[HN Gopher] El Salvador Plans to Use Electricity Generated from ...
___________________________________________________________________
El Salvador Plans to Use Electricity Generated from Volcanoes to
Mine Bitcoin
Author : pseudolus
Score : 131 points
Date : 2021-06-11 10:26 UTC (12 hours ago)
(HTM) web link (www.npr.org)
(TXT) w3m dump (www.npr.org)
| lm28469 wrote:
| > So tell me, why did your civilisation built a Dyson sphere
|
| > BTC lmao XDDD
|
| This world is sick
| thehappypm wrote:
| One interesting thing to me is that Bitcoin is a lot easier to
| steal than money in banks. A bad actor can steal your private key
| and take all of your BTC, and it's gone forever. Try doing that
| with a bank account -- the bank will back you up, there are
| transfer limits.
| defgeneric wrote:
| The whole point of Bitcoin is that the bank itself cannot steal
| your money.
| thehappypm wrote:
| Coinbase or any other exchange can certainly steal your
| coins, just like a bank can steal your money. Hosting your
| own private key is like having your money in your mattress --
| it's as secure as you allow it to be, and once stolen it's
| gone forever.
| leesalminen wrote:
| Tell that to my brother-in-law who had his identity stolen and
| several lines of credit taken out in his name. He's spent the
| past 2 years working to resolve it with limited success. His
| credit score is still trashed and can't buy a car nor house.
| ipaddr wrote:
| How does this apply? This makes it easier for others to steal
| all of the money? I would think they would be selling those
| coins after mining them not holding on to them as some future
| investment.
|
| Nevermind that banks in smaller countries can be a huge source
| of thief.
| einpoklum wrote:
| I wonder if someone called in a favor with the president in order
| to hike up the price of BitCoin even more before they sell
| theirs.
| cs702 wrote:
| The country is already going all-out in its adoption of Bitcoin,
| so sure, why not go from "ludicrous" to "plaid" by bringing
| volcanoes into the mix?[a] For those not living in El Salvador,
| it will be fascinating to see how this unorthodox approach to
| monetary policy works out in the end.
|
| [a] https://www.youtube.com/watch?v=VO15qTiUhLI
| beiller wrote:
| Yeah. How can a country survive without unlimited QE? The poor
| residence will see their buying power constantly rise against
| all other currencies as the other countries of the world follow
| in USA's footsteps of unlimited manipulation. Realistically
| that might actually be tough for any of their exports however
| and may make everyone unemployed as their "currency" rises in
| value, but will they also all be rich? Frankly I think it is an
| amazing experiment.
| lucb1e wrote:
| Almost half the electricity produced in El Salvador is from
| fossil sources (they don't have nuclear power):
| https://data.worldbank.org/indicator/EG.ELC.PETR.ZS?location...
|
| Option A: invest in that volcano and reduce greenhouse gas
| emissions.
|
| Option B: invest in that volcano and mine bitcoin.
|
| B makes them richer so long as other people keep expecting
| Bitcoin prices to rise (increasing demand), so I can see why they
| do this, but I'm not sure I like it. Even if the equipment,
| installation, and operation are all compensated for, it's wasting
| renewable energy on making heat and some money by gambling on
| future demand of a PoW-based system. But for a poor country,
| making money to get up to rich country living standards makes
| sense so... I can't even fault them.
| bgitarts wrote:
| Option A requires building out power transmission and storage.
|
| Option B does not as the mining is always running and near the
| source.
| wyager wrote:
| The economics of geothermal are often unfavorable for
| consumer/industrial electricity production. Bitcoin mining is
| unique in that provides a consistent consumer for electricity
| at a reliable price 24/7.
|
| The long-term effect of Bitcoin mining will probably be to
| subsidize the creation of reliable constant-output power
| sources like geothermal and nuclear, with some of that capacity
| being used for consumer/industrial usage during peak hours.
| adrianN wrote:
| "a reliable price" until the bubble pops?
| wyager wrote:
| If the price of Bitcoin goes down, it will reduce demand
| starting at the most expensive power sources used to mine
| Bitcoin. There is a lot of "buffer" for something like
| geothermal before Bitcoin falls enough for it to get axed.
| kerng wrote:
| Its telling of the quality if HN, if the top comment is a false
| dichotomy... I have noticed a steep decline of thoughtful
| comments over the last year.
|
| And of course: why not do both, and more?
|
| Edit: lots of downvotes, but at least a higher quality comment
| is on top now.
| lucb1e wrote:
| > why not do both, and more?
|
| We'd all love if they did that instead of what was announced,
| but that's not the announcement.
| jlarocco wrote:
| Yeah, it's hard to imagine an implementation where the
| geothermal can _only_ be used for bitcoin mining.
