El Salvador's Bitcoin use grows but headaches persist
reuters.com
reuters.com
For that it consumes the equivalent power of Countries?
A problem which scales even worse the more nodes in play.
https://www.reddit.com/r/Bitcoincash/comments/8n9xbp/why_the...
Most transactions settle in two seconds or less for a fraction of a cent in fees.
Did the GP provide any specific reason why LN can't scale other than "here's a link to youtube from 2018?"
The author of the video was explaining how the LN works and it seems to be an exponential routing calculation problem ( similar to traveling salesman )
So while it could work for 75 k channels, it's not going to work for 1 million.
If the explanation of that video is correct (since you didn't disagree that), then how many channels it has now is irrelevant from my POV.
Actually. Was there a successful double spend in Bitcoin ever?
I mean, this kind of attack can't be done in secret, right? Such attack wold immediately make the news, because the blockchain is public. And to pull it off you need a substantial % of the mining capacity, so only a handful entities in world can coordinate such high hashrate attack.
It just doesn't seem very likely, and specially not if you're just reversing a low value retail purchase. I'd wager the rate of counterfeit money you receive when dealing with cash is way higher.
[0] https://help.coinbase.com/en/coinbase/getting-started/crypto... "Coinbase requires 3 confirmations to consider a bitcoin transaction final."
[1] https://finance.yahoo.com/news/binance-cuts-time-needed-btc-...
Now your transaction may not be included until a future block or be lost forever, though I'm not certain what it takes to be dropped from the mempool.
The wait for confirmation is exactly to avoid double spend (but not only), as the Bitcoin wiki says[0].
> It's entirely possible two miners successfully mine a block simultaneously but one of the miners didn't include your transaction in the block they mined.
The example you make would work with just 1 block of confirmation, just keep try to include the transaction into the next block.
> longest blockchain wins, so whichever gets the most participants is likely to be the final blockchain
It's more about hashrate power rather than number of participants, however the longest blockchain of confirmed blocks wins, unconfirmed blocks may be invalidated and transactions pushed to the next ones or dropped.
> I'm not certain what it takes to be dropped from the mempool.
After 2 weeks[1] the transaction is considered invalid and should get dropped from the mempool (not all nodes use the same software version or they may run a fork with different settings)
[0] https://en.bitcoin.it/wiki/Irreversible_Transactions
[1] https://github.com/bitcoin/bitcoin/pull/9312
EDIT: grammar
> To be clear, the respective blockchains will confirm blocks as normal and are not controlled by Binance. For the faster service, the exchange is accepting a reduced number of confirmations as sufficient to alter wallet balances within its own systems.
Binance and Coinbase on their own nodes can choose a lower number of blocks for confirmation but the network may reject it later, if that's the case they will have to put the transaction in another block to be mined.
Regardless of the future of bitcoin, I do wonder if this move will serve to accelerate the country's move towards more technological and digital literacy. For a place that's probably still pretty heavy on physical cash, this could be a net positive for them in the long term even if bitcoin as a currency doesn't work out.
El Salvador already offers permanent residency if you have a few BTC in capital. And they're going to start mining using excess volcano energy. We truly live in odd times.
Imagine that it works. A tech society evolving in the jungle. The feeling of being part of a rapidly developing society, rather than one stagnating or in decline.
And next, every neighboring country watching carefully. Which they already do. Because they're all tired of being a 2nd class America.
On Twitter, the president of El Salvador dissed the IMF's concerns as if an immature crypto bro.
I love it. It's a thing of beauty.
You mean vassals of the American Empire, paying tribute in the form of currency debasement that only benefits citizens of the empire at the expense of your own citizens?
See eg
https://www.theguardian.com/commentisfree/2014/oct/23/gough-...
Source: https://www.amazon.com/Overthrow-Americas-Century-Regime-Cha...
The same thing was applied to a handful of Chinese and Hong Kong officials. See: https://www.scmp.com/economy/china-economy/article/3098691/h...
> The extensive and complex nature of the US financial system means non-US international banks would most likely comply with the Hong Kong sanction requests to safeguard their overseas network and US dollar-denominated transactions that are ultimately cleared in the US by passing through the US Clearing House Interbank Payments System (Chips).
My understanding is that if you do not comply you are basically unable to trade in USD.
Good thing they're using bitcoin now!
