4 ms·

Maybe I'm just a cranky skeptic but I can't stop wondering, what's in it for the panaman (and salvadorian) government? What kind of money this switch will bring

by soco 5y ago

Maybe I'm just a cranky skeptic but I can't stop wondering, what's in it for the panaman (and salvadorian) government? What kind of money this switch will bring in their vaults/pockets? What kind of control does it enable? What kind of business will the move bring?

jazzyjackson 5y ago
If a population really did adopt a single payment network, the goverment could issue a blacklist of accounts that you can be punished for transacting with. think of the power the US government has to freeze the funds of russian oligarchs - blockchain allows at least a version of this: not to freeze the funds, but to prohibit sending or receiving funds from a certain address vendors could happily subscribe to this blacklist to ensure legal compliance (an RSS feed will do but thats just me)
- qecez 5y ago
  Bitcoin is perfectly fungible, if you know what you're doing. Even beyond this, there are no "accounts" or "addresses" on the Lightning Network - its privacy is superb.
  - jazzyjackson 5y ago
    I haven’t looked at lightning since it was vaporware so I’ll have to check that out… I don’t know much about channels, is there really no public ledger in that case?
    - qecez 5y ago
      Same thing, tried dipping my toes a couple of years ago, payments would often fail, gui inexistent, etc. But we've come a long way since then. For starters, download bluewallet and get some free sats to play around with: https://lnfaucet.com https://lnfaucet.com https://fixedfloat.com/lightning-faucet https://fixedfloat.com/lightning-faucet Quite a rabbit hole you're falling into. And no, there's no public ledger.
- woutr_be 5y ago
  Wouldn’t that be incredibly easy to circumvent? Just create a new address for each transaction?
  - jazzyjackson 5y ago
    with what money? the blockchain is the all seeing eye, if you move a penny from one wallet to another, that wallet gets blacklisted too. (not to mention you eat the transaction fee every time you try it!)
    - jstanley 5y ago
      If that's really how it works, then you can get everyone's addresses blacklisted by just sending tiny amounts of money to them.
      - jazzyjackson 5y ago
        …you got me there! probably not a smart thing to automate, but I’m sure they will try
    - qecez 5y ago
      Transactions on Bitcoin's layer 2 (the Lightning Network) are extremely private and there's no way to blacklist anything.
ghego1 5y ago
My best bet is that they hope to attract BTC whales that need to liquidate some of their otherwise unspendable fortunes (I'm talking of wallets that on paper are worth billions of USD, but in practice are difficult to liquidate). For example you could go there, buy a watch worth 100000 USD with Bitcoin, come back and resell it.
- tgv 5y ago
  > BTC whales Enabling ransomware criminals, you mean. But I still find it hard to believe that would bring the Panamanian or Salvadorian jeweler any benefit, let alone the rest of the population. The problem of converting the BTC rests with them after the purchase.
  - conistonwater 5y ago
    There are already some countries that made a business of looking the other way when somebody wants to launder some money, that's been going on forever and isn't related to Bitcoin. The benefit to the population is that because the government gets to tax some part of the activity, the people's taxes are lower and the government can provide better services than it would otherwise. If this makes a country a kind of a tax haven, but for Bitcoin, then that's probably just business as usual, in a way (still wrong, though).
- conistonwater 5y ago
  Doesn't that undermine the argument the Bitcoin is a good store of value, if that's the trouble you have to go to with an "unspendable fortune"?
  - qecez 5y ago
    It definitely would, if it was true.
    - ghego1 5y ago
      And even if it was, for many such store of value would still be difficult to liquidate compared to the average person. Let's just say that there are plenty of people that need to "clean" non trivial amounts of BTC
notahacker 5y ago
Both of them are small US Dollar economies, so their central bank doesn't lose influence it never had and hopefully Bitcoinisation brings with it a few wealthy tax exiles and offshore businessss. But maybe looking at what's in it for the government from the POV of the country's financial stability is the wrong question anyway... one might also want to look at the personal financial stakes of some of the individuals involved...
johanneskanybal 5y ago
"Silvia said that the bill had the potential to create jobs, attract investment and foster greater government transparency" Seems like good reasons to me, short term the first two are probably the important part, longer term the last one could be massive for countries struggling with massive corruption. Like any good idea it can be subverted or corrupted though so let's see.
Quarrelsome 5y ago
the cynic in me says money laundering.
ikerdanzel 5y ago
Currency, traditional fiat, depends on country economic strength and stability. That 2 countries lack or at least unable to get to the level like Singapore or HK for indefinite amount of time. They jump on crypto purely for speculation purpose. Government tends to act slow. So if they received 1 BTC and take 2mths to process the transaction and financial paperwork, they actually will gain more value indirectly due to their slowness. Once BTC reach a stable plateau or dropping values significantly (very possible see American government gold policy decades ago and now China), you will see they abandon crypto. With fiat, in time of crisis you can print money out of problems. With a currency outside of your control, you will be like Greece Euro at the mercy of Merkel. After a decade, it is still bad there.
kragen 5y ago
Because much of El Salvador's population lives abroad and supports their families back home with remittances, 4% of El Salvador's GDP goes to remittance companies like Western Union. If they can cut that by a factor of 4 or more by using Bitcoin instead, they can boost their effective GDP by 3-4% in a single year, which will help a lot with getting re-elected. (I have no idea what the corresponding numbers are for Panama; probably not so urgent.) Also, like their predecessors Wikileaks, Sci-Hub, and Library Genesis, they become immune to possible future US sanctions (official or secret) that try to cut them off from international trade.
Gys 5y ago
For one thing: emotion. El Salvador previously depended on the USD and generally I assume those kind of countries do not like to depend on a currency controlled by a 'big neighbor'. But better: now the authorities can instantly see all financial transactions? Using their special app (El Salvador) which connects each ID to a BTC address makes it possible to know exactly who is doing what and where. Yes BTC can be used to pay taxes. But much more important they can now probably see much better how much taxes should be paid in the first place. This might schrink the dirty money part of the economy immensly.
timbit42 5y ago
They avoid the inflation caused by the US printing massive amounts of USD. In El Salvador, they avoid up to $400 million in bank transfer fees when citizens working in other countries send their earnings back to their families.

