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El Salvador's Bitcoin use grows but headaches persist
- wyck 5y agoReuters articles don't belong here.
- pkulak 5y agoWelcome to custodial wallets. The only way to get all the problems of banks and cryptocurrencies in one place.
- butmuh 5y agoSo now they are up 5% on their investment in two weeks and the establishment still has to nitpick on a national tech rollout with positive cashflow.Hmm.
- anonporridge 5y agoHardly surprising. Regardless of the future of bitcoin, I do wonder if this move will serve to accelerate the country's move towards more technological and digital literacy. For a place that's probably still pretty heavy on physical cash, this could be a net positive for them in the long term even if bitcoin as a currency doesn't work out.
- R0b0t1 5y agoMay draw lots of money if it is easy to exchange USD for BTC.
- colechristensen 5y agoIs it not easy to do this in the US with several popular legal local exchanges?
- fleddr 5y agoThere's a chance. If you consider that society is largely digital and increasingly remote, it stands to reason that theoretically a new mini Silicon Valley can be founded anywhere. El Salvador already offers permanent residency if you have a few BTC in capital. And they're going to start mining using excess volcano energy. We truly live in odd times. Imagine that it works. A tech society evolving in the jungle. The feeling of being part of a rapidly developing society, rather than one stagnating or in decline. And next, every neighboring country watching carefully. Which they already do. Because they're all tired of being a 2nd class America. On Twitter, the president of El Salvador dissed the IMF's concerns as if an immature crypto bro. I love it. It's a thing of beauty.
- anonporridge 5y ago> 2nd class America You mean vassals of the American Empire, paying tribute in the form of currency debasement that only benefits citizens of the empire at the expense of your own citizens?
- fleddr 5y agoYep, that's another way to put it.
- endisneigh 5y agoIf the government cares about making it easier to send remittances, should there be a simpler way than Bitcoin?
- tdeck 5y agoThis isn't about making things easier or better for ordinary people. If it were, the government wouldn't make it a crime for small businesses to not accept Bitcoin in a very poor country with limited communications infrastructure. El Salvador has 3.8 million internet users out of a population of 6.4 million people.
- fleddr 5y agoWhat is it about then? What possible dark scheme lies behind a system where citizens can instantly swap between USD or BTC at no charge? Remittances aren't about easy, it's about bypassing fees in traditional banking that may be as high as 30%. As well making remittances possibly to people that are unbanked, yet do have a smartphone.
- tdeck 5y agoThese policies go far beyond remittances. My understanding is that any business is required to accept bitcoin (through the government wallet system) for payment. In a mainly cash-based society this obviously gives the government more visibility and control.
- fleddr 5y agoBeing forced to accept Bitcoin is no different from being forced to accept any other legal tender, but you're right that the specific way in which it is implemented, is far from ideal. Most of the BTC community (if there is such a thing) also isn't happy with it. Then again, depending on the country, the traditional system also has deep insight into capital flow.
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- asdff 5y agoWhy would they adopt something as volatile as cryptocurrency as legal tender?
- tombert 5y agoApparently, a fairly high percentage of El Salvador's economy is based on people outside the country sending currency in, so I think the idea was to use a currency that makes it relatively cheap and easy to send money from the US to El Salvador. That said, since they're on the US Dollar anyway, I think it might have made more sense to use a stablecoin like GUSD or DAI or something.
- asdff 5y agoIf its USD to USD in this case, why not mail a check? I wonder if you could even just scan a check and email it and use a mobile bank app to deposit a printed copy. Or even have the US relative log into the Salvadoran relatives bank account and do it all within the U.S.
- woah 5y agoYou should let the El Salvadoreans know about all these ideas, might save them a lot of trouble
- tombert 5y agoWell, I mean, mailing a check takes a long time, certainly longer than sending some bitcoin would take, even if it was free. Emailing a scan could work, but wouldn't that be completely trivial to abuse? If someone gets a Gmail password, they could just photoshop a the check to empty out your relative's account with very low effort. I think blockchain kind of solves these two particular problems; the money transfers are relatively quick (around 20 minutes for bitcoin), and you have all this cryptographic goodness to minimize the potential for fraud.
- asdff 5y agoIt shouldn't matter how long it takes to mail after the first check is mailed, right? If the relative in the US is sending money every biweekly pay check and it takes 9 days or whatever to mail a check, the relative in El Salvador is still getting a check every two weeks, just nine days later on the calendar than payday.
