El Salvador makes Bitcoin legal tender | Hacker News Reader

El Salvador makes Bitcoin legal tender

bbc.com

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"Bitcoin is positioned to disrupt the remittances industry in El Salvador, estimated at about $5 billion annually. Most families in towns like El Zonte do not have bank accounts, and rely on services such as Western Union WU +0.5%, which take 5-10% in fees. The closest Western Union is approximately one hour by bus, requiring the recipient of the cash transfer to take the bus back with cash on hand, creating a safety issue." [0]

[0] https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

It's important to note that El Salvador's currency is the US dollar. WU doesn't even need to convert currency. They are simply taking up to 10% from a low-earning demographic group in the US just because they can. Even if bitcoinization itself "fails", if it forces WU to lower its fees it'll do net good.

Among U.S. Hispanics and Salvadorans, the median annual personal earnings for those ages 16 and older was $25,000.

Salvadoran Americans, even those who are poor, have an incentive to send money to family and friends in El Salvador because a U.S. dollar buys much more there than in the States. In all, they send approximately $800 million back home per year—close to $1000 per person

1000 bucks per person is not some exorbitant amount, it's some people's yearly starbucks budget.

https://www.everyculture.com/multi/Pa-Sp/Salvadoran-American....

https://www.pewresearch.org/hispanic/fact-sheet/u-s-hispanic...

Interestingly Bitcoin can’t really “fail” in the conventional sense. It won’t go bankrupt and isn’t beholden to profits. It will be an interesting experiment

I think if it plummeted to fractions of a dollar it would be considered a failure. Especially if they spent millions on something now worth a few dollars.

Of course it can. The people maintaining the network can decide it's not profitable to do so and the value could drop to near worthless.

According to the article, the town didn't even want to use Bitcoin.

An anonymous donor gifted them a large amount of Bitcoin on the condition that they must learn how to use Bitcoin and advocate for the use of Bitcoin:

> After meeting with several philanthropies in the region, all of which wanted to take the funds and convert them into fiat to cover the community's immediate needs, the donor partnered with Michael Peterson, a San-Diego native that spends up to 9 months of the year volunteering in El Zonte. Michael was given the opportunity to administer the Bitcoin on one condition - he would not cash it out. Beneficiaries of the digital currency had to learn how to use the Bitcoin itself, creating a Bitcoin economy

In other words, a wealthy Bitcoin holder gifted Bitcoin to one of the poorest towns he could find on the condition that they don't cash it out.

They basically forced a poor town to use Bitcoin in exchange for free Bitcoin and now try to use it as an organic success story.

Seems legit to me. It worked. There was no reason for them to want to cash out apart from resistance to change.

Meanwhile whoever donated it is seemingly furthering adoption of it helping solidify the unnecessary increasingly large wealth transfer from later adopters to earlier adopters - a promise where the money is only worth the artificial price if enough of society adopt it to allow early adopters to be made whole again without crashing the price..

Sounds like what a typcial Silicon Valley startup would do - and historically it worked pretty well.

Keyword is "immediate needs," another community that only focused on "immediate needs"? Easter Island.

It's evil.

Just wait until you hear about how we give money to low income families on the condition that they don't cash it out for alcohol and tobacco.

This one time a guy offered to give me $5k, but I had to give him my car.

There are sick people everywhere, I simply said "No, thank you" but clearly I should have called the cops on him.

The humanity!

I've had some experience with this myself, although I haven't gotten robbed outside a WU yet; I wrote a little about my Argentine experience in https://news.ycombinator.com/item?id=27448744.

It's important to remember that WU's fees are so high in large part because WU is assuming risks (of identity fraud, of regulatory blockage, and of cash theft) that Bitcoin largely avoids.

WU incurred $41.3 million in "non-credit related losses," which includes fraud in 2020[1] which is only maybe 1% of their revenue. It had another ~$40 million in expected credit losses (primarily from agents), so I think ~2% of the fee goes to losses.

Since their gross margins are consistently 40% and their operating margins are ~20% I think barriers to entry/international government regulations better explains the high fees.

[1] 2020 10-k (ctrl-f for 41.3)

Thanks for digging that up. Yeah, I suspected that the "regulatory blockage" thing there might account for more of the risks than armed robbery :)

The WU fees are likely so high because they can be. If there's no competition, why not rake profits? I'm curious what the fees will be in a few weeks.

If you are the only financial service for a large population, why not take them for all they're worth?

Because you push the government to legislate an alternative on an immediate country-wide level. At their scale they could've been taking smaller profit for many years without poking the bear.

Not only that, but handling cash is expensive

Yeah, operating a cash-heavy business _in El Salvador_ probably has some costs.

Amazingly shortsighted. The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars, which they can use to buy trade items and export the profits.

The number one export of El Salvador is actually people. If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from OCGs and Western Union / Money Gram etc.

El Salvador is set to be a big climate change loser, and every joule spent on bitcoin is bringing them closer to disaster.

"El Salvador has seen a steady increase in extreme events (storms, floods and droughts) during the last 30 years. The Pacific coastline is already experiencing rising sea levels and it is expected that 10–28 percent of the country’s coastal zone territory will be lost by the end of the century. Coastal areas, home to over 30 percent of the population, are highly vulnerable to the combination of sea level rise and El Niño events."

https://www.climatelinks.org/resources/climate-risk-profile-...

Coastal flooding risk is significant due to loss of mangroves.

https://thinkhazard.org/en/report/75-el-salvador/CF

There was a quote recently from a high ranking former FBI agent that worked on money laundering where she said she wasn't really concerned about crypto making money laundering worse (trying to find the article again).

Her reasoning was: "what people need to understand is, 95% of money laundering with fiat currency already succeeds today without getting caught."

In other words, this won't really change much, it was already really hard to catch money laundering.

of course crypto would not help criminal money laundering. Bitcoin and Etherium are very traceable by design. In fact, it is often much, much easier to trace to origin of Bitcoin funds than the origin of USD funds, especially when cash was involved. There are "private" coins like Monero but they aren't getting much traction.

Monero is pretty popular in Venezuela right now.

Also shortsighted. With increased ability to convert between hard currency and bitcoin it will be more practical for criminals to move large amounts of cash. The overhead of existing money laundering is significant -- the expression "follow the money" exists because it's a useful attack on criminal activities.

Money laundering is one problem; getting a large payment of cash is another, particularly if you're in the business of, say, demanding ransoms. This story was posted recently: https://news.ycombinator.com/item?id=27396804

interesting(ly sad) percentage .. I wonder how come nothing impedes their laundering

that said I wonder if having another path won't make them even more hungry.. i'm sure criminals are very creative when it comes to making more money

Money laundering doesn't really make money, it just legitimize it in the financial system.

This weird meme that Bitcoin is so beneficial to criminal activity (especially in comparison with physical cash)... I don't know where it started, but I wish its completely bad-faith nature would die. Sure, the Silk Road started, but the feds have wised up on how to trace Bitcoin since then - it's fairly straight-forward given the public-nature of the blockchain.

I totally agree that Bitcoin should not be primarily identified with criminal activity.

However, I think it's very easy to understand where it started and why it generally isn't in bad faith. Digital currencies (of which Bitcoin is the largest and most well known) make certain types of crimes easier (drugs by mail, ransomware). Those crimes (as they are understood) always involve a digital currency so they feel new (even if they aren't in many ways). Most people don't pay attention to digital currencies so it's not surprising that they associate them with new behavior that doesn't seem possible without them.

I also suspect that, if you were to break down digital currency activity, that most exchanges of goods and services (as opposed to investments) do choose to use a digital currency because it evades some regulatory processes or laws. With the transaction cost of Bitcoin at over $4[1] (down from over $50 recently), I really doubt that people are using it for many exchanges of goods or services where its digital qualities don't enable the transaction in some way.

[1] https://ycharts.com/indicators/bitcoin_average_transaction_f...

Edit: added a clarification about ransomware and drugs-by-mail. Ransomware and "darkweb markets" are based on older practices that, to an extent, are distinct because of digital currency. Corporate espionage and ransom demands are quite old, but we call generally call it "ransomware" when the extortion is based on holding digital assets and paying digitally as well.

This is both true and not true. It is true that transactions on the blockchain is public. But it's not true that it makes it trivially easy to identify the actual entities behind those transactions.

The only thing that's actually public are the public keys of the transacting parties. Public keys can be anonymously generated for free. It only becomes possible to deanonymize transactions if the money actually touches a deanonymized terminus.

Even assuming all the fiat off-ramps are properly KYC'd, it still gives the criminal unilateral control to arbitrarily decide when and where to risk deanonymization. You can commit a crime, then wait years for the heat to let up and make sure you're in a safe country without extradition treaties.