by soco 5y ago

jazzyjackson 5y ago

If a population really did adopt a single payment network, the goverment could issue a blacklist of accounts that you can be punished for transacting with. think of the power the US government has to freeze the funds of russian oligarchs - blockchain allows at least a version of this: not to freeze the funds, but to prohibit sending or receiving funds from a certain address vendors could happily subscribe to this blacklist to ensure legal compliance (an RSS feed will do but thats just me)

qecez 5y ago
Bitcoin is perfectly fungible, if you know what you're doing. Even beyond this, there are no "accounts" or "addresses" on the Lightning Network - its privacy is superb.
- jazzyjackson 5y ago
  I haven’t looked at lightning since it was vaporware so I’ll have to check that out… I don’t know much about channels, is there really no public ledger in that case?
  - qecez 5y ago
    Same thing, tried dipping my toes a couple of years ago, payments would often fail, gui inexistent, etc. But we've come a long way since then. For starters, download bluewallet and get some free sats to play around with: https://lnfaucet.com https://lnfaucet.com https://fixedfloat.com/lightning-faucet https://fixedfloat.com/lightning-faucet Quite a rabbit hole you're falling into. And no, there's no public ledger.
woutr_be 5y ago
Wouldn’t that be incredibly easy to circumvent? Just create a new address for each transaction?
- jazzyjackson 5y ago
  with what money? the blockchain is the all seeing eye, if you move a penny from one wallet to another, that wallet gets blacklisted too. (not to mention you eat the transaction fee every time you try it!)
  - jstanley 5y ago
    If that's really how it works, then you can get everyone's addresses blacklisted by just sending tiny amounts of money to them.
    - jazzyjackson 5y ago
      …you got me there! probably not a smart thing to automate, but I’m sure they will try
  - qecez 5y ago
    Transactions on Bitcoin's layer 2 (the Lightning Network) are extremely private and there's no way to blacklist anything.

