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El Salvador makes Bitcoin legal tender

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Re: El Salvador makes Bitcoin legal tender

#351

Post by kragen »

UncleMeat wrote: post #292
kragen wrote: post #234

Earlier quoted context omitted.

Remittances are one of the best use cases for bitcoin; my comment at https://news.ycombinator.com/item?id=27448744 goes into more details. Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.

> fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable This is incoherent. Nothing ties these prices together. If tomorrow the price of BTC goes up 1000x, the price to buy a joule of energy via burning coal doesn't change at all.

The ratio of joules of energy to bitcoin mined isn't fixed; it's varied to keep the rate of bitcoin mining constant, although not from one day to the next. If the price of bitcoin goes up 20% in the next two weeks, then bitcoin mines that would have been running at a 10% loss start running at a 10% profit instead, which increases the hash rate and then the difficulty. This increases the amount of energy (and hardware investment) needed to mine bitcoin, which reduces the miners' profits, but disproportionately the profits of fossil-fuel-driven miners.

It's true that rapid price changes can make fossil-fueled mining temporarily profitable, and things like burning off flare gas are also profitable, but bitcoin mining is already dominated by renewables and becoming progressively more so: https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall...

I'm sorry I abbreviated this whole explanation so much in my original post that you ended up so confused.

Re: El Salvador makes Bitcoin legal tender

#352

Post by ROARosen »

jvanderbot wrote: post #303
ddtaylor wrote: post #251

Earlier quoted context omitted.

LN requires opening and closing channels, each of which have to be done as a regular Bitcoin transaction. The value proposition of LN is that repeated transactions with the same entity (or some subset of) can be done without high fees, but considering almost nobody is currently using LN that doesn't change things right now.

That sounds fairly easy on a national exchange level, actually.

> you’ve negated all the features of Bitcoin and may as well be using any random currency with the government as shared banker

Since the goals are to 'give people without bank accounts access' and 'To make it easier to send back remittance payments'. I suppose they are just negating the value of bitcoin in general, though not for their specific use-case. Especially give the fact that the current legal tender there is currently USD which anyhow does not give the country any control over monetary policy.

Re: El Salvador makes Bitcoin legal tender

#353

Post by cowl »

carloseduardov wrote: post #169
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.

I am salvadoran myself and I do not support the current president but I should say that the law passed by congress says that El Salvador will have it's own bitcoin reserve and an exchange for bitcoin against USD (our current national currency), so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange.

But Bitcoin is so volatile. You deposit today let's say 10k of your USD and in one week if the market doesn't like the twits of the day you find yourself with half that.

Re: El Salvador makes Bitcoin legal tender

#354

Post by SkyMarshal »

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.

Before they can even pay $10 per transaction, they need to buy Bitcoins first.

The problem of the unbanked isn’t that they don’t have access to financial services, it’s that they don’t have enough money. They live paycheck-to-check, if that. There’s no point in converting what little they have to Bitcoin and paying fees on the conversion, and then more fees when spending it.

Re: El Salvador makes Bitcoin legal tender

#355

Post by kragen »

xapata wrote: post #318
kragen wrote: post #208

There's disappointingly much heat and little light in this thread; lots of people in rich countries ripping on El Salvador (and bitcoin) with little more than stereotypes to go on. Let me try to displace some of the content-free flaming with real information. I'm not in El Salvador, but I do have some experience with how Bitcoin gets used in practice in low- and middle-income countries, despite the transaction fees s…

> The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what’s happened in the US over the last 50 years, in fact, only more so. Why does it make most…

Maybe it won't! It's a potential disaster, not a guaranteed one. You can read Tim May's Crypto-Anarchist Manifesto for a slightly more detailed argument, and there are decades of cypherpunk stuff to read on the subject, mostly from the perspective that destroying the welfare state would be really super great.

I don't agree, but the immediate and pressing problem for most people (especially in El Salvador) is not the potential collapse of the welfare state but the depredations of kleptocracy.

Re: El Salvador makes Bitcoin legal tender

#356

Post by rawtxapp »

paulgb wrote: post #341
rawtxapp wrote: post #262

Earlier quoted context omitted.

Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.

Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the…

If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is.

The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.

Re: El Salvador makes Bitcoin legal tender

#357

Post by lowkey »

throwawayggdf wrote: post #100
ardme wrote: post #65

Earlier quoted context omitted.

This site sucks

Maybe before such an ad hominem you need to become a bit more familiar with recent developments in El salvador. Associating this government initiative with criminality is a very reasonable thing to do. https://www.economist.com/the-americas/2021/05/06/el-salvado...

I read the article and then I did some more research. His government was elected with a significant majority. Per the constitution they have a legal right to replace judges and even though the article skips those facts they never actually claim criminality - since there is no evidence of such.

Looking back at history, El Salvadore was devastated by a 12 year long civil war [1] in the 1980’s funded to the tune of $1-2 million USD per day by the US Government (Carter and Reagan administrations) funding child soldiers and such - let’s talk about that criminality.

[1] https://en.m.wikipedia.org/wiki/Salvadoran_Civil_War

Re: El Salvador makes Bitcoin legal tender

#358

Post by javert »

wickoff wrote: post #340
kragen wrote: post #226

Earlier quoted context omitted.

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.

If bitcoin becomes the world currency, nation states can mine in order to protect the system.

I think an equilibrium would be reached. For example, the US is probably OK with Russia having 10% of hash power if the US has 10%, and so on.

However, that particular example may be unrealistic, because the US would probably choose poverty over accepting bitcoin.

Re: El Salvador makes Bitcoin legal tender

#359

Post by divs1210 »

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.

Salvadoreans have the Strike [0] app available to them, on which payments are practically instant and free.

[0] https://finance.yahoo.com/news/strike-launches-bitcoin-light...

Re: El Salvador makes Bitcoin legal tender

#360

Post by ddtaylor »

paulgb wrote: post #341
rawtxapp wrote: post #262

Earlier quoted context omitted.

Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.

Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the…

LN doesn't reduce on-chain Bitcoin transaction fees, but instead attempts to move most of the transactions off-chain. With LN you would open a channel using an on-chain transaction, conduct any number of off-chain transactions in that channel, then "settle" the channel by closing with another on-chain transaction.

There basically are two different views currently on the future scalability and funding model of the network.

The LN/small block view is to keep that layer limited and small and build on top of it and the idea is that with such limited transaction volume these "settlement" transactions will eventually cost a lot. I don't really see this working since to compete with block subsidy rewards you would need very costly transactions.

The big block or "Bitcoin Cash" view is to scale the block size up and eventually you will have very high volume of on-chain transactions.

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