11 ms·

Amazingly shortsighted. The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dol

Amazingly shortsighted. The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars, which they can use to buy trade items and export the profits. The number one export of El Salvador is actually people. If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from OCGs and Western Union / Money Gram etc. El Salvador is set to be a big climate change loser, and every joule spent on bitcoin is bringing them closer to disaster. "El Salvador has seen a steady increase in extreme events (storms, floods and droughts) during the last 30 years. The Pacific coastline is already experiencing rising sea levels and it is expected that 10–28 percent of the country’s coastal zone territory will be lost by the end of the century. Coastal areas, home to over 30 percent of the population, are highly vulnerable to the combination of sea level rise and El Niño events." https://www.climatelinks.org/resources/climate-risk-profile-el-salvador https://www.climatelinks.org/resources/climate-risk-profile-... Coastal flooding risk is significant due to loss of mangroves. https://thinkhazard.org/en/report/75-el-salvador/CF https://thinkhazard.org/en/report/75-el-salvador/CF

annoyingnoob 5y ago
My take is that El Salvador may actually want the flow of money laundering through their banking system. And it gives them an opportunity to seize some of it. The idea of increased remittances is interesting but the logistics of doing that on the ground might be challenging for the unbanked.
kspacewalk2 5y ago
El Salvador has (and will have) negligible impact on both generation of and popularity of cryptocurrency, so I don't think that argument is very important given the far more pressing matters they have to deal with as a country, and ones they have control over. The point about opening up a bank is interesting though. The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP. There's gotta be a less pie-in-the-sky way to disrupt that without making El Salvador a money laundering haven, which will absolutely happen with this idea.
- mumblemumble 5y ago
  > The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP. 20% of El Salvador's GDP is remittances, and WU takes a 5-10% cut. I don't know how much of that business WU controls, so let's pick a range out of a hat: 75%. That would imply that WU fees represent something in the neighborhood of 1% of the country's total GDP.
- el-salvador 5y ago
  I've just checked, remittances to El Salvador account for 20% of the GDP. https://www.theglobaleconomy.com/rankings/remittances_percent_gdp/ https://www.theglobaleconomy.com/rankings/remittances_percen...
pinkybanana 5y ago
> If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from OCGs and Western Union / Money Gram etc. Can you elaborate? With remittance there is people with physical cash in tens of different local currencies and countries, and they need to transfer that value to some other (obscure) country. I don't see any scenario how "just set up a bank in the US" is going anywhere near in fixing that problem.
- angry_octet 5y ago
  Most of the money is coming from El Salvadorians in the US, and as El Salvador uses the US Dollar as currency, that would be fairly straightforward. Even from, e.g. Mexican pesos, it would be simple because the USD is the destination currency. It would be a different proposition if we were talking about, e.g., Indians.
carlosdp 5y ago
There was a quote recently from a high ranking former FBI agent that worked on money laundering where she said she wasn't really concerned about crypto making money laundering worse (trying to find the article again). Her reasoning was: "what people need to understand is, 95% of money laundering with fiat currency already succeeds today without getting caught." In other words, this won't really change much, it was already really hard to catch money laundering.
- agumonkey 5y ago
  interesting(ly sad) percentage .. I wonder how come nothing impedes their laundering that said I wonder if having another path won't make them even more hungry.. i'm sure criminals are very creative when it comes to making more money
  - carlosdp 5y ago
    Money laundering doesn't really make money, it just legitimize it in the financial system.
    - agumonkey 5y ago
      it's the way criminal groups live, without laundering they can't use what they got, so more laundering equates potentially more activity for them
- rllearneratwork 5y ago
  of course crypto would not help criminal money laundering. Bitcoin and Etherium are very traceable by design. In fact, it is often much, much easier to trace to origin of Bitcoin funds than the origin of USD funds, especially when cash was involved. There are "private" coins like Monero but they aren't getting much traction.
  - carlosdp 5y ago
    Monero is pretty popular in Venezuela right now.
kragen 5y ago
Remittances are one of the best use cases for bitcoin; my comment at https://news.ycombinator.com/item?id=27448744 https://news.ycombinator.com/item?id=27448744 goes into more details. Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.
- UncleMeat 5y ago
  > fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable This is incoherent. Nothing ties these prices together. If tomorrow the price of BTC goes up 1000x, the price to buy a joule of energy via burning coal doesn't change at all.
  - kragen 5y ago
    The ratio of joules of energy to bitcoin mined isn't fixed; it's varied to keep the rate of bitcoin mining constant, although not from one day to the next. If the price of bitcoin goes up 20% in the next two weeks, then bitcoin mines that would have been running at a 10% loss start running at a 10% profit instead, which increases the hash rate and then the difficulty. This increases the amount of energy (and hardware investment) needed to mine bitcoin, which reduces the miners' profits, but disproportionately the profits of fossil-fuel-driven miners. It's true that rapid price changes can make fossil-fueled mining temporarily profitable, and things like burning off flare gas are also profitable, but bitcoin mining is already dominated by renewables and becoming progressively more so: https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall... I'm sorry I abbreviated this whole explanation so much in my original post that you ended up so confused.
    - UncleMeat 5y ago
      But that's true for renewable energy too. Nothing about the two energy sources are different. Either energy prices are decoupled from mining rewards, in which case reduced prices of either fossil fuels or renewables (or increased price of BTC) means more profit for miners or energy prices are coupled to mining rewards, in which case changing prices of fossil fuels or renewables means nothing to miners. Please tell me why mining does not incentivize cheaper fossil fuel energy technology in the same way it supposedly incentivizes cheaper renewable energy technology. > that you ended up so confused I am not confused. I've heard this argument 1000 times. It is bogus.
