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I am salvadoran myself and I do not support the current president but I should say that the law passed by congress says that El Salvador will have it's own bitc

I am salvadoran myself and I do not support the current president but I should say that the law passed by congress says that El Salvador will have it's own bitcoin reserve and an exchange for bitcoin against USD (our current national currency), so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange.

Sebb767 5y ago
> so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange. For buying and selling Bitcoin, possibly. Transactions with Bitcoin will still have the usual transaction fees, as you still need to pay the miners verifying/realizing them.
- rawtxapp 5y ago
  They are using lightning network which allows almost instant and practically free Bitcoin payments.
  - blocked_again 5y ago
    Asking as a noob, isn't the whole point of transaction fees to prevent malicious actors from flooding the network with spam. How does lighting networks prevent that from happening and why can't one use a smiliar approach for the actual bitcoin blockchain?
    - rawtxapp 5y ago
      The blockchain settles the transaction and records the finality. Imagine a transaction as being a simple cryptographic signed message that sends 1 BTC to someone, you just broadcast it to the network and it gets recorded immediately. But if you expect to continue transacting with the same person, instead of broadcasting the transaction, you can hold on to it and keep iterating on top of it with new balances, each time signing the transaction so that your counterparty can always go to blockchain to claim their coins. There's obviously some mechanism to avoid broadcasting old state and making sure you actually have the funds, etc, but you can't flood the network, even if you tried, you'd only be flooding your immediate neighbor which still charges fees, but much smaller fees than the blockchain. There's also mechanism for connecting those channels, so you don't need to have a direct channel with someone you want to pay, you just need a path to them.
    - nepthar 5y ago
      High level answer: Lightning transactions happen off network and only "sync up" once in a while. In a lightning transaction, only the two individuals transacting know that it has happened. But in an on-chain transaction, that info is public.
      - eeegnu 5y ago
        What prevents someone from making the transaction on the lightning network, as well as the btc blockchain before the lightning network syncs up?
        random_kris 5y ago
        Other person node who would lose money if this happend can publish the original transaction that is construscted in a way that the attacker would lose all his funds. So attacker could potentially do this but if they get caught they get punished for losing everything and they get caught if the other side node is online when this happens. There are also watchtowers that can monitor the network for hacks like this
        drdeca 5y ago
        The coins are essentially allocated to being on the lightning network, and cannot be used on the blockchain until the two are synced up.
        madacol 5y ago
        To open a LN channel, both parties puts their funds in an address that can only be spent if both parties agree (both have to sign) But the way this swap happen trustlessly between onchain and LN channel funds it's complicated, I don't have it clear right now If you want to get an idea how later the balances updates happen trustlessly see my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184
    - scotty79 5y ago
      It's mostly to provide miners incentive to mine beyond periodically halved builtin reward for mining a block.
    - tiku 5y ago
      This is called sharding in Ethereum and Zilliqa I believe.
      - gruez 5y ago
        AFAIK it's different from sharding. The transactions aren't being recorded on a separate chain, they're kept between the two ends of the channel.
  - UncleMeat 5y ago
    Why would somebody who doesn't have a bank account be more capable of using a provider on the lightning network?
    - neither_color 5y ago
      This is a good question and I think the clues are in the way informal vendors in parts of Asia and Africa have already caught on to transacting through mobile. In remote parts of ES there aren’t any bank branches and villagers have to travel an hour or more by bus into town just to open an account, when they get back to their village that same lack of infrastructure means no POS or businesses accepting cards. Feature phones and smart phones, however, are ubiquitous and this gives an “official” way of doing this. This solution doesn’t have to be crypto at all, however. I’ve been to China where even food carts have QR codes printed on them for people to take wechat pay and ali pay.
      - el-salvador 5y ago
        Electronic transfers are common. But electronic payments like that are not so much. We have Bank QR codes and something simillar to M-Pesa, but its not that widespread because there is no one standard for QR payments or similar. That makes it less practical to use because both you and the vendor must use the same bank. (El Salvador is small and there are many finatial instituions.) Something like U.S. Zelle or Swedish Swish would help, but banks have not standardized yet. If WhatsApp started something like WeChat payments it would become a hit. Like they did in Brazil.
