These transactions are not occurring on the bitcoin network - they are occurring on the lightning network which is a second layer on top of the base bitcoin layer. Transactions here are virtually free and use virtually no energy. This is how bitcoin scales for many small transactions.
The only knowledge you have of the lightning network is a YouTube video from 3 years ago posted on a subreddit with a financial interest in badmouthing BTC?
I'm not really sure if this is the proof I'm looking for.
The author of the video was explaining how the LN works and it seems to be an exponential routing calculation problem ( similar to traveling salesman )
So while it could work for 75 k channels, it's not going to work for 1 million.
If the explanation of that video is correct (since you didn't disagree that), then how many channels it has now is irrelevant from my POV.
Confirmed by who? Coinbase currently requires only 3 confirmations[0]. Binance requires only 1 confirmation for deposits and 2 for withdraw[1].
Actually. Was there a successful double spend in Bitcoin ever?
I mean, this kind of attack can't be done in secret, right? Such attack wold immediately make the news, because the blockchain is public. And to pull it off you need a substantial % of the mining capacity, so only a handful entities in world can coordinate such high hashrate attack.
It just doesn't seem very likely, and specially not if you're just reversing a low value retail purchase. I'd wager the rate of counterfeit money you receive when dealing with cash is way higher.
It's not about double spend. It's entirely possible two miners successfully mine a block simultaneously but one of the miners didn't include your transaction in the block they mined. Now there's two competing blockchains and every miner chooses which one is the truth... longest blockchain wins, so whichever gets the most participants is likely to be the final blockchain
Now your transaction may not be included until a future block or be lost forever, though I'm not certain what it takes to be dropped from the mempool.
The wait for confirmation is exactly to avoid double spend (but not only), as the Bitcoin wiki says[0].
> It's entirely possible two miners successfully mine a block simultaneously but one of the miners didn't include your transaction in the block they mined.
The example you make would work with just 1 block of confirmation, just keep try to include the transaction into the next block.
> longest blockchain wins, so whichever gets the most participants is likely to be the final blockchain
It's more about hashrate power rather than number of participants, however the longest blockchain of confirmed blocks wins, unconfirmed blocks may be invalidated and transactions pushed to the next ones or dropped.
> I'm not certain what it takes to be dropped from the mempool.
After 2 weeks[1] the transaction is considered invalid and should get dropped from the mempool (not all nodes use the same software version or they may run a fork with different settings)
> To be clear, the respective blockchains will confirm blocks as normal and are not controlled by Binance. For the faster service, the exchange is accepting a reduced number of confirmations as sufficient to alter wallet balances within its own systems.
Binance and Coinbase on their own nodes can choose a lower number of blocks for confirmation but the network may reject it later, if that's the case they will have to put the transaction in another block to be mined.
And coin exchanges are becoming mainstream. There are lots of transactional coins that can be converted into. Although there are still some usability hurdles, it's getting better all the time.
Regardless of the future of bitcoin, I do wonder if this move will serve to accelerate the country's move towards more technological and digital literacy. For a place that's probably still pretty heavy on physical cash, this could be a net positive for them in the long term even if bitcoin as a currency doesn't work out.
There's a chance. If you consider that society is largely digital and increasingly remote, it stands to reason that theoretically a new mini Silicon Valley can be founded anywhere.
El Salvador already offers permanent residency if you have a few BTC in capital. And they're going to start mining using excess volcano energy. We truly live in odd times.
Imagine that it works. A tech society evolving in the jungle. The feeling of being part of a rapidly developing society, rather than one stagnating or in decline.
And next, every neighboring country watching carefully. Which they already do. Because they're all tired of being a 2nd class America.
On Twitter, the president of El Salvador dissed the IMF's concerns as if an immature crypto bro.
You mean vassals of the American Empire, paying tribute in the form of currency debasement that only benefits citizens of the empire at the expense of your own citizens?