|
| I'm not a fan of crypto or bitcoin, but if it funds their
| roll out of geothermal power, then that seems like a net-
| positive.
| adrianN wrote:
| > why not do both, and more
|
| Presumably because they have limited capital and can't solve
| all problems at once?
| emodendroket wrote:
| I imagine what happens is a small circle of people makes a
| whole lot of money this way.
| cratermoon wrote:
| > B makes them richer
|
| B makes the colonizing foreign investors richer. It won't do
| shit for the poor country.
| 29athrowaway wrote:
| When a government...
|
| 1) owns a profitable state company
|
| 2) that does not require the cooperation of the population in
| order to be profitable
|
| ...the result is a dictatorship.
|
| https://www.youtube.com/watch?v=rStL7niR7gs
| lucb1e wrote:
| That sounds a lot like Norway though, didn't they have this
| massive amount of money from some natural resource (oil I
| think) and made a big pension fund for the population?
|
| There are obviously also counter-examples, but a currently-
| democratic country finding a new way to make money from
| natural resources, I wouldn't expect we have a large enough
| sample size to really say anything about that with
| certainty.
|
| Edit: The Norway thing being (for those interested):
|
| > [The oil fund] was established in 1990 to invest the
| surplus revenues of the Norwegian petroleum sector. It has
| over US$1.3 trillion in assets, including 1.4% of global
| stocks and shares, making it the world's largest sovereign
| wealth fund. In May 2021, it was worth about $248,000 per
| Norwegian citizen.
|
| https://en.wikipedia.org/wiki/Government_Pension_Fund_of_No
| r...
| 29athrowaway wrote:
| Because oil was discovered in modern times when Norway
| was already a developed society with strong institutions
| and an educated populace.
|
| In contrast, El Salvador right now is still fighting
| barbarism and anarchy.
| ipaddr wrote:
| How did you reach that conclusion? Wouldn't this be a way to
| export power without the lines.
| freeone3000 wrote:
| No, because Bitcoin doesn't turn back into energy. The
| energy is just gone.
| bpodgursky wrote:
| "To prevent colonizing foreign investors from controlling
| your country, you just have to run your country how I, an
| educated wealthy westerner, think you should."
| rawtxapp wrote:
| Are you referring to the fact that their currency is USD
| which they don't control therefore can be pushed around by
| the USG?
| deweller wrote:
| This is a false dichotomy.
|
| They can subsidize the startup costs for harvesting geothermal
| energy from Bitcoin mining and then use the geothermal
| infrastructure to produce electricity for the country.
| emodendroket wrote:
| It's not a false dichotomy. The infrastructure does not exist
| and they can't do both things at once
| vidarh wrote:
| How does the infrastructure not exist given geothermal
| currently provides a quarter of their electricity?
| ipaddr wrote:
| The parent said with profits they can fund plus some work
| will need to be made to mine bitcoin possible and those
| road/building can be repurposed.
| deweller wrote:
| A false dichotomy is when one argues that only option A or
| option B are available when in fact options C, D, and E
| also exist.
|
| https://en.wikipedia.org/wiki/False_dilemma
| emodendroket wrote:
| I know what a false dichotomy is. I'm rejecting the claim
| that we're dealing with one.
| narrator wrote:
| They can put the Bitcoin mine out in the middle of nowhere
| next to the volcano. Building a transmission and
| distribution infrastructure to the rest of the country can
| be funded by the Bitcoin mine.
| bthazos wrote:
| They tried this in Italy 2000+ years ago. A wealthy city
| will spawn from the mine, but since bitcoin doesn't
| appease the gods like physical gold does, the city will
| be buried in ash.
| lucb1e wrote:
| That sounds great. Let's hope that actually happens and hope
| that the geothermal equipment lasts longer than Bitcoin
| demand lasts. Perhaps, though, if that is actually the plan,
| they could say as much?
| adolph wrote:
| They are already doing Option A.
|
| _El Salvador is the largest producer of geothermal energy in
| Central America._
|
| https://en.wikipedia.org/wiki/Electricity_sector_in_El_Salva...
| vidarh wrote:
| Or option A + B: Invest in more geothermal - they already have
| a lot -, and use bitcoin mining when demand is low to help
| offset the cost. If mining makes it cost-effective to increase
| sources like geothermal past the point where it covers the base
| load so it reduces the need for peaker plants, that might be
| worthwhile (though of course the other option is to invest in
| storage)
|
| But the potential geothermal output for El Salvador is huge.
| lucb1e wrote:
| Okay but that's not what they're saying, is it? If that was
| the plan, surely there would be a mention of said plan while
| they're announcing plans. Would be a bit weird to only
| announce "we're gonna turn heat into heat+money" but not "and
| also reduce our climate impact whenever possible".