You must be joking? There is a trivial way to hide the traces by using mixers. Why do you think ransomware and black markets today exclusively run crypto not fiat?

Just recently colonial pipeline paid $5 million in btc.

It's not that hard to imagine when you don't have to send anything physical.

Well, Monero is the crypto of choice these days for drug dealers, due to the fact that feds have backtraced BTC transactions to bust people.

Most trusted BTC exchanges are going KYC so even tax evaders have to start reconsidering.

> The primary beneficiaries of this will be organized crime

Michael Morell, a former acting director of the CIA, has some things to say about the use of BTC in crime:

> Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.

Source: https://casebitcoin.com/story/former-cia-director-finds-bitc...

There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive, by only mining when renewables are producing excess power. That lessens the problem of renewables creating excess energy (which can be damaging to power grids).

I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them.

> There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive

If this is true then the goal is to create a mining algorithm that focuses on being as wasteful as possible.

> by only mining when renewables are producing excess power.

This is simply not true. There is no such thing as excess power, whatever is not used should be stored or sold to other countries.

> (which can be damaging to power grids).

Excess energy production has always been a thing and there are mitigation efforts in place much better than "lets put a server farm that wastes energy"

> I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them.

The problem here is El Salvador is basically burning its clothes to keep itself warm. any cryptocoin would've been a better solution. hell even dogecoin would've been a better choice.

This is where we are all headed.

https://www.rt.com/business/524923-iran-bans-crypto-mining-s...

El Salvador has (and will have) negligible impact on both generation of and popularity of cryptocurrency, so I don't think that argument is very important given the far more pressing matters they have to deal with as a country, and ones they have control over.

The point about opening up a bank is interesting though. The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP. There's gotta be a less pie-in-the-sky way to disrupt that without making El Salvador a money laundering haven, which will absolutely happen with this idea.

> The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP.

20% of El Salvador's GDP is remittances, and WU takes a 5-10% cut. I don't know how much of that business WU controls, so let's pick a range out of a hat: 75%.

That would imply that WU fees represent something in the neighborhood of 1% of the country's total GDP.

I've just checked, remittances to El Salvador account for 20% of the GDP.

https://www.theglobaleconomy.com/rankings/remittances_percen...

Remittances are one of the best use cases for bitcoin; my comment at https://news.ycombinator.com/item?id=27448744 goes into more details.

Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.

> fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable

This is incoherent. Nothing ties these prices together. If tomorrow the price of BTC goes up 1000x, the price to buy a joule of energy via burning coal doesn't change at all.

The ratio of joules of energy to bitcoin mined isn't fixed; it's varied to keep the rate of bitcoin mining constant, although not from one day to the next. If the price of bitcoin goes up 20% in the next two weeks, then bitcoin mines that would have been running at a 10% loss start running at a 10% profit instead, which increases the hash rate and then the difficulty. This increases the amount of energy (and hardware investment) needed to mine bitcoin, which reduces the miners' profits, but disproportionately the profits of fossil-fuel-driven miners.

It's true that rapid price changes can make fossil-fueled mining temporarily profitable, and things like burning off flare gas are also profitable, but bitcoin mining is already dominated by renewables and becoming progressively more so: https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall...

I'm sorry I abbreviated this whole explanation so much in my original post that you ended up so confused.

"The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars ..."

This bitcoin to dollars confluence is even more interesting in the case of El Salvador where the US Dollar is the official currency.

When you are in El Salvador you use actual, physical US Dollars for all cash transactions.

This is not a de facto standard as in some other countries - it is the official legal currency in the country.

So that's interesting in terms of geography, currency usage and the ability to wash bitcoins into (physical) dollars...

> When you are in El Salvador you use actual, physical US Dollars for all cash transactions. This is not a de facto standard as in some other countries - it is the official legal currency in the country.

El Salvador has very strict cash regulations. Most transactions over $100 in cash require an ID. Even paying for a new laptop in cash would require you to fill a form stating source of income.

I’d be curious to know if similar regulations will exist for BTC.

An empty bitcoin block and a full bitcoin block use the same amount of energy

Use and El Salvador’s use has no influence on that

The hyperbole only marginalizes yourself

The price of bitcoin determines how miners get paid, which determines how much energy they can (and rationally should) spend on mining.

This news appears to have spiked the price of Bitcoin.

Presumably, if El Salvador actually implements this policy and starts using Bitcoin that would also increase demand for Bitcoin and increase its price.

Additionally, a full bitcoin block with high fees pays for more mining expenditure than an empty one. So if there is high demand for block space, that also can increase mining energy usage.

As they use lightning network the reasoning that there will be high demand for block space is not a valid assumption. Theoretically, it is possible that the government of el salvador is doing a single transaction on the blockchain as channel funding and sends bitcoin via lightning to 6,4 million people from el salvador from that channel without touching the blockchain...

This argument is deeply flawed for an obvious reason. E.g. why do you vote if your vote is only one of a hundred million?

Because 99,999,999 != 100,000,000?

It wasn’t an argument

I said how it works

Truly an exemplary level of delusion. I marvel that people are able to function day to day in society while having deeply held views that are so divorced from reality.

An empty bitcoin block and a full bitcoin block use the same amount of energy

I wasn't commenting on whether use of the network makes it more attractive to compete for increasingly scarce bitcoin with sustained or greater use of energy

Its not that hard, just imagine you are taking a standardized test, the accurate answer is the one you choose

> If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from OCGs and Western Union / Money Gram etc.

Can you elaborate? With remittance there is people with physical cash in tens of different local currencies and countries, and they need to transfer that value to some other (obscure) country. I don't see any scenario how "just set up a bank in the US" is going anywhere near in fixing that problem.

Most of the money is coming from El Salvadorians in the US, and as El Salvador uses the US Dollar as currency, that would be fairly straightforward. Even from, e.g. Mexican pesos, it would be simple because the USD is the destination currency. It would be a different proposition if we were talking about, e.g., Indians.

My take is that El Salvador may actually want the flow of money laundering through their banking system. And it gives them an opportunity to seize some of it.

The idea of increased remittances is interesting but the logistics of doing that on the ground might be challenging for the unbanked.

Using Bitcoin for money laundering and crime is probably one of the worse ideas... I mean an open public ledger that tracks everything - makes job of FBI easier as skills improve.

Let's take drug money as an example - the solution here is to legalize and control substances, not criminalize them and then ban something totally unrelated (blockchain technology). This is patching a symptom rather than fixing the root cause which never works out.

And most importantly, withholding blockchain technology is not a solution to money laundering - it is happening already with legacy systems.

Fixing money laundering is not the priority here - we can look at fixing this later in our journey.

El Salvador doesn't need to establish mining operation to leverage this new legal tender, anymore than Ecuador (or others) have to print USD for their own economies. countries that use large quantities of dollars do need to regularly import/export USD notes though

Not gonna lie, all this makes me want to move to El Salvador now. Strongly considering incorporating my SaaS there now but have to look further into it, but interest is definitely piqued.

To give some technical background: yes, using Lightning (as they seem to do) for affordable BTC payments is challenging for most. As far as I am aware that is why they rely on custodial solutions [1]. People hold their money with someone from their village they trust, which is not ideal but neither is being unbanked. Down the road I could easily see this trust being spread over multiple people using multisig wallets.

The amazing thing about all this is that everyone can become a BTC "bank". You need a bit of capital but orders of magnitude less than a normal bank would require, maybe 2k$ to get started of which you might spend 400$ on hardware and fees to open some channels. The trustless nature of lightning lets you and your users then join the global payment network without asking for permission from anyone and you can engage in commerce internationally.

I think, while we are still early, that this is an awesome experiment. It will highlight the UX problems so we can fix them. Hopefully at some point all this will make sense to the average westerner too, so we can finally have a money not controlled by anyone (states, incumbent banks) again. But that might take a long time.

[1] https://github.com/GaloyMoney/galoy#status-of-the-project

I've always said that the most productive use of the state in response to bitcoin is by helping make better UX, protocols, optional smart contracts for industries (no different than little stickers on plastic bottles or electronics, but way more useful for builders and consumers alike).

This is a great step in that direction.