rsync 5y ago
"The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars ..." This bitcoin to dollars confluence is even more interesting in the case of El Salvador where the US Dollar is the official currency. When you are in El Salvador you use actual, physical US Dollars for all cash transactions. This is not a de facto standard as in some other countries - it is the official legal currency in the country. So that's interesting in terms of geography, currency usage and the ability to wash bitcoins into (physical) dollars...
- el-salvador 5y ago
  > When you are in El Salvador you use actual, physical US Dollars for all cash transactions. This is not a de facto standard as in some other countries - it is the official legal currency in the country. El Salvador has very strict cash regulations. Most transactions over $100 in cash require an ID. Even paying for a new laptop in cash would require you to fill a form stating source of income.
  - lukifer 5y ago
    I’d be curious to know if similar regulations will exist for BTC.
627467 5y ago
El Salvador doesn't need to establish mining operation to leverage this new legal tender, anymore than Ecuador (or others) have to print USD for their own economies. countries that use large quantities of dollars do need to regularly import/export USD notes though
birthday 5y ago
Let's take drug money as an example - the solution here is to legalize and control substances, not criminalize them and then ban something totally unrelated (blockchain technology). This is patching a symptom rather than fixing the root cause which never works out. And most importantly, withholding blockchain technology is not a solution to money laundering - it is happening already with legacy systems. Fixing money laundering is not the priority here - we can look at fixing this later in our journey.
vmception 5y ago
An empty bitcoin block and a full bitcoin block use the same amount of energy Use and El Salvador’s use has no influence on that The hyperbole only marginalizes yourself
- Dzugaru 5y ago
  This argument is deeply flawed for an obvious reason. E.g. why do you vote if your vote is only one of a hundred million?
  - vmception 5y ago
    It wasn’t an argument I said how it works
    - Dzugaru 5y ago
      Except that's not how it works. This adoption has a massive impact on acceptance of Bitcoin. If we assume Bitcoin is a mistake for humanity - this clearly is a great wrongdoing. A smaller wrongdoing would be buying Bitcoin, holding Bitcoin or making positive comments about Bitcoin on HN. Sadly, all these are economically justified (for now).
      - sabhiram 5y ago
        Isn't it pretty awesome that as a bunch of environmental activists, we are ok with golf greens and almond exports? Ok with tankers which spill oil by the lake-full and intense deforestation? But when it comes to proof of work crypto - suddenly it's a veil of FUD? How can you find fault with someone trying to make more money? This is capitalism at work. Not saying the energy argument for crypto is moot, but it is certainly blown way the heck out of proportion. Let's regulate lithium mining while we are at it, no? Economic advantage is a like gas in a vacuum, it will spread everywhere it can, until it cannot.
        rspeele 5y ago
ar_lan 5y ago
This weird meme that Bitcoin is so beneficial to criminal activity (especially in comparison with physical cash)... I don't know where it started, but I wish its completely bad-faith nature would die. Sure, the Silk Road started, but the feds have wised up on how to trace Bitcoin since then - it's fairly straight-forward given the public-nature of the blockchain.
- Dzugaru 5y ago
  You must be joking? There is a trivial way to hide the traces by using mixers. Why do you think ransomware and black markets today exclusively run crypto not fiat?
  - sadfasf122 5y ago
    Most criminals use cash. USD to be exact.
    - fbernier 5y ago
      Because unlike cryptocurrencies it has an actual value as a currency.
      - fredfoobar 5y ago
        What do you mean "actual value" where is that value coming from?
        bankisan 5y ago
        I can walk down the street and buy a coffee with it.
        fredfoobar 5y ago
        We can do this soon in El Salvador (and some pockets in the US too). The thing is, this is a strange argument, you want a sudden world wide adoption, like, tomorrow every biz owner wakes up and decides to accept bitcoin, so that you can buy your coffee at your local starbucks, have you thought through this? how does the total adoption happen what steps should happen before.
kerng 5y ago
Using Bitcoin for money laundering and crime is probably one of the worse ideas... I mean an open public ledger that tracks everything - makes job of FBI easier as skills improve.
fatsdomino001 5y ago
Not gonna lie, all this makes me want to move to El Salvador now. Strongly considering incorporating my SaaS there now but have to look further into it, but interest is definitely piqued.
joshmarlow 5y ago
> The primary beneficiaries of this will be organized crime Michael Morell, a former acting director of the CIA, has some things to say about the use of BTC in crime: > Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool. Source: https://casebitcoin.com/story/former-cia-director-finds-bitcoins-use-in-illicit-finance-to-b https://casebitcoin.com/story/former-cia-director-finds-bitc... There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive, by only mining when renewables are producing excess power. That lessens the problem of renewables creating excess energy (which can be damaging to power grids). I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them.
- nmz 5y ago
  > There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive If this is true then the goal is to create a mining algorithm that focuses on being as wasteful as possible. > by only mining when renewables are producing excess power. This is simply not true. There is no such thing as excess power, whatever is not used should be stored or sold to other countries. > (which can be damaging to power grids). Excess energy production has always been a thing and there are mitigation efforts in place much better than "lets put a server farm that wastes energy" > I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them. The problem here is El Salvador is basically burning its clothes to keep itself warm. any cryptocoin would've been a better solution. hell even dogecoin would've been a better choice. This is where we are all headed. https://www.rt.com/business/524923-iran-bans-crypto-mining-sunner/ https://www.rt.com/business/524923-iran-bans-crypto-mining-s...