    - rawtxapp 5y ago
      You just need a phone, that's it. Banking requires all the infrastructure, etc.
      - fuj 5y ago
        Do you think the Salvadorians do not have a bank account because of the lack of banking infrastructure or because of the fees to use it or lack of funds to justify it?
  - whoisninja 5y ago
    correct, just search El Zonte or Bitcoin Beach, tons of videos on youtube on how they're using lightning network in fully circular economy since entire town has been unbanked it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community. I plan to visit later this year and have friends who work with Strike team etc. The future is looking optimistic!
  - ddtaylor 5y ago
    LN requires opening and closing channels, each of which have to be done as a regular Bitcoin transaction. The value proposition of LN is that repeated transactions with the same entity (or some subset of) can be done without high fees, but considering almost nobody is currently using LN that doesn't change things right now.
    - rawtxapp 5y ago
      Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.
      - paulgb 5y ago
        Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
        rawtxapp 5y ago
        If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
        throwaaskjdfh 5y ago
        > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
  - m3kw9 5y ago
    The problem here lies when the merchant want to derisk btc/USD by often converting it back to USD after a transaction. That causes a miner fee, there is a penalty in breaking the lighting channel.
    - rawtxapp 5y ago
      You can stay on lightning for exchanges, Bitfinex for example offers lightning deposits/withdrawals, El Salvador would too, considering they are using lightning right now.
ashtonkem 5y ago
Transaction fees come from the miners who will put your transaction in a block and mine it for you. Creating your own reserve changes nothing for this. Unless if you’re going to do a bunch of off chain stuff, which seems pointless.
- spmurrayzzz 5y ago
  Lightning network liquidity should actually help solve this. If you maintain a reserve and open a ton of payment channels for folks (those HTLCs are all on-chain), this drastically reduces impact of confirmation time and fees.
  - wokwokwok 5y ago
    Should? Is that a speculation? Surely if they’re not doing this for the first time ever on an entire country? Someone has already used a large scale lightning network before right?
    - brianobush 5y ago
      Six million is not a huge country. The current lighting network can handle millions of transactions per second.
      - lottin 5y ago
        Has it handled millions of transactions per second before? Last time I checked (2019) it was processing 5,000 transactions per month.
      - ashtonkem 5y ago
        That’s been the claim for a while, yes. But actually delivery of said promises has always been “soon”. And while six million isn’t a huge country comparatively, I personally would be mighty pissed off if my entire country was used as a massive financial experiment for crypto enthusiasts.
    - reedjosh 5y ago
Blikkentrekker 5y ago
> I am salvadoran myself and I do not support the current president but [ ... ] The word “but” implies some kind of contrast with what is to follow; there is none. Your support to lack thereof is orthogonal to the next point.
cowl 5y ago
But Bitcoin is so volatile. You deposit today let's say 10k of your USD and in one week if the market doesn't like the twits of the day you find yourself with half that.
- rawtxapp 5y ago
  That won't be the case forever, as the market cap gets larger and larger, the fluctuations get much smaller. I mean fiat currency and gold's value still fluctuate on a day to day basis, nothing is set in stone.
  - cowl 5y ago
    fiat currency does not drop 50% in one month and is not at the mercy of other countries. If US forbids all banks to execute trades in BTC like China did, BTC is dead.
    - dragonwriter 5y ago
      > fiat currency does not drop 50% in one month and is not at the mercy of other countries. Fiat currency not controlled by major economic powers has been know to do that (and there are a few cases for major powers, too, in conditions like just after losing major wars with other such powers.) Conversely, if you aren’t a major economic power, a fiat currency that is controlled by one is at the mercy of other countries. (And, even if you are a major power, your currency has some exposure to your relationships with othe countrieds, though “at the mercy of” may be too strong.) Not all fiat is “the USD from the perspective of the US”.
    - rawtxapp 5y ago
      USD doesn't fall by 50% in one month, but some smaller currencies do. Instead USD drops by ~95% over a 100 year period[1]. 1: https://www.statista.com/statistics/1032048/value-us-dollar-since-1640/ https://www.statista.com/statistics/1032048/value-us-dollar-...
foobiekr 5y ago
This seems ready made for government theft.
- ohmanjjj 5y ago
  Feature, not a bug
RIMR 5y ago
So you aren't using Bitcoin, the government is using Bitcoin as a backing for their own currency...