| vidarh wrote:
| You're assuming there _is_ a plan, rather than just the
| president using it to get attention. All that seems to have
| really happened is that he 's asked someone at the majority
| government owned geothermal power company to look into
| doing it.
| lucb1e wrote:
| Not exactly. I'm wondering whether the person who says
| they're going to do something better than what they're
| currently saying is correct.
| vidarh wrote:
| Who is saying they _are_ going to do something better?
| You gave a couple of options, and I pointed out there was
| an additional option. They are still just options absent
| a commitment to a plan, and there 's no indication anyone
| has set out any actual plans.
| garydevenay wrote:
| Some context to this plan:
|
| This idea was presented to President Bukele during a
| Twitter Spaces[1] session where he discussed the bill with
| the Bitcoin community whilst it was going through voting.
| Mining Bitcoin was not something he has previously
| considered and openly ideated on the call with the
| community. It seems like a fully proposed plan for how
| Bitcoin mining will play a part in the country's overall
| energy policy has likely not yet been fully formed.
|
| [1]: https://www.youtube.com/watch?v=IRnygiyuG0k&t=4s
| paulgb wrote:
| > use bitcoin mining when demand is low to help offset the
| cost
|
| I've looked at income statements of a bunch of public
| companies that mine Bitcoin, and one of the most striking
| things is how much of the cost is actually depreciation of
| hardware. Granted, part of this is that they are running the
| hardware to its limits, but another aspect is that new
| improved mining hardware comes out frequently and pushes the
| old hardware over the profitability edge.
|
| Basically, I'm skeptical that anyone can mine Bitcoin
| profitably without running the hardware 24/7. Other coins
| that use commodity hardware, maybe.
| vidarh wrote:
| But aggressive depreciation of hardware is in part a
| function of how much the electricity costs. If you're
| running off what is in effect "waste", then that would
| change the amortisation significantly.
|
| May well be that it won't change the cost structure
| _enough_ - I treat this as the president deciding an
| announcement like this, which amounts to little more than
| "I've asked them to look into it", as a way to get some
| publicity. It could very well end up being silently put
| aside if the costs don't stack up.
| nonamenoslogan wrote:
| Seems to me El Salvador will say anything they can to make the
| price rise.
| deepserket wrote:
| exactly, the problem with listening who is betting in bitcoin
| is that they will try to pump the price almost all the times
| whereistimbo wrote:
| goblok. I feel relieved, even though Indonesian President is
| still Jokowi, he isn't as stupid, hippie dumb like El Salvador's
| president.
| IfOnlyYouKnew wrote:
| At what point do the Bitcoin bros notice the company they keep is
| getting more and more ridiculous?
| defgeneric wrote:
| What exactly is ridiculous about El Salvador? What an ignorant
| and racist comment.
| runbathtime wrote:
| The El Salvador government is directing a state run energy
| company to provide 'cheap' (does that mean free?) energy to those
| mining bitcoin in El Salvador. Are these miners even locals or
| are they Americans? The miners will be getting cheap energy at
| the expense of the local population/ country. Maybe the miner's
| profits will be taxed and go back to the government for a return
| on investment. The thermal energy from the volacano is being
| pursued not because it is more efficient, but because it is more
| green and more moral. El Salvador making bitcoin legal tender,
| and forcing it to be accepted in payments, is the best thing to
| happen to bitcoin. The only way this can work is if the
| government buys the bitcoin from merchants and give them dollars,
| so the government is the buyer of last resort for your bitcoin.
| No where in the world can a bitcoiner force anyone to accept
| bitcoin for goods/services or exchange for dollars but El
| Salvador. El Salvador receives millions of dollars in aid from
| the US. The US tax payer is funding bitcoin mining (through
| energy subsidy) and funding the El Salvador government trading
| facility of converting bitcoin to dollars. The government bears
| the transactions costs/ and the volatility risk. El Salvador
| shouldn't receive a cent of US aid to support this, only private
| contributions. If the El Salvador government has enough money for
| bitcoin projects, they don't need US aid for humanitarian
| reasons. Bitcoiners who support this can no longer claim to be
| about freedom, as this is coercive, and is only possible through
| massive government spending to subsidize it that El Salvador is
| doing. This is only a victory for the miners being subsidized,
| and the bitcoiners who have a buyer of last resort. Is it really
| a medium of exchange if statistics show that 95% of merchants
| convert to dollars immediately? Is it really a victory if you
| have to use government force to get people to accept it?
| pocoloco wrote:
| > El Salvador receives millions of dollars in aid from the US.
|
| This has been true for decades. Not anymore. A couple of weeks
| back the US gov said that it would stop all USAID funding and
| give it instead to ONGs in El Salvador which are basically the
| opposition or anti-Bukele.
