One year on, El Salvador’s Bitcoin experiment has proven a failure(theconversation.com) |
One year on, El Salvador’s Bitcoin experiment has proven a failure(theconversation.com) |
I would prefer a neutral crypto currency to be the new world reserve instead of a competing currency like the YUAN. Government should not have the power to print money out of thin air.
The technology of blockchains is improving, for the example lightning network should make it very well possible. Just like with the invention of 'real' money there is a lot of failure in the crypto space.
The subject of money and currencies is a much more complex issue. A government giving its "printing power" or in the case of Elsalvador, no longer wanting to be the victim of the printing power of the USA, is a very good thing.
El Salvador gambled which is stupid. Whether they won or lost at the lottery is inconsequential to its stupidity.
Speculative spikes can happen for a lot of reasons, but that Bitcoin would replace all currencies (as early advocates would have had you believe) was not one of those reasons.
Bitcoin was not bought because people believed it will replace all currencies. They bought bitcoin to get rich fast and cash out BEFORE the expected crash.
Regardless of your opinion on this, you have to at least wait till the proposition plays out before passing judgement. You have to see if they can withstand the short term volatility and whether bitcoin succeeds or not.
Calling the experiment failure before the results is silly to say the least.
Salvadoran here.
It's hard to see the benefits if there is no transparency on the process.
If we could even have a dashboard and an official website were we could have access to audited reports about the results of this bet, and see how its value varies over time. Then I might agree.
Maybe just a graph like the one found Norway's Sovereign Fund website
In reality we just don't. Public information is limited or contradictory. The few public information available includes a tweet about the president buying bitcoin from his phone while not wearing clothes.
https://www.washingtonpost.com/world/2022/01/26/el-salvador-...
As far as I know, the trust that holds El Salvador bitcoin doesn't have a public website. And the state wallet's website doesn't publish an address or phone number.
The only time I've seen their address is a receipt from a veterinary hospital run by the same state company operating the wallet, in which every procedure costs only US $0.25 because they are subsidized by "bitcoin profits"
El Salvador is a strange country sometimes.
See: Survivorship bias.
Its utility as a decentralised banking system for those who have no access to banking in poorer regions of the world is a clear benefit and has achieved what it wanted for the country.
A lot of the risk can be hedged by custodians, so I don't agree.
The reason it should fail for transactions is because Bitcoin sucks for transactions. Few people will prefer slow, irreversible and expensive transactions.
El Salvador primarily uses lightning network, same network Strike uses for instant cross border payments.
> Investments are sound based on probability and risk beforehand.
Investing in bitcoin had a limited downside (lose 100%), but a very high upside (reaches it's initial goals). For me, the potential gains outweighed the low probability.
I consider myself very lucky that I made some money (wasn't crazy to put all my money in there). But for me, when it would have gone to 0, I still feel it was worth the risk.
But of course, with such a high risk high reward investment, only invest a small % of your total money.
Or I guess you could buy lottery tickets. Probably a slightly less insane way to "invest" your money.
I went from living very comfortably to living paycheck-to-paycheck in about 6 months. Holding my value in USD has become a significant risk.
Yeah, its up like 100% over Bitcoin and like +30% over Euro, Yen, and GBP? In fact, holding Cash/USD has been basically one of the best performing things in my entire portfolio this year (after oil/energy)
Have _you_ seen BTC's buying power recently?
Yeah, it's been going up relative to almost all other currencies and especially BTC.
If Bitcoin's momentum hadn't been dissolved, it wouldn't require people to be forced by State to accept it.
[1] https://bitinfocharts.com/comparison/size-btc-ema14.html#all...
You're the opposite of lucky.
Moreover, the entire philosophy of holding BTC as some store of value destroys the notion of BTC as a viable currency.
What it had was a currency it does not print (US dollar) and for which there is an ongoing international shortage.
What El Salvador got with Bitcoin was yet another currency it does not print and for which there is currently an international surplus.
The thing the article does not mention, and the only reason the policy made any sense, is that ~50% of Salvadorans live abroad. So there is a substantial remittance market in El Salvador relative to GDP. Allowing remittances to flow through bitcoin cuts out companies like Western Union who scoop from the top.
Even so, this scheme only makes a little sense. A better approach might have been for the government to have set up a USD-based remittance program of its own.
However, the presupposed lack of adoption of Bitcoin as a means of payment is not supported by the source bar chart. The numbers are actually pretty impressive compared to card: ~25% of businesses accept card and 20% accept Bitcoin as payment. That is impressive adoption after 1 year by any standard in a country that primarily uses cash.
From the article:
> But Bukele wanted more. Making bitcoins legal tender meant a payee had to accept them. As the 2021 legislation stated, “every economic agent must accept Bitcoin as payment when offered to him by whoever acquires a good or service”.
The numbers may be be higher in places that cater to bitcoin tourists, like beach hotels and restaurants, but for day to day locals the transactions is lower.
During peak bitcoin usage I asked a few cashiers how many transactions have been in bitcoin, and the answer was none in normal stores, and 1-3 in the largest supermarket in the fanciest part of San Salvador.
Even the largest bank in El Salvador, only processed 7500 bitcoin transactions on their payment gateway from october 2021 to december 2021. That would be like 80 por day.
"más de 7,500 transacciones [..] en el 2021 [...]n pago con bitcoin." [1]
[1] https://www.bancoagricola.com/salaprensa/notas-de-prensa/ban...
