El Salvador adopts Bitcoin as official currency, first country to do so • Hacker News Board

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#121

Post by simiones » Tue, Sep 07, 2021, 5:09 PM UTC

m00dy wrote: post #72

simiones wrote: post #55

Earlier quoted context omitted.

Actually, they are not even using lighning wallets. They are using a centralized payment processor that has personal accounts for users, like any other payment app. This centralized processor happens to use lightning wallets in its backend, but there is no 1:1 mapping of payment_account:lightning_wallet. And since Lightning itself doesn't interact with the blockchain except when you open/close payment channels, there…

I think you are spreading misinformation. Your whole comment is absolutely wrong. [0]: https://twitter.com/OpenNodeCo/status/1435264127241527306

I was a bit too direct - it's true that officially bitcoin transactions must be accepted, and any valid bitcoin app would work - including anything based on Lightning.

But in practice, it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will). Instead, most will use an app that hides all the complexity from them, and since the government is advertising one particular app, that will likely see overwhelming use.

And then, the official app or any other app will likely avoid wasting money on lightning or bitcoin to settle app-app transfers, and instead settle most transactions in their own centralized backend.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#122

Post by space_rock » Tue, Sep 07, 2021, 5:10 PM UTC

throwdecro wrote: post #54

space_rock wrote: post #37

Earlier quoted context omitted.

In El Salvador it means an obligation to accept it. Which is good for bitcoin adoption but does reduce people's freedom to refuse it

I'm envisioning a lot of dirty looks from paper cash-preferring shopkeepers to crypto tourists when the tourists buy up all shop's inventory and leave the shopkeeper with just a few numbers in some app. EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.

The government made a wallet so they can easily convert to USD

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#123

Post by arcticbull » Tue, Sep 07, 2021, 5:10 PM UTC

washedup wrote: post #6

As a country where remittances make up roughly 20% of the GDP, and with remittance fees as high as 20% or more, this could boost GDP by 4-5%. Not surprising to see them be the first to do this. Others will likely follow.

Well if you include the fact you have to pay 1-2% to an exchange to move USD->BTC, and your $0.50-60.00 transaction fee then wait a day or so, and deal with astronomical FOREX risk in the meantime (like today's 30% instant drop in BTC) suddenly Western Union doesn't look so bad.

Especially since Western Union actually hands you cash which you have to get out of one of the Bitcoin ATMs that eats 20% of your withdrawal lol.

Remember Strike is a centralized custodial wallet offering so not actually Bitcoin. They only use their own private LN to transfer Bitcoin between their own two custodial accounts (which they could elide entirely by using a spreadsheet lol).

If they really cared about remittances Bukele would make a deal with TransferWise. That's not what this is about, at all.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#124

Post by wittycardio » Tue, Sep 07, 2021, 5:11 PM UTC

ajkdhcb2 wrote: post #59

simiones wrote: post #42

Earlier quoted context omitted.

> Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users. No, that is completely inaccurate. First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions. And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become v…

>First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions. Completely wrong. Go run a testnet yourself and you will see. >And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of a…

Please stop you clearly don't understand this at all

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#125

Post by throwdecro » Tue, Sep 07, 2021, 5:11 PM UTC

bee_rider wrote: post #109

throwdecro wrote: post #54

Earlier quoted context omitted.

I'm envisioning a lot of dirty looks from paper cash-preferring shopkeepers to crypto tourists when the tourists buy up all shop's inventory and leave the shopkeeper with just a few numbers in some app. EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.

I suspect the number of people who would actually do this sort of thing is quite minuscule. They could probably be handled with something like "Well tourist, the cops here think it is a civil matter so you can spend the rest of your vacation dealing with the local legal system if you really want to buy everything in this random shop for some reason." I suspect more likely some rich people will find it more convenient…

I didn't mean one tourist buying everything (which would be problematic no matter what the currency was), I meant in the aggregate. I've added an edit to my comment to clarify.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#126

Post by BelenusMordred » Tue, Sep 07, 2021, 5:11 PM UTC

throwdecro wrote: post #54

space_rock wrote: post #37

Earlier quoted context omitted.