|
| I assume that there are other ways that the US gov sends "aid"
| but I'm sure these will also stop soon enough.
| neither_color wrote:
| Wow this is the REAL story then. I had no idea why this move
| to BTC came out of nowhere and passed as law so quickly.
| Really scummy move from the US, using aid money to bully
| small countries and enforce its will. Too many strings come
| with US foreign "aid", it's more like predatory lending. I
| hope this works out for El Salvador.
| pizza234 wrote:
| Two questions:
|
| - will those moves make the country a good location for
| laundering bitcoins?
|
| - generally speaking, is there no other way of profiting from
| surplus electricity (which essentially, this is)?
| dadoge wrote:
| https://www.google.com/amp/s/www.nytimes.com/2021/06/09/tech...
|
| Nah. Bitcoin is actually a lot easier to trace than paper US
| Dollars.
| ostenning wrote:
| Exactly, people who claim btc is anonymous don't know what
| they are talking about. You can literally trace every
| transaction ever made, and given nearly all on-off ramps to
| fiat require KYC, btc itself is not the problem.
|
| The problem comes from privacy coins like Monero, which
| arguably should be outlawed (if not already)
| Hendrikto wrote:
| > The problem comes from privacy coins like Monero, which
| arguably should be outlawed (if not already)
|
| You cannot (and should not try to) outlaw maths.
| selsta wrote:
| > The problem comes from privacy coins like Monero, which
| arguably should be outlawed (if not already)
|
| Are you also in favour of outlawing Tor, E2EE, HTTPS? I am
| always surprised that some people want privacy outlawed.
|
| Disclaimer: Monero contributor
| jMyles wrote:
| Can you imagine the price spike the day that's announced?
|
| But also: outlaw _where_? Math doesn 't recognize borders;
| the two are like oil and water.
| cinntaile wrote:
| Regarding privacy coins... This sounds a bit dystopian
| though, why do you think the state should have a right to
| see your entire transaction history?
| kcmastrpc wrote:
| - given the economies of scale, im guessing that the major 1st
| world countries will continue to be the most prolific in terms
| of bitcoin laundering
|
| - of course there are other ways, but given the return on kW/h,
| what's the _most_ profitable?
| vondro wrote:
| > generally speaking, is there no other way of profiting from
| surplus electricity (which essentially, this is)?
|
| Making hydrogen, smelting aluminium, de-salinating water. But
| bitcoin can be transferred over internet, so the logistics is
| easier.
| kcmastrpc wrote:
| unless the US ramps up nuclear or renewables to a level as of
| yet unseen, i can see the US building fresh water pipelines
| to central america in the next 25-50 years.
| conjectures wrote:
| > other way
|
| Undoubtedly there is, e.g. steel making - with the attendant
| logistical challenges. But few ways to fairly directly convert
| electricity into money.
| garydevenay wrote:
| In the case of laundering Bitcoin-- this seems to be a majorly
| misunderstood concept. Bitcoin transactions are completely
| transparent and observable by everyone who has an internet
| connection. Anyone (with an internet connection) can watch any
| wallet and observe any and all transactions. The notion of a
| country being a "good location for laundering bitcoins" doesn't
| really make sense, as Bitcoin are never in a location.
|
| In terms of profiting from surplus electricity, Bitcoin (or
| cryptocurrency mining in general) is a great option as it's
| exceptionally simple to scale up and down in accordance with
| available cheap surplus. One major benefit that miners are
| taking advantage of is locating in close proximity to energy
| stations, reducing the inefficiency of transporting electrical
| energy over distance. This turns effectively "wasted" energy in
| to a solidly efficient energy store for infinite amount of
| time-- for example: 1 BTC will always be equal to 1/21000000 of
| the total supply.
| numbers_guy wrote:
| You know how much each wallet contains but not whom it
| belongs to. Hypothetically, if you cannot use a western
| exchange you might figure out how to buy Hondurian assests,
| and then resell for dollars. It entirely depends on how
| Honduras will setup KYC laws, if any at all.
| legutierr wrote:
| Are lightning transactions completely transparent?
| ajkdhcb2 wrote:
| The transactions pass through generally only 1-2 nodes
| which will be required to log everything unless they want
| to risk punishment for laundering illegal BTC, and people
| dont want to close their channel and end up with illegal
| BTC without evidence of how it happened, so yeah. There are
| huge problems with trying to build fungibility on top of a
| traceable foundation.
| pyrale wrote:
| > it's exceptionally simple to scale up and down in
| accordance with available cheap surplus.
|
| This point comes back frequently, but it's actually not true.
|
| In order to turn a profit from bitcoin, you need to offset
| hardware depreciation costs, and that usually means you need
| to mine 24/7.