El Salvador is the only place on Earth where you can exchange your bitcoins to USD without any questions are being asked. It is the wormhole between bitcoin and legacy financial system.
I'm not sure it's true. Crypto is very popular in Turkey too and you can easily sell your coins for fiat Turkish lira, withdraw the money to your bank account in seconds any time of the day and convert it to USD - no questions asked. Then you send that USD anywhere or withdraw it from a branch or an ATM(that supports USD, there are plenty).
Also, 45x the economy, 15x the population with significant percentage of it having at least one exchange account. No question asked when bringing money from abroad is the governments policy, strong EU, UK and US financial ties and integrations are in place with billions already laundered. The neighbouring Bulgaria, the police seized 200K Bitcoins and sold them at the previous bull market.
I know what you mean but El Salvador is a micro-wormhole. The value essentially comes from the publicity, they had something like 700 BTC last time I checked.
El Salvador is a storm in a teacup. One noisy storm though. Their president is a millennial who knows how to ride the hype train.
isn't the difference that the entities in El Salvador are obligated to take it?
Questions or not, that's a different story, but Citibank in Turkey is not obligated to accept Bitcoin, but in El Salvador - they are under a legal obligation to accept it.
Yes, that's the difference. However the volume in El Salvador is so small that it's insignificant in any real terms. It's a poor country with a tiny population. They certainly wont be able to exchange you USD for BTC and vise versa if you try to do it with a significant amount.
1-) If your transactions have low volume, no one is going to question what you are doing. The problem arises when you have a lot of Bitcoins and couldn't really explain where they come from. El Salvador fixes this.
2-) Sending/Receiving USD is not as free as you think. You can get sanctioned like IRAN. Every foreign USD transfer must be checked through a blacklist. That's how it works.
Actually, no one asks anything. That's why it's really popular money laundering destination. I lost count of scandals of money laundry, fraud and tax evasions that each are over a billion USD. They tend to come out when something political happens. The amount of cocaine seized this year was in the scale of metric tons with no arrests made on the receiving side.
Oh and about your 2). I have some exposure to that stuff and I assure you, it's not how it works. The US does have sanctions but these are lists of names and specific corporations, you don't suddenly get into a blacklist. These lists change with the political situations. Also, there are known terrorist, so if you are not one of those or if you are not politically targeted you wont have problems.
If you are in a list, you use private jet to move cash or gold. Turkey is truly the wild west of illicit money at the moment.
If you send USD, it will go through the usual SWIFT mechanisms and will be visible to the USA but you can always move cash and gold. Turkey's proximity to major markets and the infrastructure is excellent. EU is just right there, accessible by plane, train, car, bus or boat. UK is less than 4 hours of flight, just like Dubai.
Istanbul has a physical cash only gold and USD/EUR/GBP trading center. The city of Istanbul is gargantuous, 3 times of El Salvador's population.
I'm sure you've heard of Reza Zarrab, the Kingston Brothers, Sedat Peker, Tosuncuk that comes to my mind from the recent years.
For context, Reza Zarrab is an Iranian-Azeri who laundered Iranian money with help of a major Turkish government owned bank, Halkbank. He flew gold with his private jet for years. He ended up in the witness protection program in the USA. There are very serious allegation of involvement with high ranking Turkish officials. It come to light that Erdogan personally lobbied Trump during his trail.
The Kingston Brothers are some mormon community in Utah that stole billions from the US government and laundered money with the Help of a Turkish businessman. The brothers are now in a US prison, the Businessman is in Switzerland and Turkey and US are fighting over who is going to get him. That businessman also has proven ties, multiple photos with Erdogan and other highly ranked Turkish officials.
