cost. Salvadorians will end up forced to use proprietary payment networks denominated in BTC.
BTC is not cash anymore, it won't work as such. There are other cryptos that could work, we'll have to see how broadly 'bitcoin' is interpreted.
The CGT exemption will be of interest to crypto whales and entrepreneurs and may attract some, but organized crime is a concern given the nature of the asset.
BTC is not cash anymore, it won't work as such. There are other cryptos that could work, we'll have to see how broadly 'bitcoin' is interpreted.
The CGT exemption will be of interest to crypto whales and entrepreneurs and may attract some, but organized crime is a concern given the nature of the asset.
They're literally using Lightning for payments right now in El Salvador. They didn't do this without having local projects already. Bitcoin Beach (https://twitter.com/Bitcoinbeach) made a lot of this happen.
Lightning Network capacity visualized: https://embed.theblockcrypto.com/data/on-chain-metrics/bitco...
It's a good experiment:
- we'll see how good of a currency it is
- how creative people are when trying to avoid delays / transaction costs.
- how law enforcement will work when money is stolen. (imagine their government's funds getting stolen, ordinary people I doubt they will do much)
I assume they will likely make their own exchange where people can park funds and 'transfer' funds on paper. This also solves returning money back and so on.
- we'll see how good of a currency it is
- how creative people are when trying to avoid delays / transaction costs.
- how law enforcement will work when money is stolen. (imagine their government's funds getting stolen, ordinary people I doubt they will do much)
I assume they will likely make their own exchange where people can park funds and 'transfer' funds on paper. This also solves returning money back and so on.
Lol doesn’t this defeat the whole point of a decentralized currency? You basically just described a modern bank
That is unfortunately correct, I'm curious what other solutions to usual problems bitcoin can provide, as it stands now the volatility/transaction costs/speed/immutability of transactions are going to be felt badly.
>You basically just described a modern bank
In what way? The "make their own exchange where people can park funds and 'transfer' funds on paper" bit? The lightning network allows this to be done without trusting your exchange with your funds since transfers are nearly free and instant.
In what way? The "make their own exchange where people can park funds and 'transfer' funds on paper" bit? The lightning network allows this to be done without trusting your exchange with your funds since transfers are nearly free and instant.
> Even if Lightning worked (it doesn't)
In what way doesn't it work?
In what way doesn't it work?
> Sigh. Bitcoin BTC, at 3 transactions per second...
Are you confusing the current fill rate with the max? I remember the battlecry of the bcash people being something like "7 tps is nowhere near visa levels!", has that changed?
> Even if Lightning worked (it doesn't)...
wut? There are nearly 50 thousand channels open right now with 50 million dollars in flight, what isn't working?
Are you confusing the current fill rate with the max? I remember the battlecry of the bcash people being something like "7 tps is nowhere near visa levels!", has that changed?
> Even if Lightning worked (it doesn't)...
wut? There are nearly 50 thousand channels open right now with 50 million dollars in flight, what isn't working?
Right. Why not any of the many options that are faster. Even Eth had more transactions per second.
I'm a big fan of Algorand. But also Litecoin or even Dogecoin could go faster. Plus a bunch of others.
The #BitcoinLaw has been approved by a supermajority in the Salvadoran Congress.
62 out of 84 votes!
https://twitter.com/nayibbukele/status/1402507224916836352
62 out of 84 votes!
https://twitter.com/nayibbukele/status/1402507224916836352
Looks like El Salvador is trying to become a haven for money laundering.
Wonder if some economist can chime in. If there is a sudden influx of laundered capital in El Salvador, won't that lead to massive inflation in the local currency and basically kill the economy? Or, do I have it backwards?
Wonder if some economist can chime in. If there is a sudden influx of laundered capital in El Salvador, won't that lead to massive inflation in the local currency and basically kill the economy? Or, do I have it backwards?
Local currency is only a collectible item. USD has been used since 2001.
Oh, that makes it even more interesting..
Basically El Salvador becomes the new Switzerland due to laundered and hidden money?
I'm unable to wrap my head around due to the USD angle.
Basically El Salvador becomes the new Switzerland due to laundered and hidden money?
I'm unable to wrap my head around due to the USD angle.
From what I understand the government wants to promote the country to bitcoin investors and companies by offering no capital gains taxes on Bitcoin. They also promoted that El Salvador doesn't have property taxes.
I wouldn't call El Salvador a laundering capital though. Our local regulations are super strict.
Most payments above USD 100 require and ID. It is impossible to pay or deposit, even one cent, in a bank without and ID or passport. Other countries are much more lax.
