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El Salvador makes Bitcoin legal tender

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Re: El Salvador makes Bitcoin legal tender

#331

Post by bun_at_work »

jwolfe wrote: post #244
bun_at_work wrote: post #221

Earlier quoted context omitted.

The bank does hold a fraction of your deposits, as our banking in the US is fractional reserve banking. This has been the case for quite some time, and isn't really the same thing as digital currency, even if we transact digitally.

From my understanding, they hold most of that in reserve accounts with the Federal Reserve. But yeah, someone at some point holds some cash. But of the total US money supply (in 2018), physical currency makes up about 11% of the total value[0]. [0] https://www.businessinsider.com/heres-how-much-us-currency-t...

Right, because fractional reserves are set around 10% or so.

edit: fraction reserve _requirements_ are set around 10% or so.

Re: El Salvador makes Bitcoin legal tender

#332

Post by aerosmile »

whiskyant wrote: post #187
aNoob7000 wrote: post #72

Earlier quoted context omitted.

LOL! Very true.. Who the hell has time to figure out all this stuff? I personally think the day the digital US dollar is developed and can be stored in your IPhone. If I can take my locally stored digital dollar and then send it via imessage or whatsapp, then the game is truly over for Bitcoin.

>Who the hell has time to figure out all this stuff? In the early days of the internet, many things were a complete pain in the ass to do. But then services and apps were built and things became easier, same is happening in this space. Before, even purchasing Bitcoin was extremely difficult to do, and involved a lot of research + steps - now it's trivial. Before, securing your wallet was extremely difficult, now it's…

This is such a brilliant answer. Imposing the grandma test on early-stage ecosystems is a total naysayer move. We all know that humans are capable of doing advanced math, even though a newborn baby doesn't come even close to being able to do it.

Re: El Salvador makes Bitcoin legal tender

#333

Post by wyager »

kwhitefoot wrote: post #59
blocked_again wrote: post #18

> The El Salvador President has previously said the move will open up financial services to the 70% of Salvadoreans who do not have bank accounts. Right. People who can't even afford a bank account would now all be using financial services by paying 10 dollars per transaction.

Where I live ordinary bank transactions are free for ordinary consumers. I never pay a transaction fee or any annual fees. My bank used to charge an annual fee for a credit card but they have stopped charging now. In fact in my whole life (I'm 65 so about 50 years of having bank accounts) I have never paid transaction fees for ordinary transactions (in the UK and Norway).

> I have never paid transaction fees for ordinary transactions

You have, just not in a way that’s obvious to you.

Re: El Salvador makes Bitcoin legal tender

#334

Post by reedjosh »

kqr wrote: post #300
bun_at_work wrote: post #221

Earlier quoted context omitted.

The bank does hold a fraction of your deposits, as our banking in the US is fractional reserve banking. This has been the case for quite some time, and isn't really the same thing as digital currency, even if we transact digitally.

Well, you make it sound like there's a limited number of dollar notes and the bank will refuse your deposit/loan if they don't have enough notes lying around to make the fractional requirements. In reality, they will accept your deposit/loan (as long as it makes business sense) with no regard for how many notes they have lying around. If that puts them over the edge of the fractional requirements, they'll just go to…

> they'll just go to the Fed/Treasury, who will swing their wand and write in additional (digital) reserves for the bank.

Pretty sure that's true for larger institutions and lending between themselves, but not for your everyday accounts. They must go to fed member banks themselves to ask for the loans.

Re: El Salvador makes Bitcoin legal tender

#335

Post by wyager »

blocked_again wrote: post #148
BTCOG wrote: post #122

Earlier quoted context omitted.

They are using Zap/Strike (Lightning) and zero fees. The phony "fees are $1,000 a tx line" and $10 hyperbole simply show you have no clue what you're talking about when speaking about Bitcoin. Even on chain the past solid week you could send free BTC transactions, or for a couple of cents.

I am sorry but what is the point of adopting BTC if vast majority of the transactions are going to be handled by a third party service. Makes no sense to me.