Sedat Peker, a mafia boss who was disowned by the political elite that protected him for years. He escaped to Saudi Arabia and start doing tell-all YouTube videos. He again exposed billions and billions of USD of corruption and drug and arms trade. Many of the allegations were proven or confirmed by those involved but almost no action was taken. When it come time to make a video about Erdogan, he was silenced. At that time Turkey and the Saudis had very bad relations, probably that's why he went to Saudi Arabia. When the video time come to Erdogan, the relationships begin to improve, the saudis intervened and the video about Erdogan never came.
Here is his YouTube channel, if you are curious about the Mobster: https://www.youtube.com/c/sedatpekerreis/videos
He got 180 million views! He promised that the next video will be about Erdogan and that video never came.
Tosuncuk, or his real name Mehmet Aydın, is a high school dropout who build an online pyramid scheme in form of a game like farmville. When the scheme collapsed he run away to South America, keeping close to a billion of USD. The exact sum is debatable because he started buying Bitcoins just before the 2018 Bitcoin bull market and run away with unknown amounts of Bitcoins. Just this year, somehow he decided to turn himself in and is promising that he has all the money he collected and can pay back everyone. Again, there were photos of his affiliates posing with the Interior minister and the relatives of the interior minister.
Fascinating stuff are happening in Turkey, sometimes I feel bad for those who don't speak Turkish. Serious next level corruption and drama have been happening the past few years and don't get me started about the stuff that happened from 2013 to 2016. Just amazing. BTW, Turkey's GDP has been in free fall since 2013 and it's definitely not a coincidence.
Which countries are you referring to? No identification is required when exchanging peer to peer, and it's not illegal to exchange peer to peer. I don't know any countries where this would be forbidden.
You can use service like https://hodlhodl.com to exchange peer to peer without questions or identification.
If you're using your bank account, then it's not completely private. However, cash trades are always possible.
On the other hand, Chivo requires strong identification with passport, so it's hardly a wormhole.
> No identification is required when exchanging peer to peer, and it's not illegal
People have been prosecuted for the crime of exchanging bitcoin for dollars in person-to-person meetings. It's probably not illegal to do it once for a small amount for a friend, but it absolutely is illegal in the US to do it regularly or for many people or for large amounts.
>and it's not illegal to exchange peer to peer. I don't know any countries where this would be forbidden.
You're right that it's not technically illegal, if you can somehow find another private person (ie. not a business) to transact with, but good luck finding a supply of those. I suspect someone that makes those transactions enough would get classified as a money service business and would be subject to KYC/AML requirements.
The questions will still be asked at some point. Are you exchanging it for cash? If so, how are you getting the cash back to your home country? If to a local bank account, how do you transfer it back to the US (or another country) without raising flags?
And doing things like this are quite likely to make you guilty of money laundering, it can of course be noticed if you’re withdrawing large amounts of money from outside the country.
The irony is that a blockchain is the perfect tool to get rid of any form of money laundering: A permanent public record of each transaction. You can always run a simple program that checks your financial history against a blacklist.
Now the problem with such a system is also quite obvious: Money laundering poisons the whole economy. If you could follow every dollar, you would likely find out it was at some point part of the profit from a criminal operation.
I know of an ATM that claims to deal in bitcoin, in the basement of a government building in the US. I don't know how it works though, as I haven't tried it.
> The extensive and complex nature of the US financial system means non-US international banks would most likely comply with the Hong Kong sanction requests to safeguard their overseas network and US dollar-denominated transactions that are ultimately cleared in the US by passing through the US Clearing House Interbank Payments System (Chips).
My understanding is that if you do not comply you are basically unable to trade in USD.
Threaten to cut diplomatic ties, prevent US banks from doing business with El Salvador, prevent USD remittances, make transferring BTC to El Salvadorans illegal, etc.
I assume it would be more like requiring US exchanges to reject bitcoin from El Salvador addresses. I know people have been stung before on this exchanges for having deposited or withdrawn bitcoin that is too few hops from a prohibited use like gambling. (But don’t have cites atm.)