I wouldn't call El Salvador a laundering capital though. Our local regulations are super strict.
Most payments above USD 100 require and ID. It is impossible to pay or deposit, even one cent, in a bank without and ID or passport. Other countries are much more lax.
> I wouldn't call El Salvador a laundering capital though..
My apologies, I meant no disrespect to El Salvador. Also, I did not mean that it is currently the laundering capital. I was merely asking the question that would it become possible for someone to just enter the country with BTC and exchange into USD, and if so that would lead to laundering. But I’m no expert in this topic so I’m pretty sure there will be safeguards..
My apologies, I meant no disrespect to El Salvador. Also, I did not mean that it is currently the laundering capital. I was merely asking the question that would it become possible for someone to just enter the country with BTC and exchange into USD, and if so that would lead to laundering. But I’m no expert in this topic so I’m pretty sure there will be safeguards..
That's an interesting question... I dont think there is an answer for those specific cases yet. The new regulations for bitcoin are yet to be written by the local regulator.
Could be they want to (appear to) be less US dependent
What about this new law makes El Salvador a haven for money laundering? USD is typically used for that.
This could be a catastrophe. Since BTC is still too unstable to use as an everyday currency, citizens will likely use BTC only as a payment rail and convert to USD. The government will end up net long BTC. Any BTC whale in the world could dump BTC and destroy an entire countries economy. They are trading being beholden to the US for being beholden to anonymous BTC whales. Some fucking VCs just took over an entire country. My heart goes out to Salvadorans, i really hope im wrong and this works out well.
Pioneers are often mocked like this, I salute El Salvador ♥
I don't mean to mock anyone, this scares the hell out of me.
I just want to call out what I see here in the hope that some of you might reconsider the implications of what is happening.
Everything branded as "new and shiny" or pioneering technology is not automatically better.
I just want to call out what I see here in the hope that some of you might reconsider the implications of what is happening.
Everything branded as "new and shiny" or pioneering technology is not automatically better.
> Any BTC whale in the world could dump BTC and destroy an entire countries economy
This is true for every single currency ever and so doesn't make sense to invoke strictly for this one. Even your original claim (that it can't be used as an everyday currency) is already demonstrably untrue as there are plenty of goods that can be bought using purely bitcoin.
This is true for every single currency ever and so doesn't make sense to invoke strictly for this one. Even your original claim (that it can't be used as an everyday currency) is already demonstrably untrue as there are plenty of goods that can be bought using purely bitcoin.
> This is true for every single currency ever and so doesn't make sense to invoke strictly for this one
It does, actually because the large holders of fiat currencies are governments. Their holdings are public. El Salvador can atleast identify, talk to and negotiate with them. They are at least somewhat transparent and accountable to their own citizens.
The large holders of BTC are completely unknown. You morons are empowering a global mafia. We don't know who they are, they have zero accountability to anyone but themselves.
Please wake the fuck up, this is not about number go up, you are fucking with global politics without even knowing it, happily complicit because it makes you money.
In a decade, holding crypto will be a black stain on your soul like holding shares in the East India Company or giving money to dictators.
It does, actually because the large holders of fiat currencies are governments. Their holdings are public. El Salvador can atleast identify, talk to and negotiate with them. They are at least somewhat transparent and accountable to their own citizens.
The large holders of BTC are completely unknown. You morons are empowering a global mafia. We don't know who they are, they have zero accountability to anyone but themselves.
Please wake the fuck up, this is not about number go up, you are fucking with global politics without even knowing it, happily complicit because it makes you money.
In a decade, holding crypto will be a black stain on your soul like holding shares in the East India Company or giving money to dictators.
>The large holders of BTC are completely unknown. You morons are empowering a global mafia.
Are you suggesting that "the large holders of BTC" are part of a criminal organization?
> We don't know who they are, they have zero accountability to anyone but themselves.
Less accountability, less control. Bitcoin holders are just that, holders. They don't control the network or the monetary policy. The fed on the other hand can print money as it pleases.
Are you suggesting that "the large holders of BTC" are part of a criminal organization?
> We don't know who they are, they have zero accountability to anyone but themselves.
Less accountability, less control. Bitcoin holders are just that, holders. They don't control the network or the monetary policy. The fed on the other hand can print money as it pleases.
> Are you suggesting that "the large holders of BTC" are part of a criminal organization?
No, i’m saying whoever they are, they have unchecked power. Which, historically leads to evil. Which is why we created democracy in the first place.
