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It seems like many here don't get what I think they're doing: government buys 180 million USD worth of Bitcoin, stores it in their wallet, and creates an SQL da

It seems like many here don't get what I think they're doing: government buys 180 million USD worth of Bitcoin, stores it in their wallet, and creates an SQL database (well, with a bank as a wrapper) with 6 million entries with $30 (or whatever that is in BTC) each. The transactions can just be recorded in this SQL database, and the "reserve" would be untouched. If someone wants to exchange their BTC to USD or Euro, they can go to a money changer, their SQL database entry will be decreased, the money changer's SQL database entry will be incremented, and the total BTC in the reserve remains. Hmm, I think I just described the so-called Lightning Network, which means in the end you have to trust a central authority after all. (EDIT: After reading about LN, it seems this isn't how the Lightning Network works). They might as well make something like "El-Salvador-Coin" without needing dumb blockchain stuff.

amelius 5y ago
But what if someone wants to pay in BTC?
jl2718 5y ago
Interesting. So what they are actually building, is a Bitcoin reserve for a central digital currency, replacing USD, SDR, or gold reserves. The trick here is that it is a one-way accumulator. Bitcoin comes into the reserve but never leaves. The initial money may come from existing USD reserves, or it may be undercapitalized fiat Bitcoin. Every currency has a value theory. USD has military hegemony and financial market centralization. China has exports and foreign land holdings. CHF is backed by gold. The Euro is trying to become a regional 3rd world reserve through remittances. Labor-based currency has been tried, but, you probably don’t want to know about it.
- bellyfullofbac 5y ago
  TBH it's just my speculation, if I wanted to attach my implementation to the hype-train of crypto, that's how I would do it.
rocqua 5y ago
It would be interesting if this is indeed the case. With the government not giving salvadorians custodial wallets. That also explains the idea lower down this thread [1]. That stated this might be done so the government can print their own money. With the SQL database, that would be quite easy. With actual bitcoin wallets (or the lightning network) essentially not doable. [1] https://news.ycombinator.com/item?id=27628739 https://news.ycombinator.com/item?id=27628739 p.s. for people wondering what LN is, it is essentially: Pairs of people agree to split some locked up bitcoin a certain way. If they want to exchange bitcoin, they agree on a different split. If someone tries to cheat, Hashed Time-locked contracts (the crypt magic that makes this work) means you get to take all of the locked up bitcoin".
errantmind 5y ago
As you pointed out, this isn't how Lightning Network works. The fact this is being upvoted is useful information about the state of this site and people's knee-jerk reaction to anything cryptocurrency related (coming from someone who has been here a while)
- mujina93 5y ago
  Can you explain to me how something that is very unsatble in value can be useful as a currency? Assuming all other aspects are solved.
  - errantmind 5y ago
    The current volatility will decrease as adoption and everyday use increases. The primary value of cryptocurrency is there not being a central authority to inflate away its value (through bailouts or economic 'stimulus'). Smart contracts offer the same fundamental value: you know what you are getting into and no one authority can change the terms on you.

amelius 5y ago

But what if someone wants to pay in BTC?

jl2718 5y ago

Interesting. So what they are actually building, is a Bitcoin reserve for a central digital currency, replacing USD, SDR, or gold reserves. The trick here is that it is a one-way accumulator. Bitcoin comes into the reserve but never leaves. The initial money may come from existing USD reserves, or it may be undercapitalized fiat Bitcoin. Every currency has a value theory. USD has military hegemony and financial market centralization. China has exports and foreign land holdings. CHF is backed by gold. The Euro is trying to become a regional 3rd world reserve through remittances. Labor-based currency has been tried, but, you probably don’t want to know about it.

bellyfullofbac 5y ago
TBH it's just my speculation, if I wanted to attach my implementation to the hype-train of crypto, that's how I would do it.

rocqua 5y ago

It would be interesting if this is indeed the case. With the government not giving salvadorians custodial wallets. That also explains the idea lower down this thread [1]. That stated this might be done so the government can print their own money. With the SQL database, that would be quite easy. With actual bitcoin wallets (or the lightning network) essentially not doable. [1] https://news.ycombinator.com/item?id=27628739 https://news.ycombinator.com/item?id=27628739 p.s. for people wondering what LN is, it is essentially: Pairs of people agree to split some locked up bitcoin a certain way. If they want to exchange bitcoin, they agree on a different split. If someone tries to cheat, Hashed Time-locked contracts (the crypt magic that makes this work) means you get to take all of the locked up bitcoin".

errantmind 5y ago

As you pointed out, this isn't how Lightning Network works. The fact this is being upvoted is useful information about the state of this site and people's knee-jerk reaction to anything cryptocurrency related (coming from someone who has been here a while)

mujina93 5y ago
Can you explain to me how something that is very unsatble in value can be useful as a currency? Assuming all other aspects are solved.
- errantmind 5y ago
  The current volatility will decrease as adoption and everyday use increases. The primary value of cryptocurrency is there not being a central authority to inflate away its value (through bailouts or economic 'stimulus'). Smart contracts offer the same fundamental value: you know what you are getting into and no one authority can change the terms on you.