Panama unveils bill to make Bitcoin legal tender | Hacker News Reader

Panama unveils bill to make Bitcoin legal tender

cnet.com

46 pointsdanaos76 comments

I always find it fascinating how HN dis-acknowledges the crypto movement. I admire both and wish they would go hand in hand

There are lots of places to go to hear cheerleading and doom saying. I would like HN to be a place where people ask questions and get thoughtful answers.

This may be silly question, but what does official status actually mean?

Bitcoin wasn't illegal in Pananama. It's not like they can print more nor guarantee value of the coin with other goods, is it?

Government payments and certain civilian contracts have to be settled on legal tender. Utilities, hospitals, have to accept it as payment. Taxation purposes.

If a currency is legal tender in a country it means that everyone in the country are required to accept it as means of settling a debt.

You can accept it as a means of debt repayment in the eyes of the law . No one is "required" to accept anything.

I think what it means is that if I break your car and you sue me to get the money back from me, I can pay you in bitcoin and you'll have to accept it, i.e. cannot claim that I haven't repayed you for the damage. In all countries were Bitcoin is not an official currency (so pretty much everywhere) you could claim that even though I payed you in Bitcoin, it doesn't settle the debt and you reject the payment and ask me to pay you in an official currency.

You cannot pay someone in bitcoin who hasn't setup a wallet or shared a bitcoin address with you...

That's like saying you can't pay one who doesn't have a bank-account. You can either give the money (or bitcoin) to some service that keeps them for this person and give them the access to it or find another way to do it. At this point, I'm pretty sure that the burden of proof goes over to the other person and they will have to show why they didn't work with you to get the money.

Are there any successful cryptocurrencies that aren't based on proof-of-waste? El Salvador's and Panama's moves seem like the start of a bad trend.

I read a interesting take on this, in case you're interested: https://gist.github.com/joepie91/daa93b9686f554ac7097158383b...

That article performs some sleight of hand, where nodes "control" the currency. Nodes sign transactions publicly, they don't control anything. They can't covertly pick the wrong transaction to sign, if they do it will be very visible.

I mean, I may be wrong, but don't consensus between miners determine whether a block is valid or not? Specifically, 51% of mining power determines this, AFAIK.

Yes, but you can verify blocks independently and see that someone verified a block that was actually invalid. It's not something that can remain secret.

But you won't verify the blockchain and call every node to say "hey! big corp X is cheating". The consensus protocol is what it is and if 51% agree on anything it will go on. We are at the mercy of 4 giants messing with the chain. Also probably simple double spending could be noticed and proven wrong but, for instance, rolling back a transaction would still be possible breaking the immutability of the blockchain.

Well I guess bitcoin remains the most established. I guess they could switch to ether at some point if it goes well, but I remember something about ether not being fully decentralized? I'm not even a crypto nut but these are pretty interesting developments

Indeed: https://bitcoinera.app/arewedecentralizedyet/

Why would anyone look beyond Bitcoin defeats me

Monero is far superior with regards to anonimity, if that’s what you’re looking for.

*anonymity

Bitcoin's Lightning Network is private enough, thank you very much.

It's great if it's private enough for you, but not everyone is satisfied with LN's level of privacy. Your original question was why anyone would use a different cryptocurrency.

Thank you for correcting me, but since you yourself wrote a comment saying "Why would anyone look beyond Bitcoin defeats me", I’m wondering if you really corrected me because you believe spelling and grammar are important.

Are you personally not satisfied with LN's level of privacy? If you're not, mind explaining why?

Mozilla wants the W3C to reject any proposals that rely on Bitcoin because of the energy use: https://lists.w3.org/Archives/Public/public-new-work/2021Sep...

Ethereum is right now in the process of migrating to proof-of-stake.

https://ethereum.org/en/eth2/

Miners are already staking using the more energy-efficient validation.

Running a T-account in Excel is even more energy-efficient.

A recent report "Energy Footprint of Blockchain Consensus Mechanisms Beyond Proof-of-Work" (http://blockchain.cs.ucl.ac.uk/wp-content/uploads/2021/09/UC...) has estimated (Table VI) the energy consumed per transaction of leading proof-of-stake and found that some exceed the efficiency of VisaNet (including Eth 2.0 on a high-throughput projection):

  Platform | Per transaction (kW h/tx)
  Eth. 2.0 |   0.00009 – 0.00286 (High throughput projection)
  Eth. 2.0 |   0.01823 – 0.55713 (Low throughput projection)
  Algorand |   0.00017 – 0.00534
  Cardano  |   0.01239 – 0.37854
  Polkadot |   0.00378 – 0.11556
  Tezos    |   0.00036 – 0.01096
  Bitcoin  | 360.39300 – 3691.40700
  VisaNet  |   0.00358

nano is interesting to watch. it is one of those DAGs/lattices, like stellar. they were vulnerable to spam and got written off after a couple exchange scams soured the early adopters and ddoses brought the network to a halt, but years later they’ve patched the place up and maybe it’ll work

there’s even a cute/terrifying faucet app, “wenano”, where people can setup a geofence and disburse funds to anyone who shows up, pokemon go style

mostly a dollar or two for being in a certain city, but I can imagine the chaos that allowing more specific geofences and higher bounties can cause.