ghego1 5y ago

My best bet is that they hope to attract BTC whales that need to liquidate some of their otherwise unspendable fortunes (I'm talking of wallets that on paper are worth billions of USD, but in practice are difficult to liquidate). For example you could go there, buy a watch worth 100000 USD with Bitcoin, come back and resell it.

tgv 5y ago
> BTC whales Enabling ransomware criminals, you mean. But I still find it hard to believe that would bring the Panamanian or Salvadorian jeweler any benefit, let alone the rest of the population. The problem of converting the BTC rests with them after the purchase.
- conistonwater 5y ago
  There are already some countries that made a business of looking the other way when somebody wants to launder some money, that's been going on forever and isn't related to Bitcoin. The benefit to the population is that because the government gets to tax some part of the activity, the people's taxes are lower and the government can provide better services than it would otherwise. If this makes a country a kind of a tax haven, but for Bitcoin, then that's probably just business as usual, in a way (still wrong, though).
conistonwater 5y ago
Doesn't that undermine the argument the Bitcoin is a good store of value, if that's the trouble you have to go to with an "unspendable fortune"?
- qecez 5y ago
  It definitely would, if it was true.
  - ghego1 5y ago
    And even if it was, for many such store of value would still be difficult to liquidate compared to the average person. Let's just say that there are plenty of people that need to "clean" non trivial amounts of BTC

notahacker 5y ago

Both of them are small US Dollar economies, so their central bank doesn't lose influence it never had and hopefully Bitcoinisation brings with it a few wealthy tax exiles and offshore businessss. But maybe looking at what's in it for the government from the POV of the country's financial stability is the wrong question anyway... one might also want to look at the personal financial stakes of some of the individuals involved...

johanneskanybal 5y ago

"Silvia said that the bill had the potential to create jobs, attract investment and foster greater government transparency" Seems like good reasons to me, short term the first two are probably the important part, longer term the last one could be massive for countries struggling with massive corruption. Like any good idea it can be subverted or corrupted though so let's see.

Quarrelsome 5y ago

the cynic in me says money laundering.

ikerdanzel 5y ago

Currency, traditional fiat, depends on country economic strength and stability. That 2 countries lack or at least unable to get to the level like Singapore or HK for indefinite amount of time. They jump on crypto purely for speculation purpose. Government tends to act slow. So if they received 1 BTC and take 2mths to process the transaction and financial paperwork, they actually will gain more value indirectly due to their slowness. Once BTC reach a stable plateau or dropping values significantly (very possible see American government gold policy decades ago and now China), you will see they abandon crypto. With fiat, in time of crisis you can print money out of problems. With a currency outside of your control, you will be like Greece Euro at the mercy of Merkel. After a decade, it is still bad there.

kragen 5y ago

Because much of El Salvador's population lives abroad and supports their families back home with remittances, 4% of El Salvador's GDP goes to remittance companies like Western Union. If they can cut that by a factor of 4 or more by using Bitcoin instead, they can boost their effective GDP by 3-4% in a single year, which will help a lot with getting re-elected. (I have no idea what the corresponding numbers are for Panama; probably not so urgent.) Also, like their predecessors Wikileaks, Sci-Hub, and Library Genesis, they become immune to possible future US sanctions (official or secret) that try to cut them off from international trade.

Gys 5y ago

For one thing: emotion. El Salvador previously depended on the USD and generally I assume those kind of countries do not like to depend on a currency controlled by a 'big neighbor'. But better: now the authorities can instantly see all financial transactions? Using their special app (El Salvador) which connects each ID to a BTC address makes it possible to know exactly who is doing what and where. Yes BTC can be used to pay taxes. But much more important they can now probably see much better how much taxes should be paid in the first place. This might schrink the dirty money part of the economy immensly.

timbit42 5y ago

They avoid the inflation caused by the US printing massive amounts of USD. In El Salvador, they avoid up to $400 million in bank transfer fees when citizens working in other countries send their earnings back to their families.