| StavrosK wrote:
| I agree with the rest of your comment, but there's some
| sleight of hand here:
|
| > This turns effectively "wasted" energy in to a solidly
| efficient energy store for infinite amount of time-- for
| example: 1 BTC will always be equal to 1/21000000 of the
| total supply.
|
| It's not an efficient energy store if you can't get the
| energy back, it's just energy usage. Also, yes, 1 BTC will
| always be the same fraction of the total supply, but the
| actual value of it varies.
| garydevenay wrote:
| I think that's a fair comment. Re-using the word "energy"
| in that sense is potentially misleading to always mean
| electrical energy.
|
| As for the value of 1 BTC, it's value fluctuates if you
| operate on a base currency which is not BTC, but that is
| the same for any currency exchange.
|
| (I am suggesting currency, though I also understand that
| BTC may not be unanimously agreed on as a currency-- but in
| El Salvador's case it is)
| StavrosK wrote:
| > As for the value of 1 BTC, it's value fluctuates if you
| operate on a base currency which is not BTC, but that is
| the same for any currency exchange.
|
| Yes but also, even though 1 BTC will always be worth 1
| BTC, the amount of work it buys you won't be the same, as
| with any currency. In theory, you can also store USD for
| an infinite amount of time (assuming you exchange the
| paper for new paper when it decays), but it, too, won't
| hold its value.
| garydevenay wrote:
| > In theory, you can also store USD for an infinite
| amount of time
|
| This is actually not true, as 1 USD does not equal a
| static percentage of all USD. If you look at the stock-
| to-flow of storing value in USD compared to Bitcoin or
| even Gold, it's immediately apparent that USD or central
| bank backed fiat currency is an exceptionally inefficient
| way to store value as it's being debased at alarming
| rates.
|
| This is why $1000 was worth way more in 1980 than it is
| today.
|
| Edit Note: I actually just re-read your comment and
| realised I misread. I read store value for an infinite
| amount of time
| throwawayffffas wrote:
| I would point out that 1 BTC does not equal 1/21000000 of
| the total supply forever. For three main reasons a)
| wallet keys get lost making stored bitcoins unavailable.
| b) The developers/community may very well decide to
| change the total amount of bitcoins available in the
| future. c) With the rise of quantum computing it is
| conceivable that the public key encryption that is used
| to secure the wallets may be broken in the next few
| decades rendering bitcoin unusable.
|
| EDIT: corrected public key, I had written
| "public/private" for some reason.
| epigen wrote:
| > this seems to be a majorly misunderstood concept.
|
| It seems you misunderstand. Illicit fiat and extortion can be
| used to access energy to mine Bitcoin, effectively laundering
| that illicit fiat.
| garydevenay wrote:
| This scenario doesn't have any particular features that
| make access to energy or mining bitcoin the differentiating
| factor. Illicit fiat and extortion can be used in order to
| launder illicit fiat in many ways.
|
| The underlying problem actually lies in the fiat system,
| not the Bitcoin one.
| epigen wrote:
| > The underlying problem actually lies in the fiat
| system, not the Bitcoin one.
|
| How so?
| garydevenay wrote:
| > How so?
|
| Fiat currencies are exceptionally good instruments for
| exchange value for illicit purposes. Primarily this is
| because it is unknown what the total supply of fiat is
| (although there are reasonable models for estimation) and
| it's transactional history is impossible to define.
|
| Both of these properties combined (although other factors
| undoubtably are at play) mean it's very easy for large
| amounts of fiat to exchange hands without any third
| parties knowing (i.e cash transactions).
|
| This is the underlying issue that allows fiat currencies
| to be the best method for transacting for illicit
| purposes.
| Hendrikto wrote:
| Wouldn't the money already need to be laundered to buy
| energy with it in the first place?
| epigen wrote:
| Iran doesn't need to launder money to buy electricity in
| their own country.
| disruptalot wrote:
| Wow this is perhaps the best critique of Bitcoin yet.
|
| In summary, Bitcoin is bad because it allows money
| laundered using the existing financial system to flow into
| it. Forget the property, energy and hardware providers for
| accepting illicit funds. Bitcoin is the real problem.
| jiveturkey wrote:
| > this seems to be a majorly misunderstood concept.
|
| By you as well!
|
| 1. Yes, they are transparent, however mixers are a thing.
|
| 2. The 2 things confounding mixers are KYC and volume. El
| Salvador, a country, is in a position to ignore KYC and
| thereby promote mixing (laundering as one of the benefits)
| under its jurisdiction. Now they just have to attract the
| volume. You could never get away with this in the US.
|
| There's more to it than the bitcoin fundamentals. Laws do
| matter and they come into play by location.
| yawaworht1978 wrote:
| Does a volcano have to be active to generate electricity from it
| or is heat sufficient?
| Ensorceled wrote:
| Geothermal, similar to Iceland ...
