5 ms·

I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors

I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP. The developed world is responsible for climate change, so I guess the poorest have their right to use their money how they want and not in the way some banks or you consider it. The impact of the lightning network on energy consumption is even neglible...

fennecfoxen 5y ago
> I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP. The fees are high because the costs are high. Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls. If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.
- exdsq 5y ago
  And all the other fees taken along the way too https://www.moneyandbanking.com/commentary/2018/2/18/the-stubbornly-high-cost-of-remittances https://www.moneyandbanking.com/commentary/2018/2/18/the-stu...
- tehjoker 5y ago
  El Salvador was the site of Ronald Regan's financing of death squads in the 1980s. The cost of preventing these crimes and terrorism pales in comparison to the official terrorism that was perpetrated on that country. I'm not sure if there's a direct tie to Iran-Contra, but in Nicaragua Regan directly contravened a congressional funding ban and used Iranian and CIA drug money to fund the death squads there. Similar funding sources were probably at play in El Salvador.
- el-salvador 5y ago
  > If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose Major banks in El Salvador accept cheques from US banks, sometimes of them without any fees or very low fees. Main disadvantage is that it is slow. I haven't seen this used as a mainstream remmitance channel though. But an Salvadoran American relative could give their family a checkbook and they could deposit it here. This is for cheques though. Different from Panama and Mexico whose ACH systems are connected with the US Fed ACH system in a way El Salvador isn't.
- topranks 5y ago
  The fees are inflated because the block size is artificially limited. The mining reward is likely still enough to incentivize miners without any significant fee market, and difficulty adjustment is part of the protocol anyway.
oh_sigh 5y ago
In most cases, economic transactions are beneficial for both parties. Yes, banks are "earning money with the poorest", but only because banks and literally every business engage in activities which (ideally) earn them money. Right now, the poor have a choice of using a banks service, or to not use it. The bank could, I guess, not offer services to the poor, but that seems like you're removing choices from the poor, not protecting them. They don't hunt down poor people and make them use their services. Yes, the poor and rich alike have the right to use their money how they see fit. But I'm curious - if I have a pile of $20 bills here in Florida, how exactly do I 'use it how I want' by letting my grandmom in El Salvador buy food at the local grocer?
- la_fayette 5y ago
  The homo economicus would search for the cheapest way to do so, thats why they start to use bitcoin and tranfer it to tjeir grandmom...
  - oh_sigh 5y ago
    Sure, but when a more cost effective technology comes along, it doesn't mean that it indicates that the old way was a rip off or exploitative, especially when the newer method lacks numerous requirements the government put in place for the old method.
JumpCrisscross 5y ago
> fees for remitance make up for a large portion of the el salvadors GDP Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee. [1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitcoin-Blunder-Final.pdf https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...

fennecfoxen 5y ago

> I think awful is how the banks of the developed world are earning money with the poorest. The fees for remitance make up for a large portion of the el salvadors GDP. The fees are high because the costs are high. Existing remittance channels are shackled by anti-money-laundering, anti-organized-crime, anti-terrorism, know-your-customer compliance costs (typically enforced by the governments of multiple jurisdictions leaning on the money transfer operator's banking partners, who tend to be skittish about these things as a result). The world average of a ~$14 fee on a $200 remittance is easily in line with these costs; any crypto-remittance system which offers lower fees is only able to do so because it bypasses these controls. If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose.

exdsq 5y ago
And all the other fees taken along the way too https://www.moneyandbanking.com/commentary/2018/2/18/the-stubbornly-high-cost-of-remittances https://www.moneyandbanking.com/commentary/2018/2/18/the-stu...
tehjoker 5y ago
El Salvador was the site of Ronald Regan's financing of death squads in the 1980s. The cost of preventing these crimes and terrorism pales in comparison to the official terrorism that was perpetrated on that country. I'm not sure if there's a direct tie to Iran-Contra, but in Nicaragua Regan directly contravened a congressional funding ban and used Iranian and CIA drug money to fund the death squads there. Similar funding sources were probably at play in El Salvador.
el-salvador 5y ago
> If you wanted to reform this in the existing world banking system, you'd need the US and El Salvador government to work with each other to some treaty which streamlines these channels; this would lower costs either directly or when competition arose Major banks in El Salvador accept cheques from US banks, sometimes of them without any fees or very low fees. Main disadvantage is that it is slow. I haven't seen this used as a mainstream remmitance channel though. But an Salvadoran American relative could give their family a checkbook and they could deposit it here. This is for cheques though. Different from Panama and Mexico whose ACH systems are connected with the US Fed ACH system in a way El Salvador isn't.
topranks 5y ago
The fees are inflated because the block size is artificially limited. The mining reward is likely still enough to incentivize miners without any significant fee market, and difficulty adjustment is part of the protocol anyway.

oh_sigh 5y ago

In most cases, economic transactions are beneficial for both parties. Yes, banks are "earning money with the poorest", but only because banks and literally every business engage in activities which (ideally) earn them money. Right now, the poor have a choice of using a banks service, or to not use it. The bank could, I guess, not offer services to the poor, but that seems like you're removing choices from the poor, not protecting them. They don't hunt down poor people and make them use their services. Yes, the poor and rich alike have the right to use their money how they see fit. But I'm curious - if I have a pile of $20 bills here in Florida, how exactly do I 'use it how I want' by letting my grandmom in El Salvador buy food at the local grocer?

la_fayette 5y ago
The homo economicus would search for the cheapest way to do so, thats why they start to use bitcoin and tranfer it to tjeir grandmom...
- oh_sigh 5y ago
  Sure, but when a more cost effective technology comes along, it doesn't mean that it indicates that the old way was a rip off or exploitative, especially when the newer method lacks numerous requirements the government put in place for the old method.

JumpCrisscross 5y ago

> fees for remitance make up for a large portion of the el salvadors GDP Average remittance costs for El Salvador are between 1.67% and 4.33%, with the average being 2.85% [1]. Meanwhile, the two Bitcoin ATMs in the country charged a 5% fee. [1] https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitcoin-Blunder-Final.pdf https://sites.krieger.jhu.edu/iae/files/2021/06/Bukeles-Bitc...