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El Salvador to adopt Bitcoin as legal tender

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Re: El Salvador to adopt Bitcoin as legal tender

#291

Post by arcticbull »

samatman wrote: post #157
PragmaticPulp wrote: post #115

Earlier quoted context omitted.

According to the article, someone donated "six-figure" amounts of Bitcoin to the town each year on the condition that they learn how to use Bitcoin: > Beneficiaries of the digital currency had to learn how to use the Bitcoin itself, creating a Bitcoin economy. If you give a relatively poor town the option to take free money as long as they learn how to use Bitcoin, of course they're going to learn how to use Bitcoin.…

The payment system mentioned in the Fine Article is built on top of Bitcoin, using Lightning Network. There's nothing stopping them from putting various consumer protections and rewards programs on top of that, and plenty of motive to do so. It's definitely a wait-and-see sort of thing, but I don't see as to how betting against it is the obvious move.

Why does the Strike app use LN or crypto at all? I just can't wrap my head around this.

They're a custodial wallet for your fiat currency, right? You deposit fiat with them. You withdraw fiat from them. You move it between accounts on their service. They, or a designed entity must hold that fiat on deposit on behalf of users.

When you 'send' that money (according to Jack Maller), they buy BTC for you, send it over the LN network, then convert it into a stablecoins. Which ends up, notionally, in one of the Strike custodial accounts.

So this Rube Goldberg machine of crypto is used for internal account transfers within Strike? Am I missing something? They're a centralized, trusted custodian (and a registered money services business). Why are they sending money from a Strike-owned account to another Strike-owned account this way? Could they not simply record a debit on one account and a credit on another account in any kind of traditional store? One they clearly already have?

Why wouldn't they have one account for each country, a small slush fund and/or debt facility to cover near-term transfers, then just record how much of the pot is attributed to each user account - and if money has to move across borders, send a wire from time to time.

Is this really just the most complicated intra-company account transfer of all time?

Or are they just doing it to avoid regulation?

Re: El Salvador to adopt Bitcoin as legal tender

#292

Post by arcticbull »

toxik wrote: post #279
habibur wrote: post #259

Earlier quoted context omitted.

How a large a "cut" they take from every transaction is the question here. As for cash,there's no cut taken by any middle man. And when the central government or bank is involved in pushing a legal currency -- there shouldn't be any cut.

You know damn well that banks and credit card institutions take cuts of transactions. Why this aversion to Bitcoin on HN, even with LN?

Why the horror when someone asks how a free service is making their money, and how much? The quantification matters because we want to know if, in the future once they've spent all their VC money and have to make payroll themselves, it represents a better deal or not.

Re: El Salvador to adopt Bitcoin as legal tender

#293

Post by arcticbull »

foepys wrote: post #277
rawtxapp wrote: post #67

Earlier quoted context omitted.

Strike is using lightning where the fees are barely a few satoshis (much smaller than cents) most of the time. This isn't the Bitcoin of 2015, there has been lots of new development, lightning is here and is being used with growing adoption (1ml.com), there are other changes coming to improve the base layer itself (taproot, eltoo, etc).

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 podcast and I simply don't get it.

Re: El Salvador to adopt Bitcoin as legal tender

#294

Post by imtringued »

qeternity wrote: post #255
bufferoverflow wrote: post #189

Earlier quoted context omitted.

Tell how stable it is to the Venezuelans or the Zimbabweans or the Russians. And Usd isn't doing too well in the last 2 years.

Stable does not mean unchanging. People don’t understand that modest inflation in a currency is actually a good thing because it’s a natural incentive to spend, and velocity of money is a critical aspect of economic growth and health. Moving off of the gold standard launched the world into a period of unprecedented growth. Obviously too much of any good thing is bad, and this applies to inflation as well. But the ide…

>People don’t understand that modest inflation in a currency is actually a good thing because it’s a natural incentive to spend, and velocity of money is a critical aspect of economic growth and health.

I looked up hyperinflation in MMOs and honestly the hyperinflation is by design. The fundamental problem is that veterans should not prevent new players from earning money. If the supply was fixed then veterans would acquire the majority of the currency. By letting monsters and NPC vendors print money you are stealing from the rich players robin hood style. It's impossible to solve without just outright taking the money that NPCs printed from wealthy players.

I've seen other approaches that just try to limit the supply of ingame currency and tie it to some random cryptocurrency or just plain old dollars and that is such an overengineered solution that doesn't even address the robin hood problem, which isn't a bug, stealing wealth from old players is 100% intentional.

Re: El Salvador to adopt Bitcoin as legal tender

#295

Post by arcticbull »

staktrace wrote: post #125
CyberDildonics wrote: post #71

Earlier quoted context omitted.

