[1] https://datareportal.com/reports/digital-2021-el-salvador
So, for instance, if your plumber did some work for you and sends you an invoice afterwards then that debt is discharged if you offer to settle it using a 'legal tender'.
However, shopping in a store is usually not the same because payments do not settle an existing debt.
Again, I'm not sure exactly what El Salvador's new law entails.
EDIT: To be clear, I mean tourists each individually buying a normal amount of things using BTC, which adds up to the store exchanging it's inventory for a number in the app.
[1] https://u.today/el-salvador-government-to-punish-businesses-...
> every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service
https://theconversation.com/bitcoin-will-soon-be-legal-tende...
https://twitter.com/nayibbukele/status/1402446890466217985
Art. 7 states "Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".
So it goes beyond merely saying it's "legal tender".
I suspect more likely some rich people will find it more convenient to pay their tax bill.
I'm actually curious how this will be implemented specifically. I guess (although I'm not well-informed on the ecosystem) that most of the places that let you do small cryptocoin transaction either use some smaller coin, or they must have some way of doing fractions of a bitcoin, right? In which case, the fraction system would have to be proprietary, I guess? I can't imagine the law required shopkeepers to use any particular proprietary exchange...
Its fundamental unit it the "Satoshi", of which there are 100 million in a "Bitcoin".
Bitcoin could be used by the whole world with mining only happening on a laptop. That would not change anything for Bitcoin users.
No, that is completely inaccurate.
First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
Proof of work systems will always require absurd wastes of energy - that is, by definition, the only way they ensure the correctness of the blockchain.
Completely wrong. Go run a testnet yourself and you will see.
>And if the parameters were adjusted such that it would be that easy to mine blocks, bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin.
The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
If you imagine that a laptop has enough hashrate to mine all the world's transactions in realtime, then how do you explain to yourself that the actual Bitcoin network is only able to add a few hundred transactions per second to the chain?
> The difficulty adjusts automatically. The energy usage comes only from the competition aspect - people are competing to earn blocks. You are lacking basic understanding of how PoW functions.
PoW works because miners have to invest significant resources in building and maintaining their mining rigs. As such, no one who wins the race to add a new block will want that block to contain false transactions, as that would bring down the value of the currency and leave them with extremely expensive mining equipment that is useless (once the deception would be noticed by others).
If the bitcoin network was run on 3 laptops, I could buy 100 laptops and start advertising my own blockchain which reverts the entire previous blockchain and replaces it with transactions I like. Since I can mine many more blocks with my 100 laptops, I can create a longer chain, so all clients will accept my chain and discard the old one, reverting all transactions that ever happened.
Instead, if I wanted to mount such an attack on the actual bitcoin network today, I would have to spend billions of dollars on equipment and electricity - ensuring that I wouldn't want to do so.
Originally the discussion is about people "using Bitcoin to pay for their McDonalds". Then the commenter erroneously stated, in response to that, that a "bitcoin transaction uses the energy equivalent the entire lifespan of a tree". El Salvador is using the lightning network. These transactions are done off-chain. So the transaction fees do not even go to miners. There can be thousands of McDonalds transactions that occur off-chain and are eventually settled on-chain in one transaction. Processing and validating transactions is very computationally easy. You can indeed do it on a laptop.
Mining blocks is a separate issue. If you ignore the competitive security race, then the network can indeed function on a laptop. Most the mining race that is currently occurring is because people are fighting to win the block reward - this would happen even if nobody were transacting, and someone doing a lightning network transaction has truly negligible effect on that energy usage.
When you said "bitcoin would become valueless, as everyone with a laptop could produce their own longest blockchain where they have half of all bitcoin" this shows you don't understand the process, because the difficulty would rise until people can no longer produce blocks so rapidly. You're describing a situation where miners are not even on the same network so it doesnt make sense
Let's look at it like this: a block on the blockchain has a maximum size. A transaction has a minimum size. So, each block contains a maximum number of transactions. Miners must waste a certain amount of energy hashing a block to ensure the security of the network (through the incentive mechanisms described above).
So, we can compute a practical energy/block, which translates to an energy/typical transaction.
Now, the block size is a kind of free parameter - the blockchain guarantees wouldn't be significantly different with 1GB blocks instead of 1MB. And that, in turn, would reduce the energy cost per transaction dramatically, and allow the network to process more transactions/second.
Similarly, if there were fewer people putting fewer resources into mining bitcoin, the energy cost/block could go down. This would affect the security of the network though, as it also brings down the cost of a 51% attack.