The best alternative payment system I have seen myself is M-Pesa in Kenya [0]
It's THE payment system in Kenya everything runs of it in terms of commence for the "ordinary man". It has a somewhat unique starting point, since Kenya (Africa) (I'm from there myself), was not "modern enough" for the everyday man to make use of traditional banking services. But even the "low tech man" had a cellphone.
I hope to see more examples like this in the future, and I'm sure many a BigCorp is doing just that, I do wish the next-gen version of these services will be more community-driven and less bigcorp. Oh gosh I almost described the original vision of bitcoin :)
Much like Africa, all of SE Asia went directly to cell service and skipped all landlines because they were so far behind. The same goes for banking in these parts of the world and India.
The people there will skip over the traditional banking system which is massively undeserving the population and adopt a digitally native banking system. The masses will go with the flow and accept the CBDC, but many already understand the implications and limitations.
There are many deep subtle questions about Economics, even with stablecoins but the choice of Bitcoin was way off base, the only possible reason to use it was because it was the only one most people had heard of.
Bitcoin is totally nonsensical for low-value high volume transactions and by the time the money gets paid to the seller for already bought goods, they could be making a loss. At least inflation in normal currency is only (usually) a few percent per year.
That question has an obvious answer: because it's the oldest and biggest cryptocurrency. Not letting perfect be the enemy of adequate (let alone good) is a perfectly reasonable choice.
Remove grifters, acquire actual progress.
I'd like to see an analysis of the situation, assuming that the value goes neither up or down, but simply holds a constant value in an inflation indexed manner. Would it still be a bad idea in that situation?
Why? BTC has zero history of doing this.
Gold and currencies backed by gold come very close to this, with historical evidence to back it up. The purchasing power of gold -- that is, its convertibility to goods and services you might wish to consume -- have remained remarkably stable over time.
Countries stopped issuing currencies backed by gold for a few different reasons, but its ability to hold constant value over time wasn't one of them.
I think we'll see another even worse cycle unfortunately within the next 10 years.
I'm sure I would pay $500 per month for internet or drinking water for instance, but in general this type of rent-seeking behavior is not good for the economy.
Through that lens, it would be interesting to see if there was any anomaly in GDP, luxury goods sold, real estate sales, or tourism in the country.
If there was some crypto without any incentives of hodling long term, I'm sure the adoption would be higher. People don't spend Bitcoin the same way they don't spend gold in daily life: to own it as a long-term value reserve.
The inverse is also true: you can have little impact but attain big wealth/success.
Moreover, due to competitive pressures this lack of correlation happens is quite common. If impact requires a mix of skill+luck+timing and success requires skill+luck+timing, then impact+success is (mathematically speaking) exponentially harder.
It's way too early to declare El Salvador's Bitcoin experiment a failure (or, for that matter, a success). Adopting a new currency (let alone an entire alternative financial system) doesn't happen overnight.
You want a currency that encourages usage in the economy, not one being buried in vaults.
Being pretty young, everyone I know is involved in crypto in one way or another. I'm personally waiting on the sidelines, but there should be some beneficial middle ground between going all-in and completely discarding the tech.
Another one that I find fascinating is immutability, things like https://opentimestamps.org/ (uses bitcoin's blockchain), it allows you to proof that X piece of information existed prior to time Y.
I know of 2 different paths of assumptions you need to verify that proof:
1. Somewhat trusting bitcoin block's timestamps and the immutability that proof of work provides to the chain of blocks
2. Having a higher bound estimate of your attacker's ability to generate proof of work, and then sum all the available proof of work (it is sequentially chained in the blockchain from the block's proof, till the latest block produced), and compute how much time the attacker needed to spend to fake that proof of work, and that's your proof of the minimum time that must have passed since X was conceived
https://e-estonia.com/wp-content/uploads/2020mar-nochanges-f...
This is just not true. Crypto as foreign remittance has been proven and is working quite well in Argentina.
What you really don't want as a layperson in Latin America, is for really any third party -- but especially government third parties, to have control of your money in any capacity during remittance.
I agree with that. For example linking the U.S. banking system via ACH/Fedglobal with the El Salvador one as Panama and Mexico have done to bring down transactions costs.
https://www.frbservices.org/financial-services/ach/fedglobal
> This is just not true. Crypto as foreign remittance has been proven and is working quite well in Argentina.
But El Salvador is not Argentina though. El Salvador had never been affected by unstable currencies or unfavorable exchange rates set by their governments.
Bitcoin on the other hand, has been the first experience for Salvadorans, of having a currency that loses 50% of its value.
I'm just judging from their accents in Youtube videos, but part of the Salvadoran bitcoin wallet developers were from South American countries, so it seems to me that they were trying to solve a problem that existed in their countries, but not in El Salvador.
https://www.freethink.com/technology/crypto-argentina-black-...
Bitcoin enthusiasts can be so anti-government that they seem to think ever government will turn into a basket case like Argentina. Perhaps every government gets into trouble eventually. But you could wait a couple lifetimes for it in some countries.
Second best is a currency that no country can print.
Third best is a currency that another country prints (since that country can easily devalue your holdings).
About 1.50 USD bitcoin fee transfer[1][2], no fees for deposits or withdrawals on FTX for both BTC and USD (for > 0.01BTC, around 200 USD)[3]. And 0.07% taker, 0.02% maker fees for trades [4]
[1] https://ycharts.com/indicators/bitcoin_average_transaction_f...