This has had quite a few discussions including a couple large ones:

Bitcoin becomes Legal Tender in El Salvador - https://news.ycombinator.com/item?id=27445119 - June 2021 (134 comments, ongoing)

El Salvador to adopt Bitcoin as legal tender - https://news.ycombinator.com/item?id=27408683 - June 2021 (398 comments)

El Salvador Congress Approves Bitcoin As Legal Currency - https://news.ycombinator.com/item?id=27444718 - June 2021 (48 comments)

Bitcoin is a legal tender in El Salvador for all transactions and tax payments - https://news.ycombinator.com/item?id=27444400 - June 2021 (8 comments)

El Salvador Bitcoin legal tender is much bigger news than most realize - https://news.ycombinator.com/item?id=27421705 - June 2021 (7 comments)

Bitcoin: El Salvador plans to make cryptocurrency legal tender - https://news.ycombinator.com/item?id=27416409 - June 2021 (8 comments)

El Salvador to offer residence and no capital gains tax to Bitcoin investors - https://news.ycombinator.com/item?id=27416068 - June 2021 (6 comments)

El Salvador President: 1% of BTC invested would increase GDP by 25% - https://news.ycombinator.com/item?id=27414667 - June 2021 (14 comments)

---

I guess we'll leave this one up and then downweight follow-ups [1], unless significant new information [2] arises.

[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

[2] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

> The El Salvador President has previously said the move will open up financial services to the 70% of Salvadoreans who do not have bank accounts.

Right. People who can't even afford a bank account would now all be using financial services by paying 10 dollars per transaction.

I am salvadoran myself and I do not support the current president but I should say that the law passed by congress says that El Salvador will have it's own bitcoin reserve and an exchange for bitcoin against USD (our current national currency), so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange.

> so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange.

For buying and selling Bitcoin, possibly. Transactions with Bitcoin will still have the usual transaction fees, as you still need to pay the miners verifying/realizing them.

Transaction fees come from the miners who will put your transaction in a block and mine it for you. Creating your own reserve changes nothing for this.

Unless if you’re going to do a bunch of off chain stuff, which seems pointless.

But Bitcoin is so volatile. You deposit today let's say 10k of your USD and in one week if the market doesn't like the twits of the day you find yourself with half that.

This seems ready made for government theft.

So you aren't using Bitcoin, the government is using Bitcoin as a backing for their own currency...

> I am salvadoran myself and I do not support the current president but [ ... ]

The word “but” implies some kind of contrast with what is to follow; there is none. Your support to lack thereof is orthogonal to the next point.

What the normal people will use in the beginning is going to be non-custodial LN based solution like strike. Minimal fees, easy to use. If you get a bit more, move to custodial LN wallet/onchain transactions. More fees, more security and less trust. And once you have too much BTC start storing them in an offline cold storage.

I can see someone explaining to their grandmother about having to move her BTC to offline cold storage and storing her private keys securely or she could lose her life's savings in an instant with no recourse

The idea that "normal people" will be able to use bitcoin at all without getting their private keys stolen is laughable.

Think of how often online bank accounts get hacked in the US, except the difference now is that your money is gone, permanently.

You're telling us people that don't have bank accounts are gonna be using bitcoin in some abstruse way?

Or are you saying some other entity (a bank) will help them with it?

And if the latter, why would bitcoin be of help at all? A normal bank account would be simpler and less worrisome.

I don't know how do you expect people to understand two disparate, absolutely differently working payment systems (LN and BTC) with different threat models, and moving between them always costs a lot of money.

But hey whatever works.

I think this will work as well as Petro worked for Venezuela.

My understanding is that Strike is already reasonably popular in El Salvador, because it's much better than taking a bus 2 hours to the Western Union, paying 10% to them, then paying 10% to the gang that hangs outside.

Could a more "conventional" system do the same job? Probably, but I won't begrudge people a working solution.

LN still requires periodic on-chain transactions to close and open payment channels. So either these costs are being passed along to the users in El Salvador or the wallet provider is subsidizing it.

Is there some writeup with details on how El Salvador will implement things? One obvious option would seem to be a wholly custodial, national, off-chain payment system. So El Salvador would hold BTC reserves, while people would actually transact on a government-operated ledger, only interacting with the Blockhain when withdrawing or receiving actual BTC outside the system, if that will be allowed.

I think you have your custodial/non-custodial terminology mixed up.

If you aren’t holding the keys that control your funds the entire time, it’s a custodial service. If USD is involved in any form besides paper cash in your own hands, it’s a custodial service.

I don't think LN is easy to use. Common trope is that most Bitcoin maximalists have never used it.

Where I live ordinary bank transactions are free for ordinary consumers. I never pay a transaction fee or any annual fees. My bank used to charge an annual fee for a credit card but they have stopped charging now.

In fact in my whole life (I'm 65 so about 50 years of having bank accounts) I have never paid transaction fees for ordinary transactions (in the UK and Norway).

Where I live (USA) I tried to transfer money between my Wells Fargo account (that charges large fees for foreign ATM withdrawals) and a credit union account (that required heavy bureaucracy to open a business account, that's why my main accounts are in Wells Fargo, but the credit union withdrawals at the foreign ATMs are free). Wells Fargo offered Zelle for ACH but I got confused. Then I tried transferring through Robin Hood, where I had both accounts connected. RH presented a pop-up saying that if I want to transfer to a different account from the funding account, I have to email them some documents to comply with AML. Same with WeBull. PayPal charges fees. So I came to the conclusion that the only simple way was to write myself a check, and deposit it in the phone app to the other account. And that is only permitted because checks were created before the current Orwellian financial system. But I could not write a check, because I am abroad and do not have my checkbook.

The baroque steam punk vibe of signing a cheque to yourself, then depositing it to your own account by taking a photo of it with your handheld supercomputer... I must order some more cheques.

I wonder if you could just fudge it with Photoshop (Gimp)? Could you get in trouble for forging a cheque to yourself?

Yes, I think cryptocurrency has a potential use case of cheap international transfers. I too faced issues living abroad and transferring money back and forth from the US. There are both flat fees, making small transfers expensive, and %age costs, since banks don't give you spot price for cross currency transactions but instead skim the spread between spot and whatever exchange rate they choose.

If the above doesn't sound correct to a reader here, then either you've never lived outside of the US or, please tell me how to transfer money via banks and not get fleeced.

Weird. Have you thought about using Wells Fargo's web interface to send the money? It's usually not hard to do if you have two account numbers.

Living in Germany here. Many traditional banks charge a monthly fee of 10 euros for maintaining the bank account.

Additionally, my parents wanted to send me some money from another country and the cheapest fee they could find was $10.5 (Wise) most other options were from $30 to $100. This was for transferring roughly $2000.

I can agree that for a simple in country tx I've not had to pay living in Germany, that is largely because of smaller banks challenging and whittling down fees.

I might not be remembering well, but I sort of remember receiving extra charges from my bank (Germany at the time) because I passed the number of transactions limit for the month. All transactions above the limit came at a charge.

Then you're with the wrong bank.

Greece here, transactions cost 3 EUR. I think they're possibly free if you use the same bank, but the apps are cumbersome to use and the potential for fees is a deterrent, so nobody uses them for transactions of less than hundreds of EUR.

> Greece here, transactions cost 3 EUR.

You mean that a transfer from your Greek bank account to another Greek bank account would cost you 3 EUR?

What happens if you get a bank account in another EU / SEPA country (e.g. via n26) and use it instead of a Greek bank account? Would there be any downside? Would a Greek company paying you a salary refuse to transfer the money there rather than a Greek bank account?

Greece is part of SEPA, I thought euro transfers would be free in that case.

As a EU resident, you have the right to open a bank account in any EU country, no questions asked.

A lot of banks in many countries charges heavily for not maintaining the minimum balance. I think a lot of people can't afford that. Though the minimum balances are usually much lower than a normal BTC transaction.

Where I live (Canada), transactions are usually "free" up to a certain amount per month, but they often hit you with monthly fees. That is unless you can maintain a minimum balance in your bank account, in which case the fees become the interest they earn off that chunk of cash, I suppose.

I'm in Canada too and a couple years ago my regular bank sent me a notice saying they needed to increase my fees on my account plan by $1 making it a total of $16 per month IIRC. I already thought $15 was a total ripoff and trying to squeeze the extra $1 a month out of me got me annoyed enough to go looking for alternatives.

I got a free Tangerine account for free unlimited debit transactions. As a bonus I can withdraw cash with no fees at Scotiabank ATMs in addition to my normal bank. They also give you a VISA debit card that can be useful as a backup card for important online services (as long as you keep some money in it).

I also got a free (prepaid) Stack Mastercard. They give you a virtual credit card number you can use online plus a physical card. The main benefit though is 0% (or near 0%) foreign exchange fees. Most online services bill in USD and my normal bank charges around 2% extra in fees for the foreign currency conversion.

Then I reduced my normal bank account to the bare minimum $4 per month plan. So instead of squeezing an extra $12 per year from me, my bank gets $132 less per year now. However, that shows you why it works. Even if 9% of their customers do what I did they still make more money and I'd bet a ton that barely anyone reevaluates their banking because of a $1 per month increase in prices.

> I have never paid transaction fees for ordinary transactions

You have, just not in a way that’s obvious to you.