Another side effect of this is someone like me is curious in going there just to use BTC for the fun of it. It would be interesting to know if there are other such tourist dollars as a side effect
This isn't about making things easier or better for ordinary people. If it were, the government wouldn't make it a crime for small businesses to not accept Bitcoin in a very poor country with limited communications infrastructure. El Salvador has 3.8 million internet users out of a population of 6.4 million people.
What is it about then? What possible dark scheme lies behind a system where citizens can instantly swap between USD or BTC at no charge?
Remittances aren't about easy, it's about bypassing fees in traditional banking that may be as high as 30%. As well making remittances possibly to people that are unbanked, yet do have a smartphone.
These policies go far beyond remittances. My understanding is that any business is required to accept bitcoin (through the government wallet system) for payment. In a mainly cash-based society this obviously gives the government more visibility and control.
Being forced to accept Bitcoin is no different from being forced to accept any other legal tender, but you're right that the specific way in which it is implemented, is far from ideal. Most of the BTC community (if there is such a thing) also isn't happy with it.
Then again, depending on the country, the traditional system also has deep insight into capital flow.
I think it's different from cash in the sense that Bitcoin requires you to have an working phone with an internet connection. That might not seem like much, but if you're some guy selling bananas by the side of the road mobile data may be a tough tradeoff with other expenses. More than 20% of El Salvador's population lives on less than $5.50 a day.
This is true but not in the way you’re implying. El Salvador wants to attract bitcoin tourists. To spend bitcoin in the US it’s a taxable event, not in El Salvador though. If you are in your 20s with a few bitcoin you can live like a king in El Salvador for a few months and pay 0 capital gains.
Can someone tell me if adopting Bitcoin in El Salvador as legal tender is a way for the Salvadorian president to print money, in a way? Since the only other legal currency there is USD, which they can't print. Not sure if that question makes sense.
Since they're mainly trying to push their own wallet app, once it has enough users, I can imagine they could create a new cryptocurrency and instantly make it one of the top cryptocurrencies in the world. If it catches on, they could be sitting on a huge fraction of the coins, and just gradually sell them off which would be akin to printing money.
I'm guessing right now it's more of a gamble that the value of Bitcoin will continue to rise, which will increase the wealth of the government and the whole economy. In that case, it's almost better than printing money. But I'm not so sure the gamble will pay off. There's a decent chance that Bitcoin has peaked. I think it will be meeting increasing regulatory hurdles across the world in the years ahead.
Not really, because printing money implies a low cost to produce new "money" into the system. It’s more like defaulting to gold as well. El Salvador can buy more gold but at a very high cost that isn’t akin to printing money.
Is El Salvador really using Bitcoin, or is it just using Bitcoin-denominated local bank accounts? The Bitcoin blockchain has nowhere near enough transaction capacity to handle all those transactions if they actually go out to the blockchain.
The article reports that Bukele claims 2.1M active users. Setting up a lightning channel still requires a transaction. It would take days (even weeks maybe?) for Bitcoin to handle 2.1M such transactions even if it did nothing else, and an enormous amount of fees.
More likely, the Chivo app is just a centralized system like a bank (i.e. a database tracking everybody's transactions and balance) and it only interacts with certain entities outside of the Chivo system via lightning.
I've been using it with a couple of other people and testing transfers between private wallets, chivo wallets, conversion between USD and BTC in small amounts, it hasn't failed on me yet.