annoyingnoob 5y ago

My take is that El Salvador may actually want the flow of money laundering through their banking system. And it gives them an opportunity to seize some of it. The idea of increased remittances is interesting but the logistics of doing that on the ground might be challenging for the unbanked.

kspacewalk2 5y ago

El Salvador has (and will have) negligible impact on both generation of and popularity of cryptocurrency, so I don't think that argument is very important given the far more pressing matters they have to deal with as a country, and ones they have control over. The point about opening up a bank is interesting though. The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP. There's gotta be a less pie-in-the-sky way to disrupt that without making El Salvador a money laundering haven, which will absolutely happen with this idea.

mumblemumble 5y ago
> The amount of money WU is skimming off the top must be a non-negligible percentage of the country's GDP. 20% of El Salvador's GDP is remittances, and WU takes a 5-10% cut. I don't know how much of that business WU controls, so let's pick a range out of a hat: 75%. That would imply that WU fees represent something in the neighborhood of 1% of the country's total GDP.
el-salvador 5y ago
I've just checked, remittances to El Salvador account for 20% of the GDP. https://www.theglobaleconomy.com/rankings/remittances_percent_gdp/ https://www.theglobaleconomy.com/rankings/remittances_percen...

pinkybanana 5y ago

> If they were concerned about remittance fees they could just set up a bank in the US with low fees, instead of getting kickbacks from OCGs and Western Union / Money Gram etc. Can you elaborate? With remittance there is people with physical cash in tens of different local currencies and countries, and they need to transfer that value to some other (obscure) country. I don't see any scenario how "just set up a bank in the US" is going anywhere near in fixing that problem.

angry_octet 5y ago
Most of the money is coming from El Salvadorians in the US, and as El Salvador uses the US Dollar as currency, that would be fairly straightforward. Even from, e.g. Mexican pesos, it would be simple because the USD is the destination currency. It would be a different proposition if we were talking about, e.g., Indians.