> This isn't the Bitcoin of 2015 I agree, because I used bitcoin in 2015 and it actually worked well instead of being crippled to a few transactions per second for the whole network. How are they getting their balance on to the bitcoin chain? How much does that cost? Once they are in control of their money and actually have it on the real chain and not some wallet app maker's sub-chain they still have to eat more gia…

Maybe you should try to actually read up on what the lightning network is before you argue against some ill-informed strawman version of it.

No, CyberDildonics is right - and asking the pertinent question. Strike doesn't denominate customer deposits in any kind of crypto. They're a traditional custodial wallet for fiat deposits, and a registered money services business. They appear to be using the lightning network to move money between Strike's own accounts.

They seem to use their own lightning nodes - that they don't allow third parties onto - to move money between their own accounts, rather than amending the centralized database of who owns how many dollars directly. However, it's all closed and internal, and I simply do not get why they would do this.

Re: El Salvador to adopt Bitcoin as legal tender

#296

Post by acdha »

lottin wrote: post #240
acdha wrote: post #140

Earlier quoted context omitted.

Bitcoin is guaranteed to be deflationary as long as there’s a finite limit – if nothing else, lost keys would reduce the total over time. More importantly, the people hawking it _really_ want it to be deflationary because that effectively makes them landed gentry getting richer without any effort on their part. After a decade of that being integral to the sales pitch I would be extremely surprised to see any major ho…

No currency is guaranteed to be deflationary. You may guarantee that the currency supply will behave in a certain way (although even that is debatable), buy you cannot guarantee that the price level in terms of such a currency will continuously fall.

The fixed currency supply guarantees it: unless the economy is shrinking at the same rate, each BTC becomes more valuable over time and that’d cause purchase prices for goods to trend lower.

This has been a key part of the sales pitch for a decade: buy now and it’ll be worth more later, guaranteed, but that’s not good for an economy since it heavily incentivizes holding onto anything you aren’t forced to spend. Since Bitcoin has no innate demand, that’s an especially dangerous cycle since almost everyone has alternatives.

Re: El Salvador to adopt Bitcoin as legal tender

#297

Post by lottin »

bigger_inside wrote: post #290
lottin wrote: post #282

Earlier quoted context omitted.

Yes, of course. But the fact that bitcoin governance makes it very difficult to introduce changes means that all the relevant decisions were made during the design phase by the original developers, and that everybody who came later had no influence on these decisions. Whereas a currency that is managed through democratic institutions allows the community that uses it to have control over crucial aspects of the curren…

True, the basic lines were set in the original development, that is true. Yet, they continue to be followed by this swarm, which is continuous consent; they could all stop and do something else, but every attempt at that has created largely unsuccessful forks. And... do you really believe currency management decisions on the level of the US Federal Reserve or the European Central Bank are in any realistic sense democ…

The US Federal Reserve and the European Central Bank are democratic institutions inasmuch as they have a public mandate and are subject to public scrutiny and control. I'm not aware that anyone disputes these facts.

Re: El Salvador to adopt Bitcoin as legal tender

#298

Post by imtringued »

BenoitEssiambre wrote: post #97
Geee wrote: post #87

Earlier quoted context omitted.

Bitcoin will stabilize in time, when it's big enough to absorb short time supply and demand shocks. It will eventually follow the value of all economic activity through its network. The more economic activity, the less volatility in aggregate. There's a huge cost in "stabilizing" a fiat currency, in terms of debt and inflation.

A deflationary coin cannot stabilize without destabilizing the economy that trades in it. https://benoitessiambre.com/specter.html

Nice article. Pretty much matches what I have figured out myself but you gave it a new perspective that I hadn't thought of.

Re: El Salvador to adopt Bitcoin as legal tender

#299

Post by gregwebs »

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…

From a quick reading (just spent a minute after seeing this article) lightning claims support for secure forwarding. So there might be an economic way for a payment app to operate the channel.

Re: El Salvador to adopt Bitcoin as legal tender

#300

Post by lottin »

acdha wrote: post #296
lottin wrote: post #240

Earlier quoted context omitted.

No currency is guaranteed to be deflationary. You may guarantee that the currency supply will behave in a certain way (although even that is debatable), buy you cannot guarantee that the price level in terms of such a currency will continuously fall.

The fixed currency supply guarantees it: unless the economy is shrinking at the same rate, each BTC becomes more valuable over time and that’d cause purchase prices for goods to trend lower. This has been a key part of the sales pitch for a decade: buy now and it’ll be worth more later, guaranteed, but that’s not good for an economy since it heavily incentivizes holding onto anything you aren’t forced to spend. Since…

> The fixed currency supply guarantees it

No, it doesn't. Bitcoin can lose 50% of its value in a matter of hours, as recent experience shows, despite being in a limited supply.

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