But miners are opposed to such changes, which have been proposed before. So, in practice, the bitcoin network as it is today has a huge energy cost/mined transaction.
Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Separately to the lightning network, the security (hashrate, energy usage) is still not directly linked to the number of on-chain transactions that are processed. You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions. You can have a less-secure blockchain that does many more transactions than bitcoin with low energy usage (altcoins exist) - if these are low value transactions then people won't even be incentivised to attack it. The relationship is NOT just energy/transaction. Your estimated energy/transaction value will keep changing because that's not the relationship; the new coins in the block reward will eventually drop to zero, the value processed by the network will change, the ASIC development situation will change, etc. It's like finding a runner that eats icecream and computing icecream/kilometre.
>Again, if you don't believe this, you should ask yourself what stops the bitcoin blockchain from processing 1 billion transactions/second instead of the current pitiful ~2 hundred transactions.
Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
The whole discussion is about the Bitcoin blockchain itself. Altcoins, lightning, payment apps etc are all entirely irrelevant to this point.
The bitcoin blockchain as it exists today has a pretty well fixed energy cost per transaction. All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc.
But what you are claiming is like saying that it's meaningless to talk about the gas/mile of a diesel Ford Mustang, since you could always change the engine (block size), or change from gas to another fuel (better ASICs), or choose to ship the car by ferry somewhere(use Lightning instead)!
> You can compute "a practical energy/block" specifically for bitcoin but it does not translate to a meaningful energy/transaction value because the quantity of energy used is not directly caused by transactions.
Why does it matter that "it's not caused by " the number of transactions? As long as the block size is fixed, the number of transactions that can be processed by the existing bitcoin network is directly linked to the energy expenditure of the existing bitcoin network. Other hypothetical versions of the bitcoin network could achieve other energy/transaction thresholds. But the one we have today is extremely wasteful.
> Nothing is stopping it. Run your own lightning node and you can do more transactions than what you are erroneously claiming
"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
But changing the blocksize is just a software change. It doesn't require outlay on a "bigger engine", or any new engineering. The "existing bitcoin network" could switch to it with a 1 line change in the code.
So it's not quite the same as some of your examples.
It's not "just" a software change. It's a huge political and organizational issue. It has been proposed and agreed and disagreed and fought over for many years, with no plausible change in site.
Turns out, changing fundamental limits of a truly distributed system is actually very hard. True, not entirely for engineering reasons, but that makes it even worse - engineering can in principle be solved, people problems can be forever.
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Bl...
>"Why can't my car do 600km/h, it can only do 200km/h?" "Nothing is stopping it. Board a maglev train and you can do far more than 200 km/h."
Going by this analogy, you are commenting on an article about maglev trains. The article is about lightning network transactions. So you've gone completely off-topic? Why even talk about "transaction costs of the blockchain itself" if you think lightning transactions arent bitcoin transactions?
>What do off-chain transactions like Lightning have to do with the transaction costs of the blockchain itself?
Facilitating off-chain transactions lowers demand for on-chain transactions. Off-chain transactions arent possible without the underlying blockchain, yet they can fulfill the use-case of small bitcoin transactions. You can't separate the two.
>All sorts of things could change this - changes in the protocol to allow bigger blocks, changes in the hashrate that most miners are willing to invest, changes in mining hardware efficiency etc. But what you are claiming...
Back up the comment chain you were arguing that changing electricity prices etc would not affect the energy usage... I think you have changed what you are arguing about. Previously you disagreed with this:
"Bitcoin use and mining power are completely uncorrelated. By mining bitcoins, your earn as much as the computational fraction you are representing. So, indeed, there was a race to more and more mining power in the recent years but it can completely be reversed. For example if electricity prices rises."
> First of all, with current parameters that would mean that you need a good few hundred years to process a few seconds of world-wide transactions.
If you settle everything onchain, maybe (I haven't done the math on this, so I honestly don't know), but storing every transaction for a cup of coffee in a datastore that persists across tens of thousands of computers for the rest of time is absurd.
Long term Bitcoin layer 1 (onchain) is likely to be the settlement layer for large transactions, and other layers (lightning network, etc) will be used for every day activities like buying coffee, sending funds to a friend, etc.
You don't need consensus about the state of the entire network on layer 2 like you do on layer 1.
So it's not really a problem.
A lightning channel does require an onchain bitcoin transaction both to be opened and closed, but while open it supports unlimited transactions within the channel while it is open without increasing the onchain storage burden on the network validation nodes further beyond the two transactions to open and close the channel.
Or can there be more than 2 owners of a channel?