carlosdp 5y ago

There was a quote recently from a high ranking former FBI agent that worked on money laundering where she said she wasn't really concerned about crypto making money laundering worse (trying to find the article again). Her reasoning was: "what people need to understand is, 95% of money laundering with fiat currency already succeeds today without getting caught." In other words, this won't really change much, it was already really hard to catch money laundering.

agumonkey 5y ago
interesting(ly sad) percentage .. I wonder how come nothing impedes their laundering that said I wonder if having another path won't make them even more hungry.. i'm sure criminals are very creative when it comes to making more money
- carlosdp 5y ago
  Money laundering doesn't really make money, it just legitimize it in the financial system.
  - agumonkey 5y ago
    it's the way criminal groups live, without laundering they can't use what they got, so more laundering equates potentially more activity for them
rllearneratwork 5y ago
of course crypto would not help criminal money laundering. Bitcoin and Etherium are very traceable by design. In fact, it is often much, much easier to trace to origin of Bitcoin funds than the origin of USD funds, especially when cash was involved. There are "private" coins like Monero but they aren't getting much traction.
- carlosdp 5y ago
  Monero is pretty popular in Venezuela right now.

kragen 5y ago

Remittances are one of the best use cases for bitcoin; my comment at https://news.ycombinator.com/item?id=27448744 https://news.ycombinator.com/item?id=27448744 goes into more details. Bitcoin mining is mostly a subsidy to renewable energy (fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable), so although I could be wrong, I expect it to ameliorate global warming, not worsen it.

UncleMeat 5y ago
> fossil fuels are too expensive to make fossil-fueled bitcoin mining profitable This is incoherent. Nothing ties these prices together. If tomorrow the price of BTC goes up 1000x, the price to buy a joule of energy via burning coal doesn't change at all.
- kragen 5y ago
  The ratio of joules of energy to bitcoin mined isn't fixed; it's varied to keep the rate of bitcoin mining constant, although not from one day to the next. If the price of bitcoin goes up 20% in the next two weeks, then bitcoin mines that would have been running at a 10% loss start running at a 10% profit instead, which increases the hash rate and then the difficulty. This increases the amount of energy (and hardware investment) needed to mine bitcoin, which reduces the miners' profits, but disproportionately the profits of fossil-fuel-driven miners. It's true that rapid price changes can make fossil-fueled mining temporarily profitable, and things like burning off flare gas are also profitable, but bitcoin mining is already dominated by renewables and becoming progressively more so: https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall... I'm sorry I abbreviated this whole explanation so much in my original post that you ended up so confused.
  - UncleMeat 5y ago
    But that's true for renewable energy too. Nothing about the two energy sources are different. Either energy prices are decoupled from mining rewards, in which case reduced prices of either fossil fuels or renewables (or increased price of BTC) means more profit for miners or energy prices are coupled to mining rewards, in which case changing prices of fossil fuels or renewables means nothing to miners. Please tell me why mining does not incentivize cheaper fossil fuel energy technology in the same way it supposedly incentivizes cheaper renewable energy technology. > that you ended up so confused I am not confused. I've heard this argument 1000 times. It is bogus.

rsync 5y ago

"The primary beneficiaries of this will be organised crime, who will now be able to wash the Bitcoin via El Salvador to convert it to dollars ..." This bitcoin to dollars confluence is even more interesting in the case of El Salvador where the US Dollar is the official currency. When you are in El Salvador you use actual, physical US Dollars for all cash transactions. This is not a de facto standard as in some other countries - it is the official legal currency in the country. So that's interesting in terms of geography, currency usage and the ability to wash bitcoins into (physical) dollars...

el-salvador 5y ago
> When you are in El Salvador you use actual, physical US Dollars for all cash transactions. This is not a de facto standard as in some other countries - it is the official legal currency in the country. El Salvador has very strict cash regulations. Most transactions over $100 in cash require an ID. Even paying for a new laptop in cash would require you to fill a form stating source of income.
- lukifer 5y ago
  I’d be curious to know if similar regulations will exist for BTC.