- m00dy 5y agoEl Salvador is the only place on Earth where you can exchange your bitcoins to USD without any questions are being asked. It is the wormhole between bitcoin and legacy financial system.
- colechristensen 5y agoAnd doing things like this are quite likely to make you guilty of money laundering, it can of course be noticed if you’re withdrawing large amounts of money from outside the country.
- m00dy 5y agoThat's the thing. I am super bullish on El Salvador. I think It could be next Switzerland in the new world order.
- vineyardmike 5y ago> I think It could be next Switzerland in the new world order. Could be, but i suspect there are a lot more laws and historic reasons for the swiss status than just banking.
- choeger 5y agoThe irony is that a blockchain is the perfect tool to get rid of any form of money laundering: A permanent public record of each transaction. You can always run a simple program that checks your financial history against a blacklist. Now the problem with such a system is also quite obvious: Money laundering poisons the whole economy. If you could follow every dollar, you would likely find out it was at some point part of the profit from a criminal operation.
- oh_sigh 5y agoI'm curious how long that is going to last. Can the US not allow El Salvador to use US currency?
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- maerF0x0 5y agoAnother side effect of this is someone like me is curious in going there just to use BTC for the fun of it. It would be interesting to know if there are other such tourist dollars as a side effect
- fleddr 5y agoThere's little fun to be had. The store owner holds up a QR code, you scan it and hit OK. Done. Money wired.
- bob229 5y agoCrypto is trash
- jbverschoor 5y ago> "It took my money but gave me nothing," Sounds like any government or bank
- kevingadd 5y agoWhat do you mean? I'm struggling to think of any examples here other than police stealing people's money. I don't understand the bank comparison here at all, deposits in most banks are insured.
- goldcd 5y agoIf you're paying for some chicken wings, then you're clearly not actually paying with bitcoin as the transaction fee would cost more than your dinner. From the sound of it the "Chivo app" is what you have to use - so government must be banking bitcoin and then issuing "Chivo-money" that's actually exchanged, backed by the bitcoin reserve. Bit like the old 'gold standard'. What's interesting though, is that the transfers are going to be asymmetric - bitcoins being sent in as remittance, then traded internally as Chivo-coins. I guess there has to be a mechanism to allow conversion back to BTC (and then maybe dollars) to import goods - but the circulating Chivo-coin is value that's been conjured out of thin air (as long as there's confidence it's still backed up with BTC). All quite fascinating - either a stroke of genius, or a disaster in the making.
- m00dy 5y agoYou are 5 light-years away from crypto industry.
- goldcd 5y agoI clearly am. I'll see if I can downvote myself.
- tvhahn 5y agoYou're wrong. They are completing bitcoin transactions on lightning network, which is built upon the base bitcoin block chain (it's a layer two). Thus, the cost of spending bitcoin for some chicken wings is virtually free.
- I_am_tiberius 5y agoChivo uses the lightning network - transaction fees are close to 0!
- anonporridge 5y agoCorrection. Chivo is compatible with the lightning network, but Chivo to Chivo transactions are just centralized database updates. That's still really great, because people are perfectly free to use any other LN app (both custodied and self-custodied options available) to interact with Chivo users if they don't trust the El Salvador government app. This open network is why Bitcoin + Lightning will win.
- DantesKite 5y agoThis just sounds like a way for the President of El Salvador to become a billionaire.
- gremloni 5y agoIt’s all of us. He doesn’t have any more information than we do.
- jdhn 5y agoPersonally, I think that the growing pains are going to result in a much needed UX improvement for bitcoin, and crypto in general.
- fleddr 5y agoAgreed. This is a fascinating beta test for the masses. Another one around the corner is Bitcoin (and NFT) integration within Twitter.
- kd913 5y agoPurely bitcoin transactions will never be for the masses. It can't even scale past what 350k per day? For that it consumes the equivalent power of Countries?
- c54 5y agoLightning network and power consumption have been discussed in countless HN threads
- johnla 5y agoAnd coin exchanges are becoming mainstream. There are lots of transactional coins that can be converted into. Although there are still some usability hurdles, it's getting better all the time.
- StillWaiting 5y agoWhat this thread really needs is a hot take like calling Bitcoin a pyramid scheme
- Centmo 5y agoThese transactions are not occurring on the bitcoin network - they are occurring on the lightning network which is a second layer on top of the base bitcoin layer. Transactions here are virtually free and use virtually no energy. This is how bitcoin scales for many small transactions.