In this case, the correct point is that the waste of energy is to ensure the security of the blockchain (as you correctly pointed out), and not to process transactions. The marginal cost of processing another transaction is completely negligible compared to the cost of securing the blockchain, and so naive comparisons saying that a single transaction uses as much energy as XXX where XXX is the total energy cost divided by the number of transactions is misguided. You could send a million more transactions and the energy cost wouldn't budge.
Of course, the overreach is in the part where they said a single laptop could run all of Bitcoin. Marginal transactions are cheap, but not that cheap, and a single laptop couldn't secure shit. (Again, all as you correctly pointed out. I just wanted to clarify where everyone was coming from for readers who aren't familiar with how Bitcoin works.)
Obviously it's limited now by the blocksize (let's not go there). But the point is the "per transaction" figure is based on the currently imposed limits.
Bitcoin is secure only under the assumption that a 51% attack is computationally difficult, i.e., that it is not cheaper to acquire more mining capacity than the non-malicious miners collectively have (whether by creating a conspiracy of existing miners, or by becoming new miners) than to actually pay whatever transaction you're trying to get away with not paying.
This means two things (which are, in a sense, the same thing in two different directions).
First, Bitcoin needs to have a nontrivial fraction of the world's computational power in order to be secure. If mining happens on a laptop, well, I personally own at least two laptops, so I can easily double-spend coins, making the currency worthless. It doesn't have to be 51% of the world's total computational power, but it has to be enough that nobody can easily and cheaply put together enough additional power to mine false chains at a rate that keeps up with the non-malicious miners.
Second, if it were ever the case that secure mining was happening on a single laptop, that would mean that this one laptop represents a huge portion of humanity's computing power, meaning that, first of all, the fair market value of being able to use this laptop would be incredibly high (both because it needs to be high enough that a double-spend attack isn't profitable, and because of simple supply and demand), and second, there would be a separate moral question of why we're using this laptop to mine Bitcoin instead of, say, powering any of the scientific research (like vaccine development) that now has to happen on TI-83s.
It is technically true that Bitcoin could "work" with mining only happening on a laptop (and probably did "work" in this sense when Satoshi was developing it on his personal laptop), but that's like saying that, say, MD5 is a "secure" hash provided the attacker only has pen and paper. True, but that's not what anyone means by "secure."
I don't see how you could significantly reduce the energy usage without sacrificing security (unless you make structural changes such as moving to POS)
That's not gonna happen at this stage however.
Which is of course to be expected, as the bitcoin network is entirely unable to process the transactions of a small rural town.
Basically, people in El Salvador will use a centralized payment app that happens to denominate prices in Bitcoin. It will be interesting to see how much this actually works with the extreme volatility of Bitcoin, but for a country that is apparently desperate to get foreign value into the country it may be the worse option, except for all the others.
With ligthning, you're not using the bitcoin network to process transactions. If we opened a lightning channel for our 2 personal bitcoin wallets, and I paid you 1000SAT over the channel, and then someone checked my bitcoin wallet, they would see that I still have all those SATs (of course, I can't double spend them).
Did Jo and Alice participate in a USD transaction?
If Bitcoin's original thesis of truly decentralized P2P cash still holds, then it should be viewed as an M0 money supply. Financial services and products build on top of and separately from the main chain make sense as analogues to reserve banks and payment processors that do not handle the majority of transfers in physical cash.
Calling it a promise makes it sound like there's counterparty risk and you're relying on them not changing the code. Changing the lightning code would have no effect on your funds locked into lightning using the old code.
Similarly, if I send you 1000SAT through the lightning network, I am trading in bitcoin, but not using the bitcoin blockchain to do so.
Sure, Lightning relies on guarantees offered by the bitcoin blockchain to promise payment security. But it's not the same thing, and the Lightning network could become compromised even if the bitcoin blockchain remain secure For example, if Lightning accidentally started adding an extra 0 to transactions, if I send you 100 SAT over the LN you could see that you are receiving 1000 SAT and send me some products. Later, when the channel is closed, the bitcoin blockchain would refuse the final transfer, but it may be too late.
[0]: https://twitter.com/OpenNodeCo/status/1435264127241527306
Nobody is required to use Chivo, but people are required to accept legal tender. There's no reason to expect that Chivo-Chivo transfers will go to the trouble of opening individual lightning channels for each user, which costs non trivial amounts of money for each opened and closed channel.
It would make sense that users of the app can settle with each other and it doesn't so much as escape the four walls of a database at Chivo-HQ. But McDonalds is a multi-national enterprise and won't be trusting Chivo (or any El-Salvador official banking infra, I'd assume) to manage their wallets.