on the other hand, humanitarian crisis on the turkish border? some benevolents can set up a free-money faucet right in the middle of the refugee camp, people around the world can “top off” the faucet and keep the the funds flowing

freaky future coming up quick

> there’s even a cute/terrifying faucet app, “wenano”, where people can setup a geofence and disburse funds to anyone who shows up, pokemon go style

How does that work, can't you just fake the location service on your phone and "be" there? Or do they require 24/7 tracking and checking whether you've been a the airport etc?

I’ll try it tomorrow and let you know, I was looking up ways to spoof gps through devtools but I can imagine some countermeasures, namely, comparing your location when you try to claim a faucet and deciding you arrived awfully fast from newfoundland to the maltese islands.

If I can only teleport my location as fast as I can drive, it would hardly be worth it.

Create a million accounts, each spread out in a grid around the world. Then, as soon as a claimable geolocation appears, you use the closest to claim it!

That is why developing proof-of-location is important.

what’s the state of the art? I always imagined you could just have some random number generator sunk into concrete somewhere and do kind of like the authenticator apps do: turn the crank on the RNG to produce the next key. except instead of having 30 seconds to type it in, your phone would have like .3 milliseconds to communicate that to the geo-beacon to prove that you’re nearby, then the geobeacon can sign your attestation and you can use that proof however you want

Aha, they have no verification or captcha even for creating accounts. I’m sure its already being done.

If you count market cap as success, the PoS protocol Cardano (ADA) is currently at #3, right behind the two big ones (BTC and ETH).

If you mean successful adoption as a currency, there is no such thing yet, PoW or PoS.

Market cap is a useless metric. All altcoins without exception are a leveraged way to play Bitcoin.

You’re free to offer your definition of success, then.

Don't know, perhaps decentralization?

What about it?

My money is on Ethereum getting there first while pointing out it's unfair to call something creating value pure waste. Siding with gold miners and bloated corrupt banking systems as the future on a tech site seems weird.

There are many alternatives to the proof of work concept. Cardano uses proof of stake with a fraction of energy cost and is academic proven with 100+ peer reviewed papers. Beautiful project

Solana has had quite a month.

https://www.notboring.co/p/solana-summer

>Solana uses a Proof of Stake consensus mechanism plus Proof of History, a decentralized source of time that Solana Labs CEO and founder Anatoly Yakovenko told me is “the implementation of the arrow of time in math.” Sounds mind-bending, and it is, but what it means is that transactions on Solana are verifiably ordered without all nodes needing to agree simultaneously. That’s what makes it so fast.

At the rate it's been growing, relative to other major coins, it could be a top 4-5 coin very soon. It currently sits right behind Binance Coin and Tether at #6. https://www.coingecko.com/en

Yes.

There are a number of "Level 1" blockchains[1] that are proof-of-stake.

Ethereum is moving to PoS. Algorand was just announced as the level 1 chain for the El Salvador[2], while Cardano and Solana are both pretty big chains. Other contenders include NEAR.

[1] https://medium.com/the-capital/layer-1-vs-layer-2-what-you-n...

[2] https://finance.yahoo.com/news/el-salvador-develop-blockchai...

Can you define proof of waste? I haven't heard of that protocol?

But Switzerland to stick to the Swiss Franc, strangely ;-)

Maybe I'm just a cranky skeptic but I can't stop wondering, what's in it for the panaman (and salvadorian) government? What kind of money this switch will bring in their vaults/pockets? What kind of control does it enable? What kind of business will the move bring?

If a population really did adopt a single payment network, the goverment could issue a blacklist of accounts that you can be punished for transacting with.

think of the power the US government has to freeze the funds of russian oligarchs - blockchain allows at least a version of this: not to freeze the funds, but to prohibit sending or receiving funds from a certain address

vendors could happily subscribe to this blacklist to ensure legal compliance (an RSS feed will do but thats just me)

Bitcoin is perfectly fungible, if you know what you're doing. Even beyond this, there are no "accounts" or "addresses" on the Lightning Network - its privacy is superb.

I haven’t looked at lightning since it was vaporware so I’ll have to check that out… I don’t know much about channels, is there really no public ledger in that case?

Same thing, tried dipping my toes a couple of years ago, payments would often fail, gui inexistent, etc. But we've come a long way since then.

For starters, download bluewallet and get some free sats to play around with:

https://lnfaucet.com

https://fixedfloat.com/lightning-faucet

Quite a rabbit hole you're falling into. And no, there's no public ledger.

Wouldn’t that be incredibly easy to circumvent? Just create a new address for each transaction?

with what money? the blockchain is the all seeing eye, if you move a penny from one wallet to another, that wallet gets blacklisted too. (not to mention you eat the transaction fee every time you try it!)