Most bitcoin holders have little power, but bitcoin miners absolutely do control the network. 30% of the capacity of bitcoin went down when there was a power outage in China. It only takes a few large holders to control the network. Bitcoin mining is extremely energy and capital intensive. Whoever holds the electricity & equipment holds the power. It is only transferring power from democratic governments to whatever shadowy figures happen to be able to generate the most electricity. Its not going to be you or me, it will be an informal, shifting, unaccountable cartel of whatever countries happen to ally and form a >50% control of mining capacity.
This fantasy story about decentralized power is false. Many terrible regimes begin with promises of utopia.
No, i’m saying whoever they are, they have unchecked power. Which, historically leads to evil. Which is why we created democracy in the first place.
Most bitcoin holders have little power, but bitcoin miners absolutely do control the network. 30% of the capacity of bitcoin went down when there was a power outage in China. It only takes a few large holders to control the network. Bitcoin mining is extremely energy and capital intensive. Whoever holds the electricity & equipment holds the power. It is only transferring power from democratic governments to whatever shadowy figures happen to be able to generate the most electricity. Its not going to be you or me, it will be an informal, shifting, unaccountable cartel of whatever countries happen to ally and form a >50% control of mining capacity.
This fantasy story about decentralized power is false. Many terrible regimes begin with promises of utopia.
>but bitcoin miners absolutely do control the network.
Again, what type of control? They can determine what gets confirmed and possibly revert transactions (at great expense, given enough confirmations), but they can't affect monetary policy.
Again, what type of control? They can determine what gets confirmed and possibly revert transactions (at great expense, given enough confirmations), but they can't affect monetary policy.
That's already a lot of control no? They can block any transaction. They can create and confirm fraudulent transactions.
In a world where BTC is on par with any other currency, where people are paid and save in BTC, what would it look like if they decide to rob someone and the network has to fork? In economic terms, it would be identical to previous cases of the currency being destroyed. For example, when El Salvador originally dollarized and people lost half their purchasing power overnight.
In a world where BTC is on par with any other currency, where people are paid and save in BTC, what would it look like if they decide to rob someone and the network has to fork? In economic terms, it would be identical to previous cases of the currency being destroyed. For example, when El Salvador originally dollarized and people lost half their purchasing power overnight.
>They can block any transaction
Not exactly. Any miner can arbitrarily exclude transactions from the blocks they're working on, but that won't do much because it can still be confirmed via another miner. To full censor transactions you need to perform a 51% attack, ie. form a cartel of miners controlling 51+% of the hashpower, and refusing to build on top of other miner's blocks. such attacks would be plainly visible, cause the network to slow down (because hashing power is halved), and would decrease confidence in the network (which is the cost that miner pays for doing it).
>They can create and confirm fraudulent transactions.
No they can't. Confirming fraudulent transactions (ie. ones with invalid signatures) would produce invalid blocks that are rejected by the rest of the network.
>what would it look like if they decide to rob someone and the network has to fork
I doubt this will occur. The precedence for this exists in ethereum (ie. DAO hack), but not in bitcoin.
>In economic terms, it would be identical to previous cases of the currency being destroyed.
That happens in fiat demonetizations (eg. india) because the old currency is deemed worthless and you must exchange your old currency for new ones (via official channels and subject to arbitrary limits, of course). In contrast this doesn't happen with forks because you end up owning coins on both sides of the fork.
Not exactly. Any miner can arbitrarily exclude transactions from the blocks they're working on, but that won't do much because it can still be confirmed via another miner. To full censor transactions you need to perform a 51% attack, ie. form a cartel of miners controlling 51+% of the hashpower, and refusing to build on top of other miner's blocks. such attacks would be plainly visible, cause the network to slow down (because hashing power is halved), and would decrease confidence in the network (which is the cost that miner pays for doing it).
>They can create and confirm fraudulent transactions.
No they can't. Confirming fraudulent transactions (ie. ones with invalid signatures) would produce invalid blocks that are rejected by the rest of the network.
>what would it look like if they decide to rob someone and the network has to fork
I doubt this will occur. The precedence for this exists in ethereum (ie. DAO hack), but not in bitcoin.
>In economic terms, it would be identical to previous cases of the currency being destroyed.
That happens in fiat demonetizations (eg. india) because the old currency is deemed worthless and you must exchange your old currency for new ones (via official channels and subject to arbitrary limits, of course). In contrast this doesn't happen with forks because you end up owning coins on both sides of the fork.
My entire point is that power over mining is derived from power over energy. Nations do have the power to use energy and build miners. Multiple nations working together can form a cartel just like the oil cartel of previous years.
I understand what you're saying, re: txns and forks. My point is everything rests on this idea of 51% attacks being impossible. They are not at all impossible or even unlikely. Nations can form alliances or control huge parts of the mining capacity. The blockchain cannot magically solve the problems of politics and centralized power because that power can be used to control the chain too.