[2] Could be avoided or greatly reduced if using other cheaper cryptos
[3] https://help.ftx.com/hc/en-us/articles/360034865571-Blockcha...
[4] https://help.ftx.com/hc/en-us/articles/360024479432-Fees
Pyramid and MLM schemes exist and thrive today despite widespread knowledge of them and how they work.
So I think shitcoins will have their day again, they'll just have new branding.
Every 4 years it looks like that. And yet the next greed fueled ascension comes around like a clock. Each next one smaller than the last one.
Next one will come around 2025 but this time it's going to be just few hundred percent.
From all the fanfare around them, I was sure they had to invest more. But after looking up the numbers, this looks like a publicity stunt more than any serious investment. Also 20% adoption when it's mandatory to support it, is quite interesting too.
> The next bond payment (2023 note that they are trying to buy back now) There are two bonds which they are buying. The 2023 one at 91 cents per dollar, and the 2025 one at 51 cents per dollar.
> this looks like a publicity stunt more than any serious investment.
El Salvador has a very good PR team. So many announcements have their own publicitiy students. Teven produce different material targeting different foreign countries. It's always interesting to see what each to see what PR message each country gets.
For example: Targeting those who didn't agree on vaccine mandates in English Speaking Countries (Australia/Canada/UK):
https://twitter.com/CanAlbertaHuman/status/14784727600660725...
https://twitter.com/LowCard_Hunger/status/148358166523034010...
Targeting those who wanted vaccines in neighboring countries (Honduras):
https://twitter.com/radioamericahn/status/140378336359768474...
I also am largely okay with people using it for personal quantities of controlled substances, even though I do not use it for that personally. Sometimes these are for legitimate medicinal purposes as well (for example, schedule 2 TRT and HRT drugs)
Crypto can keep them, it's nice to not have to deal with the noise
I reserve judgement as to whether or not this will be a net benefit for society. I suspect not, but our present ignorance is far too great to make such a prediction - I just think it's gonna happen whether we want it to or not, so get used to the idea of crypto-everything.
Think of all the poor slobs in Russia who've been steam-rolled by these sanctions, and can no longer sell their software or get paid for their little Apps. Whatever you might think about Russia -- "group punishment" is not cool; these are people like you and me who cannot now feed their families. To them, Bitcoin (and other even more capable cryptocurrencies now in development) is the difference between life and death.
So, it might be worthwhile to ... reflect, if we find ourself agreeing with the obese head banker at BIS or weird Klaus Schwab, when they say they want to control all aspects of personal commerce. They can pound sand -- I'm going to continue to work to move cryptocurrency technology forward.
Remove grifters, acquire actual progress.
I wonder if there were people in the 80s that said that.
There are (and always will be) people who see no good in the Internet. I played a small part in its growth in the early 90s and even I have pangs of regret over what it has become. AND there was a lot of grift and lawlessness in the early Internet -- that is what paid the bills at first.
However, at the time I was able to articulate all the ways moving X, Y and Z to the Internet would make things better -- for hours on end -- and I would 'win' those arguments. OTOH, all my crypto crazed associates have trouble doing that same thing today. For years, the argument ended up being "I got in early and now my 'investment' is worth X amount." It has been an end justifies the means proposition.
In the end, the Internet was judged by its exponential growth and adoption. There was a mad rush of, arguably, useful activity going on... for years. Everything I wished for and pushed for back in the day has come true -- monkey paw curse and all. Bitcoin's use has actually gone down afaict, the market value of it is the only metric people care about.
Humanistically, I gotta say, perceptions matter. I left crypto because it just started "tasting gross", regardless of the technological interest I had. Clearly, I wasn't in a minority with that.
Bitcoin miners and devs took the project in a specific direction a few years later, optimizing it for use as digital gold, while making it much harder and more expensive to use as a currency.
El S. is in a pretty strange place because they don't have their own currency. They have no control over their economy in that regard, so adopting a separate currency which frees them from singular dollar dependence is quite useful.
Nullifies what claims exactly?
We the hodlers believe that Bitcoin can be hacked only by hacking cryptografic hash-functions, which will lead to collapse all the banks, all passwords on all websites, maybe some data structures like hash-maps.
> or I get scammed in some way, where is my legal recourse?
How will you get scammed if you have a backup which you promise to yourself to not even introduce to computer with online? Also nobody recommends you to hold all your wealth in crypto. Some metals work not bad also, my favorite example is copper.
> But state regulation nullifies a lot of what bitcoin advocates claim is the advantage of cryptocurrency.
Let me guess, you have not read / have to reread the bitcoin.org/bitcoin.pdf whitepaper?
Adoption for what purpose though?
If you're not keeping a substantial "float" in the currency, you have to buy more every time you want to use it. So you've just inserted an extra, riskier step into your ecommerce or international wire transfer.
Within El Salvador, the policy behaves like dollarisation with all its advantages and disadvantages, with an extra disadvantage that the currency has fallen by a third against the dollar.
Interestingly, that is also the analysis that most central banks make. Their monetary policy sets a positive target inflation rate for this exact goal.
However, that monetary policy is often a large part of why people use Bitcoin.
The opposite.
Cryptos that are anchored to USD have no appeal. They're less useful than USD, and, there's no 'get rich quick' aspect. So what's the point.
The Ponzi Mania is what drives people into BTC and to talk about it incessantly on the Internet etc.. Without the mania, it's not going to spread.
