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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

#381

Post by lowkey »

habibur wrote: post #259
rawtxapp wrote: post #44

Earlier quoted context omitted.

To add on to that, it's been used pretty nicely in the El Zonte beach town [1]. 1: https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

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.

As for cash, the “cut” that is taken is via inflation. Governments print money increasing the total supply of currency and decreasing the purchasing power of your cash. It’s also called currency debasement and has a history almost as old as currency itself.

Re: El Salvador to adopt Bitcoin as legal tender

#382

Post by narrator »

fladrif wrote: post #377
narrator wrote: post #361

Earlier quoted context omitted.

It criticizes the statement by Keynes that savings leads to depression due to underconsumption and thus there must be regularly monetary stimulus, meaning expansion of government borrowing and hence, the money supply. Hayek was a proponent of the gold standard and fixed money supply at this time and the Keynesians promoted fiat money and a flexible money supply and monetary policy.

I'm not familiar with Hayek, so you may need to fill in gaps where I may have them, but the argument in the article (as I understand) specifically establishes the context where savings are presumed invested into capital. How I understand deflationary currency is that investments are not incentivized, and would therefore not lead to the situation as described in the article.

Investment is naturally incentivized because the only reason capital is created is to lower the cost of production. If you build a factory, or invest in a machine to make things and it costs the same to manufacture those things in the factory or with the machine as it would to manufacture them by hand, why did you even build the factory in the first place? The inputs used to construct the factory would be better used for other things and thus the business loss from building a useless factory or unnecessary piece of equipment is the economically efficient because it is a misuse of labor and material inputs.

We are not talking about deflationary money either. We are talking about stable money supply, which is what Bitcoin is.

Re: El Salvador to adopt Bitcoin as legal tender

#383

Post by siwatanejo »

rafaelero wrote: post #376
arcticbull wrote: post #365

Earlier quoted context omitted.

Strike is a fiat custodial wallet. They can also be censored in exactly the same way which is part of my confusion around the offering. In fact, it's not available in New York or Hawaii. Further, Wise offers their multi-currency account, including in El Salvador ( https://wise.com/us/multi-currency-account/ ) and allows you to store any of 56 currencies without conversion and offers banking details in 9 jurisdictions…

I am not well versed about the Strike wallet specifically, but I believe that it is a fiat wallet from the perspective of the sender and a lightning wallet from the perspective of the receiver.

This.

Re: El Salvador to adopt Bitcoin as legal tender

#384

Post by arcticbull »

rafaelero wrote: post #376
arcticbull wrote: post #365

Earlier quoted context omitted.

Strike is a fiat custodial wallet. They can also be censored in exactly the same way which is part of my confusion around the offering. In fact, it's not available in New York or Hawaii. Further, Wise offers their multi-currency account, including in El Salvador ( https://wise.com/us/multi-currency-account/ ) and allows you to store any of 56 currencies without conversion and offers banking details in 9 jurisdictions…

I am not well versed about the Strike wallet specifically, but I believe that it is a fiat wallet from the perspective of the sender and a lightning wallet from the perspective of the receiver.

Ok but why. They have a custodial wallet on both sides, the sender sends dollars, the receiver gets dollars. Why not just use addition and subtraction instead of LN? I can't think of a reason they would do this except to shoehorn LN into the app or avoid regulations in some way. Is there something I'm missing?

Re: El Salvador to adopt Bitcoin as legal tender

#385

Post by lottin »

incrudible wrote: post #355
lottin wrote: post #323

Earlier quoted context omitted.

Okay I didn't know that the LN has no fees. How does this network sustain itself economically?

It has virtually no fees, often just one satoshi (less than 1/10th of a cent).

If fees are less than 1/10th of a cent, it means they make less than $1 for every 1000 transactions. So how many transactions are they processing? In 2019, ~5000 transactions per month [1], so the entire lightning network was generating less than $5 per month in revenue. Something doesn't add up.

[1] https://www.opennode.com/blog/wp-content/uploads/2020/03/Ope...

Re: El Salvador to adopt Bitcoin as legal tender

#386

Post by fladrif »

narrator wrote: post #382
fladrif wrote: post #377

Earlier quoted context omitted.

