Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

El Salvador to adopt Bitcoin as legal tender

cnbc.com

Post reply on HN
Print view View original

331–340 of 421 posts

Re: El Salvador to adopt Bitcoin as legal tender

#331

Post by Geee »

imtringued wrote: post #309
louloulou wrote: post #228

Earlier quoted context omitted.

Allowing corrupt governments continue to steal the wealth of their citizens through printing money isn't a great alternative. At the end of the day people will use the money that works best for them if they have a choice.

>Allowing corrupt governments continue to steal the wealth of their citizens through printing money isn't a great alternative. How many times does this get repeated? No money is being printed right now. No MMT is happening. No helicopter money is happening. Barely any Keynesian fiscal stimulus is happening (the US has stimulus checks but the EU doesn't and it's suffering for it) and the fiscal stimulus that is happen…

Yeah, and that's the problem. All the debt is basically money that is stolen from people's savings in the form of inflation.

"Financed with debt" that is never going to be paid back. You have to think who is doing the actual financing here, and why they aren't getting interest on their financing.

Re: El Salvador to adopt Bitcoin as legal tender

#332

Post by runeks »

pastech wrote: post #324
runeks wrote: post #318

Earlier quoted context omitted.

> Is it really "locking" when putting bitcoins on LN actually make them easily spendable with very little fees? Merchants don’t want to spend, they want to receive. Why should a merchant have to lock e.g. $100k worth of bitcoins at the beginning of the month (in a payment channel connected to a gateway) just in order to receive that amount from consumers during that month? No other payment system in the world require…

Well if a merchant doesn't want to spend or lock anything, it doesn't have to. Consumers and gateways can open channels to the merchant and that's enough for them to pay the merchant. In the case of a merchant that doesn't want to participate much in the network, gateways have interest in opening to him to allow consumers to pay the merchant for a fee.

> Well if a merchant doesn't want to spend or lock anything, it doesn't have to.

If the merchant wants to receive funds via the gateway then funds need to be locked in a payment channel between the gateway and the merchant.

This is in addition to the funds locked in multiple payment channels between consumers and the gateway.

Consider a super simple LN setup, consisting of (a) one thousand consumers, each with 0.001 BTC to spend, (b) a single gateway and (c) a single merchant. The consumers are connected to the gateway, the gateway is connected to the merchant. In order for the one thousand consumers to each send 0.001 BTC to the merchant there needs to exist a payment channel between the gateway and merchant with 1 BTC in it (assigned to the gateway), and every time 0.001 BTC is sent from the consumer to the merchant, 0.001 BTC moves from a consumer to the gateway (in one payment channel) and from gateway to merchant (in a separate payment channel).

My concern here is that this is (1) expensive, and (2) inflexible. Expensive because the gateway needs to borrow 1 BTC to sit in a payment channel between it and the merchant, and inflexible because if another consumer connects to the gateway then the merchant cannot receive additional funds because it would require increasing the capacity of the channel between the gateway and merchant.

Re: El Salvador to adopt Bitcoin as legal tender

#333

Post by spiorf »

runeks wrote: post #238

Why is no one pointing out that, in order to receive bitcoins on the Lightning Network (LN), you need to lock bitcoins in a payment channel? So, if a consumer wants to send bitcoins to a merchant, either the consumer needs to lock up bitcoins in a payment channel which can only send bitcoins to that given merchant , or the consumer needs to lock up bitcoins in a payment channel to an intermediate gateway, and the mer…

> Why is no one pointing out that, in order to receive bitcoins on the Lightning Network (LN), you need to lock bitcoins in a payment channel?

Because it is false. To receive bitcoins on the LN you need to have a node. Other parties can open a channel with you to send you money.

> lock up bitcoins in a payment channel which can only send bitcoins to that given merchant

This is again false. The consumer can pay anyone on LN. The nodes you call "gateways" are just regular nodes, some with more funding than others. You can choose to run a regular node and keep it online and use it to route payments for other, or you can use a light wallet that opens a private channel and uses channel hints to route payments through his private channel to the network.