Even without Lightning, it's not US$10 per transaction; I commented in more detail at https://news.ycombinator.com/item?id=27448744.

Sometimes it's lower, sometimes it's much higher. Usually the more people that are using the blockchain the higher the fees. Bitcoin right now mostly follows a trend where it gains in popularity, which causes a surge in transactions, which causes fees to go up, which in turn causes people to stop using it, etc.

Low on-chain fees are actually a disaster for Bitcoin. Once mining rewards dwindle to nothing due to halvings fees would have to rise astronomically to maintain hash power.

If bitcoin becomes the world currency, nation states can mine in order to protect the system.

I think an equilibrium would be reached. For example, the US is probably OK with Russia having 10% of hash power if the US has 10%, and so on.

However, that particular example may be unrealistic, because the US would probably choose poverty over accepting bitcoin.

It depends on the price, it would need to increase ~10x to maintain hash power with today's fee

(Fees are a little more than 10% of miner's reward)

It varies over time. But I think everybody agrees that if BTC takes over the world then the transaction fee will be much much higher.

El Salvador is using the lightning network to facilitate transactions for the most part. They are using the work of Strike & bitcoin beach in El Salvador as an example.

They are using them?

The country has a population of >6 million.

Bitcoin beach is a philanthropy run by one adult coordinator, 4 university students and 4 high school students.

The country is not using the lightning network. Maybe some have intentions for them to. But this is not something widely used by any means.

ref: https://www.bitcoinbeach.com/

They're using Lightning network which provides almost free transactions.

Before they can even pay $10 per transaction, they need to buy Bitcoins first.

The problem of the unbanked isn’t that they don’t have access to financial services, it’s that they don’t have enough money. They live paycheck-to-check, if that. There’s no point in converting what little they have to Bitcoin and paying fees on the conversion, and then more fees when spending it.

It's fees all the way down. I'm not even joking. I wanted to buy an ENS domain last week, so I put $100 CAD into an exchange (~$80USD). I abandoned the attempt because, after the fees to transfer out of the exchange to a private wallet and the fees to actually make the transaction on the blockchain, I wasn't sure if I'd have enough money. That's $80 to buy something that's supposed to be $5. I couldn't even figure out how to figure out what the damn thing would actually cost in the end.

>> by paying 10 dollars per transaction

I really wish comments would be more focused on telling the whole story rather than focusing on outdated information.

Lightning transactions are cheap and fast - so this argument is misinformed.

A core reason for El Salvador to adopt Bitcoin might be related to remittance - big part of their GDP is based on remittance and this will save people money.

Source: https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?lo...

They are using Zap/Strike (Lightning) and zero fees.

The phony "fees are $1,000 a tx line" and $10 hyperbole simply show you have no clue what you're talking about when speaking about Bitcoin. Even on chain the past solid week you could send free BTC transactions, or for a couple of cents.

I am sorry but what is the point of adopting BTC if vast majority of the transactions are going to be handled by a third party service. Makes no sense to me.

> the past solid week you could send free BTC transactions, or for a couple of cents

Why was that? Didn't miners charge for that service?

Your username doesnt indicate any sort of bias whatsoever, particularly in the face of a 3rd party being in control of the transactions.

Correct me if I'm wrong but I heard Strike and Bitcoin Beach Wallet use Lightning and that network makes the fees to drop bellow 1 cent.

It's not about "affording". Banks outright refuse people, businesses etc.

Then it's easier to give everyone the right to a bank account than introduce a new payment infrastructure.

Banks are free to accept, reject, or kick people.

Not just there. Also here. Banks, PayPal, all the same shit in terms of exclusion and power imbalance

The main benefit from this that I can see is that El Salvador will attract bitcoin businesses with a lot of money and other bitcoin whales who might move there and start businesses, employing locals and injecting money into the El Salvador economy.

The average person isn't going to use bitcoin and the average merchant will likely never be paid in it.

This is hopefully the plan. As a Salvadorean living in the US it would worry me otherwise

This is plain wrong. I don't know why it is upvoted to the top.

living in a priviliged bubble, can't even open a website to check Bitcoin fees and what lightning network is. why strike is #1 app in their country.

main chain fees is $1 right now, and lightning tx are almost free: https://mempool.space/

Of course, but bitcoin was never meant to be 'banking for the underbanked'.

Not the unbanked population that most think of when they hear about the unbanked.

It is meant more for people that are ousted from banking or traditional payments, like pornhub or Trump, or Loomer.

The narrative is that they'd use the lightning network

The bigger concern might be that Bitcoin offers zero privacy; anyone you pay with Bitcoin can know exactly how much you have in your account, which is a huge personal security risk, possibly especially so in El Salvador.

If people use Bitcoin to store their life savings instead of banks, expect gangs to run around robbing people for their bitcoin because all it takes is one unscrupulous vendor to inform the gangs of your net worth.

The poor always pay more than wealthy for services. E.g. if you have a poor credit history you are unlikely to get the same rate as someone who doesn't

Salvadoreans have the Strike [0] app available to them, on which payments are practically instant and free.

[0] https://finance.yahoo.com/news/strike-launches-bitcoin-light...

Right now, doing a Bitcoin transaction costs $0.97, so it's already false. If you are willing to wait ~48 hours for confirmation, it can cost as little as $0.15.[0]

Furthermore, the system in question is not Layer 1 Bitcoin, but Layer 2 Lightning. To use Lightning, one must perform a Bitcoin transaction to open a channel– akin to opening a bank account– which provides access to the entire lightning network.

I find opening a bank account for less than a dollar very attractive.

That being said, layer 2 fees exist as well– you must pay someone, usually a hub, to securely lock some amount of Bitcoin to a channel so that you may transact. (Note that the secure lock isn't a security deposit; a channel be closed with funds returned without any third-party trust.)

[0]: https://mempool.space/

Why intentionally spread misinformation?

Fees are currently $1.17 and were as low as $0.30 recently.

https://mempool.space/

Doubt they will be using the Bitcoin blockchain, likely a custodial wallet powered by a normal database. Like paying with your coinbase account to another one

They'll eventually use lightning network.

Shortsighted.

If you make one legal tender, suddenly they all are more useful there.

Doge transactions outside of their system for small things, their corpo BTC chain for larger things? Maybe.

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.

Lightning does work. I've used it myself as have many others. You should really work on explaining what it is you actually mean by that statement instead.

Apparently they are using Lightning and a service LN Strike that recently launched.

https://twitter.com/starkness/status/1402635954653904902?s=2...

They're literally using Lightning for payments right now in El Salvador. They didn't do this without having local projects already. Bitcoin Beach (https://twitter.com/Bitcoinbeach) made a lot of this happen.

I'm not sure how you can say lightning doesn't work when it in fact does, 1ml.com shows you growing adoption and there are many private channels that won't even be known. There are many easy to use wallets, etc.

Channel factories will bundle channel open/closes into a single transaction, so it won't be burdensome on the main chain.

It is not hard to scale Bitcoin for millions of people for everyday transactions. You give people a custodial wallet and track the balances off-chain using a trusted third party. As long as a government is willing to allow such a service to legally operate:

1. You can easily support billions of bitcoin transactions a second since the transactions only change centralized database entries.

2. Users can send and receive funds using a website. You could even issue tokens that user could use to authorize fund transfers at Point of Sale (see Credit Cards).

If you want to ensure that this trusted party isn't hacked, you can have five trusted parties instead of one and use multisig so that 4 of 5 of them must consent and sign to do an on-chain transaction. You can something similar for the internal ledger maintained by the trusted parties to ensure that one of them doesn't maliciously alter user balances.

The typical rejoiner to this is: Why do you need Bitcoin to do this? Why not do it with fiat? They aren't wrong per se, you could do this with fiat and it would work pretty well. However building a system like this with Bitcoin does have some advantages:

1. User's can withdraw funds on-chain,

2. there is a clearly defined on-chain layer for settling large balances between institutions,

3. bitcoin isn't created by fiat from a government bank. This removes the risk of inflation in longterm international contracts, etc...

I have a lightning wallet and it works - please don't post uninformed information.

Haha as someone who listened to the entire Twitter spaces chat last night, it's amazing how ignorant HN is about what's actually happening on the ground in El Salvador.

I found this to be a good read: https://en.m.wikipedia.org/wiki/2021_Salvadoran_political_cr...

To add color to the source you shared, no where in the article (or in my research) does anyone claim that what the majority elected Salvadoran government did here was illegal, only that their opposition didn’t like it and so called it a ‘coup’.

Based on my understanding the elected government was well within it’s rights to replace these judges under the constitution of the country. Also to echo the sister comment here, many of these judges were highly politically active oponents of the newly elected government.

