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Forget Lightning— Did you know you can transfer Bitcoin from one user to another on Coinbase with zero transaction fees instantly? Any exchange can do the same.

Forget Lightning— Did you know you can transfer Bitcoin from one user to another on Coinbase with zero transaction fees instantly? Any exchange can do the same. Centralized layer two scales just fine for many use cases and is working today.

pinkybanana 5y ago
This. People just assume onchain txes and LN are the only way to scale. In practice centralized scaling via custodials has been there from the very early days.
gjulianm 5y ago
But then why use Bitcoin if you're going to use what is essentially a bank?
- wereHamster 5y ago
  Ease of access to and exchange with global marketplaces. I can transfer/trade directly from/to El Salvador without any bank being involved in that transaction.
  - willeh 5y ago
    A bank by any other name is still a bank. Sure there is definitely a legal difference such as deposit insurance and access to their lender of last resort. For the customer however it doesn't matter they still need KYC, the cops can still see their transactions, they still have to ask where the money is from, they can still knock on your door and put your hands in handcuffs. Many of the advantages to people in El Salvador with BTC is avoiding extreme inflation in the national currency. However one does well to note that inflation woes in the Atlantic world actually correlated with a partial deflation of the Bitcoin bubble, so if you're in the EU/US bitcoin is an investment when money is cheap, not a hedge for your money becoming cheap.
    - el-salvador 5y ago
      Our currency is the USD since 2001. The SVC our former local currency has been pegged for 20+ years to the usd [1]. The SVC is no longer used day to day and is usually kept as a collectible item, it can still be exchanged at banks at 8.75 SVC per 1 USD. [1] https://www.xe.com/currencyconverter/convert/?Amount=1&From=SVC&To=USD https://www.xe.com/currencyconverter/convert/?Amount=1&From=...
  - deleted 5y ago
    [deleted]
  - gjulianm 5y ago
    If you need to keep your money on an exchange to be able to do transactions, you'll probably still need to go through a bank or exchange or the same thing by any other name.
- echelon 5y ago
  To make the bitcoin investors rich. Also to stick it to the man. Nevermind the unprecedented new level of randomware hacks.
- grey-area 5y ago
  Not just a bank but an unregulated bank tied to all sorts of shady currencies like USDC, Doge etc which has regular outages. That's also ignoring the wild volatility in the value of bitcoin. What could possibly go wrong!
- willnz 5y ago
  Once you have BTC you can choose to store it outside of a bank as a non-inflationary asset. No one can remove it from your wallet.
  - ben_w 5y ago
    I can do that with gold. Gold is less volatile, and the value of the volume of a €2 coin in gold is 9 months of El Salvador nominal GDP per capita. Or the gold could be stored elsewhere and accessed via an app, with exactly the sort of database every bank already uses. Either way, BTC adds nothing. Apps might, depending on the banking infrastructure, but BTC itself? Nada.
    - el-salvador 5y ago
      This is a new unit of measure! Now I need to know my monthly salary in eurocent volume of gold.
      - ben_w 5y ago
        €0.01 coins have a volume of ~0.346ml, gold has a density of 19.3g/ml and a current price of 60.89 USD/g, so a eurocent-sized gold coin would be worth 407.02 USD :)
        el-salvador 5y ago
        Thank you :) I'll look at those coins differently now.