| https://en.wikipedia.org/wiki/Geothermal_power_in_Iceland
| chrisco255 wrote:
| Geothermal heat is sufficient.
| pocoloco wrote:
| As a Salvadoran living abroad but keeping an eye on politics
| there, I feel the need to comment given the amount of skepticism
| shown here, which is understandable given the history.
|
| I believe that what the president, Nayib Bukele, and his team
| have done is monumental. The reason is that I also believe that
| the financial system crashed back in 2008 and has been kept alive
| by central banks worldwide. Last summer we saw how Lebanon banks
| reneged to pay back their customers their holdings in USD. This
| seems to be increasing. The thirst for USD around the world is
| increasing and all the so called printing by the FED is not
| getting to the other countries and international companies fast
| enough. El Salvador is in a though position since it does not
| control its main currency. The other one, the Colon, while still
| legal tender is for all practical purposes unusable. It would
| take too long to grow the economy enough for it to be valued
| appropriately against the USD. Mandating BTC as legal tender is
| an awesome move. To me the most important benefit is that the 70%
| of the population which was excluded from banking and relegated
| to use physical currency will now be included. If the economy is
| an engine and money is the oil, El Salvador, which had only some
| drops of oil, will now get a complete oil change with synthetic
| on top of that. Lets remember that the law obligates the
| government to instruct all citizens on the use of the technology
| and to provide the means if necessary. This means that the
| government now has to provide connectivity to all citizens and
| teach them. Nayib has shown that he's up to the task. For
| example, El Salvador is providing every child in the public
| school system with a laptop and free internet connectivity.
|
| So I think this is beyond if BTC goes up to 200k. It doesn't
| matter. If it goes back to 10k is OK too. What matters is that
| every citizen will now be included as equal in this new financial
| system.
| yongjik wrote:
| Not gonna argue about bitcoin's merit, but this part:
|
| > Lets remember that the law obligates the government to
| instruct all citizens on the use of the technology and to
| provide the means if necessary. This means that the government
| now has to provide connectivity to all citizens and teach them.
|
| It's like proposing to dismantle old but working streetcars,
| because when the only way people can get around is by cars then
| the government will have to build decent highways. Sure, maybe
| the government should, but if it couldn't until now then what
| makes you think it will suddenly be able to?
| sanderjd wrote:
| Without debating any of your points: bitcoin is a terrible
| choice for this. It is horribly volatile, it is incredibly
| expensive to transact in, it is an awful waste of energy.
|
| Using a stablecoin on a proof of stake blockchain with high
| transaction rates would make a lot of sense.
|
| But that wouldn't help the officials who pushed this get rich
| from their stash of bitcoin...
| rawtxapp wrote:
| Once again, El Salvador is using lightning network which
| enable almost instant and practically free Bitcoin payments.
| PoS isn't perfect either and has it's own sets of problems.
| sanderjd wrote:
| It remains to be seen whether lightning network will
| actually work for this. If it does, then I'll allow that
| only the volatility and energy waste are the reasons this
| is a bad idea.
|
| But yeah, if you sell this to me as a test of lightning at
| scale, then I'm definitely more interested in it, while
| still thinking a super volatile asset is a bad currency.
| rawtxapp wrote:
| It _does_ work, they have been using it in El Zonte town
| for quite some time now [1].
|
| The volatility will come down as the market caps get
| larger, but it'll never go away (I mean even fiat
| currencies and gold's price fluctuate on a daily basis).
|
| The energy usage ( _not_ waste if you consider it to be a
| useful thing) will only go up as the price goes up, but
| it 'll use increasingly renewable % and stranded energy
| and even bankroll new renewable power plants that
| wouldn't have been profitable to start.
|
| 1: https://www.forbes.com/sites/tatianakoffman/2020/07/14
| /this-...
| Shaanie wrote:
| This "volatility will come down as the market cap gets
| larger" keeps getting thrown around, yet Bitcoin just
| lost 50% of its value at a market cap of 1 trillion USD.
| What market cap is required for Bitcoin to stop being
| volatile?
| megameter wrote:
| Well, how little volatility is needed to be called
| stable? Over a few years, large swings can happen with
| _major forex pairs_. Take GBP /USD for example: High of
| 1.71602 in 2014. Low of 1.14926 in 2020. It currently
| trades around 1.4.
|
| So, not the same kinds of returns and drawdowns as
| BTC/USD, but enough to make one's eyes water and stomach
| churn. Forex has always had a reputation for volatility.
| sanderjd wrote:
| I think it is more useful to look at inflation /
| deflation as the comparison point for a currency rather
| than forex pairs.
| rawtxapp wrote:
| I mean even gold (which is a centuries old asset) is
| pretty volatile on a yearly basis (high of ~2100$, low of
| ~1650$ this year).