627467 5y ago

El Salvador doesn't need to establish mining operation to leverage this new legal tender, anymore than Ecuador (or others) have to print USD for their own economies. countries that use large quantities of dollars do need to regularly import/export USD notes though

birthday 5y ago

Let's take drug money as an example - the solution here is to legalize and control substances, not criminalize them and then ban something totally unrelated (blockchain technology). This is patching a symptom rather than fixing the root cause which never works out. And most importantly, withholding blockchain technology is not a solution to money laundering - it is happening already with legacy systems. Fixing money laundering is not the priority here - we can look at fixing this later in our journey.

vmception 5y ago

An empty bitcoin block and a full bitcoin block use the same amount of energy Use and El Salvador’s use has no influence on that The hyperbole only marginalizes yourself

Dzugaru 5y ago
This argument is deeply flawed for an obvious reason. E.g. why do you vote if your vote is only one of a hundred million?
- vmception 5y ago
  It wasn’t an argument I said how it works
  - Dzugaru 5y ago
    Except that's not how it works. This adoption has a massive impact on acceptance of Bitcoin. If we assume Bitcoin is a mistake for humanity - this clearly is a great wrongdoing. A smaller wrongdoing would be buying Bitcoin, holding Bitcoin or making positive comments about Bitcoin on HN. Sadly, all these are economically justified (for now).
    - sabhiram 5y ago
      Isn't it pretty awesome that as a bunch of environmental activists, we are ok with golf greens and almond exports? Ok with tankers which spill oil by the lake-full and intense deforestation? But when it comes to proof of work crypto - suddenly it's a veil of FUD? How can you find fault with someone trying to make more money? This is capitalism at work. Not saying the energy argument for crypto is moot, but it is certainly blown way the heck out of proportion. Let's regulate lithium mining while we are at it, no? Economic advantage is a like gas in a vacuum, it will spread everywhere it can, until it cannot.
      - rspeele 5y ago

ar_lan 5y ago

This weird meme that Bitcoin is so beneficial to criminal activity (especially in comparison with physical cash)... I don't know where it started, but I wish its completely bad-faith nature would die. Sure, the Silk Road started, but the feds have wised up on how to trace Bitcoin since then - it's fairly straight-forward given the public-nature of the blockchain.

Dzugaru 5y ago
You must be joking? There is a trivial way to hide the traces by using mixers. Why do you think ransomware and black markets today exclusively run crypto not fiat?
- sadfasf122 5y ago
  Most criminals use cash. USD to be exact.
  - fbernier 5y ago
    Because unlike cryptocurrencies it has an actual value as a currency.
    - fredfoobar 5y ago
      What do you mean "actual value" where is that value coming from?
      - bankisan 5y ago
        I can walk down the street and buy a coffee with it.
        fredfoobar 5y ago
        We can do this soon in El Salvador (and some pockets in the US too). The thing is, this is a strange argument, you want a sudden world wide adoption, like, tomorrow every biz owner wakes up and decides to accept bitcoin, so that you can buy your coffee at your local starbucks, have you thought through this? how does the total adoption happen what steps should happen before.

kerng 5y ago

Using Bitcoin for money laundering and crime is probably one of the worse ideas... I mean an open public ledger that tracks everything - makes job of FBI easier as skills improve.

fatsdomino001 5y ago

Not gonna lie, all this makes me want to move to El Salvador now. Strongly considering incorporating my SaaS there now but have to look further into it, but interest is definitely piqued.

joshmarlow 5y ago

> The primary beneficiaries of this will be organized crime Michael Morell, a former acting director of the CIA, has some things to say about the use of BTC in crime: > Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool. Source: https://casebitcoin.com/story/former-cia-director-finds-bitcoins-use-in-illicit-finance-to-b https://casebitcoin.com/story/former-cia-director-finds-bitc... There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive, by only mining when renewables are producing excess power. That lessens the problem of renewables creating excess energy (which can be damaging to power grids). I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them.

nmz 5y ago
> There's also a strong (IMO) argument that energy-intensive crypto-mining can make renewable energy more competitive If this is true then the goal is to create a mining algorithm that focuses on being as wasteful as possible. > by only mining when renewables are producing excess power. This is simply not true. There is no such thing as excess power, whatever is not used should be stored or sold to other countries. > (which can be damaging to power grids). Excess energy production has always been a thing and there are mitigation efforts in place much better than "lets put a server farm that wastes energy" > I'm not trying to downplay El Salvador's vulnerability to climate change. But actual solutions to climate change - or even just mitigating its effects - is going to require considerable capital and other resources. If using BTC gives El Salvador an economic advantage, then more power to them. The problem here is El Salvador is basically burning its clothes to keep itself warm. any cryptocoin would've been a better solution. hell even dogecoin would've been a better choice. This is where we are all headed. https://www.rt.com/business/524923-iran-bans-crypto-mining-sunner/ https://www.rt.com/business/524923-iran-bans-crypto-mining-s...