Here is another good read if you want to understand the historical context in which El Salvador is operating [1]

In short, one of the primary reasons that El Salvador is in a difficult position financially and politically at all is the history of war crimes committed against them by foreign governments such as the United States.

In the 1980’s the US Government spent $1-2 million US dollars per day to fund a 12 year long proxy civil war to defend US imperial interests. This resulted in the US Government directly funding the training and recruitment of an army of child soldiers. The country is still dealing with the ramifications of this war today.

I see your claims that new El Salvador government is evil and raise you 1 US Government with a history of war crimes against the country.

[1] https://en.wikipedia.org/wiki/Salvadoran_Civil_War

There's statements from the EU,UN, and Human Rights Watch condemning the actions. I'm not an expert, but dismantling the justice system utterly (especially when it is critical to the government) isn't something to be taken lightly in any democracy.

It's really superficial, for example it mentions arbitrary descisions from part of the supreme judges, but completely gloss over the fact that they were members of political parties and we're seen at rallies all over the country, they delayed clear cases of corruption from previous governments and that's more than enough reason to get them out according to the constitution.

People want ARENA and FMLN out of the country for good.

Are you saying its surprising (or “amazing”) that people didn't spend 4 hours on fake Clubhouse listening about a country with an economic output of a single US equity talk about a plan that was unveiled less than a week ago and passed a day ago?

Even the most enterprising enthusiasts have barely gotten back home from the bitcoin conference in Miami

What is happening on the ground in El Salvador?

On HN if you try to post anything even remotely positive about bitcoin you get downvoted to oblivion, so it usually doesn't feel worth posting. For an introduction about El Salvador I highly recommend Jack Maller's talk where he made the announcement.

https://m.youtube.com/watch?v=_59hrgTiRJU

Regardless of your feelings about Bitcoin, it was really exciting to see the president of El Salvador himself pop into a Twitter Space last night, as the bill was being voted on, to chat with bitcoiners about the implications of the new law. This is exactly the appeal of Twitter, if you think about it: it's a kind of "direct democracy" where the leader of a country can chat casually with everyday people -- and not in some scripted townhall photo-op, but within a space moderated by the people themselves!

This president of El Salvador sent soldiers into the Legislative Assembly to coerce the parliament to vote in his favor:

https://en.wikipedia.org/wiki/2020_Salvadoran_political_cris...

He is not a friend of democracy, except the performative "chatting with laser-eyed crypto stans on Twitter" kind.

Sorry if this is not on your sensibilities, but that assembly was very corrupt so much so that people wanted them out as soon as possible, he did not command the military to do what they did, the military showed up in support for the people who were also there.

He has 90% approval rate on the opposition owned polls, and he has supermajority of the assembly for a reason, 30 years of pure corruption without any consequences by the previous governments, you'll not find enough people to oppose him to fill a boulevard.

The new assembly just passed a bill finally allowing Salvadorans in other countries to vote in all future elections, if that's not democracy I don't know what is, if the opposition is against the overwhelming support he has, maybe they should've done things right by the people in those 30 years, but they didn't and they're finally out.

And it was done democratically, by the people without a single protest.

Read into what the traditional parties did to try to block Bukele for running for president, they closed a political party overnight with a congressman from that party still in the assembly, which was unconstitutional, but nobody said a word there.

These are the same arguments people used to defend Hugo Chávez back in the day. He’s very popular, the military loves him, other politicians are so corrupt, he’s just doing what he has to do in face of American imperialist manipulation, etc.

They are both tapping the same deep vein of authoritarian populism, although nominally at opposite ends of the political spectrum.

This is one of the best explanations of what's actually going on there.

The level of condescension elsewhere in this thread combined with total ignorance of the actual events taking place is stunning.

"the leader of a country can chat casually with everyday people"

What % of the people on the call were from El Salvador? What % of the folks that spoke or asked questions? And what % were unbanked?

From listening to the call for a while, I'd guess a low single-digit number.

He could likely be on the Space knowing comfortably that the bill would pass. Because otherwise, he'd send the army in again.

Remittances are a significant part of the El Salvadoran GDP. As a percent of GDP, remittances have been up to 21.8% of total GDP in recent years [1]. If encouraging Bitcoin reduces the 5-10% typical remittance fees charged on 20% of GDP, that could be a 1-2% boost to GDP purely through legislation.

Even if it doesn't last, it does force remittance companies to become competitive, which will benefit El Salvador for years to come.

[1] https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?lo...

This is good news in that we will see a real country with decent population use it and fail badly proving that Bitcoin is not viable as a valid currency. Once that is done its value should plummet dramatically. Until now it is not used for any payments and mainly for speculation/gambling to make easy money. Most of the people are just supporting it to hype up the value so they can make most profit.

Or, maybe just consider this, you are wrong and it ends up being very successful and more countries adopt it. For what it's worth, they have already been using Bitcoin in the El Zonte for some time now [1].

1: https://www.forbes.com/sites/tatianakoffman/2020/07/14/this-...

It doesn't really help my faith in BTC when the article never refers to actual Bitcoins like currency, and instead uses USD equivalent everywhere.

> Transfers of $35/family are made to 600 families every 3 weeks, which covers 50% of basic needs per household.

$35? Or $35 equivalent in Bitcoin? The article never really explains why giving them bitcoin is better than just giving them $35 in paper bills and coins. Just that the person giving the money will only do so as BTC, it doesn't sound like the townsfolk have any say in it.

> At the time of writing, the price of Bitcoin is $9226.56.

So anyone who paid their utility bill with Bitcoin at the time of the article overpaid by 4x compared to current bitcoin prices, or about 6x compared to the peak.

How realistic is it for this to continue when delaying a utility bill by a month could possibly make the value of that bill half, or double. I don't see how this can scale, and it sounds like the El Zonte situation only works because of the guaranteed BTC income by a benefactor.

My question to you is have you used it to buy anything real with it?

Not only I have used it many times, I've even built a lightning network wallet (link in my profile).

You just have to look around and you'll see that millions of people are using it on a regular basis. Pure speculation can't make something become worth as much as Bitcoin is worth right now.

I'd suggest you write down on a piece of paper a measurable fact that would disprove your hypothesis. (The hypothesis you write down here as if it were a fact.)

What does failing look like to you?

If that doesn't happen will you revise your opinion on bitcoin?

In order for bitcoin to be used as valid currency it needs to be pegged to the local government issued fiat currency. If BTC fluctuates so much would you like a coffee or groceries with it knowing its value can be half or double tomorrow. Real question to ask yourself is have you used it to buy anything in the real world with it.

I have yeah, that was a long time ago when I believed in Bitcoin as a currency and it's use in payments.

I don't particularly believe in bitcoin anymore, but that's only relative to other cryptocurrencies like Ethereum.

I don't see how this is going to benefit Salvadorans. As much as I try, I can't find a use case beyond money laundering, ransomware and extortion.

They're using Strike, which has no fees, nearly instant transfers, can send globally (again for free) and only need a name and phone number. Isn't that better than a bank aside from clawbacks?

https://strike.me/

But you see that's the problem. With Strike you aren't tranasacting on the Blockchain, you're transacting through Strike which I then would settle the transaction for you. Yes it has the advantage of no fees, instant transfers, etc. But you aren't really transacting on the blockchain, at least not directly.

El Salvador picked BTC because of it's popularity, the problem is BTC is a terrible currency to actually use for something like this because of slow transaction speeds and high fees, so to get around that they augment it with Stike, which takes the decentralization out of the transactions, which makes the whole thing moot in my mind.

Government buys 10,000 coins at $30k/coin

Announces it's legal tender

Price increases to $40k/coin

Government sells

Government makes $100m it no longer needs to raise in tax

Government investigates Government for purchasing arrangement at below market value.

Government investigates Government for illegal pump & dump scheme.

Bitcoin value drops.

Citizen held Bitcoin is worth less.

Pretty sure the salvadorian government isn't going to be investigating it's self other than for more power grabs for the moment:

https://en.m.wikipedia.org/wiki/2021_Salvadoran_political_cr...

The dominate usecase is speculation, why are you missing that one on your list?

Going to help the kidnappers get paid. A fair bit of those in El Salvador: https://www.hrw.org/world-report/2020/country-chapters/el-sa...

Why do you feel like it'd be better than cash in this case?

Avoiding the high fees of remittances when families send money to their loved ones back home.

People have always used Western Union, for which the charges are ten dollars or so, that's bearable. And, yes, they do have SMS banking in Salvador.

They can be a lot more than $10.

If everyone has and knows how to use Bitcoin then they can transfer as much as they like for <$1 ATM, and it'd be a much easier process.

The article claims that WU's fees in El Salvador average 10% of the remittances. You can read about my experiences with bitcoin vs. WU in https://news.ycombinator.com/item?id=27448744.