I've also bought in a supermarket with it, again small amounts 8.00 USD to be precise (avocados and some other stuff), a lot of businesses take BTC now, some of these businesses are:
- Super Selectos (biggest supermarket chain here in ES)
- Walmart (second biggest supermarket chain here in ES)
- Siman (electronics, furniture, clothes)
- ZARA (clothing)
- Starbucks
- Mcdonald's
- Pollo Campero
these are just some examples, a bunch more are taking BTC payments from chivo wallet and really any LN compatible wallet.
you can take your money out of the government wallet by:
1. linking your existing bank account and transferring USD to your bank
2. cashing out in one of the 200 ATMs
3. transferring your BTC to a private wallet
for me personally, superficially it works, the inner workings are opaque tho, I don't expect every BTC in government wallets to actually be backed by an actual BTC for example, the government does not have enough BTC to cover the $30 USD in BTC bonus they've been giving out, and not every BTC you get in the chivo wallet is reflected somehow in the blockchain.
again my use has been pretty limited, I've day-traded with really small amounts, I've read people complaining about bank transfers taking a few days or not working at all (balance disappears from app, does not appear on bank), or ATMs being out of cash, or ATMs subtracting amounts from wallet and not giving money, I have not tried to do any of these yet though
other issue is security, the facial verification seems to be a facade so anyone with your DUI (similar to SSN, but it is public knowledge) and your birth date can claim your account and your $30 bonus if you haven't, and also potentially make financial transactions with your ID tied to them.
Both seem like issues to me? Either your paychecks are being adjusted for inflation (in which case they could be adjusted to the Bitcoin price) or they are not adjusted for inflation and each check is smaller than the last.
Then you swap it instantly to USD, which is part of the implementation.
So citizens can chose. Conservative ones pick USD for its stability, others may pick BTC. Which has appreciated by 200% for 12 years straight, but hey, who's counting.
Or, mix it up. 75% USD, 25% BTC. So...what is the problem again?
The problem is it is only advantageous to hold BTC for those that can assume that risk. It's not being "conservative", they have no choice. If you're living paycheck-to-paycheck and the price collapses while you're sleeping, how do you eat the next day?
This ultimately means the rich get richer and the poor get poorer.
Pretty much any fledging currency will be volatile. So you might as well be asking why anyone would adopt any new currency?
As a currency gains adoption and value, its volatility naturally goes down.
As far as what advantages bitcoin has over traditional existing currency? Numerous. Immutable, unseizable, uncensorable, fixed supply/non-inflationary/store of value, digitally transferrable without a 3rd party.
Bitcoins have been seized, and stolen. Bitcoins have been banned in China. Not at all transferable without a majority of nodes on the network agreeing - unless you mean you can hand a flash drive to someone, and that’s not an advantage to a currency you can hand notes to someone.
Why is “non inflationary” an advantage? It means less incentive to spend, more incentive to hoard, and anyone who comes later is necessarily poorer. It’s terrible, population increases and younger people fight for the scraps of the few bitcents left, so the pyramid early adopters can take advantage. That isn’t going to hold as a stable system.
The same way it seizes anything else; have people with guns show up [0] to the person with control over it, and inform them they must turn it over or face dire consequences. Seizing money held in a personal wallet means doing that to the owner (whether its a physical or digital wallet), seizing money held in a third-party service (often the case with Bitcoin) means doing it to the service operator.
> Stealing Bitcoin is not the same as seizing.
True, in that “stealing” is what is called when someone seizes property from another without legal authority. But false in the senae that seems intended, in that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
[0] Or people without guns with the implicit backing of people with guns. Or just messages from an agency known to be backed by people with guns.
> have people with guns show up [0] to the person with control over it
It is much easier to physically confiscate cash, than it is to confiscate a wallet that you don't have the keys to.
Sorry, but it just is. Yes, an arresting authority can always threaten people, with violence, but that has problem and roadblocks to it. People get mad. Courts come into the picture. And although yes it is possible it is still more difficult to do, with greater negative consequences to doing so.
The point of censorship "resistance" is not to be completely immune from a mind reading mecha-hitler, who will nuke the universe if you don't give up the password to your crypto wallet.
Instead, the point is to make it more difficult to confiscate assets, in more situations, such that it significantly reduces but does not stop completely, the times that assets are confiscated, as opposed to the absurd super hitler with nukes hypothetical.
> that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
Nope. The mechanics that are used and available to the government, in real life actual examples, of how actual governments work, make it easier for those existing governments to confiscate cash as opposed to crypto.