Are you at all familiar with Latin American history? That's hardly an unprecedented US response to ideological, commercial, or other differences.
Also, 45x the economy, 15x the population with significant percentage of it having at least one exchange account. No question asked when bringing money from abroad is the governments policy, strong EU, UK and US financial ties and integrations are in place with billions already laundered. The neighbouring Bulgaria, the police seized 200K Bitcoins and sold them at the previous bull market.
I know what you mean but El Salvador is a micro-wormhole. The value essentially comes from the publicity, they had something like 700 BTC last time I checked.
El Salvador is a storm in a teacup. One noisy storm though. Their president is a millennial who knows how to ride the hype train.
Questions or not, that's a different story, but Citibank in Turkey is not obligated to accept Bitcoin, but in El Salvador - they are under a legal obligation to accept it.
Citibank is active in El Salvador.
2-) Sending/Receiving USD is not as free as you think. You can get sanctioned like IRAN. Every foreign USD transfer must be checked through a blacklist. That's how it works.
Oh and about your 2). I have some exposure to that stuff and I assure you, it's not how it works. The US does have sanctions but these are lists of names and specific corporations, you don't suddenly get into a blacklist. These lists change with the political situations. Also, there are known terrorist, so if you are not one of those or if you are not politically targeted you wont have problems.
If you are in a list, you use private jet to move cash or gold. Turkey is truly the wild west of illicit money at the moment.
If you send USD, it will go through the usual SWIFT mechanisms and will be visible to the USA but you can always move cash and gold. Turkey's proximity to major markets and the infrastructure is excellent. EU is just right there, accessible by plane, train, car, bus or boat. UK is less than 4 hours of flight, just like Dubai.
Istanbul has a physical cash only gold and USD/EUR/GBP trading center. The city of Istanbul is gargantuous, 3 times of El Salvador's population.
Any source on this ? I born and raised in Turkey and I won't let you to bullshit on my country
For context, Reza Zarrab is an Iranian-Azeri who laundered Iranian money with help of a major Turkish government owned bank, Halkbank. He flew gold with his private jet for years. He ended up in the witness protection program in the USA. There are very serious allegation of involvement with high ranking Turkish officials. It come to light that Erdogan personally lobbied Trump during his trail.
The Kingston Brothers are some mormon community in Utah that stole billions from the US government and laundered money with the Help of a Turkish businessman. The brothers are now in a US prison, the Businessman is in Switzerland and Turkey and US are fighting over who is going to get him. That businessman also has proven ties, multiple photos with Erdogan and other highly ranked Turkish officials.
Sedat Peker, a mafia boss who was disowned by the political elite that protected him for years. He escaped to Saudi Arabia and start doing tell-all YouTube videos. He again exposed billions and billions of USD of corruption and drug and arms trade. Many of the allegations were proven or confirmed by those involved but almost no action was taken. When it come time to make a video about Erdogan, he was silenced. At that time Turkey and the Saudis had very bad relations, probably that's why he went to Saudi Arabia. When the video time come to Erdogan, the relationships begin to improve, the saudis intervened and the video about Erdogan never came. Here is his YouTube channel, if you are curious about the Mobster: https://www.youtube.com/c/sedatpekerreis/videos
He got 180 million views! He promised that the next video will be about Erdogan and that video never came.
Tosuncuk, or his real name Mehmet Aydın, is a high school dropout who build an online pyramid scheme in form of a game like farmville. When the scheme collapsed he run away to South America, keeping close to a billion of USD. The exact sum is debatable because he started buying Bitcoins just before the 2018 Bitcoin bull market and run away with unknown amounts of Bitcoins. Just this year, somehow he decided to turn himself in and is promising that he has all the money he collected and can pay back everyone. Again, there were photos of his affiliates posing with the Interior minister and the relatives of the interior minister.
Fascinating stuff are happening in Turkey, sometimes I feel bad for those who don't speak Turkish. Serious next level corruption and drama have been happening the past few years and don't get me started about the stuff that happened from 2013 to 2016. Just amazing. BTW, Turkey's GDP has been in free fall since 2013 and it's definitely not a coincidence.
You can use service like https://hodlhodl.com to exchange peer to peer without questions or identification.
If you're using your bank account, then it's not completely private. However, cash trades are always possible.