> the charges are ten dollars or so, that's bearable.

Sorry, but no that's an extraordinarily privileged take. $10 is a lot of money for just transmitting some USD. And it goes a long way in El Salvador. I highly doubt the average remitter is sending more than $500/month, so it represents a 2% tax. I only consider $10 an acceptable fee if I'm sending tens of thousands of dollars.

There isn't any currency conversion because El Salvador's official currency is USD. Assuming it's WU on both ends there's no settlement risk. It sounds like pure greed.

remittance transfers from Salvadorans on the U.S are around 17% of GNP, that's a lot of money lost on transfer fees that Bitcoin and the LN won't have

Bitcoin blockchain as an open ledger is the perfect tool for El Salvador gov to track any laundering, ransomware or extortion money.

The lack of descrimination imposed by banks I guess?

This represents yet another valuable opportunity for crypto skeptics to set up falsifiable measure to check their skepticism against, but I'm afraid most won't bother going through the exercise.

Reading these comments has me a bit confused. Even in remote parts of Central America Androids are extemely common, there is less of a barrier to entry to a crypto wallet than there is to a bank.

There is so much misinformation about bitcoin, misunderstanding about the problems within countries, banking, politics. It's really unbelievable how almost everybody seems to be living in bubble where banks are safe and good.

Is the government accepting it for the payment of taxes and fines? Or are they just forcing businesses to take on the risk of accepting it?

I can't imagine what an enormous pain in the ass this is going to be for businesses, given the volatility of BTC.

They guarantee spot rate to dollar for every transaction - so businesses never need to take that risk if they don't want to.

They are mandating that merchants must accept it as a means of transaction though.

The president said last night, in a Twitter spaces group, that they, the government, are offering a free wallet that will instantaneously transfer bitcoin to USD to any merchant that doesn’t want bitcoin exposure. He clarified that there will be no obligation for merchants to use this government funded wallet.

The big thing IMO is that taxes won't be due on capital gains for Bitcoin. This could potentially drive foreign investment?

There are services that convert to fiat currency on the fly, no risk to the business. With the caveat that I have no idea if they are available in El Salvador..

it's more of an issue when economic actors around you don't operate in the same currency

I fully expect people to keep USD on the side, it's already part of the culture all over Central America

This is the full text of the bill https://twitter.com/nayibbukele/status/1402446890466217985 3 pages, double spaced. Very digestible.

Bitcoin will never be able to beat official currencies in developed countries in this important metric - short term inflation risk.

People tend to forget this but no other asset is safer in the short-term than the dollar, euro, etc. Why? Because no other asset has a powerful central entity whose job is to prevent loss of value above the 2% inflation target.

Their job is to push the worth of their currency inexorably toward zero.

Beat at what?

Is bitcoin specifically legal tender, or other digital currencies, or layer 2 solutions, or what exactly? If bitcoin only was made legal tender, then layer 2 solutions will not be legal tender, and businesses could choose to only accept direct bitcoin payments via the blockchain, forcing customers to pay high fees.

Then maybe as a customer I would buy from the seller that doesn't have the high fees. As soon as one business chooses to use the "cheaper and faster" option, then all other businesses sort of have to too, unless they want to be out of business.

Sure, if businesses collude to undertake user hostile actions, they could get this experiment to fail. Let's hope the incentives lead them to treat their customers better.

Are they being the first country for the sake of being the first country?

The President of El Salvador doesn't want to get couped. He figures his best bet is to establish a public persona, in English, and appeal to Americans (tech bros) directly.

Its the same in Europe. Russian Oligarchs bought British Soccer Clubs so that they could become public personalities and avoid being assassinated by the Russian Government or other oligarchs.

The political class in South America exists in a different sphere. They are ancestrally directly European, whereas the working classes of the country are ancestrally native American or mestizo. The concern for the every day worker is minimal as is the overlap between the worlds of these groups.

No, Japan recognized bitcoin as legal tender some years ago.

But smart move. Even the poorest of the poor have smartphones with a (limited) internet subscription.

So a web based wallet like www.coins.io will work wonderfully for them.

But the reason El Salvador is working together with Strike.me is because they have a service where someone pays you in bitcoin but you can choose to receive all or part of the payment in dollars or another currency.

No, they really just like wasting 4 bucks on every transaction.

So how does paying in BTC via Lightning actually work? What kind of integration will store owners in El Salvador have to make within the next 90 days? Does this apply to buying a can of soda at a brick and mortar?

There's a bunch of open source payment processors they can use [1], BTCPay is my favorite. I think strike and a bunch of other Bitcoiners are helping them.

1: https://lightningnetworkstores.com/services

Does anyone know how the Strike app works? They say they use bitcoin to move usd to usd? Strike is the partner with the El Salvador gov that will help convert bitcoin to usd for any merchant who doesn't want the bitcoin. Merchants will be forced to accept bitcoin for payment for goods and services, and the government will basically subsidize the transaction (a huge tax on its people for the benefit of bitcoiners).

I kind of assumed this is a play to get $ from bitcoin tourism, but also clearly El Salvador is not a country that needs to take into account the affect it has on their own currency. They gave up on their own currency in 2004.

I think it's interesting that people are still harping on the transaction fees.

It's a fair point, but I don't honestly think that most people who've studied Bitcoin for more than a minute wants to use it for transactions. More and more people are seeing Bitcoin as either a store of wealth or a money making scheme. In either of those cases, the transaction fees really don't matter as much.

Incessantly bringing up the transaction fees seems to be missing the contemporary vision of BTC. The original intent of BTC is pretty much dead outside of black markets, and even then BTC wouldn't be a first choice.

People bring it up because BTC evangelists keep arguing that bitcoin is a game changer for remittances, the unbanked, transactions, etc.

I am just surprised how much negativity is in HN towards Bitcoin. This is the first case of decentralised open source tech winning against big established powers - governments/faceamagoos. We should be celebrating this. I sure hope that Bitcoin is going to be Linux of money/finance.

Lightning might not be at the scale it needs to be now but it will improve greatly. maybe it is good enough already? Like Ruby on Rails. People keep talking about it being slow while massive web applications are being built with and billions of dollars being processed.

I'm not. Bitcoin has stagnated, and it hasn't delivered its promise of being used as a DeFi currency.

I bet if it was Ethereum that El Salvador had chosen, the opinion wouldn't be as harsh. Proof of stake doesn't have the same energy consumption concerns.

imo this is still a great development for all of crypto and DeFi. It will also help protect people who aren't connected and wealthy from losing their value due to ever higher levels of inflation (it is currently much higher than 3%) http://www.shadowstats.com/alternate_data/inflation-charts

If BTC used proof-of-stake or some other scheme that was less energy-intensive/made graphics cards a scarce resource there would probably be less hostility towards it.

by comparing it to Linux do you mean where the backbone of finance is run by Bitcoin (like Linux running servers), or where <1% of users directly use Bitcoin themselves?

I think a lot of the negativity comes from the fact that this is largely a forum of technologists, and Bitcoin is objectively inferior technology. That's not necessarily a knock against Bitcoin, it was revolutionary when it was introduced, but it was the 1.0 cryptocurrency and it's already essentially fossilized and become legacy technology. Miners hold sway over the community and they're not really interested in changing anything significant about Bitcoin, so now people are talking about absurdities like Lightning layered over Bitcoin to try to mitigate some of the flaws. We can save the effort and fix the flaws of Bitcoin by just moving on from Bitcoin. It's as though we were stuck with SSL 3.0 forever or something.

The only reason the vast majority of people advocating for Bitcoin are advocating for Bitcoin specifically is because they have invested in Bitcoin specifically, and they want the price of Bitcoin specifically to go up. Seeing people advocate for us all to be stuck with inferior technology forever because they have a financial stake in the inferior technology is exactly the sort of thing you should expect negativity about on HN.

It’s sad to see how pessimistic people here are against cryptos. Try flipping that perspective and see how this can benefit so many people in the world.

Agreed. Tech community in general are against Bitcon. They all see it as "scam".

Bitcoin is the worst cryptocurrency to use as an actual currency, isn't it? I mean the transaction speed and commission rates.

One angle I haven't seen explored much yet: This move will mean that people are legally required to use bitcoin, whether they're prepared to or not.

How does this work out for individuals running small businesses, who may not have the technical expertise to adapt well to Bitcoin? I fear they're quickly going to become the targets of phishing attacks.

Wouldn't be better to just start a government run block chain and use USDT.

The folks behind tether will probably "loan" them a reserve to start with. It costs them nothing to create so they "loan" them out like candy and the price stays fixed at or near 1 USD.

Amazing!!!