Sebb767 5y ago

> so there will NOT be a transaction fee involved as you are just moving within a national reserve with a national exchange. For buying and selling Bitcoin, possibly. Transactions with Bitcoin will still have the usual transaction fees, as you still need to pay the miners verifying/realizing them.

rawtxapp 5y ago
They are using lightning network which allows almost instant and practically free Bitcoin payments.
- blocked_again 5y ago
  Asking as a noob, isn't the whole point of transaction fees to prevent malicious actors from flooding the network with spam. How does lighting networks prevent that from happening and why can't one use a smiliar approach for the actual bitcoin blockchain?
  - rawtxapp 5y ago
    The blockchain settles the transaction and records the finality. Imagine a transaction as being a simple cryptographic signed message that sends 1 BTC to someone, you just broadcast it to the network and it gets recorded immediately. But if you expect to continue transacting with the same person, instead of broadcasting the transaction, you can hold on to it and keep iterating on top of it with new balances, each time signing the transaction so that your counterparty can always go to blockchain to claim their coins. There's obviously some mechanism to avoid broadcasting old state and making sure you actually have the funds, etc, but you can't flood the network, even if you tried, you'd only be flooding your immediate neighbor which still charges fees, but much smaller fees than the blockchain. There's also mechanism for connecting those channels, so you don't need to have a direct channel with someone you want to pay, you just need a path to them.
  - nepthar 5y ago
    High level answer: Lightning transactions happen off network and only "sync up" once in a while. In a lightning transaction, only the two individuals transacting know that it has happened. But in an on-chain transaction, that info is public.
    - eeegnu 5y ago
      What prevents someone from making the transaction on the lightning network, as well as the btc blockchain before the lightning network syncs up?
      - random_kris 5y ago
        Other person node who would lose money if this happend can publish the original transaction that is construscted in a way that the attacker would lose all his funds. So attacker could potentially do this but if they get caught they get punished for losing everything and they get caught if the other side node is online when this happens. There are also watchtowers that can monitor the network for hacks like this
      - drdeca 5y ago
        The coins are essentially allocated to being on the lightning network, and cannot be used on the blockchain until the two are synced up.
      - madacol 5y ago
        To open a LN channel, both parties puts their funds in an address that can only be spent if both parties agree (both have to sign) But the way this swap happen trustlessly between onchain and LN channel funds it's complicated, I don't have it clear right now If you want to get an idea how later the balances updates happen trustlessly see my other comment https://news.ycombinator.com/item?id=27451184 https://news.ycombinator.com/item?id=27451184
  - scotty79 5y ago
    It's mostly to provide miners incentive to mine beyond periodically halved builtin reward for mining a block.
  - tiku 5y ago
    This is called sharding in Ethereum and Zilliqa I believe.
    - gruez 5y ago
      AFAIK it's different from sharding. The transactions aren't being recorded on a separate chain, they're kept between the two ends of the channel.
- UncleMeat 5y ago
  Why would somebody who doesn't have a bank account be more capable of using a provider on the lightning network?
  - neither_color 5y ago
    This is a good question and I think the clues are in the way informal vendors in parts of Asia and Africa have already caught on to transacting through mobile. In remote parts of ES there aren’t any bank branches and villagers have to travel an hour or more by bus into town just to open an account, when they get back to their village that same lack of infrastructure means no POS or businesses accepting cards. Feature phones and smart phones, however, are ubiquitous and this gives an “official” way of doing this. This solution doesn’t have to be crypto at all, however. I’ve been to China where even food carts have QR codes printed on them for people to take wechat pay and ali pay.
    - el-salvador 5y ago
      Electronic transfers are common. But electronic payments like that are not so much. We have Bank QR codes and something simillar to M-Pesa, but its not that widespread because there is no one standard for QR payments or similar. That makes it less practical to use because both you and the vendor must use the same bank. (El Salvador is small and there are many finatial instituions.) Something like U.S. Zelle or Swedish Swish would help, but banks have not standardized yet. If WhatsApp started something like WeChat payments it would become a hit. Like they did in Brazil.
  - rawtxapp 5y ago
    You just need a phone, that's it. Banking requires all the infrastructure, etc.
    - fuj 5y ago
      Do you think the Salvadorians do not have a bank account because of the lack of banking infrastructure or because of the fees to use it or lack of funds to justify it?
- whoisninja 5y ago
  correct, just search El Zonte or Bitcoin Beach, tons of videos on youtube on how they're using lightning network in fully circular economy since entire town has been unbanked it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community. I plan to visit later this year and have friends who work with Strike team etc. The future is looking optimistic!
- ddtaylor 5y ago
  LN requires opening and closing channels, each of which have to be done as a regular Bitcoin transaction. The value proposition of LN is that repeated transactions with the same entity (or some subset of) can be done without high fees, but considering almost nobody is currently using LN that doesn't change things right now.
  - rawtxapp 5y ago
    Channel factories will bundle channel open/closes into a single transaction significantly reducing the burden on the blockchain. LN adoption is growing very nicely (1ml.com), there are lots of wallets and users now.
    - paulgb 5y ago
      Is it possible to calculate the transaction volume in BTC over the lightning network, or is the ledger non-public in the same way that Bitcoin's is? If I understood the Satoshi paper right, after the block reward is exhausted the network's security depends on transaction fees being high enough to sustain a strong level of security. If Lightning brings transaction fees down, is that not a threat to the security of the network as the block reward becomes smaller?
      - rawtxapp 5y ago
        If you run a node on lightning, you would know how much transactions you've forwarded, so you can make estimates, especially if you run a large node (say Bitfinex that runs their own nodes), but lightning isn't public the same way blockchain is. The 1MB block limit makes it highly likely that there will be transactions in the mempool, you still need to open/close channels (even batched ones) and presumably large transfers for cold storage still happen on the blockchain, but then again it's very difficult to say what happens in year ~2140, we'll all be long gone by then.
        throwaaskjdfh 5y ago
        > [I]t's very difficult to say what happens in year ~2140, we'll all be long gone by then I think it's more likely that at least one young person reading this news today will live to ~130 than Bitcoin making it that long.
- m3kw9 5y ago
  The problem here lies when the merchant want to derisk btc/USD by often converting it back to USD after a transaction. That causes a miner fee, there is a penalty in breaking the lighting channel.
  - rawtxapp 5y ago
    You can stay on lightning for exchanges, Bitfinex for example offers lightning deposits/withdrawals, El Salvador would too, considering they are using lightning right now.