An institutionalized crypto, like one by the government, and which had some kind of stability (i.e. central banked) would probably get critical mass and therefore have some utility.
El Salvador leader is basically criminally derelict, he should be jailed.
There was an early alt-coin, http://freico.in/, which had a demurrage fee for holding, which was intended to incentivize spending over saving. A terrible idea if you ask me.
Long-term saving is the biggest selling-point for Bitcoin. If the value of savings went down by design, it would have never got to where it is.
The appeal however is not from people wanting to use them to buy their coffe. The appeal is DeFi.
There's Tether and USDC, plus a handful of others.
The critical thing at the moment is to be "sophisticated" enough to make the right choice.
In US law, an investor has to prove they have means (money to spare) to do risky things. They are "sophisticated" investors and can afford losses. (This word is used in the law)
The rest don't get to play. So the rest don't know the rules and don't understand contract law.
If you read a contract it defines the rules. Most people don't want to or don't know to do this and, right now, the government isn't stopping them from making these decisions about investment in crypto.
Many people talk about crypto without acknowledging the fundamental nature of investments, because the don't invest (i.e. not "sophisticated"). They want something like their bank. Somebody to make sure they don't mess up and take care of them if things go sour.
If that person is you, leave your opinions aside and keep your money in bonds and mutual funds
There are some that strongly discourage speculation by having a purely linear emission, which after n years still has a yearly supply inflation of 1/n and takes a whole century to get down to 1%. Offering the same rewards to later generations helps avoid concentration of wealth that most cryptocurrencies, especially premined ones, suffer from.
El Salvadors adoption could have definitely been handled in a more transparent and self sovereign manner. I really wasn't big fan of forcing companies to accept it..
But then again, you never get everything you want. I guess the best we could do is praise them for the good and provide feedback when they miss the mark..
Now we have a game theoretic situation where the early adopters take the most risk but are going to reap the most benefits.
To call this a "base jump without parachute" is asinine and completely unwarranted. There is a clear bet going on with the smartest people in the world on both sides.
Some believe the “rulers” of the current system will never allow this to happen therefore we will get CBDC’s instead. Others believe, the collapse of the current debt passed system is inevitable therefore bitcoin is a lifeboat.
Either way, china isn’t using the same technology invented by satoshi (without the PoS & decentralisation) for no reason. The US isn’t thinking about thinking about creating a FedCoin for no reason. India isn’t building one for no reason.
The race is on. Its a bet. There is risks on both side but its definitely not a one sided thing to say the least.
There are those who envision a world full of privacy coins, CBDC's, bitcoin, company coins etc..
In this world, bitcoin will be the ruler of rulers. As in, Bitcoin will reward disciplined countries and punish undisciplined countries. Just like gold did in the past.
Have a nice day.
https://www.mercatus.org/publications/inflation/inflation-la...
Which is mostly driven by putting trillions of dollars into the economy. The Fed had 1 trillion on it's books during the 07 recession. It has 8 trillion on it's books now. That's a major problem.
I bought in 2015 when Bitcoin was about $250, so still looking good on a 10 year timescale.
Or am I missing something?
You're conflating two things. Inflation has little do with how well a remittance system functions. You wouldn't say that Western Union's system functions better or worse because of the currency it is denominated in.
> so it seems to me that they were trying to solve a problem that existed in their countries, but not in El Salvador.
While not inflation, El Salvador doesn't have a great history of fiduciary responsibility either. [1] 1 - https://en.wikipedia.org/wiki/History_of_El_Salvador#Corrupt...
When funds are sent on the same currency there is no exchange rate markup on the Western Union transaction, so it's cheaper.
> El Salvador doesn't have a great history of fiduciary responsibility either.
The judicial system was able to sentence former ex-president. In Saca's case all his assets and companies were seized by the National Commission of Property Administration. Unfortunately Funes was able to leave before being sentenced, and obtained nationality in another country to prevent extradition.
Kind of. It is very complex and I could write an essay, but to put it short, if you receive let's say a SWIFT transfer in USD, EUR, whatever, it will be forcibly converted to ARS (local currency) at an unfair rate: if you tried to buy back USD with the ARS you received, you could only get half of the original amount. It's almost like a 50% tax on any international wire.
Anyway people use crypto for much more than bypassing that. Some are interested in holding crypto, some are interested in holding stable coins, some to arbitrage, and so on. To be clear crypto is not used in day to day transactions (buying coffee) in any shape or form.
> And they're all going through intermediaries
I'm not sure what you mean by this? People here use both Binance/CeXes and hardware wallets the same way it's used in any other country. And unlike other countries, here (because there was already a massive black market for physical US bills) you can very easily trade face to face relatively large amounts (1k-100k USD) of US bills for USDT/USDC. Which is cool because it's the true decentralized way to on-ramp/off-ramp crypto.
The fiscal aspect of it is just magical though. Everyone and their cousin either becomes an expert in tax law, or blatantly and unknowingly breaks it every day with no major consequences. So many, many, many people live outside the law that enforcing it equally would mean instant violent riots and protests.
If someone's looking to sell high, what's to stop them from selling at $20k, which was an all time high in December 2020? Why not wait for $80k instead of selling at $60k?
It's easy to see these opportunities in hindsight, but you can never be sure where the peak is.
money has a time-value, the opportunity loss of investing it in other instruments. The longer you wait for a peak, the more that peak has to be for it to be worth it. When the value you would have had you invested elsewhere reaches your expected peak, you can officially say your strategy failed.