Other governments are already accumulating BTC silently. Way too many eyes on the topic lately. There will be some FUD along the way (maybe even El Salvador banning/unbanning BTC up to few times - the classic) but I believe at some time news will start popping left and right that other countries hold BTC on balance sheets. Will eventually start with ETH too if it hasn't already.

Re people below: I don't have any sources to back up my claim, sorry. I should have put more emphasis that what I wrote is mostly based on my beliefs and observation over years. You will only hear the news after a government has acquired amount of BTC they're satisfied with. If I wanted to acquire large amounts of BTC for the best price, I would do so quietly, while enjoying prices lowered by the Korea/electricity/whatever FUD (not saying these arguments against BTC are invalid but they would serve my goal). Feel free to dispute or downvote, whatever suits you.

Do you have any sources for "Other governments are already accumulating BTC silently."?

I’m hoping ETH and BTC are mostly sideways over the next year or so. I’d like to continue buying while it’s (relatively) cheap.

Do you have sources about other countries accumulating BTC?

>The new law means every business must accept Bitcoin as legal tender for goods or services, unless it is unable to provide the technology needed to do the transaction.

how easy is it for businesses to incorporate tech like this?

Legal tender laws do little to give a commodity value as a currency. No central bank runs the Bitcoin blockchain ledger as their payment settlement system so no one truly accepts Bitcoin in payment of taxes.

I wish bitcoin hadn't become the go-to crpyto.

As a world, we shouldn't be encouraging the use of a currency which is literally churning out CO2 into the air when there's so many less wasteful cryptos out there

The less wasteful cryptos are more centralized. What's the point of using an inefficient data structure (blockchain) if you are sacrificing de-centralization in pursuit of gaining efficiency? Over time miners will move into renewable energies as the price of them goes down.

It has years more momentum than everyone else, not really surprising it's on the top. But if there is better tech, it will get usurped eventually.

Previously discussed here: https://news.ycombinator.com/item?id=27445119

Congratulations to Bitcoin. All it took was a fascist takeover.

For the context, here are some Wikipedia articles about the 2020 and 2021 political crisis in El Salvador…

https://en.m.wikipedia.org/wiki/2020_Salvadoran_political_cr...

https://en.m.wikipedia.org/wiki/2021_Salvadoran_political_cr...

Do you even know what fascist means?

Does anyone know how Strike works? Strike is the private partner to the El Salvador government that will help convert bitcoin to usd that merchants are forced to accept.

Earlier discussion (4 days ago):

https://news.ycombinator.com/item?id=27408683

Great news for El Salvador, its people and people in general.

And that will fix what exactly? I'm not against it, I guess. I just don't get the point of it and what problems it fixes for El Salvador.

Remittances are a big part of El Salvador's economy, and they're expensive and risky. I wrote about my Argentine experience with these issues at https://news.ycombinator.com/item?id=27448744

I wonder to what degree this is related to the prevalence of organized crime (Bitcoin being a 'currency' of the black market).

When will this myth die. Do you have any evidence of this? See below a report from a firm whose task is to find bad behavior on the blockchain.

Key points:

- 0.34% of tx in 2020 were illicit - Of that 0.34% it is almost all scams and darknet market tx

In 2021, the large darknet markets either only accept Monero or accept BTC and Monero. Large ransomware gangs like DarkSide prefer Monero (they offer discounts for it). It's reasonable to assume that the percentage of BTC tx that are illicit are even lower as Monero assumes more of the activity.

BTC is not a 'currency' of the black markets.

- https://blog.chainalysis.com/reports/2021-crypto-crime-repor...

Drug dealers making $2k a month benefit from bitcoin.

Drug dealers making $1m a month can go directly to the bank and have it laundered haven't you read the news?

One of the first country to do it and definitely not the last country. More will follow in the next years I am pretty sure about that.

I don't see why people are so fixated on LN, it changes nothing, you might as well be using something like coinbase.

If two Bitcoin forks both claim they are the "real bitcoin", who decides which one is the real legal tender?

El Salvador courts?

That's a very good question. IMO it seems pretty unlikely that bitcoin will undergo another fork any time soon, the people that were fine with forking went to BCH and then had many subsequent forks meanwhile the people that stayed on BTC either believed in small blocks or believed in the virtue of not forking.

The High Council of Shitcoins, of course. Court fees payable in Shiba.

Good move to compete with Belize or the Seychelles as a hub for international money laundering.

As reassuring as when Palau joined the "Coalition of The Willing."

Does this mean that Tesla is now required to accept Bitcoin in El Salvador?

Why not a stable coin?

Bitcoin has too many problems. Each government will issue their own crypto currency and retain full control over their currency and tax revenue. Why wouldn't they?

This will last 1 year tops lmao

They should have chosen NANO instead of BTC: Fast transactions and no transaction fees.

A bunch of redditors have set up WeNano spots all over El Salvador now: https://www.reddit.com/r/nanocurrency/comments/nvsbin/lets_f...

I think the IMF getting repaid in bitcoin is a hilarious and amazing downstream effect

off topic but I am really wondering ... How a story on top of HN (number 1) suddenly drops to number 19 in matter of minutes ?

Algo glitch ? Penalty for mentioning Bitcoin much ?

its one of the most corrupt countries in the world, so I have a suspicion the people who voted for this have been compromised by Big Bitcoin

Huge news!

There's disappointingly much heat and little light in this thread; lots of people in rich countries ripping on El Salvador (and bitcoin) with little more than stereotypes to go on.

Let me try to displace some of the content-free flaming with real information.

I'm not in El Salvador, but I do have some experience with how Bitcoin gets used in practice in low- and middle-income countries, despite the transaction fees sometimes being high. I don't have experience with Strike or Lightning in general, so while in theory they should help a lot with the transaction-fee issue, I don't know how they work out in practice.

I’ve been using Bitcoin to get paid for a couple of years at this point where I live here in Argentina. It’s currently 13 years after Bitcoin’s invention, and some people think it’s regressing instead of progressing. Well, 13 years after the internet’s invention was 01982; not only couldn’t you get so much as a weather report online, much less IRC, but many of the early interesting experiments like NLS at SRI had shut down, and more and more places were disabling guest access to their hosts—you couldn’t run so much as a game of ADVENT without getting a username. And a password. Things were seriously regressing. The only people you could talk to on the internet were other people who really bought into the subculture.

If you live in a country with a highly functional banking system and no kleptocracy, Bitcoin is probably a bit puzzling unless you have family in Cuba. But it’s not puzzling at all for those of us who live somewhere in the middle of the broad spectrum between Switzerland and Somalia, because most places have a little kleptocracy. Argentina is a stable democracy, far from being “a failed state,”† but if you want to send US$500 abroad via non-Bitcoin means it’s basically impossible, and the only broadly available savings vehicle is real estate (“ahorrar en ladrillos”), which of course grossly inflates real-estate prices, with a substantial part of the capital city occupied by empty apartments someone bought “as an investment”. Historically, Argentines have saved by buying dollars, but that’s limited to US$200 a month now, and then only if you have a non-under-the-table job (about a third of total employment is under the table):

https://www.ambito.com/finanzas/dolares/cronologia-del-cepo-...

You can see that in September 02019 when this measure was imposed the price of a dollar was AR$63.50; now it’s AR$155. So whatever savings you had in pesos in 02019 have lost 59% of their value to peso devaluation.

In 02001 a lot of Argentines had saved dollars in their dollar-denominated bank accounts. This did not preserve their savings through the financial crisis that year; the cash-strapped government limited withdrawals to a trickle, then converted dollar deposits to pesos at a one-to-one rate, then released the exchange-rate peg, at which point peso went overnight from being worth US$1 to being worth US$0.25 before settling at about US$0.31 for the next few years. The US did something similar in 01933.

Some might suggest using “alternatives to banks like credit unions where customers—as owners—hold more power,” but Credicoop depositors suffered the same two-thirds confiscation of savings as depositors in for-profit banks. And they pay the same 3% tax on bank transactions including checks. That’s more than a fast Bitcoin transaction fee of US$15 for transactions over US$500.

But we’re not a failed state. There are no gangs of bandits roving the streets in Argentine cities (though there are some pretty bad slums where you’ll get robbed if you wander in without knowing anybody). Courts, free public hospitals, and roads continue to function, though there are more potholes than a year ago. Argentine infant mortality is 10 per 1000 live births, down from almost 20 in the late 01990s and the same as the late 01980s in the US; life expectancy at birth is 77 years, worse than Switzerland’s 84, but the same as China and Hungary, and better than Saudi or Mexico. (Somalia is 54.)