This is not about absurd hypotheticals. This is about existing government laws and implementations of those laws.
Once all the governments in the world, actually change their laws such that they can now threaten to nuke the universe, if you don't give up your keys, then you can start talking about how technical solutions have zero effect on getting around existing government policies.
Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement. So it is stupid to bring that up, as some gotcha counter example, for why you think technical solutions are worthless, when talking about actual real life, as opposed to your sci-fri fantasy novel.
> Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement.
No, it doesn't. Its literally what every government seizure of anything uses. It’s force or the threat thereof top to bottom. Sure, a lot of it is invisible because it is routine, but it is routine because society is adapted to the reality of the threat.
Even to the extent that you might be right, does “bitcoin disproportionately reduces the effectiveness of governments that have a strong evidentiary threshold for the application of force against those within their power” make it a good thing, likely to benefit the world by broad adoption?
> No, it doesn't. Its literally what every government seizure of anything uses.
Yes it does. Walk across the border of the USA and mexico with 20k in cash, and try it again by memorizing a crypto password.
Once you do that, see how both go.
The proveable fact, is that the actual examples that we have, of real life laws and governments, shows that the cash would be confiscated, and the crypto password would be more difficult to do so.
That is a falsifiable experiment that people can do. And the experiment goes my way. That actual, real life example, proves me right, in that specific circumstance.
I don't care about hypotheticals that don't exist in the real world right now. The only thing that I will accept, is real life proof, of crypto passwords being as easy to confiscate, as cash, in the real world.
As in, show me, specifically, how a random border patrol agent, in the US right now, would just as easily figure out that I memorized a crypto password, as opposed to figure out that I am physically carrying 20k in cash, as I go on vacation to mexico, tomorrow.
In the real world, right now, if you cross the US border to mexico your cash would be more easily confiscated than a crypto password, by the random border guard that you talk to.
> It’s force or the threat thereof top to bottom.
Then show me the government mind reading machines, that the border patrol, on the current US border, uses to scan my brain for crypto passwords. Because I can show you how they will confiscate cash. Because I have examples of them confiscating cash. There are no examples of the government turning on their mind reading devices, and stealing my crypto password.
> that have a strong evidentiary threshold
Oh but technical solutions change the evidentiary threshold! A person with a suitcase full of money, has much more evidence of them carrying money (because the suitcase can just be opened), than in the situation of a random, poorly paid border patrol agent, interrogating someone for their crypto password, that the border patrol agent doesn't even know exists!
That is one way how it makes it much more difficult to apply force.
Trezor [1] and Ledger [2] are both hardware wallets that can have a passphrase which would generate any number of wallets, each derived from the user's private key, but each generating a different public key. If someone has say 20 different passphrases, how would the people with guns know which wallet they are getting? There can be wallets without the entirety of funds stored in them, i.e. give away some to save the rest, and the people with guns think they got it all.
Even not considering passphrases, anytime you set up a crypto wallet there is a 12 or 24 word mnemonic seed which could be memorized and not written down anywhere, and which could be used to restore a wallet at a later time. So, how exactly does seizing work in this case?
Yes, with any form of money you can try to convince the authorities that a different, incomplete, or empty cache of funds is the thing they are trying to seize, or that you simply don't have what they are trying to seize.
Whether the authorities believe you and whether they decide to inflict the alternative consequences implicitly or explicitly threatened as part of the seizure mechanism ... depends on the information that forms the basis of the seizure, the personality and nature of the individuals involved and the regime they serve, and other factors.
Features that make it harder for authorities to be certain you are lying when you are also make it harder for the authorities to be certain you are telling the truth when you are. This is not universally beneficial.