Many people have conviction in their belief in God. That doesn't make the existence of God any more sound.
Until then, I will let institutions take the risk and I will stick with my index fund.
That excitement disappeared pretty quickly once I came to the (in hindsight, obvious) realization that its only valid use cases were illicit transactions and speculation. I donated whatever I had and moved well away from it (certainly a poor financial decision in retrospect, but I still believe it was the right choice personally).
The shine has been off BTC for a long time. Even though some (if not most) of the early adopters were as you describe, I suspect that almost all of the more recent comers have only joined the party for the get rich quick scheme.
Crytocurrencies have many valid use cases. For one, they are the only system that allows sending money truly anywhere in the world, to anyone, anytime, and near-instantly. No other system accomplishes this. My most poignant example was being able to send money to a then-homeless unbanked friend, on a sunday, and he even converted it to cash in hands within 1 hour as he was near a bitcoin ATM. In such an emergency, no other system would have worked. We briefly considered Western Union but he was banned from them due to previous financial issues. So the permissionless aspect of Bitcoin was another benefit.
It's a little puzzling that you were an early adopter, and yet did not appreciate the qualities. Perhaps you think crypto isn't useful to you personally, therefore it has no use cases for anyone else.
What makes this argument different than the "I don't have anything to hide" anti-privacy argument?
For example, I expect Bitcoin to likely remain an alternative system, used only for a minority of transactions. And this view didn't conflict with my desire to buy in when I did.
These people were minning not buying bitcoin.
I guess they could have all been lying to puff up their investments, but then I guess I'm left with thinking those particular people were stupid and liars.
I often wonder if those same people moved into Bitcoin.
https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
I find that most crypto-crazed enthusiasts don't have the foggiest idea about how it works, beyond some broad vague ideas. People who can articulate its benefits exist, but they tend to get drowned out. Many of them are building companies instead of bothering to prosthelytize or argue on forums.
Very very well put. Bitcoin’s use as measured by total transactions has gone down. However, the total amount of cryptocurrency transactions across all chains is still growing exponentially.
It's generally a riskless thing thing to put your money in so it's not surprising that a few funds have gone big on it. They will fold the bet eventually.
The demonization of "hoarding" is basically an endorsement of consumption. Of course, they then regulate your consumption.
You could see how people resent the micromanaging of their lives.
As penance for this, I will cite Martin Fowler's excellent essay on why privacy is necessary for at least some: https://martinfowler.com/articles/bothersome-privacy.html
USD is also up vs Bitcoin.
EDIT: Feel free to look at gold, silver, and other 'inflation hedges' while you're at it. The main thing going up is commodities (oil and food), which is certainly important. But there's more to the world than those two things.
Unless you are arguing we currently don't have any inflation, which would be a tough sell :)
Also this last CPI report oil & gas pulled inflation down whereas just about everything else pulled it up. Food is hot, but a lot of other things are as well including non-commodity service based industries.
A year or two from now Bitcoin very well might be back above it’s all time high.
Its ironically, also when BTC really began to collapse from its $60,000 high. So it really demonstrates how much the BTC was benefiting from low-interest rate / inflationary policies.
It's almost like it's not a hedge at all and just another part of the exact same game as the rest of the market.
CPI was nasty for most of June 2020 to June 2021. It's just that fewer publications were picking up the story yet.
https://www.westernunion.com/us/en/send-money/app/price-esti...
I just tried it myself and it says they will charge $60 to send $1000 to the US.
Also, they add this disclaimer:
2 In addition to the transfer fee, Western Union also makes money from currency exchange. When choosing a money transmitter, carefully compare both transfer fees and exchange rates. Fees, foreign exchange rates and taxes may vary by brand, channel, and location based on a number of factors. Fees and rates subject to change without notice.
The bigger problem is KYC laws. Kind of hard to satisfy them as an illegal immigrant. Suspect that they're getting screwed by the additional middle man willing to break the KYC laws.
[1] Access Denied You don't have permission to access "http://www.westernunion.com/us/en/send-money/app/price-estim..." on this server.
So, aside from irreversibility of transactions, what is preventing adoption?
But I do know people over estimate what can be accomplished in a year and underestimate what can be accomplished in 10.
Assume you invest 1% of your portfolio in Bitcoin. What is your downside? 1%. Not that high, is it?
What is your upside? Maybe x100, so double your entire portfolio.
Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk. And it didn't even live up to its original intent. Imagine the price if it did!
There are probably better places to put your 1% on. ;-)
Things like startups for example also have a very high risk rate, but also potential high payouts. There it actually makes sense since the ratio is way better.
As for how this scales? I have no idea. I'm just speculating that it's gonna happen somehow. I mean, hell, look at this post - a nation adopted Bitcoin. You think that's the last time a government will experiment with crypto? China is already developing their own fiat cryptocurrency. You think it's just gonna stop?
I don't necessarily want this to happen, nor am I advocating for it. It's just a prediction, so I'm now sure how to answer your questions.
Smart contracts backing more real world assets has a slightly higher chance of becoming a thing, but even with those the value isn't super clear. The whole idea of tracking ownership is that it's backed by authority to enforce it, and the whole idea of cryptocurrency is that it works without authority.
If you think NFT you think about that vague thing that has no bearing on the real world. Bitcoin is the magic technology that manages to be scarce and be manifest in the real world despite being fully digital and networked. Ethereum managed to one-up Bitcoin with the smart contracts of which the DAI stablecoin which anchors itself to the real world currency without relying on authority.