On the other hand, Chivo requires strong identification with passport, so it's hardly a wormhole.
I busted out loud at this one :). Of course they will follow "International KYC/AML regulations"
You're right that it's not technically illegal, if you can somehow find another private person (ie. not a business) to transact with, but good luck finding a supply of those. I suspect someone that makes those transactions enough would get classified as a money service business and would be subject to KYC/AML requirements.
People have been prosecuted for the crime of exchanging bitcoin for dollars in person-to-person meetings. It's probably not illegal to do it once for a small amount for a friend, but it absolutely is illegal in the US to do it regularly or for many people or for large amounts.
Or you could buy/sell some art anonymously? Or just pop down to vegas?
Could be, but i suspect there are a lot more laws and historic reasons for the swiss status than just banking.
Now the problem with such a system is also quite obvious: Money laundering poisons the whole economy. If you could follow every dollar, you would likely find out it was at some point part of the profit from a criminal operation.
Remittances aren't about easy, it's about bypassing fees in traditional banking that may be as high as 30%. As well making remittances possibly to people that are unbanked, yet do have a smartphone.
Then again, depending on the country, the traditional system also has deep insight into capital flow.
Duh, that's reality. There's no pinnacle. We solve problems forever or we are all erased from reality.
Once they expand to yield generating crypto, they can charge a small fee while holding BILLIONS in crypto assets.
I'm guessing right now it's more of a gamble that the value of Bitcoin will continue to rise, which will increase the wealth of the government and the whole economy. In that case, it's almost better than printing money. But I'm not so sure the gamble will pay off. There's a decent chance that Bitcoin has peaked. I think it will be meeting increasing regulatory hurdles across the world in the years ahead.
More likely, the Chivo app is just a centralized system like a bank (i.e. a database tracking everybody's transactions and balance) and it only interacts with certain entities outside of the Chivo system via lightning.
I've also bought in a supermarket with it, again small amounts 8.00 USD to be precise (avocados and some other stuff), a lot of businesses take BTC now, some of these businesses are:
- Super Selectos (biggest supermarket chain here in ES)
- Walmart (second biggest supermarket chain here in ES)
- Siman (electronics, furniture, clothes)
- ZARA (clothing)
- Starbucks
- Mcdonald's
- Pollo Campero
these are just some examples, a bunch more are taking BTC payments from chivo wallet and really any LN compatible wallet.
you can take your money out of the government wallet by:
1. linking your existing bank account and transferring USD to your bank
2. cashing out in one of the 200 ATMs
3. transferring your BTC to a private wallet
for me personally, superficially it works, the inner workings are opaque tho, I don't expect every BTC in government wallets to actually be backed by an actual BTC for example, the government does not have enough BTC to cover the $30 USD in BTC bonus they've been giving out, and not every BTC you get in the chivo wallet is reflected somehow in the blockchain.
again my use has been pretty limited, I've day-traded with really small amounts, I've read people complaining about bank transfers taking a few days or not working at all (balance disappears from app, does not appear on bank), or ATMs being out of cash, or ATMs subtracting amounts from wallet and not giving money, I have not tried to do any of these yet though
other issue is security, the facial verification seems to be a facade so anyone with your DUI (similar to SSN, but it is public knowledge) and your birth date can claim your account and your $30 bonus if you haven't, and also potentially make financial transactions with your ID tied to them.
With traditional bank accounts there's usually a whole circus of verifying your real identity involved that's directly tied to the account.
While getting a BC wallet involves none of that, heck, it can probably be automated to such a degree that asking the question "Who actually owns the wallet created by a bot?" could become an interesting legal conundrum.
Step 1: Buy a lot of bitcoin.
Step 2: Convince/bribe the President of El Salvador to make bitcoin the legal tender.
Step 3: Bitcoin goes up because "OMG legal tender status" even though it is in a super minor country that was de facto using the USD as currency anyway.
Step 4: Sell your bitcoin at a profit due to the events of step 3.
Step 5: Who cares about what happens after step 4.
BTC price swings occurs due to institutional buying (or selling) which are generally triggered by macro conditions. Nothing else triggers it because the market cap is too large to move on minor news.
Finally, an opportunistic Bitcoin trader wants Bitcoin to go down, not up. So that they can buy more.