Most of the world, and notably El Salvador, is worse off than Argentina, although not necessarily in such a statistically transparent fashion. About one fourth of the people in the world are unbanked, 51% here in Argentina, 70% in El Salvador; even advanced countries like Russia, Hungary, and Uruguay have roughly a quarter of the population unbanked:

https://www.gfmag.com/global-data/economic-data/worlds-most-...

And if your family lives in a country like Iran or Venezuela subject to US sanctions, and you live in the US? Good luck sending them an ACH, instant or otherwise!‡ It’s well known that Bitcoin is very popular in Venezuela, which kind of is a failed state, so one of the Venezuelan governments is trying to tax Bitcoin remittances at 15%.

https://archive.fo/ZRXzS

Bitcoin handles a few billion dollars per year in such remittances, which are the lifeblood of the Salvadoran economy. A few billion dollars a year might seem like a trivial amount of money to someone in a rich country, but in poor countries, it’s enough to keep several million people alive.

Even in the US, it’s common for the police to confiscate large amounts of paper currency just because they can (“civil forfeiture”); US bank accounts are probably fine for US$100K but probably somewhat risky for US$10M if the bank thinks you don’t seem like the kind of person who ought to have it. US$10M in US$100 bills fits in a box you can wheel around on a dolly, but Bitcoin is a lot more practical. (And of course US$10M in dollar bills loses about US$200k per year to inflation.) The problems with official corruption in El Salvador are reputed to be dramatically worse than in the US, and Bitcoin should help a lot with that.

Transaction fees are usually high enough that you wouldn’t want to use Bitcoin to pay for a can of Red Bull or even a restaurant dinner. But it’s extremely practical as an alternative to Western Union or US$100 bills or gold, even with the current very high transaction fees. At the moment, the Bitcoin transaction fee is very low—the median Bitcoin transaction fee in the last block was 0.0495 millibitcoins, which is US$1.72:

https://btc.com/0000000000000000000c28aea6e8c073e44e249460e8...

When I last checked a week ago, it was 0.00678 millibitcoins, which is US$0.25:

https://btc.com/0000000000000000000778ef382c1697706e34634696...

Three months ago it was at what I think of as a more normal rate of 0.31 millibitcoins, US$11, which is lower than the 3.4% spread you’d pay to a jeweler or black-market money changer for transactions over US$350:

https://btc.com/00000000000000000000476ab57eea9be8ada36e2680...

So, Bitcoin doesn’t have to be a cypherpunk utopia to be a big improvement on the status quo ante. For those of you living in stable countries where your worries are things like “instant and extremely low-fee ACHs” and “decentralized utopia”, this may be very confusing, but try to remember that most of the world lives in places with much more pressing concerns, concerns that Bitcoin helps a lot with. And you may live there too, soon—the loyal subjects of Kaiser Wilhelm in 01913 certainly didn’t expect that in 15 years they’d be in the middle of a hyperinflation episode that remains legendary a century later.

I think that, by providing workarounds to the people who need them, cryptocurrencies probably not only ameliorate the most immediate and pressing concerns of poor parts of the population like Venezuelan immigrants and MS-13 victims, but probably also adjust the power balance in a more liberal and democratic direction. This will improve the chance of those concerns being ameliorated by public policy over the next decades as well. But it’s hard to tell what will really happen. The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what’s happened in the US over the last 50 years, in fact, only more so.

However, at this point I think the modern welfare state is already doing a good enough job of destroying itself without any significant help from cryptocurrencies—as evidence, I can point to Maduro, Macri, Bolsonaro, Trump, and Brexit, and metonymically to the social changes they betoken. So at this point I’m more worried about cushioning the collapse than preventing it.

(I posted an earlier version of this comment at https://news.ycombinator.com/item?id=27337189.)

____

† We’ve remained democratic since 01983, electing presidents from three different political parties (UCR, PJ, and PRO), and there’s no serious insurgency. It’s the economy and government policy that are ruinously unstable, to a point that seems satirical to anyone accustomed to the US, but is lamentably common worldwide. Rich people sometimes say they don’t know of legitimate uses of Bitcoin outside of “failed states”.

‡ Family remittances are specifically exempted from the US sanctions on Iran, but good luck finding a US bank that’s willing and able to take that risk: https://www.wiggin.com/wp-content/uploads/2019/09/26580_advi...

> The potential disaster scenario is that, by making most taxation impossible, cryptocurrencies destroy the modern welfare state without providing anything to replace it. So the public hospitals close, the enormous police force starts to support itself by extracting tribute, and the infrastructure decays. Pretty similar to what’s happened in the US over the last 50 years, in fact, only more so.

Why does it make most taxation impossible? Goods and services still change hands.

> I’ve been using Bitcoin to get paid for a couple of years at this point where I live here in Argentina

Can you explain how this is better than e.g. Wise (formerly Transferwise), PayPal, or some other international money transmitter?

And in the case of El Salvador, I think Western Union is popular for remittance because people without a bank account can get cash. Bitcoin does not solve the “cash to people without a bank account”. If the idea is, that people should instead transfer money to each other via the Strike app, when they pay for things, I fail to see how this is different from e.g. sending money to each other with PayPal.

Did republicans (us) or conservatives (uk) actually succeed in making a bigger than party-typical dent to the social safety net system or popular support for it? Brexit was more aligned to defend the social safety net (from fictional threats, granted).

This is historic!

Now a country has BTC as legal tender, add to that the 700 B marketcap and the fact that it cannot be banned because nobody has enough political capital to piss off millions of holders.

We are in a new era. The social messaging out there is BTC vs Central Banks and maybe we'll get to that fight someday in the future, but in the meantime BTC is cannibalising Gold which was always the go to option for Libertarians, Government haters and Central Bank critics and opponents.

In my opinion Central Banks have nothing to worry, at least with regards to BTC. By the time BTC takes all of gold marketcap it won't post the outsized returns that it has up to now (regardless of the deflationary protocol) and so people will stop rushing in.

The article uses the words legal tender and says “ The new law means every business must accept Bitcoin as legal tender for goods or services, unless it is unable to provide the technology needed to do the transaction.”

Not a dupe. The earlier thread from 3 days ago is about the announcement that a bill would be proposed to make bitcoin legal tender. This thread is from the news from several hours ago that the bill officially passed into law by Salvadoran Congress.

That's not what legal tender means in all parts of the world. For instance, in England and Wales, legal tender has an extremely narrow definition - it means that a law court has to accept it for the payment of a debt. Legal tender doesn't apply to people who aren't law courts, and legal tender only applies to past debt - it doesn't apply to future payments such as a purchase at a shop.

It looks (from the news articles) that it has a broader definition in El Salvador, but unless one is an expert in that country's law, it would be best not to make claims about it. If someone is an expert, I'd love to hear what the actual facts are.

How are businesses expected to deal with the high transaction fees (>$5 last time I checked)? The minimum wage in El Salvador is $300/month. Even lightning network wallets must make periodic on-chain transactions. Also most crypto exchanges charge a minimum fee for any withdrawals. These costs seem like a significant burden to place on a developing country's small and informal businesses.

All merchants are mandated to accept it.

This seems to be the new news that congress approved it?

Can someone please tell me if I should sell or keep my BTCs and why? Thanks!

You should listen to "Think for yourself". Pretty good song.

Please sell

What are the chances the President of El Salvador was paid off by Coinbase or the like?

the home of ms-13. it’s fitting the child traffickers can use bitcoin to transact in.

Yep, and I hope you've never done business with any of these[1] companies.

[1] https://en.wikipedia.org/wiki/List_of_companies_involved_in_...

El Salvador didn't get the memo on killing the planet for the next generation.

Oh, the most corrupt government in the world has adopted the most specious currency option, typically used for fraud, ponzi, and money laundering?

I'm so surprised.

This is going to be great for drug traffickers and other shady elements operating in El Salvador. What they did was just opening the door for the worst individuals to laundry money and buy assets in El Salvador.

El Salvador's AML laws are very strict, much more than other countries.

Most payments over US$ 100 require and ID, and every bank deposit, require an ID or Passport.

Do you really think BTC transactions are private? BTC transactions are open to public.

I think it's time that we need some expert opinion and debunking of bitcoin.

Elon Musk sold his bitcoins, Bill Gates was against it, Warren Buffet mocked it.

One could easily make a fun documentary about all the disappointments of bitcoin. The MtGox theft was a wakeup call.

> Warren Buffet mocked it.

Buffett has also said that he does not understand technology.

Elon already clarified that Tesla did not sell their Bitcoin.

My 2 cents about it.

https://twitter.com/neiman30/status/1401592760084336648

Editing: sorry for sharing the tweet instead of rewriting the content here, it was a lazy move on my side.

>First note, the bill is not yet adopted!

Wasn't there a vote?

Thanks Neiman, who are you again?

Reply on news.ycombinator.com