|
| I think when Bitcoin approaches Gold's price, you can
| expect similar volatility because by then large
| institutions/countries would be holding it.
|
| Also on a long term basis, it appreciates an average of
| ~300% year over year which is much better than the dollar
| which is depreciating on purpose.
| thehappypm wrote:
| Gold is not a used directly as a currency anymore, in
| part for the reason that it's hard to control the value
| of an asset. It turns out that having some control over a
| currency's inflation/deflation is very powerful and good
| for economies to function.
| rawtxapp wrote:
| Fiat currencies fluctuate too, even a big pair like
| USD/EUR has a high of ~0.9 and low of ~0.8 this year and
| if we are talking about smaller currencies like say the
| Turkish Lira, you're looking at much larger changes.
|
| Gold isn't used directly because it's not convenient, are
| you gonna transport a heavy metal that you can't divide
| into small portions to pay for stuff? No! Lightning
| network wallets makes even tiny payments of couple
| satoshis very easy/instant/almost free.
| sanderjd wrote:
| Gold is also a very bad currency.
| pkulak wrote:
| Lightning is a horrible kludge to deal with the fact that
| Bitcoin is terrible at being a currency. It essentially
| boils down to this process:
|
| 1. Pay huge fees to take your money off the blockchain.
|
| 2. Whiz it around a new, totally independent, centralized
| network where you need an always-on connection to anyone
| you're paying or receiving from and need to trust any
| intermediaries you're using, with brand new fees for every
| transaction and even at rest (so you can pay a "watchtower"
| to help make sure you don't get cheated).
|
| 3. Pay more huge fees to put your money back on the
| blockchain when you're done.
|
| 4. Wonder how you got yourself into a situation where you
| have all the disadvantages of Visa and Bitcoin, with none
| of the advantages of either.
|
| We already have existing coins, like Nano, that can handle
| transactions instantly, for zero fees, and with nearly no
| energy use, on the main chain.
| rawtxapp wrote:
| Channel factories will open/close many channels at once,
| so you'll only pay a fraction of the blockchain
| transaction cost. It has the advantages of Bitcoin's
| security and p2p network speed.
|
| Security and trust are a lot more important for currency,
| nano doesn't have that. It has easily been spammed [1].
| It barely has a market cap of ~1B$ and has never
| recovered to it's 2017 prices, so it's not even remotely
| close to being an ideal candidate for a country's
| currency.
|
| 1: https://www.coindesk.com/nanos-network-flooded-spam-
| nodes-ou...
| pkulak wrote:
| Eh, it got spammed and transactions slowed to BTC level
| (but still with no fees) for a couple months. Spam is a
| solvable problem. A hard limit of 4 transactions per
| second isn't.
|
| Ya know what doesn't have security and trust? Putting
| your entire country on two custodial wallets and having
| all your citizen's wealth in the hands of two foreign
| companies (channel factoried or no). No one in El
| Salvador actually owns any Bitcoin. It baffles me how
| anyone could get on board with the original ideals of
| BTC, then defend what's happening now.
| defgeneric wrote:
| > But that wouldn't help the officials who pushed this get
| rich from their stash of bitcoin...
|
| The price didn't move much after the announcement. The whole
| point is to attract those who have already gotten rich from
| their stash of bitcoin to come to the country.
| sanderjd wrote:
| Yes that too.
| Avshalom wrote:
| >> Lets remember that the law obligates the government to
| instruct all citizens on the use of the technology and to
| provide the means if necessary. This means that the government
| now has to provide connectivity to all citizens and teach them.
| Nayib has shown that he's up to the task. For example, El
| Salvador is providing every child in the public school system
| with a laptop and free internet connectivity.
|
| That could have been done with just like a public bank instead
| of bitcoin though.
| jerry1979 wrote:
| If this experiment works, it should benefit the people in El
| Salvador because they now have the option to transact and
| communicate their purchase preferences all around the globe
| instead of just to the people they meet in person. As for
| using normal banks, I reckon we had the whole 20th century to
| try that experiment. Now, banks seem a bit like hope-cope
| such that it seems like a matter of shitting in one hand and
| "could have been done with just like a public bank" in the
| other.
| lucasnortj wrote:
| lol "new financial system", bitcoin is literally useless. take
| of your tinfoil hat
| jollybean wrote:
| I think all of this is completely upside down.
|
| It's a wildly irresponsible financial move.
|
| 1) It only takes a bare minimum of competence to create a
| currency that has integrity, and is stable.
|
| 2) Extending that digitally, should not be a hard.
|
| 3) Using energy supplies to calculate made up numbers seems
| like a giant waste of energy - that energy could be used to
| heat homes and power other things.