Bitcoins "locked" in a channel are not locked at all, You can send them to whoever you can route to on LN, or get it back to a regular on-chain wallet. And nowadays a well connected node reaches every other node.

> the gateway needs to know how many bitcoins the merchant will receive

No, the gateway needs to manage cash flow like every other money-transacting entity. There just needs to be enough capacity, like you need enough cash in a cash register. You do not need to know in advance the sum. And you can replenish and empty channels with one on-chain tx, so no need to close and re-open channels.

> the gateway needs to borrow this amount of bitcoins in the market and lock it up in a payment channel between it and the merchant.

You got it wrong.

First, gateways (that are just regular nodes, some running on raspberri pis) are already online, and with funding (https://1ml.com/). Those are already denominated in btc, so price do not affects funding capability.

Second, replace "gateway" with "the LN network". A gateway has some funding and locks it up in some channel to the LN network (meaning some other nodes)

Third, those bitcoins are not really locked for anything, but let's keep using this word.

So the "gateway" can be anyone with some bitcoins he might want to spend on LN (or not).

Re: El Salvador to adopt Bitcoin as legal tender

#334

Post by wokwokwok »

yorwba wrote: post #273
wokwokwok wrote: post #269

Earlier quoted context omitted.

You think the average person does less than one financial transaction per day? O_o I mean, sure, not everyone is out getting a coffee every morning, but that strikes me as roughly an order of magnitude below reality. Let’s say, shopping three times a week, with 5 transactions per shopping trip; that’s already an average of 2 transactions a day, but worse, since it’s clustered in small time intervals. How do possibly…

Over the last three months, I've made on average slightly more than two transactions per week, most of which is due to buying food every 3 or 4 days. Everything else is a rounding error. Now I won't claim my consumption pattern is typical, but it certainly shows that 0-1 transaction per day is possible. (What are the five shops you visit three times a week?)

> What are the five shops you visit three times a week

Ah, chemist, supermarket, coffee shop, butcher maybe bakery? Heck, I might run out of sugar and have to go shopping again! Is it really that weird?

I’d particularly like to point out that all-in-one shops are globally atypical, and specifically atypical in smaller communities.

I seriously think you should consider your buying patterns as not representative of... most people, in most places, and specifically not el salvador.

Re: El Salvador to adopt Bitcoin as legal tender

#336

Post by mambru »

arcticbull wrote: post #293
foepys wrote: post #277

Earlier quoted context omitted.

To open a LN channel you need an on-chain transaction. Same for closing a channel. Currently a Bitcoin transaction is around 7 USD. So you need 14 USD to participate, assuming the transaction cost does not change. 14 USD is more than a daily income for the average citizen, most will be below 10 USD.

The thing is, Strike doesn't open LN channels for people. In fact, they only use LN to move money between custodial accounts they themselves are beneficial owners of. I can't for the life of me figure out why they'd use LN - or crypto at all - for this and not just an entry in the centralized database they already have tracking balances. Avoid regulation, maybe? But like why ? I've listened to an hour long Maller pod…

Why are remittances so expensive if this is so simple? Maybe you are missing something here?

The function of lightning and the Bitcoin base layer is settlement and clearing, those 2 things are non-trivial.

Then there is also the legal aspect, which cannot be detached from those.

Re: El Salvador to adopt Bitcoin as legal tender

#337

Post by spiorf »

runeks wrote: post #332
pastech wrote: post #324

Earlier quoted context omitted.

Well if a merchant doesn't want to spend or lock anything, it doesn't have to. Consumers and gateways can open channels to the merchant and that's enough for them to pay the merchant. In the case of a merchant that doesn't want to participate much in the network, gateways have interest in opening to him to allow consumers to pay the merchant for a fee.

> Well if a merchant doesn't want to spend or lock anything, it doesn't have to. If the merchant wants to receive funds via the gateway then funds need to be locked in a payment channel between the gateway and the merchant. This is in addition to the funds locked in multiple payment channels between consumers and the gateway. Consider a super simple LN setup, consisting of (a) one thousand consumers, each with 0.001…

You have a wrong understanding of how LN works. You are conflating inbound and outbound liquidity. To receive 1 btc a merchant does not have to open a 1 btc channel. Another node has to open a channel with him. He can buy 1 btc of incoming liquidity for a few cents. Some nodes offer incoming liquidity for free (it costs them almost nothing to keep their btc in a channel for a while).