Personally, I don't think I'll ever need to hide crypto from the government and I pay my taxes. However, I figure that it could be regular thieves with guns, too. I get that this thread was going in the direction of government, but I think people with guns can be pretty general. What I think is cool is that technology like this has never existed. Banks were the only way to have this level of security. You don't get that with physical gold or physical cash. How do people not see how innovative this is? It's a way to store money outside of the traditional financial system, just like gold, except it's much harder to seize, much easier to transfer, is much more divisible, etc. You can literally store a million dollars in your head by memorizing a 12 word mnemonic seed, or hand a million dollars to someone via a paper or hardware wallet. How do people not think that is cool?
Apparently, a fairly high percentage of El Salvador's economy is based on people outside the country sending currency in, so I think the idea was to use a currency that makes it relatively cheap and easy to send money from the US to El Salvador.
That said, since they're on the US Dollar anyway, I think it might have made more sense to use a stablecoin like GUSD or DAI or something.
I think at some point I read that given the amount of the GDP that remittances are in El Salvador, and the % that Western Union and similar services charge for each transfer, they calculated that a good chunk of the GDP was being left in these transfer services.
In the case of Mexico, remittances would be 3.8% of the GDP, and the WU fee is 8% [1], which means that 0.3% of the GDP is being left in the table. In El Salvador I think it is about 20%, which would mean that 1.6% of the GDP is being left in the WU and similar services.
If its USD to USD in this case, why not mail a check? I wonder if you could even just scan a check and email it and use a mobile bank app to deposit a printed copy. Or even have the US relative log into the Salvadoran relatives bank account and do it all within the U.S.
Checks are not common outside of US and a few other countries. Checks from another country especially can be a hassle to cash, may take a long time (as in weeks!), and may require paying a percentage fee to the bank.
They're not terribly common even within the US. I refinanced my house recently, and and I had to order a new checkbook from my bank to do it, because I couldn't find the one they gave me four years ago. Every time I do have to write a check, I always have to "figure it out" again, which isn't exactly rocket science, but is a testament to how little I write checks.
Like most of the world, I use credit cards or debit cards or a cash sending app.
They're common enough for banks to universally support them. E.g. if you get compensation from some company (due to overpaid bill, legal settlement etc), it'll usually come as a check by default - and sometimes that's the only available option. I've also dealt with landlords and home repair providers that would only accept checks.
Well, I mean, mailing a check takes a long time, certainly longer than sending some bitcoin would take, even if it was free. Emailing a scan could work, but wouldn't that be completely trivial to abuse? If someone gets a Gmail password, they could just photoshop a the check to empty out your relative's account with very low effort.
I think blockchain kind of solves these two particular problems; the money transfers are relatively quick (around 20 minutes for bitcoin), and you have all this cryptographic goodness to minimize the potential for fraud.
It shouldn't matter how long it takes to mail after the first check is mailed, right? If the relative in the US is sending money every biweekly pay check and it takes 9 days or whatever to mail a check, the relative in El Salvador is still getting a check every two weeks, just nine days later on the calendar than payday.
Ostensibly, the purpose of adopting Bitcoin is to make possible remittances with lower fees.
This immediately raises the question of why not establish or partner with another bank that would allow lower fee remittances, and instead partner with a shadow bank to do so. And the most reasonable answer, to me at least, is that by using a shadow banking mechanism, they'd evade (international) inspection, which would allow them to potentially skim money out of ordinary El Salvadoran bank accounts.
In that case maybe their strategy might be to convert as much USD within the country into bitcoin as possible, wait for the inevitable next huge surge, sell at the peak and increase their central bank holdings of USD by a massive amount.
Admittedly, they are the first, but there's little to be surprised about.
Bitcoin is the best performing asset with a 200% average YoY return for 12 years straight. Whilst still volatile, there's enough trust in long term value for institutional adaption, which is the phase we're in the middle of.
1 in 6 Americans own Bitcoin. Companies are holding it. Clearly, it no longer is an internet joke. It's accepted as an asset.
