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Comment by FreeTrade | Hacker News Reader

Sigh. Bitcoin BTC, at 3 transactions per second, doesn't have the capacity to support El Salvador's economy. Even if Lightning worked (it doesn't), BTC doesn't have enough capacity to open channels for users at a reasonable cost. Salvadorians will end up forced to use proprietary payment networks denominated in BTC.

BTC is not cash anymore, it won't work as such. There are other cryptos that could work, we'll have to see how broadly 'bitcoin' is interpreted.

The CGT exemption will be of interest to crypto whales and entrepreneurs and may attract some, but organized crime is a concern given the nature of the asset.

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> Even if Lightning worked (it doesn't)

What doesn’t work? I’ve only skimmed some LN search results, and it looks like there are a bunch of services using it, including strike [0] which was mentioned in a comment of the big thread here [1]. This would have the same problem (proprietary network) you mentioned, but it seems to be working still?

[0]: https://strike.me/

[1]: https://news.ycombinator.com/item?id=27408978

This is some shit poster that wouldn shill some currency like nano or Bitcoin cash I guess. Lightning works fine. I've been using it for past year with zero problems. Check blue wallet, phoenix wallet, bottle pay, strike, opennode, lnmarkets, kollider, sphinx chat

If you're highly motivated and technically expert, you might be able to get non custodial payments to work on lightning. Even then, your experience may be something like this - https://threadreaderapp.com/thread/1376286470256873475.html

You don't need to be a technical expert. Go to getumbrel.com and follow the instructions

Sure, give it a try. Let me know how it goes.

I've been using Lightning on sites like coinpayments and others for months. It works perfectly every time.

Again, I'd like to ask you, what doesn't work?

https://threadreaderapp.com/thread/1376286470256873475.html

This does not show that the lightning network doesn't work. It shows that lightning has less locked value than Ethereum's layer 2. Incentivize yield farming is likely the cause.

In terms of lightning being usable now, I've been using it for years with no real problems, both as a merchant and as a consumer.

To fund a Lightning channel you have to pay fees on the Bitcoin network, which can get quite high. Up to 50 USD during times of high demand.

To send to someone who's offline the recipient either has to run their own always-on node, or use a custodial service.

Routing small payments (one of the goals of Lightning) is unreliable with a high chance of failure. See http://essay.utwente.nl/82015/1/Satcs_BA_EEMCS.pdf

The paper linked is called "Understanding the Lightning Network capability to route payments" which cannot be found in any reputable or peer-reviewed journal. How is that suppose to be a reliable study?

What a bald statement, claiming lightning does not work without anything backing up your statement.

For reference I'd like to refer to https://1ml.com/ There is currently > 1450 BTC network capacity on the lightning network, if it wouldn't work why would people provide network capacity exceeding 45 million USD.

edit Typo.

> doesn't have the capacity to support El Salvador's economy

It's easier for San Salvador to disappear Bitcoin into cronies' pockets than U.S. dollars. For this purpose, Bitcoin's deeper liquidity makes it the best choice. Less cynically, Bitcoin has brand recognition. That makes it politically palatable in a unique way.

Bitcoin isn't a great currency. But it is a competitive store of value. El Salvador doesn't have a trusted domestic market of financial assets. This is an experiment in replacing a domestic market for assets with Bitcoin.

bingo. Crypto is a boon for crime and rogue states.

BTC will make it easier for El Salvador to track those transactions as an open ledger.

Bitcoin transactions are more transparent and publicly traceable than cash, Bitcoin sucks for illicit transactions. Monero should be the crypto of choice for criminals because it is untraceable.

Forget Lightning— Did you know you can transfer Bitcoin from one user to another on Coinbase with zero transaction fees instantly? Any exchange can do the same. Centralized layer two scales just fine for many use cases and is working today.

This. People just assume onchain txes and LN are the only way to scale. In practice centralized scaling via custodials has been there from the very early days.

But then why use Bitcoin if you're going to use what is essentially a bank?

Ease of access to and exchange with global marketplaces. I can transfer/trade directly from/to El Salvador without any bank being involved in that transaction.