Use proof of work and miners can collude to launch attacks or manipulate prices. Use proof of stake and large stakeholders can do the same.
Owning crypto in an anonymous wallet, or running your own node cannot save you from a dictator with a gun. Mining may be decentralized but they can't escape crackdowns from a government with guns either.
There is fundamentally no purely technological solution to political problems in the real world. It's a distraction from the real frustration we have with democracy and centralized power in the real world.
It reminds me of when people thought social networks would unite the world.. instead they only mirror its problems. I feel like crypto is so far up in the digital land you have forgotten there is a real world out here..
I understand what you're saying, re: txns and forks. My point is everything rests on this idea of 51% attacks being impossible. They are not at all impossible or even unlikely. Nations can form alliances or control huge parts of the mining capacity. The blockchain cannot magically solve the problems of politics and centralized power because that power can be used to control the chain too.
Use proof of work and miners can collude to launch attacks or manipulate prices. Use proof of stake and large stakeholders can do the same.
Owning crypto in an anonymous wallet, or running your own node cannot save you from a dictator with a gun. Mining may be decentralized but they can't escape crackdowns from a government with guns either.
There is fundamentally no purely technological solution to political problems in the real world. It's a distraction from the real frustration we have with democracy and centralized power in the real world.
It reminds me of when people thought social networks would unite the world.. instead they only mirror its problems. I feel like crypto is so far up in the digital land you have forgotten there is a real world out here..
>Multiple nations working together can form a cartel just like the oil cartel of previous years.
Is there a wheat cartel? Coal cartel? Oil cartels are only a thing because it's geographically concentrated to a few countries. Oil could be used to generate electricity, but it's by no means the only way, or the cheapest.
>My point is everything rests on this idea of 51% attacks being impossible. [...] The blockchain cannot magically solve the problems of politics and centralized power because that power can be used to control the chain too.
The possibility of 51% attacks is acknowledged in the original whitepaper, so what you're describing isn't exactly a revelation. Moreover, the presence of a flaw doesn't mean it's absolutely useless. It simply means users think the possibility is low enough that it doesn't outweigh the other benefits.
>Owning crypto in an anonymous wallet, or running your own node cannot save you from a dictator with a gun
The most advanced military in the world lost wars against a bunch of goat herders and rice farmers. Being impervious to all attacks isn't a necessary feature.
>There is fundamentally no purely technological solution to political problems in the real world. It's a distraction from the real frustration we have with democracy and centralized power in the real world.
What's your opinion on encryption, then? Is working on e2e apps a distraction from advocating for better data privacy laws? What about VPNs? Are VPNs a distraction from petitioning the government to uncensor websites? I think technological solutions have their place alongside political ones.
Is there a wheat cartel? Coal cartel? Oil cartels are only a thing because it's geographically concentrated to a few countries. Oil could be used to generate electricity, but it's by no means the only way, or the cheapest.
>My point is everything rests on this idea of 51% attacks being impossible. [...] The blockchain cannot magically solve the problems of politics and centralized power because that power can be used to control the chain too.
The possibility of 51% attacks is acknowledged in the original whitepaper, so what you're describing isn't exactly a revelation. Moreover, the presence of a flaw doesn't mean it's absolutely useless. It simply means users think the possibility is low enough that it doesn't outweigh the other benefits.
>Owning crypto in an anonymous wallet, or running your own node cannot save you from a dictator with a gun
The most advanced military in the world lost wars against a bunch of goat herders and rice farmers. Being impervious to all attacks isn't a necessary feature.
>There is fundamentally no purely technological solution to political problems in the real world. It's a distraction from the real frustration we have with democracy and centralized power in the real world.
What's your opinion on encryption, then? Is working on e2e apps a distraction from advocating for better data privacy laws? What about VPNs? Are VPNs a distraction from petitioning the government to uncensor websites? I think technological solutions have their place alongside political ones.
> You morons
This is not a very wise way to phrase your argumentation if you want me to engage with what you're saying.
This is not a very wise way to phrase your argumentation if you want me to engage with what you're saying.
“#EnPlenaria| With 62 votes in favor (by show of hands) the opinion and bill of law that recognizes the #bitcoin as currency of legal use.
@AsambleaSV #LeyBitcoin “
Draft copy of the legislation: https://mobile.twitter.com/nayibbukele/status/14024468904662...
The president of El Salvador, @nayibbukele, participated in a Twitter Spaces conversation around 1-2 AM US eastern time. Some quotes available here: https://mobile.twitter.com/APompliano/status/140249358880671...