NFT's basically are the exact opposite of the sort of thing cryptocurrency offers as value to the real world.
Just where exactly the title itself is stored? I would assume it's a at least moderately long plaintext file, describing property and conditions. Maybe some authenticity attributes, like digital signatures of multiple parties. Where do you think is this artifact located? Inside the NFT?
Also, there's no reason why the property and conditions have to be stored together; they could readily exist as separate artifacts sharing some ID or reference.
Unless it becomes practical to pay for something with cryptocurrencies (which for me should be the primary use case of any currency) they basically seem used by people who want to time buys and sells according to the current boom/bust or pump/dump cycle.
2017 marked a pivotal point where Bitcoin specifically abandoned catering to the brick and mortar and e-commerce use cases, and started focusing on large scale financial services. It was a frustrating development for sure, but people all over the world are using various smaller cryptocurrencies to buy groceries every day.
Cryptocurrencies might not be useful for you specifically, and that's fine. Maybe you're not one of the various under-served target demographics. Complaining about that though is a bit like complaining that Yen is useless because you live in the US and none of the businesses you frequent accept Japanese currency. It's undeniably a trillion dollar global economy that provides a massive amount of value to millions.
Hearing that crypto may not be for me is quite surprising. It is advertised to me all over the place and the various stereotypical "cryptobros" seem curiously keen on people like me buying into the ecosystem, and appear to be very generously interested in helping me go "to the moon" etc. I've no idea how you're doing those things with crypto. I guess you have to go pretty far out of your way to buy, for example, airfare with a cryptocurrency or make otherwise really inconvenient trade-offs. I guess you might be semi-forced to use it due to, for example, living in a country with a currency which is more unpredictable than BTC then I think that's more of an black mark against the local currency than it is a feather in BTC's cap...
But you are actually buying a slice of a company and its future earnings. With bitcoin what are you actually buying?
(I'd really like to know. To me, BTC trading and Forex trading sound exactly the same.)
Your investment is there to make you money, not to provide you with an identity.
I still reflexively think of bitcoin primarily as the way you buy abstract board games from Spanish libertarians, because of https://nestorgames.com/
Edit: some examples https://www.ers.usda.gov/data-products/food-price-outlook/su... Retail egg prices went up 38% from July 2021 to July 2022.
Bitcoin seems to be intended as a decentralised payment system that bypasses any third party institutions. My gut feeling is that: in order for a state to provide legal recourse, bitcoin addresses need to be linked to a centralised personal/business identity that can be tracked down and sued or prosecuted if necessary. For Bitcoin to feel safe for the normal person, it would have to introduce centralisation and third parties. My gut may be wrong, of course.
The important thing is that the person must accept the responsibility of owning all aspects of their wealth.
No one can remove it from you, but you can make the mistake of giving it away. Then you bear the responsibility for losing it.
That's not a very big trade off for some people.
> Though around half of the Salvadorans surveyed have downloaded Chivo to date, with 40% of those downloads happening in September 2021, around 61% of those have abandoned it after withdrawing the $30 dollar sign-up incentive, the National Bureau of Economic Research found. Only 1.6% of all remittances were received in bitcoins via digital wallets in February 2022, according to El Salvador’s Central Bank.
> Chivo download numbers have been negligible in 2022, suggesting that the push has run out of steam. Some of those who have stuck with the application are using it for transactions unrelated to Bitcoin. The median active user does not send or receive a single Bitcoin payment a month nor make any Chivo ATM withdrawals, the survey found.
https://restofworld.org/2022/el-salvador-chivo-bitcoin-walle...
Yeah, but that payout ratio - millions to one! Bitcoin will never pay out at that level - I don't know if it ever did.
I find it interesting you're arguing that an unknown ratio is preferable to a known one. Bitcoin has a known current cost, but entirely unknown chances and payouts over an unknown duration. There's little reason to assume that Bitcoin will make another massive jump other than optimism that there will be a new wave of true believer bag holders. I know the lottery is going to be drawn each week and I know the cost and the odds, as well as the minimum payout, and the current payout is updated as we get closer to the drawing.
And best times to sell (if you needed to sell) was in 2013, 2017, 2021 ... so I think the next time will be around 2025.
Every cycle swings less (in term of percentage change) so the next one will be just few hundred percent (troth to peak) and following ones even smaller till bitcoin will become yet another random walk asset like stocks.
And by "scammed" I mean someone providing a fraudulent or faulty service or product. In the UK we have "Section 75" which protects consumers who pay via credit card or paypal: https://www.citizensadvice.org.uk/consumer/somethings-gone-w... . Is such protection possible with bitcoin?
What part of Bitcoin whitepaper tells you have to rely on third-parties? I'm not a trader, I'm a hodler, I even do not have a Coinbase account.
Of course if third-parties get lost you lose everything you have believed they will guard for you.
upd after reading responses
Sorry guys I forgot that average person needs to be an idiot. My bad, usually I consider an opposite.
The "average person" needs something roughly equivalent to a current bank or credit card in terms of simplicity. Currently, that basically means using third-parties like Coinbase, not reading the Bitcoin whitepaper, managing their own hardware wallets and encryption keys, thinking through backups and disaster recovery scenarios, and being dilligent about maintaining opsec.
Why?
