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

Re: El Salvador to adopt Bitcoin as legal tender

#121

Post by Macha » Sun, Jun 06, 2021, 1:19 AM UTC

Beached wrote: post #24

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…

they would be forced to accept it, however they would likely instantly convert it to a more stable currency at the time of payment through some processor. there will likely be a small fee to them for the conversion of Bitcoin to say, USD, but I imagine it would be similar to accepting credit cards for payment? and so it would be worked into the prices.

This isn't inherent in the definition of legal tender, for example large denomination paper notes (100/200/500 euro) are often rejected for fraud risk despite being legal tender, and the latter two ceased printing because legal vendors so rarely accepted them meant that illegal activity was a high proportion of their use.

Re: El Salvador to adopt Bitcoin as legal tender

#122

Post by PragmaticPulp » Sun, Jun 06, 2021, 1:20 AM UTC

smoldesu wrote: post #8

> Bukele said the country is partnering with digital wallet company, Strike, to build modern financial infrastructure using bitcoin technology. Wow, this seems like an incredibly shitty situation for the people of El Salvador. It looks like some lobbyists got hired by a wallet company stacked with angel investors willing to pour money into the idea of being integrated into the government at such a low level. I wouldn…

> Wow, this seems like an incredibly shitty situation for the people of El Salvador.

Indeed it is. The government just mandated that everyone in the country is obligated to use a startup's app, more or less. This has to be one of the most egregious examples of regulatory capture I've seen in a long time.

"Legal tender" means that people are legally obligated to accept this as payment. Maybe the law will be broad enough that the buyer can set the terms of how the Bitcoin is delivered, but given how prominently this Strike app and their founder are participating in the launch, I suspect it will mostly just drive users to this startup.

Forcing everyone to accept Bitcoin, maybe through a specific startup company's app depending on how this is rolled out, is a weird juxtaposition to the libertarian ideals of many Bitcoiners.

Re: El Salvador to adopt Bitcoin as legal tender

#123

Post by CyberDildonics » Sun, Jun 06, 2021, 1:20 AM UTC

bubersson wrote: post #72

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...

Transaction fees are 5 cents in the last couple days. The mempool is empty (see https://mempool.space/ ). If you are paying more, then that's an issue with the exchange or wallet that you are using.

No they aren't, you are misunderstanding that link. It gives an 'estimate' of 1 satoshi per byte. The actual current block is 12 satoshis per byte. Transactions are not a single byte of course. This is why the average transaction fee is $7 right now and was $60 a few weeks ago.

https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Re: El Salvador to adopt Bitcoin as legal tender

#124

Post by ldiracdelta » Sun, Jun 06, 2021, 1:20 AM UTC

bratao wrote: post #15

What would happen to the markets if Satoshi appeared and starts trading his 1 Mi in BTC?

We already have these problems in the normal stock exchange -- they're called "whales". In order for whales to capture the best value to _them_, they trade carefully and slowly so as not to shock the market.

Re: El Salvador to adopt Bitcoin as legal tender

#125

Post by staktrace » Sun, Jun 06, 2021, 1:20 AM UTC

CyberDildonics wrote: post #71

rawtxapp wrote: post #67

Earlier quoted context omitted.

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).

> This isn't the Bitcoin of 2015 I agree, because I used bitcoin in 2015 and it actually worked well instead of being crippled to a few transactions per second for the whole network. How are they getting their balance on to the bitcoin chain? How much does that cost? Once they are in control of their money and actually have it on the real chain and not some wallet app maker's sub-chain they still have to eat more gia…

Maybe you should try to actually read up on what the lightning network is before you argue against some ill-informed strawman version of it.

Re: El Salvador to adopt Bitcoin as legal tender

#126

Post by ipaddr » Sun, Jun 06, 2021, 1:22 AM UTC

acdha wrote: post #102

ipaddr wrote: post #69

Earlier quoted context omitted.

If the currency is in a bank that deals with the US it could be seized. Bitcoin doesn't allow this.

Kind of: Bitcoin doesn’t allow transactions without knowing the key but that isn’t true for exchanges and the public ledger makes it easy to block transactions using that address. If everyone subject to US jurisdiction or treaty agreements blocks transactions traceable back to tainted addresses, the value plummets.

In this situation you would use an exchange in a friendly country.

Re: El Salvador to adopt Bitcoin as legal tender

#127

Post by plankers » Sun, Jun 06, 2021, 1:22 AM UTC

antihero wrote: post #60

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…

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.

The beer will always be worth what you paid for it. The money you still have may, however, fluctuate in value.

Re: El Salvador to adopt Bitcoin as legal tender

#128

Post by jjulius » Sun, Jun 06, 2021, 1:23 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.

Care to argue your point rather than just continuously layering on the snark?

Re: El Salvador to adopt Bitcoin as legal tender

#129

Post by revnode » Sun, Jun 06, 2021, 1:23 AM UTC

antihero wrote: post #60

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…

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.

Why does it matter how many dollars the beer is worth? It is worth the same number of bitcoins yesterday, today, and tomorrow. That's the only stability that is relevant.

Re: El Salvador to adopt Bitcoin as legal tender

#130

Post by atweiden » Sun, Jun 06, 2021, 1:24 AM UTC

bb88 wrote: post #103

bpodgursky wrote: post #79

Earlier quoted context omitted.

This kind of fiat stability is very challenging for small and poor countries. In fact, El Salvador doesn't _have_ its own currency for this reason -- they switched to the US dollar decades ago! Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? (and sure as hell will not modify their fiscal…

> Is it worse to peg your economy to a decentralized cryptocurrency, or a fiat currency controlled by a large powerful near-neighbor who only occasionally even remembers you exist? A currency needs stability. Speculation needs volatility. Speculation only works when there's a stable currency to dump your value into when the the security your trading is going in the wrong direction.

> A currency needs stability.

The word “currency” is inherently a tautology. How does something become a currency?

> Speculation only works when there's a stable currency to dump your value into when the the security is going in the wrong direction.

Precious metals long predate government monies. Gold and silver couldn’t have become currency under the definition you’ve presented here.