Bitcoin is the best performing asset with a 200% average YoY return for 12 years straight. Whilst still volatile, there's enough trust in long term value for institutional adaption, which is the phase we're in the middle of.
1 in 6 Americans own Bitcoin. Companies are holding it. Clearly, it no longer is an internet joke. It's accepted as an asset.
Just my two cents.
The real reason is probably so the El Salvador political powers can enrich themselves, either through simply holding bitcoin, or some form of corruption.
“The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." - SN
Volatility is of far less concern than a 3rd party countries money printing.
Not when you get your weekly paycheck, it's not.
Getting your paycheck and not knowing it'll be worth roughly the same amount next week when rent is due is a serious problem.
So citizens can chose. Conservative ones pick USD for its stability, others may pick BTC. Which has appreciated by 200% for 12 years straight, but hey, who's counting.
Or, mix it up. 75% USD, 25% BTC. So...what is the problem again?
This ultimately means the rich get richer and the poor get poorer.
That said, since they're on the US Dollar anyway, I think it might have made more sense to use a stablecoin like GUSD or DAI or something.
I think blockchain kind of solves these two particular problems; the money transfers are relatively quick (around 20 minutes for bitcoin), and you have all this cryptographic goodness to minimize the potential for fraud.
Like most of the world, I use credit cards or debit cards or a cash sending app.
In the case of Mexico, remittances would be 3.8% of the GDP, and the WU fee is 8% [1], which means that 0.3% of the GDP is being left in the table. In El Salvador I think it is about 20%, which would mean that 1.6% of the GDP is being left in the WU and similar services.
[1] https://www.westernunion.com/us/en/send-money/app/price-esti...
As a currency gains adoption and value, its volatility naturally goes down.
As far as what advantages bitcoin has over traditional existing currency? Numerous. Immutable, unseizable, uncensorable, fixed supply/non-inflationary/store of value, digitally transferrable without a 3rd party.
Why is “non inflationary” an advantage? It means less incentive to spend, more incentive to hoard, and anyone who comes later is necessarily poorer. It’s terrible, population increases and younger people fight for the scraps of the few bitcents left, so the pyramid early adopters can take advantage. That isn’t going to hold as a stable system.
The same way it seizes anything else; have people with guns show up [0] to the person with control over it, and inform them they must turn it over or face dire consequences. Seizing money held in a personal wallet means doing that to the owner (whether its a physical or digital wallet), seizing money held in a third-party service (often the case with Bitcoin) means doing it to the service operator.
> Stealing Bitcoin is not the same as seizing.
True, in that “stealing” is what is called when someone seizes property from another without legal authority. But false in the senae that seems intended, in that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
[0] Or people without guns with the implicit backing of people with guns. Or just messages from an agency known to be backed by people with guns.
Even not considering passphrases, anytime you set up a crypto wallet there is a 12 or 24 word mnemonic seed which could be memorized and not written down anywhere, and which could be used to restore a wallet at a later time. So, how exactly does seizing work in this case?
[1] https://wiki.trezor.io/Passphrase
[2] https://support.ledger.com/hc/en-us/articles/115005214529-Ad...
Whether the authorities believe you and whether they decide to inflict the alternative consequences implicitly or explicitly threatened as part of the seizure mechanism ... depends on the information that forms the basis of the seizure, the personality and nature of the individuals involved and the regime they serve, and other factors.
Features that make it harder for authorities to be certain you are lying when you are also make it harder for the authorities to be certain you are telling the truth when you are. This is not universally beneficial.
It is much easier to physically confiscate cash, than it is to confiscate a wallet that you don't have the keys to.
Sorry, but it just is. Yes, an arresting authority can always threaten people, with violence, but that has problem and roadblocks to it. People get mad. Courts come into the picture. And although yes it is possible it is still more difficult to do, with greater negative consequences to doing so.
The point of censorship "resistance" is not to be completely immune from a mind reading mecha-hitler, who will nuke the universe if you don't give up the password to your crypto wallet.
Instead, the point is to make it more difficult to confiscate assets, in more situations, such that it significantly reduces but does not stop completely, the times that assets are confiscated, as opposed to the absurd super hitler with nukes hypothetical.
> that the mechanics the government uses when seizing something are exactly mechanics that would constitute stealing if they weren't backed by law.