Because they are more trustworthy than my own ability to not screw up. I lose/break things all the time. I didn't want a fragile token or backup costing me 5 figures.
Right. Wanting simplicity and low risk around basic daily purchases and transactions means that someone's an idiot. You seem like a lovely person. Thanks for representing the crypto/BTC community so well.
That's basically a hardware wallet (not 100% "airgapped" but the same idea). And yes you obviously you can use it as a currency that way.
Still I agree that crypto is too complex for the average person and I wouldn't trust my mom to not lose it or get scammed.
Eh, not that hard really. Expedia started accepting Bitcoin in 2014.
https://www.expedia.com/Checkout/BitcoinTermsAndConditions
> "cryptobros" seem curiously keen on people like me buying into the ecosystem, and appear to be very generously interested in helping me go "to the moon" etc
Yeah fuck those people. I've been in the space since 2009 and I've never once recommended to any friends or family to invest in cryptocurrencies, and in my experience, the vast majority of people in the space are the same way. The "get rich quick" types who treat all of life like one big MLM have always been reviled, but none of that is unique to cryptocurrencies. Shady hucksters and con men have always existed, and always will.
Crypto currency is a wasteful, destructive, expensive and innefficient technology that has few benefits except facilitating crimes like tax evasion, money laundering, financing terrorism and purchasing drugs.
What are the others, in the specific context of this conversation (which is privacy from the government, not from random other citizens)?
This is perhaps the primary reason that the right of privacy even exists.
This is what I'm arguing. Do you deny it?
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In a bear market, you don't have to outrun the bear to get ahead. You only have to outrun your friends.
Being able to send and receive from anyone is growth, lightning isn't on the bitcoin chain until it gets synchronized.
If I give you a bitcoin address, you can't send anything to me with the lightning network.
It's unnecessary nonsense because bitcoin is pointlessly crippled. Every other cryptocurrency has plenty of throughput and can be used decentralized.
That is literally the purpose of building second layers. We don't need to keep on-chain records of every microtransaction and coffee purchase in an immutable, ever-growing blockchain synchronized across thousands of nodes across the globe.
> If I give you a bitcoin address, you can't send anything to me with the lightning network.
Sure I can. It is called a submarine swap.
You can call it whatever you want, someone still has to sync with the main chain, where all the utility is. You can get together with your friend and give each other IOUs all day every day, it doesn't somehow change the fact that bitcoin's throughput is severely crippled to be the speed of a dialup modem.
Have you ever stopped to think that other cryptocurrencies don't have second layers because people don't want them and their chains don't need them? Why go through all this when there is no reason to have a crippled chain in the first place?
Using regular cryptocurrencies is incredibly simple and elegant. It's only when people started to believe propaganda about disk space and cpu time (that never made sense with the most basic examination) that somehow something that worked amazingly well is now a complete mess.
After people realised that this is a crap idea, they have reinvented banks, who take people's BTC and give them IOUs instead. Then only banks have to deal with the "channels" and "locked" tokens in a centralised way, lessening the overall complexity.
Few understand :)
The general story is that not all transactions are equal. A payment from your cousin for a poker debt doesn't need the fury of a million computers protecting it. Similarly if you have an ongoing relationship with a vendor, and many other examples. In real-life there are vastly differing trust-profiles between transactions. It's ok to trade some security for some efficiency sometimes. It doesn't make sense to treat them all the same.
[1] https://www.cardrates.com/advice/number-of-credit-card-trans...
This is why I can’t get Bitcoiners - their assumptions are always over the top “we will take 100% of gold’s value” “nations will dissolve because of Bitcoin” or something of that order.
Compare that to ETH - people will build decentralised applications and ETH will be the currency in those applications. Stakers get a fee.
Simple.
Bitcoin Cash (the og big block chain) is alive and kicking, and getting stable updates (both features and performance), and also has optional (affordable) coin shuffle). Lightning Network is a security and usability nightmare, and its total liquidity is in the low thousands of BTC (lol).
In comparison, BCH has lost 80% of its transaction volume in the last year alone. Its blocksize is now 100KB on average and it now processes fewer transactions than LN. It also regularly hard-forks, either because of leadership cults (Ver, Wright, Sechet, ...) or because of scheduled hard-forks every 6 months which kick off all users who haven't updated. It's the opposite of stable and the market apparently does not share its determination in sacrificing decentralization for adoption.
Second - do you realise that title contains private information which will be forever exposed on-chain?
Third - ok, even you admit that not everything will fit on-chain. Then who will store the rest of the data? Centralised entity? Which will have its internal security, bookkeeping, staff and so on?
Why do we need NFTs then, if all the work will be done by a centralised entity anyway?
Fourth - in the hypothetical case when we have titles and NFTs linked to them, there are several interesting questions - what happens when owner of the NFT forgets his private keys? What happen if the owner dies? What happens when the court judges declare that the ownership is incorrect? How are marriages handled, where today multiple people can own the same property?
That ain't an "if" at all. The actual identifying information on, say, a vehicle title or land deed takes up maybe a couple hundred bytes at most (if not far less), whereas most NFT-capable blockchains allow transaction metadata on the scale of multiple kilobytes.
> Second - do you realise that title contains private information which will be forever exposed on-chain?
Nearly (if not entirely) all of the actually-private data (namely: the owner's PII) is redundant under a title-as-NFT system, since ownership is asserted by wallet/token custody rather than being baked into the document.
Besides, encryption is a thing that exists.