  - koheripbal 5y ago
    So the modern version of keeping gold under my mattress?
  - gjulianm 5y ago
    Yeah, but you're still having to pass through Coinbase or any other exchange, and they can remove it from you there. That's the point, if Bitcoin needs an exchange to be functional you're losing all the differential features that Bitcoin has.
- pochamago 5y ago
  The only other legal tender in El Salvador is the US Dollar. If, for any reason, you have qualms about the US financial system, especially as someone foreign to the US with little priority in its decision making processes, it might be desirable to opt for a different currency. Is BTC the right currency for their government to bend to that purpose? I guess we'll find out.
onion2k 5y ago
Isn't that exactly what FreeTrade meant by "Salvadorians will end up forced to use proprietary payment networks denominated in BTC."? Coinbase might do it for free, but that doesn't mean the eventual winner will be free, nor does it mean that users couldn't be banned, or tracked, or forced to use 'supported' services, etc.
- pinkybanana 5y ago
  As long as BTC transfers between custodians are possible, that should be quite small problem. There might be winner in terms of liquidity and volume, but because anyone can quite easily fire up custodian service, there should be also plenty of competition.
  - darkwater 5y ago
    So we have basically invented... banks, but with bitcoins?
    - deepserket 5y ago
      The full circle
    - tofukid 5y ago
      With Bitcoin, I don't have to keep my savings in the bank even if I choose to use a bank for other services. As someone whose had their bank account frozen before, this is of great value to me. I could use banks or Lightning like a checking account, while keeping the majority of my savings under my control.
      - darkwater 5y ago
        Yeah but you are most probably using a centralized exchange to execute BC transactions for free which might froze your account as well in the future because $REASON. Also thinking that in the long-run, in a future where BC is accepted almost universally this is not going to be heavily regulated by governments it's being naïve IMO.
BreakfastB0b 5y ago
This is the dumbest thing I've ever read. So you designed a system that sacrifices everything to achieve trustlessness, and then you immediately reintroduce a centralised trusted entity. You can't make this shit up. I'm so glad I left the crypto community in 2014, it's become completely deranged.
- SRTP 5y ago
  Yeah, great move to leave crypto in 2014! Whatever you need to tell yourself to sleep at night, buddy.
  - 243423443 5y ago
    It's sad to see comments like this on hn. I thought this place was supposed to have meaningful discussions.
  - BreakfastB0b 5y ago
    So I'm supposed to be sad about not participating in a pyramid scheme? You're literally making my case for me.
- pishpash 5y ago
  I am coming to believe a large contingent don't actually care about trustlessness. They care about the deflationary aspect because it's supposed to make them rich.
- meowface 5y ago
  I think the parent poster was being somewhat self-aware and tongue-in-cheek. They're not saying centralization is the ideal; just that it exists and works well.
- pinkybanana 5y ago
  It is not dumb. Custodians are useful, very useful actually. With Bitcoin you can use custodians, but you can also host your bitcoins yourself if you want. The opportunity to do latter is the most important and makes Bitcoin valuable. However majority people in majority of cases prefer to use custodians, and there is nothign wrong with that.

