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Comment by simiones | Hacker News Reader

Actually, they are not even using lighning wallets. They are using a centralized payment processor that has personal accounts for users, like any other payment app. This centralized processor happens to use lightning wallets in its backend, but there is no 1:1 mapping of payment_account:lightning_wallet. And since Lightning itself doesn't interact with the blockchain except when you open/close payment channels, there is no actual use of bitcoin in the whole scheme.

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.

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I think you are spreading misinformation. Your whole comment is absolutely wrong.

[0]: https://twitter.com/OpenNodeCo/status/1435264127241527306

Chivo wallet, the official standard and the new national wallet of El Salvador, evidently has an interface with Lightning and the Bitcoin network, and it is an optional way for merchants and consumers in El Salvador to begin accepting payments denominated in Bitcoin or USD.

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.

From a screenshot I earlier today, McD El Salvador is using Opennode.com for Bitcoin payments.

I'm hearing reports (unsubstantiated, but reports) that Chivo is built on "a partition" of lightning and that it will be difficult for people who want to get their money out.

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 is a "custodial" wallet, so Chivo is in charge of the funds and can block sending those anywhere if they want. From the current reports the $30 needs to be send to another Chivo to be able to spend it on whatever. After this initial back and forth, it's spendable anywhere.

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.

I was a bit too direct - it's true that officially bitcoin transactions must be accepted, and any valid bitcoin app would work - including anything based on Lightning.

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.

> I was a bit too direct

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.

The two parts you quoted aren't as different as you claim, and are still more correct than the one they're responding to:

>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.

Do you know the ground truth about which apps, nodes, and Layer 2 protocols are being used by El Salvadorans right now? If not then all of these are just posts in a chain of speculation. I don't, and I'm not going to claim that I know what's happening. But invoking suspicion to make a strong claim isn't the way to have an effective or illuminating conversation.

Yes, my original statement was too direct - I said "they are not using lightning wallets" in response to someone saying "they are using lightning wallets".

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.

deactive hn account

pull the plug of your computer

leave the metaverse

The capacity of BTC is so low that if it had universal adoption, every human being could do around one or two transactions in their lifetime.

What's your source on this? Are you figuring in the Lightning Network?

The figures for the bitcoin blockchain are public and monitored by most exchanges. They are at about 11000 transactions/hour[0] - ~3 transactions/second for the entire world.

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).

[0] https://bitinfocharts.com/bitcoin/

> What's your source on this? The well known numbers for BTC transactions per seconds, number of people on the planet, average life expectancy, and maths.

> Are you figuring in the Lightning Network?

No.

You can use any lightning wallet in El Salvador. There’s no need to use a particular provider, or even a provider at all. If you want to buy the requisite hardware (I think a raspberry pi and a USB SSD is the budget approach) you can completely self-host.

True, but how many people will use anything other than the officially recommended app? How many businesses even will go to the trouble of looking for an app to use, other than the default?

So centralized frontend -> middle-something, decentralized backend :) - lol

You have the first part right, but to insinuate that lightning is not using the bitcoin blockchain is entirely wrong. In the case of lightning, the bitcoin blockchain is only used in a dispute over funds. This is how you properly scale a decentralized blockchain.

So the way to scale the blockchain is to avoid putting transactions on it. If I promise you that if you give me your burger you'll have 5SAT from me, and later you ask for my water and offer to reduce my debt to 4SAT in exchange, did we use the bitcoin blockchain in our transaction?

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).

Jo sends $100 from Bank A to Alice at Bank B, then Bob sends $100 from Bank B to Jo. The banks will have no USD to settle at clearing as a result.

Did Jo and Alice participate in a USD transaction?

Yes, they traded in USD. But they did not use the Fed's accounting systems to do so.

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.

I think that is a great analogy. If you view Bitcoin on the main blockchain as M0 money supply, then side channels like the Lightning Network and other centralized payment processors that have been popping up can be viewed as M1 and more commonly M2.

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.

I don't like that analogy. Unlike M0 and M1, every BTC on the lightning network represents one BTC on the L1 chain. The L1 funds are locked in order to participate in L2.

Unlike current USD, but like USD before Nixon abolished the gold standard, right?

That's a promise that Lightning makes and that you can check in their code today, but it is not a fundamental guarantee the way that the bitcoin blockchain offers guarantees.

Sure, if you changed the code of lightning then it would work differently. If you changed the code of the L1 chain it could work differently too. How are those guarantees different?

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.

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