A bank by any other name is still a bank. Sure there is definitely a legal difference such as deposit insurance and access to their lender of last resort. For the customer however it doesn't matter they still need KYC, the cops can still see their transactions, they still have to ask where the money is from, they can still knock on your door and put your hands in handcuffs. Many of the advantages to people in El Salvador with BTC is avoiding extreme inflation in the national currency. However one does well to note that inflation woes in the Atlantic world actually correlated with a partial deflation of the Bitcoin bubble, so if you're in the EU/US bitcoin is an investment when money is cheap, not a hedge for your money becoming cheap.

Our currency is the USD since 2001. The SVC our former local currency has been pegged for 20+ years to the usd [1].

The SVC is no longer used day to day and is usually kept as a collectible item, it can still be exchanged at banks at 8.75 SVC per 1 USD.

[1] https://www.xe.com/currencyconverter/convert/?Amount=1&From=...

If you need to keep your money on an exchange to be able to do transactions, you'll probably still need to go through a bank or exchange or the same thing by any other name.

To make the bitcoin investors rich.

Also to stick it to the man.

Nevermind the unprecedented new level of randomware hacks.

Not just a bank but an unregulated bank tied to all sorts of shady currencies like USDC, Doge etc which has regular outages. That's also ignoring the wild volatility in the value of bitcoin.

What could possibly go wrong!

Once you have BTC you can choose to store it outside of a bank as a non-inflationary asset. No one can remove it from your wallet.

I can do that with gold.

Gold is less volatile, and the value of the volume of a €2 coin in gold is 9 months of El Salvador nominal GDP per capita.

Or the gold could be stored elsewhere and accessed via an app, with exactly the sort of database every bank already uses.

Either way, BTC adds nothing. Apps might, depending on the banking infrastructure, but BTC itself? Nada.

This is a new unit of measure! Now I need to know my monthly salary in eurocent volume of gold.

€0.01 coins have a volume of ~0.346ml, gold has a density of 19.3g/ml and a current price of 60.89 USD/g, so a eurocent-sized gold coin would be worth 407.02 USD :)

Thank you :) I'll look at those coins differently now.

So the modern version of keeping gold under my mattress?

Yeah, but you're still having to pass through Coinbase or any other exchange, and they can remove it from you there. That's the point, if Bitcoin needs an exchange to be functional you're losing all the differential features that Bitcoin has.

Yes, but you can still protect your wealth once it’s out of the exchange.

I guess the answer to the exchange problem is to have a decentralised exchange.

The only other legal tender in El Salvador is the US Dollar. If, for any reason, you have qualms about the US financial system, especially as someone foreign to the US with little priority in its decision making processes, it might be desirable to opt for a different currency. Is BTC the right currency for their government to bend to that purpose? I guess we'll find out.

Isn't that exactly what FreeTrade meant by "Salvadorians will end up forced to use proprietary payment networks denominated in BTC."? Coinbase might do it for free, but that doesn't mean the eventual winner will be free, nor does it mean that users couldn't be banned, or tracked, or forced to use 'supported' services, etc.

As long as BTC transfers between custodians are possible, that should be quite small problem. There might be winner in terms of liquidity and volume, but because anyone can quite easily fire up custodian service, there should be also plenty of competition.

So we have basically invented... banks, but with bitcoins?

The full circle

With Bitcoin, I don't have to keep my savings in the bank even if I choose to use a bank for other services. As someone whose had their bank account frozen before, this is of great value to me.

I could use banks or Lightning like a checking account, while keeping the majority of my savings under my control.

Yeah but you are most probably using a centralized exchange to execute BC transactions for free which might froze your account as well in the future because $REASON. Also thinking that in the long-run, in a future where BC is accepted almost universally this is not going to be heavily regulated by governments it's being naïve IMO.

Yes. Financial institutions are useful for fiat and non-fiat currencies, in fact they were born long before fiat currency.

This is the dumbest thing I've ever read. So you designed a system that sacrifices everything to achieve trustlessness, and then you immediately reintroduce a centralised trusted entity. You can't make this shit up. I'm so glad I left the crypto community in 2014, it's become completely deranged.

Yeah, great move to leave crypto in 2014!