> Third - ok, even you admit that not everything will fit on-chain.
I admit no such thing. What I actually said is that you can break up large data into smaller chunks such that it can fit on-chain even if it somehow blows out the chain's transaction metadata ceiling.
Regardless:
> Then who will store the rest of the data?
Have you heard of IPFS?
> Fourth - in the hypothetical case when we have titles and NFTs linked to them, there are several interesting questions - what happens when owner of the NFT forgets his private keys? What happen if the owner dies? What happens when the court judges declare that the ownership is incorrect? How are marriages handled, where today multiple people can own the same property?
All of these things can be (and, in the case of lost keys, have been) addressed with smart contracts; the blockchain can programmatically define conditions under which the NFT can be transferred, e.g. with consent from multiple parties. Such programs can also represent multi-person ownership; in a world where blockchain computation can handle the governance of large organizations, something like a marriage or an estate is a readily solvable problem.
You can't have "smart contracts" applied to the real world without centralised entities controlling them. Therefore they are mostly redundant and unnecessary.
Regarding the size of the title - I admit I don't know much about that area, but I know enough to doubt your claim that majority or even any titles can be reduced under the kilobyte. Splitting info into multiple tokens will only make things even worse.
Also this doesn't address the issue that UX of centralised entity working with such system will be atrocious. You postulate that there will be no centralised entity, but imho that's pure fiction.
And lastly - IPFS will never be adopted for anything important because it doesn't have safety guarantees. Not even with those services promising guarantees for some regular payment. Because subscription can run out, that service may close or anything else can happen, IPFS still can't guarantee file safety. That's a nice toy, but nothing more in the current implementation.
I totally agree, but the argument being made is that "the potential upsides outweigh the low probability". That's not investing, that's gambling.
Let's say we play a game where you throw a coin 3 times in the air. If it's not 3 times head, I'll pay you $1. If it's 3 times head, you pay me $10.
Your chance of winning is pretty high, while my chance is low. Yet, I would love to play this game.
No, my argument is that once it's a matter of "you could lose everything or make it big!" is gambling.
> It's a ratio.
With totally unknown values.
> Yet, I would love to play this game.
This is exactly what the people who currently hold bitcoin are suggesting to those who don't.
Bitcoin SV did not care about these things and is dead because of it. Its blocks are ~200MB spammed with mostly non-payment related data. Its blockchain has grown to over 6 TB, the global number of nodes verifying the chain is down to 20 and it has been delisted by many exchanges and block explorers.
Bitcoin and Lightning in comparison have ~25,000 nodes.
Your example is bizarre since it is a nonsense fork made by a scammer. Even so it does actually work and keeps running even though all the people that sold you a second layer said throughput above a 56k modem was impossible. The spam could easily be prevented by a minimum fee. Even $0.10 per transaction would be $120,000 an hour paid by spammer and going to miners.
I never suggested this, as you could see a few replies up:
> Right now, you came late to the game, so don't expect a x100. The risk is probably still the same, but the upside way lower. But when Bitcoin was still young, the upside was definitely worth the risk.
Nevermind, this conversation is clearly going nowhere.
If you're a forex trader, you're trying to make money from people's need to use these currencies.
If you're doing that for crypto, you're doing that but for people who are just also buying and selling crypto - not actual goods or services.
I don't do Forex trading so I'm not particularly defending it. The currency I hold is the one that has utility to me. It's the one I'm paid in, the one I pay taxes in. I don't particularly want it jumping up or down 100s of %. I want it to be stable.
If bitcoin is more stable than your local currency go for it, (although if inflation is 'only' 25% it still doesn't seem to meet that bar). But that says more about your currency than the bitcoin and it still doesn't make it an investment. Your case would seem to be better served by holding USD though.
My first post pointed out it wasn't a very good investment. You seem to be buying it as a store of value, but it isn't very good at that either. So all were left with is a distrust of government. But the cure is worse than the disease.
Hell, I got 3.5 pounds of steak tips for $20 about a month ago.
My food costs have absolutely gone up, but it's MUCH closer to the "10 percent" figures quoted as inflation than anything close to what you have said. Where do you live and shop?
A lot of cattle was recently liquidated (made into meat products, this year) as grazing fields have been drying up and, due to climate change, meat pipelines have had to start making MAJOR changes.
https://fred.stlouisfed.org/series/APU0000FS1101
So of the two items you cherry-picked to support an assertion that groceries have more than doubled, one is up...around 30-35%. In fact, there doesn't appear to be a single food item in this list that has doubled in the past year. Eggs are the closest.
https://www.bls.gov/regions/mid-atlantic/data/averageretailf...
https://www.ams.usda.gov/mnreports/dywabutter_cme.pdf
https://www.globaldairytrade.info/en/product-results/butter/
But that's not the whole story. Prices are not primarily set by wholesale costs for many goods.
I think cereal has only gone up 30%, although there have been other events that influenced Kellogs pricing (notice how the Poptarts boxes have changed slightly) and then there has been the opportunity to steal away some extra profit - https://www.wxyz.com/news/now-cereal-prices-are-on-the-rise-... (search for "Mills").
Cryptocurrencies like Bitcoin directly mitigate (if not outright prevent) that risk.
1. No one needs btc for education tourism etc. So there is no underlying demand that the general btc holder can middleman onto
2. You aren't supposed to hodl any kind of forex pair hoping it goes up forever.
Also I forgot to stress that forex is trading and not investment