If that's really how it works, then you can get everyone's addresses blacklisted by just sending tiny amounts of money to them.

…you got me there! probably not a smart thing to automate, but I’m sure they will try

Transactions on Bitcoin's layer 2 (the Lightning Network) are extremely private and there's no way to blacklist anything.

My best bet is that they hope to attract BTC whales that need to liquidate some of their otherwise unspendable fortunes (I'm talking of wallets that on paper are worth billions of USD, but in practice are difficult to liquidate).

For example you could go there, buy a watch worth 100000 USD with Bitcoin, come back and resell it.

> BTC whales

Enabling ransomware criminals, you mean.

But I still find it hard to believe that would bring the Panamanian or Salvadorian jeweler any benefit, let alone the rest of the population. The problem of converting the BTC rests with them after the purchase.

There are already some countries that made a business of looking the other way when somebody wants to launder some money, that's been going on forever and isn't related to Bitcoin. The benefit to the population is that because the government gets to tax some part of the activity, the people's taxes are lower and the government can provide better services than it would otherwise. If this makes a country a kind of a tax haven, but for Bitcoin, then that's probably just business as usual, in a way (still wrong, though).

Doesn't that undermine the argument the Bitcoin is a good store of value, if that's the trouble you have to go to with an "unspendable fortune"?

It definitely would, if it was true.

And even if it was, for many such store of value would still be difficult to liquidate compared to the average person. Let's just say that there are plenty of people that need to "clean" non trivial amounts of BTC

What are you talking about? Bitcoin's daily trading volume is well into billions of dollars.

I bet dumping 1 or 2 USD billions worth of BTC each day would have a slight impact. Not to mention the fact that not everyone can sell noticeable amounts of BTC, let's say for "visibility" issues...

Selling 1 or 2 USD billions worth of Bitcoin each day, right.

Both of them are small US Dollar economies, so their central bank doesn't lose influence it never had and hopefully Bitcoinisation brings with it a few wealthy tax exiles and offshore businessss.

But maybe looking at what's in it for the government from the POV of the country's financial stability is the wrong question anyway... one might also want to look at the personal financial stakes of some of the individuals involved...

"Silvia said that the bill had the potential to create jobs, attract investment and foster greater government transparency"

Seems like good reasons to me, short term the first two are probably the important part, longer term the last one could be massive for countries struggling with massive corruption. Like any good idea it can be subverted or corrupted though so let's see.

the cynic in me says money laundering.

Because much of El Salvador's population lives abroad and supports their families back home with remittances, 4% of El Salvador's GDP goes to remittance companies like Western Union. If they can cut that by a factor of 4 or more by using Bitcoin instead, they can boost their effective GDP by 3-4% in a single year, which will help a lot with getting re-elected. (I have no idea what the corresponding numbers are for Panama; probably not so urgent.) Also, like their predecessors Wikileaks, Sci-Hub, and Library Genesis, they become immune to possible future US sanctions (official or secret) that try to cut them off from international trade.

For one thing: emotion. El Salvador previously depended on the USD and generally I assume those kind of countries do not like to depend on a currency controlled by a 'big neighbor'.

But better: now the authorities can instantly see all financial transactions? Using their special app (El Salvador) which connects each ID to a BTC address makes it possible to know exactly who is doing what and where. Yes BTC can be used to pay taxes. But much more important they can now probably see much better how much taxes should be paid in the first place. This might schrink the dirty money part of the economy immensly.

They avoid the inflation caused by the US printing massive amounts of USD.

In El Salvador, they avoid up to $400 million in bank transfer fees when citizens working in other countries send their earnings back to their families.

why, they should just run their own PoS so they can have all the benefits of crypto and all the benefits of having sovreign monetary policies

What does "legal tender" mean in this context? Normally, as i understand it, it means you must accept it for payments of debts. So will El Salvadorans be required to accept bitcoin? Can your employer suddenly announce your salary is now paid only in it?

In the El Salvador law, Article 7 goes beyond the typical definition of legal tender - the recognition by courts as payment for debts - and requires everyone to accept Bitcoin.

Why do they all choose BitCoin? Its arguably the worst cryptocurrency by all means but the price. It has ridiculously high transaction costs in money, time and energy, easily becoming nearly unusable this way. Doesn't it?

mindshare.

- Highest Market Cap (Large buys do not impact price much)

- Highest chance to still be around in 50 years

- Hardest to manipulate (50% attack is extremely expensive)

- Proven technology (Ethereum gets overhowl with ETH 2)

- Great track record of trustworthyness (No DAO fork)

- Defined inflation (Ethereum changes inflation often)

- Popular second layer tech (Lightning Network)

Without trust and network effect value doesn't exist and most of what you see as problems is a direct result of its success and popularity. With these new more relevant metrics of success in mind it becomes simple to see why it's undisputed for now. There's 1-2 competitors maybe but none with a track record of standing a chance over the long haul.

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