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

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

#181

Post by dQw4w9WgXcQ »

remir wrote: post #14

Why go with Bitcoin specifically? Why not use the Celo blockchain or Algorand instead and create their own stable coins on there? Both these networks are proof of work, transactions are very fast and cheap as well. Bitcoin is slow to validate transactions, is environmentally costly, and its value fluctuate, so I'm not sure what they were thinking. I wonder what the 30$ they receive from the gov is worth today after t…

They will be using Algorand for much of their blockchain infrastructure:

https://www.coindesk.com/events/2021/08/31/el-salvador-to-la...

What's likely is they'll end up with wrapped Bitcoin on the Algorand chain and using all the Algo tools.

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

#182

Post by [deleted] »

throwdecro wrote: post #125
bee_rider wrote: post #109

Earlier quoted context omitted.

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.

[deleted]

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

#183

Post by dmarcos »

Devasta wrote: post #165

Let's ignore that Bitcoin is climate arson, and that its only used for money laundering and buying drugs. Bitcoin has a max throughput of 7 transactions per second. It's utter lunacy to suggest that it could function as a currency for a country. This will only end in tears.

El salvador payment system is built on the lighting network. A layer 2 scaling solution for bitcoin (up to 25 million transactions per second)

https://en.m.wikipedia.org/wiki/Lightning_Network

edit: typos

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

#184

Post by 99_00 »

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).

Ability to implement monetary policy comes from monetary sovereignty.

Monetary sovereignty is a spectrum, with countries having high degrees of MS and low degrees of MS. Since El Salvador pegs its currency to the US dollar it has a low degree of monetary sovereignty.

Having a low degree of monetary sovereignty is the reason countries like Greece ran into so much trouble after the 2008 financial crisis. Greece doesn't control its currency. Where as the US does and it did much better.

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

#185

Post by loo »

simiones wrote: post #132
doomroot wrote: post #71

Earlier quoted context omitted.

You have the first part right, but to insinuate that lightning is not using the bitcoin blockchain is entirely wrong. In the case of lightning, the bitcoin blockchain is only used in a dispute over funds. This is how you properly scale a decentralized blockchain.

So the way to scale the blockchain is to avoid putting transactions on it. If I promise you that if you give me your burger you'll have 5SAT from me, and later you ask for my water and offer to reduce my debt to 4SAT in exchange, did we use the bitcoin blockchain in our transaction? With ligthning, you're not using the bitcoin network to process transactions. If we opened a lightning channel for our 2 personal bitcoi…

Jo sends $100 from Bank A to Alice at Bank B, then Bob sends $100 from Bank B to Jo. The banks will have no USD to settle at clearing as a result.

Did Jo and Alice participate in a USD transaction?

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

#186

Post by liquidise »

Devasta wrote: post #165

Let's ignore that Bitcoin is climate arson, and that its only used for money laundering and buying drugs. Bitcoin has a max throughput of 7 transactions per second. It's utter lunacy to suggest that it could function as a currency for a country. This will only end in tears.

> that its only used for money laundering and buying drugs

I am not surprised to see hyperbole like this, but i'm disappointed that they are so routinely upvoted. I've personally used bitcoin for sending money across borders (for legitimate purposes) and never for drugs or money laundering.

Apologies for my reactivity, but i think highly of the HN community and get deeply frustrated that this sort of ignorant hyperbole is peddled and supported.

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

#187

Post by SamPatt »

simiones wrote: post #138
xur17 wrote: post #62

Earlier quoted context omitted.

> 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. If you settle everything onchain, maybe (I haven't done the math on this, so I honestly don't know), but storing every transaction for a cup of coffee in a datastore that persists across tens of thousands of computers for the rest of t…

But the total amount of data stored in the Lightning network is even more absurd. Not only do we store "A has paid B 1 SAT" for all time, we actually store "A is paying C 1SAT for B; C is paying D 1SAT for B; E is paying F 1SAT for B; F is paying B 1SAT".

Not everyone is forced to store it though.

You don't need consensus about the state of the entire network on layer 2 like you do on layer 1.

So it's not really a problem.

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

#188

Post by JumpCrisscross »

StingyJelly wrote: post #169
JumpCrisscross wrote: post #89

Earlier quoted context omitted.

Gresham’s law [1] would (EDIT: loosely) predict Bitcoin gets hoarded while U.S. dollars trade. [1] https://en.m.wikipedia.org/wiki/Gresham%27s_law

I'm not sure that Gresham’s law would strictly apply since people can instantly exchange one for the other. Definitely an interesting situation to keep an eye on.

> not sure that Gresham’s law would strictly apply

You're correct, it's a loose analogy.

> people can instantly exchange one for the other

"El Salvadorans without a bank account (70% of the population) can only convert bitcoin to greenbacks at a bitcoin ATM. At present, El Salvador only has two active bitcoin ATMs" [1].

[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...

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

#189

Post by NicoJuicy »

eyeball wrote: post #180
Devasta wrote: post #165

Let's ignore that Bitcoin is climate arson, and that its only used for money laundering and buying drugs. Bitcoin has a max throughput of 7 transactions per second. It's utter lunacy to suggest that it could function as a currency for a country. This will only end in tears.

They’re using the 2nd layer lightning network which has more tps. https://en.wikipedia.org/wiki/Lightning_Network#2021_adoptio...

It's down though.

https://twitter.com/nayibbukele/status/1435197879795212291?r...

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

#190

Post by HWR_14 »

aazaa wrote: post #22

> To warm up a skeptical public, Bukele has promised every citizen $30 in bitcoin if they sign up for a government digital wallet. Ahead of the launch, El Salvador bought 400 bitcoins, Bukele said, helping drive the currency price above $52,000 for the first time since May. > In the early hours of Tuesday the wallet had not appeared on Apple Inc., Google and Huawei’s app download platforms, however, prompting a serie…

> There are plenty to choose from now, so what features exactly were missing in those?

IIRC, people using that wallet can opt into a government backed BTC to fiat conversion rate that allows all shopkeepers to cash out in fiat. It's to make people feel comfortable being forced to accept bitcoin. For obvious reasons, governments don't want to subsidize non-citizens or risk alternative wallet lending themselves to arbitrage.

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