ashtonkem 5y ago

Transaction fees come from the miners who will put your transaction in a block and mine it for you. Creating your own reserve changes nothing for this. Unless if you’re going to do a bunch of off chain stuff, which seems pointless.

spmurrayzzz 5y ago
Lightning network liquidity should actually help solve this. If you maintain a reserve and open a ton of payment channels for folks (those HTLCs are all on-chain), this drastically reduces impact of confirmation time and fees.
- wokwokwok 5y ago
  Should? Is that a speculation? Surely if they’re not doing this for the first time ever on an entire country? Someone has already used a large scale lightning network before right?
  - brianobush 5y ago
    Six million is not a huge country. The current lighting network can handle millions of transactions per second.
    - lottin 5y ago
      Has it handled millions of transactions per second before? Last time I checked (2019) it was processing 5,000 transactions per month.
    - ashtonkem 5y ago
      That’s been the claim for a while, yes. But actually delivery of said promises has always been “soon”. And while six million isn’t a huge country comparatively, I personally would be mighty pissed off if my entire country was used as a massive financial experiment for crypto enthusiasts.
  - reedjosh 5y ago

Blikkentrekker 5y ago

> I am salvadoran myself and I do not support the current president but [ ... ] The word “but” implies some kind of contrast with what is to follow; there is none. Your support to lack thereof is orthogonal to the next point.

cowl 5y ago

But Bitcoin is so volatile. You deposit today let's say 10k of your USD and in one week if the market doesn't like the twits of the day you find yourself with half that.

rawtxapp 5y ago
That won't be the case forever, as the market cap gets larger and larger, the fluctuations get much smaller. I mean fiat currency and gold's value still fluctuate on a day to day basis, nothing is set in stone.
- cowl 5y ago
  fiat currency does not drop 50% in one month and is not at the mercy of other countries. If US forbids all banks to execute trades in BTC like China did, BTC is dead.
  - dragonwriter 5y ago
    > fiat currency does not drop 50% in one month and is not at the mercy of other countries. Fiat currency not controlled by major economic powers has been know to do that (and there are a few cases for major powers, too, in conditions like just after losing major wars with other such powers.) Conversely, if you aren’t a major economic power, a fiat currency that is controlled by one is at the mercy of other countries. (And, even if you are a major power, your currency has some exposure to your relationships with othe countrieds, though “at the mercy of” may be too strong.) Not all fiat is “the USD from the perspective of the US”.
  - rawtxapp 5y ago
    USD doesn't fall by 50% in one month, but some smaller currencies do. Instead USD drops by ~95% over a 100 year period[1]. 1: https://www.statista.com/statistics/1032048/value-us-dollar-since-1640/ https://www.statista.com/statistics/1032048/value-us-dollar-...

foobiekr 5y ago

This seems ready made for government theft.

ohmanjjj 5y ago
Feature, not a bug

RIMR 5y ago

So you aren't using Bitcoin, the government is using Bitcoin as a backing for their own currency...