It is really cool to see a (hopefully) successful application of Lightning on Bitcoin in the wild, from a person who has been nay-saying about Lightning. I will be really glad to see it succeed. But I'm dubious about the success of this app.
One should hope the two successes are not tied to each other – it's encouraging that there are other companies. I have no way to judge Chivo and I've never used their software, but I have little trust of governments to implement complex systems well, and if there ever was a case study of a burgeoningly complex system, I think Lightning and Bitcoin is the big one.
I don't know enough about lightning to dispute it, but it would seem these reports about Opennode and McDonalds are in conflict with those reports. Do you have any local color or stories to add? I'm interested in what they actually are technically doing, I didn't know that Lightning could be "partitioned" but my Technical Spanish is rusty.
Are there any controls that would prevent folks from using Chivo to spend their $30 literally anywhere they wanted, in as much as there is a Bitcoin receiving address for them? (If I opened it up to "all lightning-capable nodes" would that change the story? I understand little in spite of knowing lots about Bitcoin and friends, something something, needs to be a route/path from one node to another?)
Chivo has just usual Lightning node as any other, you can follow it publicly here: https://amboss.space/node/02f72978d40efeffca537139ad6ac9f099... and you can see that they have direct channels with IBEX and others, so payment to many businesses from Chivo can literally be done with 0 sats fee. IBEX then has channel with OpenNode, so when paying to McDonalds there's a chance that IBEX will take some fee.
But in practice, it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will). Instead, most will use an app that hides all the complexity from them, and since the government is advertising one particular app, that will likely see overwhelming use.
And then, the official app or any other app will likely avoid wasting money on lightning or bitcoin to settle app-app transfers, and instead settle most transactions in their own centralized backend.
You're just moving the goal posts. Here was your original statement:
> Actually, they are not even using lighning wallets
Here is your updated statement:
> it's absurd to imagine that the population of a whole country will learn about lightning or bitcoin directly and create their own Lightning channels or bitcoin wallets (though doubtless some will)
You started with what sounded like fact, then revealed that the justification is just the invocation of a thought experiment. There's nothing but speculation here. You're right this may happen, but a hyperbolic angry comment isn't the way to add to the discussion. This is why HN cryptocurrency threads are garbage dumps.
>They are using lightning wallets.
If your real intent is to improve discussion, maybe you should address that instead of erroneously invoking the "move the goalposts" fallacy. Moreover, I think both comments had substance to them, especially when compared to, again, the original comment about the lightning network.
The non-hyperbolic statement would have been "they will (99.99% certainly) not be using even lightning wallets".
Still, while this is a forward-looking statement, it is more than idle speculation - the government is encouraging the population to install one specific app, even offering money to anyone that does. In contrast, running your own lightning channels is known to be very difficult to do, so it is a priori extremely unlikely for a large proportion of the population to run their own.
pull the plug of your computer
leave the metaverse
> Are you figuring in the Lightning Network?
No.
The lightning network is a separate system for transactions denominated in bitcoin. It does nothing to modify the capacity of the bitcoin network, it creates a way to do transactions WITHOUT using the bitcoin network (except occasionally).
I imagine these transactions are being done over the lightning network or something like that(I could be wrong on this though), in which case that calculation wouldn’t give the right answer.
In addition, I think I would evaluate the CO2 costs per transaction based on the contributions to the mining reward (because this is the part of transaction which has an influence on how much power people use to mine), which I think for bitcoin is still relatively small compared to the block reward part? Well, there’s also the influence on the price that making transactions has.
I think the assumption that there will be no innovation in this space, optimizations will never decrease the amount of computing resources required for a bitcoin transaction, and nothing can be done, is probably incorrect.
Some prospects:
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Ef...
The impact of the lightning network on energy consumption is even neglible...
The fees are high because the costs are high.
Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls.
If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.
https://www.moneyandbanking.com/commentary/2018/2/18/the-stu...
I'm not sure if there's a direct tie to Iran-Contra, but in Nicaragua Regan directly contravened a congressional funding ban and used Iranian and CIA drug money to fund the death squads there. Similar funding sources were probably at play in El Salvador.
Major banks in El Salvador accept cheques from US banks, sometimes of them without any fees or very low fees. Main disadvantage is that it is slow.
I haven't seen this used as a mainstream remmitance channel though. But an Salvadoran American relative could give their family a checkbook and they could deposit it here.
This is for cheques though. Different from Panama and Mexico whose ACH systems are connected with the US Fed ACH system in a way El Salvador isn't.
Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee.
[1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...