And your super simple setup is completely isolated from the rest of the economic world. It wouldn't even work with cash because every merchant would need to manage a cash reserve in every store, manage transfers of cash back and forth, and the associated risk. It would be expensive and inflexible.

Re: El Salvador to adopt Bitcoin as legal tender

#338

Post by ldiracdelta »

BreakfastB0b wrote: post #213
ldiracdelta wrote: post #124

Earlier quoted context omitted.

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.

The problem is all transaction on bitcoin are public. Satoshi even moving his coins to begin trading would cause a massive freakout. Coinbase even had to disclose this risk in their IPO filing.

You're right. That would be more akin to massive, instantaneous inflation which could shake peoples' confidence.

Re: El Salvador to adopt Bitcoin as legal tender

#339

Post by foepys »

rawtxapp wrote: post #317
foepys wrote: post #277

Earlier quoted context omitted.

To open a LN channel you need an on-chain transaction. Same for closing a channel. Currently a Bitcoin transaction is around 7 USD. So you need 14 USD to participate, assuming the transaction cost does not change. 14 USD is more than a daily income for the average citizen, most will be below 10 USD.

Channel factories will be able to open and close many channels at once, so if you open 100 channels in a single transaction, well then you can divide the onchain cost by 100.

Channel factories only work as long as all participants of the factory want their Bitcoin inside the LN. As soon as any party wants their Bitcoin in their Bitcoin wallet, the factory needs to close all channels. This makes is unusable in the real world as people can and will not commit their whole networth into static channels that need settlement of 100 or so unknown parties until they can send it anywhere else.

All of this also completely ignores the LN routing problem which is conveniently left out of the LN whitepaper as it is actually unsolvable at large scale unless you have very few supernodes coordinating everything. In the real world those are commonly known as "banks".

Re: El Salvador to adopt Bitcoin as legal tender

#340

Post by pastech »

runeks wrote: post #332
pastech wrote: post #324

Earlier quoted context omitted.

Well if a merchant doesn't want to spend or lock anything, it doesn't have to. Consumers and gateways can open channels to the merchant and that's enough for them to pay the merchant. In the case of a merchant that doesn't want to participate much in the network, gateways have interest in opening to him to allow consumers to pay the merchant for a fee.

> Well if a merchant doesn't want to spend or lock anything, it doesn't have to. If the merchant wants to receive funds via the gateway then funds need to be locked in a payment channel between the gateway and the merchant. This is in addition to the funds locked in multiple payment channels between consumers and the gateway. Consider a super simple LN setup, consisting of (a) one thousand consumers, each with 0.001…

> If the merchant wants to receive funds via the gateway then funds need to be locked in a payment channel between the gateway and the merchant.

If I keep the scenario where the merchant doesn't want to lock anything in the LN, then the gateway can do it, and charge a fee for transacting through it. It's the gateway's choice to open such a channel or not. The "expensive" part is compensated by the fee which is chosen by the gateway operator.

If the merchant chooses to "lock" a bit to participate in LN, it's easier to rebalance his channels once 1000 people depleted the channel, eliminating the "inflexible". Besides, after all the fees saved by not using the Bitcoin blockchain for 1000 transactions, one can open a new channel to deal with that as well.

And again, nothing is ever "locked" in the LN, at any moment anyone (e.g. the merchant) can send everything back to on-chain or even to exchanges that use LN. There is no reason to believe that on-chain is less "locked". As such, it's not expensive nor inflexible, or in any case, less than Bitcoin itself.

Of course it would be easier if there was nothing to think about, but centralized solutions all have their set of problems as well, and that's another debate. In the mean time, LN works well at its scale and push back like yours feels like a "perfect is the enemy of good" kind of situation.

Post reply on HN