Whatever you need to tell yourself to sleep at night, buddy.

So I'm supposed to be sad about not participating in a pyramid scheme? You're literally making my case for me.

It's sad to see comments like this on hn. I thought this place was supposed to have meaningful discussions.

I am coming to believe a large contingent don't actually care about trustlessness. They care about the deflationary aspect because it's supposed to make them rich.

I think the parent poster was being somewhat self-aware and tongue-in-cheek. They're not saying centralization is the ideal; just that it exists and works well.

It is not dumb. Custodians are useful, very useful actually. With Bitcoin you can use custodians, but you can also host your bitcoins yourself if you want. The opportunity to do latter is the most important and makes Bitcoin valuable. However majority people in majority of cases prefer to use custodians, and there is nothign wrong with that.

If 99.99% of people are holding their coins in a bank, then I'm not certain what the point of the blockchain is.

Is the entire global system supposed to move to bitcoin just so 0.001% of people can keep their money under their mattress in a hard wallet?

I think for smaller day to day transactions people are using Lightning or an app like Strike that is really using lightning underneath. For years now the problems of TX per second, fee, and speed have been worked on. https://strike.me/ is a Paypal like app that's built totally on Lightning and they just got setup in El Salvador recently. I think Jack Mallers and Strike are probably one of the main reasons were seeing this BTC law happen there now.

I always hoped that Bitcoin would become "the people's currency" but currently it does not work as cash anymore. Lightning might become great, but the engineering needed just to send to offline nodes makes me sceptical, not to mention that the cost of funding channels is always handwaved away.

I wonder, does HN hate the "Bitcoin Cash" fork as much as BTC? It's the closest to the technical specification that made me interested in BTC in the first place.

The other issues with channels is that only the entry and exit transactions are validated - every transaction in the channel is not secured by any network.

Meaning you can open a channel, but if you want to sell real-world goods in exchange for anything that happens in that channel, then you'd better trust the other parties in the channel to close it properly.

tldr; Lightning is indeed super fast, but it's not as secure.

This is not true. Lightening network is trustless just like the bitcoin base layer unless for very very small transactions (like few cents). Channels are constructed in such a way that any counterparty that attempts to cheat can be punished by the honest partner. Of course the honest partner has to be actively monitoring the base bitcoin network but this can also be outsourced to a third-party (tehcnically called a watchtower).

That's not the only issue. Channels cost a blockchain transaction to open and close, so you would never open-close a channel for an individual small transaction.

The point is essentially to setup an off-chain chain maintained by a 3rd party. If you are selling non BTC into that channel, you are TRUSTING the other party to close the channel.

If they never close it, you cannot unilaterally close the channel, which means you might never get your BTC because they simple leave the channel open forever and get to keep whatever you sent them (ie other crypto or real-world or digital assets).

The space of lightning network is quite new and I think not yet totally proven but to simply say it doesn't work is a bit misleading considering the kinds of people that are working on it and the amount of code that has been worked on https://dev.lightning.community/overview/

Sigh. A reserve asset doesn't need every transaction for coffee and candy bars to reside in its ledger. It's a foundation that other layers can build upon. The layers can be tailored to different use cases, each with different tradeoffs of security, speed and decentralization.

Yes. Unfortunately Bitcoin is not the ideal solution here. What would be the ideal solution is something like nano.org, fast transaction settlement, no fees and good UX through their community wallets.

Alternatives like XLM, SOL, ATOM could also be an option.

NANO

Too bad all those solutions aren't truly decentralized.

Nano is decentralized, it's Nakamoto coefficient:

https://nanocharts.info/

> Even if Lightning worked (it doesn't)

That hasn't been my experience. I agree it is a "complex" system and has its own limitations, but when I took some time to test it, it worked well.

Bitcoin isn't replacing USD ( although many would want to believe that).

Who would want to spend Bitcoin in a stable country. 4,5€ transaction costs for daily purchases is not what it's intended for.

So why doesn't Lightning work exactly? Jack Mallers who convinced El Savador's president to make Bitcoin legal tender works on Lightning app.

If BTC is legal tender, why wouldn't BCH also be?

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