El Salvador to adopt Bitcoin as legal tender • Hacker News Board

Re: El Salvador to adopt Bitcoin as legal tender

#111

Post by slg » Sun, Jun 06, 2021, 1:07 AM UTC

zapdrive wrote: post #105

antihero wrote: post #60

Earlier quoted context omitted.

Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.

Oh are we back to "Bitcoin is unstable" FUD. I missed the memo. I was still going with the "Bitcoin is bad for environment" FUD. I also loved the "blockchain good but Bitcoin bad" FUD while it lasted, that one was fun.

“FUD” implies it is false. Maybe you can argue against some of those, but I have no idea how anyone would argue Bitcoin has a stable value.

Re: El Salvador to adopt Bitcoin as legal tender

#112

Post by KirillPanov » Sun, Jun 06, 2021, 1:08 AM UTC

> President Nayib Bukele announced El Salvador's partnership with digital wallet company, Strike, to build the country's modern financial infrastructure using bitcoin technology.

Moments later, president Bukele was deposed in a violent military coup. The CIA denied involvement.

Re: El Salvador to adopt Bitcoin as legal tender

#113

Post by myrryr » Sun, Jun 06, 2021, 1:09 AM UTC

acdha wrote: post #95

Geee wrote: post #87

Earlier quoted context omitted.

Bitcoin will stabilize in time, when it's big enough to absorb short time supply and demand shocks. It will eventually follow the value of all economic activity through its network. The more economic activity, the less volatility in aggregate. There's a huge cost in "stabilizing" a fiat currency, in terms of debt and inflation.

Bitcoin can’t scale to handle anywhere close to that much volume, and the deflationary model makes stability harder to maintain since it discourages routine usage.

They are using lightning, which is designed to do so. It if was just bitcoin then yes, they would have serious issues, but it isn't.

Re: El Salvador to adopt Bitcoin as legal tender

#114

Post by [deleted] » Sun, Jun 06, 2021, 1:11 AM UTC

Geee wrote: post #87

antihero wrote: post #60

Earlier quoted context omitted.

Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.

Bitcoin will stabilize in time, when it's big enough to absorb short time supply and demand shocks. It will eventually follow the value of all economic activity through its network. The more economic activity, the less volatility in aggregate. There's a huge cost in "stabilizing" a fiat currency, in terms of debt and inflation.

[deleted]

Re: El Salvador to adopt Bitcoin as legal tender

#115

Post by PragmaticPulp » Sun, Jun 06, 2021, 1:12 AM UTC

rawtxapp wrote: post #44

Geee wrote: post #42

Earlier quoted context omitted.

Their work is open source and they are using standard Bitcoin protocols. Zap is their wallet https://zaphq.io Strike is a payment app that uses Bitcoin Lightning network internally to settle payments between financial institutions. It's useful for sending fiat currency denominated remittances instantly and without fees. https://strike.me When they released Strike in El Salvador, it was an instant success. The preside…

To add on to that, it's been used pretty nicely in the El Zonte beach town [1]. 1: https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

According to the article, someone donated "six-figure" amounts of Bitcoin to the town each year on the condition that they learn how to use Bitcoin:

> Beneficiaries of the digital currency had to learn how to use the Bitcoin itself, creating a Bitcoin economy.

If you give a relatively poor town the option to take free money as long as they learn how to use Bitcoin, of course they're going to learn how to use Bitcoin.

The real test is whether Bitcoin makes sense in an otherwise functioning economy where people aren't given free Bitcoin and they have the option to use a credit card that comes with a lot of consumer protections and zero (or even negative) fees.

Re: El Salvador to adopt Bitcoin as legal tender

#116

Post by afavour » Sun, Jun 06, 2021, 1:13 AM UTC

zapdrive wrote: post #105

antihero wrote: post #60

Earlier quoted context omitted.

Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.

Oh are we back to "Bitcoin is unstable" FUD. I missed the memo. I was still going with the "Bitcoin is bad for environment" FUD. I also loved the "blockchain good but Bitcoin bad" FUD while it lasted, that one was fun.