- rsj_hn 5y agoIs there anyone here on HN who lives in El Salvador and can report how things are going?
- throaway6942 5y agoAaron van Wirdum is a BitcoinMagazine journalist who documents Bitcoin in El Salvador. https://twitter.com/aaronvanw/status/1435236902274220040 https://twitter.com/aaronvanw/status/1435236902274220040
- deviantfero 5y agoI've been using it with a couple of other people and testing transfers between private wallets, chivo wallets, conversion between USD and BTC in small amounts, it hasn't failed on me yet. I've also bought in a supermarket with it, again small amounts 8.00 USD to be precise (avocados and some other stuff), a lot of businesses take BTC now, some of these businesses are: - Super Selectos (biggest supermarket chain here in ES) - Walmart (second biggest supermarket chain here in ES) - Siman (electronics, furniture, clothes) - ZARA (clothing) - Starbucks - Mcdonald's - Pollo Campero these are just some examples, a bunch more are taking BTC payments from chivo wallet and really any LN compatible wallet. you can take your money out of the government wallet by: 1. linking your existing bank account and transferring USD to your bank 2. cashing out in one of the 200 ATMs 3. transferring your BTC to a private wallet for me personally, superficially it works, the inner workings are opaque tho, I don't expect every BTC in government wallets to actually be backed by an actual BTC for example, the government does not have enough BTC to cover the $30 USD in BTC bonus they've been giving out, and not every BTC you get in the chivo wallet is reflected somehow in the blockchain. again my use has been pretty limited, I've day-traded with really small amounts, I've read people complaining about bank transfers taking a few days or not working at all (balance disappears from app, does not appear on bank), or ATMs being out of cash, or ATMs subtracting amounts from wallet and not giving money, I have not tried to do any of these yet though other issue is security, the facial verification seems to be a facade so anyone with your DUI (similar to SSN, but it is public knowledge) and your birth date can claim your account and your $30 bonus if you haven't, and also potentially make financial transactions with your ID tied to them.
- Animats 5y agoIs El Salvador really using Bitcoin, or is it just using Bitcoin-denominated local bank accounts? The Bitcoin blockchain has nowhere near enough transaction capacity to handle all those transactions if they actually go out to the blockchain.
- PretzelPirate 5y agoEl Salvador uses the Lightning network to avoid the high BTC transaction fees and slow settlement time.
- wcoenen 5y agoThe article reports that Bukele claims 2.1M active users. Setting up a lightning channel still requires a transaction. It would take days (even weeks maybe?) for Bitcoin to handle 2.1M such transactions even if it did nothing else, and an enormous amount of fees. More likely, the Chivo app is just a centralized system like a bank (i.e. a database tracking everybody's transactions and balance) and it only interacts with certain entities outside of the Chivo system via lightning.
- mudlus 5y ago"While solving problems, new problems persist" Duh, that's reality. There's no pinnacle. We solve problems forever or we are all erased from reality.
- donkey-hotei 5y agoCan someone tell me if adopting Bitcoin in El Salvador as legal tender is a way for the Salvadorian president to print money, in a way? Since the only other legal currency there is USD, which they can't print. Not sure if that question makes sense.
- brockwhittaker 5y agoNot really, because printing money implies a low cost to produce new "money" into the system. It’s more like defaulting to gold as well. El Salvador can buy more gold but at a very high cost that isn’t akin to printing money.
- audunw 5y agoSince they're mainly trying to push their own wallet app, once it has enough users, I can imagine they could create a new cryptocurrency and instantly make it one of the top cryptocurrencies in the world. If it catches on, they could be sitting on a huge fraction of the coins, and just gradually sell them off which would be akin to printing money. I'm guessing right now it's more of a gamble that the value of Bitcoin will continue to rise, which will increase the wealth of the government and the whole economy. In that case, it's almost better than printing money. But I'm not so sure the gamble will pay off. There's a decent chance that Bitcoin has peaked. I think it will be meeting increasing regulatory hurdles across the world in the years ahead.
- GreaterFool 5y agoI can't wait for El Salvador to offer a cheap, safe, and secure crypto vault. Once they expand to yield generating crypto, they can charge a small fee while holding BILLIONS in crypto assets.