Nope. The mechanics that are used and available to the government, in real life actual examples, of how actual governments work, make it easier for those existing governments to confiscate cash as opposed to crypto.
This is not about absurd hypotheticals. This is about existing government laws and implementations of those laws.
Once all the governments in the world, actually change their laws such that they can now threaten to nuke the universe, if you don't give up your keys, then you can start talking about how technical solutions have zero effect on getting around existing government policies.
Or, in other words, the "wrench" solution has significant drawbacks that make it difficult for current governments to implement. So it is stupid to bring that up, as some gotcha counter example, for why you think technical solutions are worthless, when talking about actual real life, as opposed to your sci-fri fantasy novel.
No, it doesn't. Its literally what every government seizure of anything uses. It’s force or the threat thereof top to bottom. Sure, a lot of it is invisible because it is routine, but it is routine because society is adapted to the reality of the threat.
Even to the extent that you might be right, does “bitcoin disproportionately reduces the effectiveness of governments that have a strong evidentiary threshold for the application of force against those within their power” make it a good thing, likely to benefit the world by broad adoption?
Yes it does. Walk across the border of the USA and mexico with 20k in cash, and try it again by memorizing a crypto password.
Once you do that, see how both go.
The proveable fact, is that the actual examples that we have, of real life laws and governments, shows that the cash would be confiscated, and the crypto password would be more difficult to do so.
That is a falsifiable experiment that people can do. And the experiment goes my way. That actual, real life example, proves me right, in that specific circumstance.
I don't care about hypotheticals that don't exist in the real world right now. The only thing that I will accept, is real life proof, of crypto passwords being as easy to confiscate, as cash, in the real world.
As in, show me, specifically, how a random border patrol agent, in the US right now, would just as easily figure out that I memorized a crypto password, as opposed to figure out that I am physically carrying 20k in cash, as I go on vacation to mexico, tomorrow.
In the real world, right now, if you cross the US border to mexico your cash would be more easily confiscated than a crypto password, by the random border guard that you talk to.
> It’s force or the threat thereof top to bottom.
Then show me the government mind reading machines, that the border patrol, on the current US border, uses to scan my brain for crypto passwords. Because I can show you how they will confiscate cash. Because I have examples of them confiscating cash. There are no examples of the government turning on their mind reading devices, and stealing my crypto password.
> that have a strong evidentiary threshold
Oh but technical solutions change the evidentiary threshold! A person with a suitcase full of money, has much more evidence of them carrying money (because the suitcase can just be opened), than in the situation of a random, poorly paid border patrol agent, interrogating someone for their crypto password, that the border patrol agent doesn't even know exists!
That is one way how it makes it much more difficult to apply force.
In practice, I assume most El Salvadorians aren't on Binance or Coinbase Pro.
This immediately raises the question of why not establish or partner with another bank that would allow lower fee remittances, and instead partner with a shadow bank to do so. And the most reasonable answer, to me at least, is that by using a shadow banking mechanism, they'd evade (international) inspection, which would allow them to potentially skim money out of ordinary El Salvadoran bank accounts.
Sounds like any government or bank
From the sound of it the "Chivo app" is what you have to use - so government must be banking bitcoin and then issuing "Chivo-money" that's actually exchanged, backed by the bitcoin reserve.
Bit like the old 'gold standard'. What's interesting though, is that the transfers are going to be asymmetric - bitcoins being sent in as remittance, then traded internally as Chivo-coins. I guess there has to be a mechanism to allow conversion back to BTC (and then maybe dollars) to import goods - but the circulating Chivo-coin is value that's been conjured out of thin air (as long as there's confidence it's still backed up with BTC).
All quite fascinating - either a stroke of genius, or a disaster in the making.
Chivo is compatible with the lightning network, but Chivo to Chivo transactions are just centralized database updates.
That's still really great, because people are perfectly free to use any other LN app (both custodied and self-custodied options available) to interact with Chivo users if they don't trust the El Salvador government app.
This open network is why Bitcoin + Lightning will win.
Also El Salvadorians can use any app/wallet they want to transact over Bitcoin/LN. However, the government provides incentives to use Chivo. If the government is too exploitative people will move away from Chivo.
Is there any guaranty that the database in Chivo is 100% backed by BTC?
If you are a merchant you can accept BTC via lightning but settle in USD if you wish.
Transactions costs are around $0.0005.