Would it be helpful if we clarified that all three of those assertions are true at the same time?

Re: El Salvador to adopt Bitcoin as legal tender

#117

Post by PragmaticPulp » Sun, Jun 06, 2021, 1:15 AM UTC

temp10298385 wrote: post #17

As someone who readily admits to not fully knowing what legal tender entails, I have a question for the optimists: As I understand it, legal tender status forces creditors to accept bitcoin as debt repayment. Given the volatility of bitcoin, wouldn't this impact risk assessment of loans? Being obligated to accept a high volatility asset as a repayment sounds like a nightmare for creditors. Wouldn't interest rates ris…

Loans and bills would be denominated in the original currency. Bitcoin would only be used for transferring money. It would be converted back to the original currency upon receipt.

If the cryptocurrency infrastructure and exchanges become fast enough, the exchange rate of the cryptocurrency doesn't matter. Users would buy, transfer, and the recipient would sell the cryptocurrency at the other end in however long the technology allows.

This puts cryptocurrency in a weird spot as an investment because the exchange rate doesn't matter as much.

If PayPal announced that transactions on the PayPal network would be denominated in a finite amount of PayPalCoins, everyone would roll their eyes. Call it a cryptocurrency and add some blockchain technology, though, and for some reason it's an investment that's going to the moon.

Re: El Salvador to adopt Bitcoin as legal tender

#118

Post by windthrown » Sun, Jun 06, 2021, 1:18 AM UTC

zapdrive wrote: post #105

antihero wrote: post #60

Earlier quoted context omitted.

Yeah but imagine if you bought a beer for $4 and then next week the beer was actually worth $8 and the next it was worth $7 and then a few months later the beer was worth $50. The whole point of fiat is that it is stable and so you aren't fucking yourself by exchanging it for consumables.

Oh are we back to "Bitcoin is unstable" FUD. I missed the memo. I was still going with the "Bitcoin is bad for environment" FUD. I also loved the "blockchain good but Bitcoin bad" FUD while it lasted, that one was fun.

Call it "FUD" if you want but in this case Fear, Uncertainty, and Doubt are all very much justified.

Re: El Salvador to adopt Bitcoin as legal tender

#119

Post by staktrace » Sun, Jun 06, 2021, 1:18 AM UTC

slg wrote: post #111

zapdrive wrote: post #105

Earlier quoted context omitted.

Oh are we back to "Bitcoin is unstable" FUD. I missed the memo. I was still going with the "Bitcoin is bad for environment" FUD. I also loved the "blockchain good but Bitcoin bad" FUD while it lasted, that one was fun.

“FUD” implies it is false. Maybe you can argue against some of those, but I have no idea how anyone would argue Bitcoin has a stable value.

You argue it is stable by arguing you never need to convert it to fiat. If your economy is running 100% on Bitcoin it doesn't matter what the exchange rate to USD our any other currency is. (Note I'm not actually arguing this is the case in El Salvador, just pointing out that there is a theoretical argument that could be made.)

Re: El Salvador to adopt Bitcoin as legal tender

#120

Post by dariusj18 » Sun, Jun 06, 2021, 1:18 AM UTC

rawtxapp wrote: post #67

CyberDildonics wrote: post #56

Earlier quoted context omitted.

When that article was written the transaction fees were around $1.50-$2.00 USD which is already a lot for meals and snacks. Now that the average transaction fees are anywhere from $7 - $60 I doubt people are buying much with bitcoin's dialup throughput. https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Strike is using lightning where the fees are barely a few satoshis (much smaller than cents) most of the time. This isn't the Bitcoin of 2015, there has been lots of new development, lightning is here and is being used with growing adoption (1ml.com), there are other changes coming to improve the base layer itself (taproot, eltoo, etc).

I still don't understand how the lightning network works and maintains the important blockchain feature of bitcoin.