They can continue to price things in US dollars without letting American elites steal from them through the Cantillon effect. If you didn't know, they were using US dollars before.
Just my two cents.
The real reason is probably so the El Salvador political powers can enrich themselves, either through simply holding bitcoin, or some form of corruption.
In theory as you earn bitcoin, you can exchange it in a marketplace for other currencies if various risk levels, including stablecoins for low risk, or even for a few fiat currencies.
In practice, I assume most El Salvadorians aren't on Binance or Coinbase Pro.
It was also sold to the President of El Salvador by some rather savvy salesmen who may or may not have had a prior long position in bitcoin before the announcement was made.
Step 2: Convince/bribe the President of El Salvador to make bitcoin the legal tender.
Step 3: Bitcoin goes up because "OMG legal tender status" even though it is in a super minor country that was de facto using the USD as currency anyway.
Step 4: Sell your bitcoin at a profit due to the events of step 3.
Step 5: Who cares about what happens after step 4.
The El Salvador plan has done absolutely nothing for Bitcoin's price, so I guess the plan (which you made up) failed.
BTC price swings occurs due to institutional buying (or selling) which are generally triggered by macro conditions. Nothing else triggers it because the market cap is too large to move on minor news.
Finally, an opportunistic Bitcoin trader wants Bitcoin to go down, not up. So that they can buy more.
From what I have read, this is actually not the case. Remittances account for 1/5 of El Salvador's GDP, which is one of the highest ratios in the world. The companies that facilitate these remittances often charge pretty high fees, so the idea behind using bitcoin is to increase the amount of money that makes it home to El Salvador by reducing the cost incurred from transfer fees.
How are cryptocurrencies even "encrypted" and more anonymous than hard cash if all transactions are recorded in a ledger, the ledger that is the very basis of the currency? Isn't that the very antithesis of anonymity?
Afaik that claim to fame originally came from the fact how it's really difficult to track down the real owner of a wallet.
With traditional bank accounts there's usually a whole circus of verifying your real identity involved that's directly tied to the account.
While getting a BC wallet involves none of that, heck, it can probably be automated to such a degree that asking the question "Who actually owns the wallet created by a bot?" could become an interesting legal conundrum.
What do you mean? I'm struggling to think of any examples here other than police stealing people's money. I don't understand the bank comparison here at all, deposits in most banks are insured.
If you're paying for some chicken wings, then you're clearly not actually paying with bitcoin as the transaction fee would cost more than your dinner.
From the sound of it the "Chivo app" is what you have to use - so government must be banking bitcoin and then issuing "Chivo-money" that's actually exchanged, backed by the bitcoin reserve.
Bit like the old 'gold standard'.
What's interesting though, is that the transfers are going to be asymmetric - bitcoins being sent in as remittance, then traded internally as Chivo-coins.
I guess there has to be a mechanism to allow conversion back to BTC (and then maybe dollars) to import goods - but the circulating Chivo-coin is value that's been conjured out of thin air (as long as there's confidence it's still backed up with BTC).
All quite fascinating - either a stroke of genius, or a disaster in the making.
You're wrong. They are completing bitcoin transactions on lightning network, which is built upon the base bitcoin block chain (it's a layer two). Thus, the cost of spending bitcoin for some chicken wings is virtually free.
People still talking about high Bitcoin transaction fees pretending like the Lightning Network doesn't exist... it's almost as though they aren't keeping up with latest developments in the space, instead relying on old information they formed their initial opinion on.
Also El Salvadorians can use any app/wallet they want to transact over Bitcoin/LN. However, the government provides incentives to use Chivo. If the government is too exploitative people will move away from Chivo.
Chivo is compatible with the lightning network, but Chivo to Chivo transactions are just centralized database updates.
That's still really great, because people are perfectly free to use any other LN app (both custodied and self-custodied options available) to interact with Chivo users if they don't trust the El Salvador government app.
This open network is why Bitcoin + Lightning will win.