Getting off the federal reserve petrodollar inflation express.

Bitcoin (and lightning) give you the option to self-host as much as you want. They don’t force you to do anything.

Re: El Salvador makes Bitcoin legal tender

#336

Post by bun_at_work »

kqr wrote: post #300
bun_at_work wrote: post #221

Earlier quoted context omitted.

The bank does hold a fraction of your deposits, as our banking in the US is fractional reserve banking. This has been the case for quite some time, and isn't really the same thing as digital currency, even if we transact digitally.

Well, you make it sound like there's a limited number of dollar notes and the bank will refuse your deposit/loan if they don't have enough notes lying around to make the fractional requirements. In reality, they will accept your deposit/loan (as long as it makes business sense) with no regard for how many notes they have lying around. If that puts them over the edge of the fractional requirements, they'll just go to…

This simply isn't how the financial system works. The bank will only loan out amounts based on what they hold in reserve. Asking the Fed/Treasury to "swing their wand around" isn't really close to what happens. Also, the Federal Reserve and the Treasury are different entities.

They don't just "print money" for banks arbitrarily.

Re: El Salvador makes Bitcoin legal tender

#337

Post by kragen »

CapriciousCptl wrote: post #313
kragen wrote: post #246

Earlier quoted context omitted.

I've had some experience with this myself, although I haven't gotten robbed outside a WU yet; I wrote a little about my Argentine experience in https://news.ycombinator.com/item?id=27448744 . It's important to remember that WU's fees are so high in large part because WU is assuming risks (of identity fraud, of regulatory blockage, and of cash theft) that Bitcoin largely avoids.

WU incurred $41.3 million in "non-credit related losses," which includes fraud in 2020[1] which is only maybe 1% of their revenue. It had another ~$40 million in expected credit losses (primarily from agents), so I think ~2% of the fee goes to losses. Since their gross margins are consistently 40% and their operating margins are ~20% I think barriers to entry/international government regulations better explains the h…

Thanks for digging that up. Yeah, I suspected that the "regulatory blockage" thing there might account for more of the risks than armed robbery :)

Re: El Salvador makes Bitcoin legal tender

#338

Post by Empact »

FreeTrade wrote: post #153
TimJRobinson wrote: post #89

Earlier quoted context omitted.

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.

The cost and complexity of opening channels for users is prohibitive. Any widely adopted solutions will therefore be custodial. Might as well use PayPal.

There's a big difference between a solution which requires you to use a custodial service, and one which gives you the option of non-custodial service - the latter allows for a much greater ability to hold custodial services accountable, by opting to self-custody, without forcing you to change your payment medium in the process.

Re: El Salvador makes Bitcoin legal tender

#339

Post by agumonkey »

carlosdp wrote: post #218
angry_octet wrote: post #79

Amazingly shortsighted. The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars, which they can use to buy trade items and export the profits. The number one export of El Salvador is actually people. If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from O…

There was a quote recently from a high ranking former FBI agent that worked on money laundering where she said she wasn't really concerned about crypto making money laundering worse (trying to find the article again). Her reasoning was: "what people need to understand is, 95% of money laundering with fiat currency already succeeds today without getting caught." In other words, this won't really change much, it was al…

interesting(ly sad) percentage .. I wonder how come nothing impedes their laundering

that said I wonder if having another path won't make them even more hungry.. i'm sure criminals are very creative when it comes to making more money

Re: El Salvador makes Bitcoin legal tender

#340

Post by wickoff »

kragen wrote: post #226
blocked_again wrote: post #18

> The El Salvador President has previously said the move will open up financial services to the 70% of Salvadoreans who do not have bank accounts. Right. People who can't even afford a bank account would now all be using financial services by paying 10 dollars per transaction.

Even without Lightning, it's not US$10 per transaction; I commented in more detail at https://news.ycombinator.com/item?id=27448744 .

Low on-chain fees are actually a disaster for Bitcoin. Once mining rewards dwindle to nothing due to halvings fees would have to rise astronomically to maintain hash power.
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