Once again, lightning network is here and functional with growing adoption (1ml.com) and that's what they are using in El Salvador. LN can achieve almost instant and practically free Bitcoin payments.
Strike is, in the US, a custodial US dollar wallet. You give them dollars and they keep them as dollars. You send them to another person in the US and they just amend their internal ledger.
When you try and send them to El Salvador things go pear shaped. They:
(1) Buy Bitcoin with those dollars.
(2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO.
(3) To send those Bitcoin between their own two accounts.
(4) And then buy Tether with them in El Salvador. You remember, the dollars that are actually 3% dollars.
Strike is somehow the absolute worst case for the people of El Salvador. Centralized, permissioned, censorable (it's not available in Hawaii or New York) and backed by Tether. Not a coin that's likely to have the money (USDC) but Tether, who admits they don't.
El Salvador by the way, is a dictatorship mandating their citizens use of Bitcoin.
Where's the win exactly?
[1] https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-...
This is a strange statement to make. It still runs on the same LN network as everyone else, it's just that they won't peer with anyone. I wouldn't exactly call that a "private LN network" in the same way I wouldn't characterize verizon as operating a "private internet" because they don't have an open peering policy.
As for the bit about using tether, I wholeheartedly agree that something like USDC would be much more suited. The only explanation I can come up with is that USDC has orders of magnitude less volume than USDT. According to cryptowatch USDT has 24hr volume of 73.3B whereas USDC only has 0.60B.
[edit] Complete speculation, but if I had to guess, Tether's ability to create ersatz dollars is really important to the Salvadoran scheme. After all El Salvador cannot print currency, because it's a USD economy. I know someone who's got an unlimited wildcat money printer (and the reckless abandon to use it) - his name is Paolo.
If I were a criminal mastermind operating in plain sight with about $60B shortfall on my books due to counterfeiting, the best way I could think of to keep myself out of trouble would be to make a poor nation dependent on its continued existence. Literally too big to fail. Again, purely speculative.
Remember, frauds have to keep getting bigger out of necessity.
1. Bitcoin mining will eventually halvening away and all security will be funded by transaction fees.
2. Most transactions will move to the Lightning Network and be practically free.
As the LN will remove the need to pay fees with it combining so many transactions, the Bitcoin network will thus not be worth mining on, and will thus be able to be easily attacked. As the security of the network is diminished, it will quickly become worthless.
I don't see how this works long-term.
The 1MB limit makes it highly likely that there will always be a backlog of transactions even post reward world.
Currently block fees are 5% of the block reward. In 2024 when the next halvening occurs, either Bitcoin needs to double in price by then or the block fee will have to make up 45% of the gap, which is an increase in almost 10x, from $4.5/transaction to $40. If it fails to do this miners on the margin will stop mining and the security of the network will diminish.