pinkybanana 5y ago

This. People just assume onchain txes and LN are the only way to scale. In practice centralized scaling via custodials has been there from the very early days.

gjulianm 5y ago

But then why use Bitcoin if you're going to use what is essentially a bank?

wereHamster 5y ago
Ease of access to and exchange with global marketplaces. I can transfer/trade directly from/to El Salvador without any bank being involved in that transaction.
- willeh 5y ago
  A bank by any other name is still a bank. Sure there is definitely a legal difference such as deposit insurance and access to their lender of last resort. For the customer however it doesn't matter they still need KYC, the cops can still see their transactions, they still have to ask where the money is from, they can still knock on your door and put your hands in handcuffs. Many of the advantages to people in El Salvador with BTC is avoiding extreme inflation in the national currency. However one does well to note that inflation woes in the Atlantic world actually correlated with a partial deflation of the Bitcoin bubble, so if you're in the EU/US bitcoin is an investment when money is cheap, not a hedge for your money becoming cheap.
  - el-salvador 5y ago
    Our currency is the USD since 2001. The SVC our former local currency has been pegged for 20+ years to the usd [1]. The SVC is no longer used day to day and is usually kept as a collectible item, it can still be exchanged at banks at 8.75 SVC per 1 USD. [1] https://www.xe.com/currencyconverter/convert/?Amount=1&From=SVC&To=USD https://www.xe.com/currencyconverter/convert/?Amount=1&From=...
- deleted 5y ago
  [deleted]
- gjulianm 5y ago
  If you need to keep your money on an exchange to be able to do transactions, you'll probably still need to go through a bank or exchange or the same thing by any other name.
echelon 5y ago
To make the bitcoin investors rich. Also to stick it to the man. Nevermind the unprecedented new level of randomware hacks.
grey-area 5y ago
Not just a bank but an unregulated bank tied to all sorts of shady currencies like USDC, Doge etc which has regular outages. That's also ignoring the wild volatility in the value of bitcoin. What could possibly go wrong!
willnz 5y ago
Once you have BTC you can choose to store it outside of a bank as a non-inflationary asset. No one can remove it from your wallet.
- ben_w 5y ago
  I can do that with gold. Gold is less volatile, and the value of the volume of a €2 coin in gold is 9 months of El Salvador nominal GDP per capita. Or the gold could be stored elsewhere and accessed via an app, with exactly the sort of database every bank already uses. Either way, BTC adds nothing. Apps might, depending on the banking infrastructure, but BTC itself? Nada.
  - el-salvador 5y ago
    This is a new unit of measure! Now I need to know my monthly salary in eurocent volume of gold.
    - ben_w 5y ago
      €0.01 coins have a volume of ~0.346ml, gold has a density of 19.3g/ml and a current price of 60.89 USD/g, so a eurocent-sized gold coin would be worth 407.02 USD :)
      - el-salvador 5y ago
        Thank you :) I'll look at those coins differently now.
- koheripbal 5y ago
  So the modern version of keeping gold under my mattress?
- gjulianm 5y ago
  Yeah, but you're still having to pass through Coinbase or any other exchange, and they can remove it from you there. That's the point, if Bitcoin needs an exchange to be functional you're losing all the differential features that Bitcoin has.
pochamago 5y ago
The only other legal tender in El Salvador is the US Dollar. If, for any reason, you have qualms about the US financial system, especially as someone foreign to the US with little priority in its decision making processes, it might be desirable to opt for a different currency. Is BTC the right currency for their government to bend to that purpose? I guess we'll find out.

onion2k 5y ago

Isn't that exactly what FreeTrade meant by "Salvadorians will end up forced to use proprietary payment networks denominated in BTC."? Coinbase might do it for free, but that doesn't mean the eventual winner will be free, nor does it mean that users couldn't be banned, or tracked, or forced to use 'supported' services, etc.

pinkybanana 5y ago
As long as BTC transfers between custodians are possible, that should be quite small problem. There might be winner in terms of liquidity and volume, but because anyone can quite easily fire up custodian service, there should be also plenty of competition.
- darkwater 5y ago
  So we have basically invented... banks, but with bitcoins?
  - deepserket 5y ago
    The full circle
  - tofukid 5y ago
    With Bitcoin, I don't have to keep my savings in the bank even if I choose to use a bank for other services. As someone whose had their bank account frozen before, this is of great value to me. I could use banks or Lightning like a checking account, while keeping the majority of my savings under my control.
    - darkwater 5y ago
      Yeah but you are most probably using a centralized exchange to execute BC transactions for free which might froze your account as well in the future because $REASON. Also thinking that in the long-run, in a future where BC is accepted almost universally this is not going to be heavily regulated by governments it's being naïve IMO.

BreakfastB0b 5y ago

This is the dumbest thing I've ever read. So you designed a system that sacrifices everything to achieve trustlessness, and then you immediately reintroduce a centralised trusted entity. You can't make this shit up. I'm so glad I left the crypto community in 2014, it's become completely deranged.

SRTP 5y ago
Yeah, great move to leave crypto in 2014! Whatever you need to tell yourself to sleep at night, buddy.
- 243423443 5y ago
  It's sad to see comments like this on hn. I thought this place was supposed to have meaningful discussions.
- BreakfastB0b 5y ago
  So I'm supposed to be sad about not participating in a pyramid scheme? You're literally making my case for me.
pishpash 5y ago
I am coming to believe a large contingent don't actually care about trustlessness. They care about the deflationary aspect because it's supposed to make them rich.
meowface 5y ago
I think the parent poster was being somewhat self-aware and tongue-in-cheek. They're not saying centralization is the ideal; just that it exists and works well.
pinkybanana 5y ago
It is not dumb. Custodians are useful, very useful actually. With Bitcoin you can use custodians, but you can also host your bitcoins yourself if you want. The opportunity to do latter is the most important and makes Bitcoin valuable. However majority people in majority of cases prefer to use custodians, and there is nothign wrong with that.