I'm not familiar with Hayek, so you may need to fill in gaps where I may have them, but the argument in the article (as I understand) specifically establishes the context where savings are presumed invested into capital. How I understand deflationary currency is that investments are not incentivized, and would therefore not lead to the situation as described in the article.

Investment is naturally incentivized because the only reason capital is created is to lower the cost of production. If you build a factory, or invest in a machine to make things and it costs the same to manufacture those things in the factory or with the machine as it would to manufacture them by hand, why did you even build the factory in the first place? The inputs used to construct the factory would be better used…

A couple things. Your first statement appears to be circular, it doesn't answer the question of why an entity would want to invest their money on an uncertain venture when it would just be worth more doing nothing with it. Secondly, I'm not sure what the rest of the first paragraph is in aid of, it seems like you're stating that capital is useful which I don't think was ever in question.

Sure, the article never mentioned anything about deflationary currency, but you were responding to a comment that a deflationary currency would have issues that you seemed to respond in opposition to. If you don't have a stance on deflationary currency, what is your argument for or against?

On that note, I believe that bitcoin fits the definition of a deflationary currency, and having looked up 'stable' money supply haven't found a consensus on what that means. Could you explain how you define that?

Re: El Salvador to adopt Bitcoin as legal tender

#387

Post by fladrif »

lottin wrote: post #300
acdha wrote: post #296

Earlier quoted context omitted.

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.

So the only way bitcoin isn't deflationary is if demand for it continually goes down over time until it's irrelevant. If demand either goes up or stays the same, it will behave deflationary (wallets getting lost). This doesn't seem to be a good performance pattern for a currency.

Re: El Salvador to adopt Bitcoin as legal tender

#388

Post by incrudible »

lottin wrote: post #385
incrudible wrote: post #355

Earlier quoted context omitted.

It has virtually no fees, often just one satoshi (less than 1/10th of a cent).

If fees are less than 1/10th of a cent, it means they make less than $1 for every 1000 transactions. So how many transactions are they processing? In 2019, ~5000 transactions per month [1], so the entire lightning network was generating less than $5 per month in revenue. Something doesn't add up. [1] https://www.opennode.com/blog/wp-content/uploads/2020/03/Ope...

It's up to the nodes how much they want to charge, which is a competitive thing. They might as well charge 1000x more, that's just the figure the market arrived at.

So, why do they charge so little? Running Lightning could be done for other reasons than just collecting fees, similar to why you might run a full Bitcoin node, even though it only costs you money: You are invested in the network as a whole.

It's also worth noting that Lightning is not actually that well-adopted yet, it's more of a solution "in principle". Just because some place accepts Bitcoin doesn't mean you can use Lightning. In that case, you can usually just use Dash, Bitcoin Cash or Litecoin, which all have very low fees. Hence, the pressure to actually adopt Lightning isn't that high - yet.

Re: El Salvador to adopt Bitcoin as legal tender

#389

Post by lokedhs »

jerf wrote: post #32
squiggleblaz wrote: post #25

Earlier quoted context omitted.

But if I have a loan for a value that corresponds to about 1 bitcoin and $53, then doesn't legal tender mean I have to accept 1 bitcoin and $53 in exchange for it? The fact that tomorrow the value will be 1 bitcoin and $196 seems irrelevant. And this is significant: debtors could repay their debts when bitcoins look like they will decrease in value with respect to the currency of denomination with an intent to harm t…

A loan can be denominated in a currency other than what you directly pay for it with. That just means somebody is automatically converting it for you. Financially, it's exactly the same as using your Visa to buy something in a foreign currency; you're paying in Euros for a loan denominated in dollars, and you'll pay it off in dollars. The loan can't be denominated in multiple currencies at once, as you seem to be thi…

If course they do. It's called a dual currency deposit. Suffice it to say that a bank would never accept these, but they can easily convince customers to do it since the published interest is much higher than a regular deposit.

Re: El Salvador to adopt Bitcoin as legal tender

#390

Post by senectus1 »

SantalBlush wrote: post #77
rawtxapp wrote: post #31

Earlier quoted context omitted.

Historically, Bitcoin appreciated 300% YoY whereas the dollar is in a constantly depreciating cycle, I know which one I'd prefer.

>I know which one I'd prefer. Yeah, the dollar. Because I can be confident that my $USD won't lose half its value in two months. That's what I need in a currency.

!remindme 1 year

:-P

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