In El Salvador it means an obligation to accept it. Which is good for bitcoin adoption but does reduce people's freedom to refuse it

I'm envisioning a lot of dirty looks from paper cash-preferring shopkeepers to crypto tourists when the tourists buy up all shop's inventory and leave the shopkeeper with just a few numbers in some app. EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.

And then they walk down the bank 5 minutes later to cash it out?

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#127

Post by dmichulke » Tue, Sep 07, 2021, 5:11 PM UTC

alberth wrote: post #99

Monetary Policy. Can someone explain how a country plans to implement a monetary policy (e.g. inject new currency during a recession to fund expansion) when they don’t control their national currency (Bitcoin).

What if I told you that injecting currency not only "helps" in a recession but also causes the next recession? Or so Austrian economic theory goes.

Similarly, there is not really a reason that interest rates should be fixed by a central banks. Markets can do that as well.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#128

Post by yyyk » Tue, Sep 07, 2021, 5:12 PM UTC

lottin wrote: post #9

JumpCrisscross wrote: post #3

Earlier quoted context omitted.

> prompt the USA to import more products from El Salvador to reduce the size of the remittances sector and thereby lessen the reason people use Bitcoin Who in America would benefit from fighting this? Crypto is a real industry. It’s more profitable for the financial sector than similar activity in U.S. dollars. And the Fed doesn’t thoroughly love that it has to take international factors into account when its politic…

> Crypto is a real industry. Not really. An industry produces goods and services. What does crypto produce?

Ransomware and money laundering.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#129

Post by fennecfoxen » Tue, Sep 07, 2021, 5:13 PM UTC

la_fayette wrote: post #77

hsavit1 wrote: post #16

Earlier quoted context omitted.

what an awful waste of energy. Each bitcoin transaction uses the energy equivalent the entire lifespan of a tree. Effectively, each bitcoin transaction is cutting down of tree... in this case, for a hamburger

I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP. The developed world is responsible for climate change, so I guess the poorest have their right to use their money how they want and not in the way some banks or you consider it. The impact of the lightning network on energy consumption is even neglible..…

> I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP.

The fees are high because the costs are high.

Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls.

If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.

Re: El Salvador adopts Bitcoin as official currency, first country to do so

#130

Post by ajkdhcb2 » Tue, Sep 07, 2021, 5:14 PM UTC

simiones wrote: post #85

ajkdhcb2 wrote: post #59

Earlier quoted context omitted.

>First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions. Completely wrong. Go run a testnet yourself and you will see. >And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of a…

> Completely wrong. Go run a testnet yourself and you will see. If you imagine that a laptop has enough hashrate to mine all the world's transactions in realtime, then how do you explain to yourself that the actual Bitcoin network is only able to add a few hundred transactions per second to the chain? > The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competin…

I am struggling the follow the argument through the comment chain. Energy is used to secure the chain via mining; a secure network is required to be a payment system, but the energy usage is not from processing transactions.

Originally the discussion is about people "using Bitcoin to pay for their McDonalds". Then the commenter erroneously stated, in response to that, that a "bitcoin transaction uses the energy equivalent the entire lifespan of a tree". El Salvador is using the lightning network. These transactions are done off-chain. So the transaction fees do not even go to miners. There can be thousands of McDonalds transactions that occur off-chain and are eventually settled on-chain in one transaction. Processing and validating transactions is very computationally easy. You can indeed do it on a laptop.

Mining blocks is a separate issue. If you ignore the competitive security race, then the network can indeed function on a laptop. Most the mining race that is currently occurring is because people are fighting to win the block reward - this would happen even if nobody were transacting, and someone doing a lightning network transaction has truly negligible effect on that energy usage.

When you said "bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin" this shows you don't understand the process, because the difficulty would rise until people can no longer produce blocks so rapidly. You're describing a situation where miners are not even on the same network so it doesnt make sense