|
| 4) BTC is wildly unstable, since El Salvador depends on imports
| - and - nobody accepts BTC for payment - it's going to be a
| wild ride.
|
| 5) Nobody is going to be issuing debt in BTC so that part is
| moot.
|
| 6) BTC is inappropriate for 'unbanked' people - they're going
| to be the target of hackers worldwide. Sure, you could make a
| 'government wallet' that protects them from that ... but then
| why not just do regular banking.
|
| 6) For a _currency_ ... if for some reason you can 't do #1 ...
| the best option, by far, is to use USD. Prices in USD are
| stable. They're accepted globally. You don't have to issue debt
| in USD, but you can if you want. You can also digitally bank in
| USD if you want, it's not that hard.
|
| 7) If you really think that the best way to leverage volcanic
| heat is to mine BTC ... then fine. Do that - and exchange it
| for whatever currency you need.
|
| This whole concept is fairly insane, regular people I feel are
| going to pay a heavy price.
|
| Lastly - the problem is not 'finances' - it's the fools
| managing the country. If they acted with a modicum of
| responsibility, you'd be able to have all of the normal things
| other countries do i.e. a currency, basic banking. None of that
| is actually that hard.
|
| A better solution would be to approach an established bank
| somewhere: US, Canada, Brazil, UK, Germany and ask them to
| provide online banking for your citizens, probably in USD or a
| mix of USD and local currency.
|
| Do the BTC mining if you really want to, but as a secondary
| thing.
|
| Final Note: this already has the stench of corruption. My bet
| is that the leadership already has a big stake in BTC and are
| 'Doing a Musk' by propping it up and they will be grafting off
| the top of the mining activity.
| pocoloco wrote:
| I'm afraid that if I try to retort to each point we may end
| up talking past each other.
|
| But I will say this, I think that your assumption in point 1
| is wrong. I think that the mismanagement of the financial
| system worldwide has proven that there is no country currency
| invulnerable to manipulation.
|
| Jeff Booth talks about this towards the end of this interview
| which is great in it's entirety IMO.
|
| How Inflation Is Stealing Your Wealth | Jeff Booth | Pomp
| Podcast #572 https://www.youtube.com/watch?v=RuCqFjU9Wi4
| rsj_hn wrote:
| > The thirst for USD around the world is increasing and all the
| so called printing by the FED is not getting to the other
| countries and international companies fast enough.
|
| This is because all the Fed does is create reserves that it
| uses to purchase Treasuries on the open market. But when we
| talk of foreigners demanding USD, what they really demand are
| treasuries, thus more "printing" (it is electronic, reserves
| are just numbers in a database) actually _reduces_ the supply
| of assets that foreigners want to hold. Of course the scale is
| not really relevant to make a big difference in either
| direction.
|
| What _would_ increase the supply of treasuries is more debt
| issuance. There is an insatiable thirst to hold risk free debt
| in stable jurisdictions where property rights are respected.
| That is why the U.S. can run enormous deficits every year and
| the yields on those deficits are negative in real terms. None
| of this has anything to do with the supply of Federal reserve
| liabilities, which are reserves, but with the supply of
| Treasury liabilities, both actual liabilities and the off-
| balance sheet stuff like mortgages which are federally insured
| and thus also risk-free. We live in a world where the
| globalization of capital means that the moment anyone has some
| money to save, they want to store it on account in some US Bank
| or as a US corporate bond or equity, as they don 't trust their
| own local banks and their own local corporations. Thus the U.S.
| is the world's bank, and that's why there is a global demand
| for dollar-denominated assets independent of whatever the
| Federal reserve does to increase or decrease the supply of
| reserves within the US banking system. Adjusting those reserves
| with open market operations does absolutely nothing to supply
| more dollars to anyone in El Salvador (or in Kansas).
|
| But the problem for El Salvador is not the technology of
| monetary systems, it is that El Salvador has an underground
| economy that prevents it from collecting taxes or having a
| working credit system. If all your dealings are under the
| table, you have nothing to show a loan officer. If you don't
| want to store your savings in a bank but want to instantly
| withdraw them and store them in a foreign bank or under your
| mattress, then you are not going to be able to get much in bank
| loans in your own currency. None of that will be solved or even
| improved with bitcoin. Proving once again that bitcoin is a
| solution in search of problem, even in the arena of El
| Salvador's monetary woes.
| pocoloco wrote:
| > But the problem for El Salvador is not the technology of
| monetary systems
|
| I do believe that the monetary system IS the problem since El
| Salvador is dollarized and is subject to a foreign central
| bank antics while having no say in the matter. Having their
| own would be marginally better perhaps but IMO bitcoin is a
| much better solution.
| fnord123 wrote:
| > Mandating BTC as legal tender is an awesome move. To me the
| most important benefit is that the 70% of the population which
| was excluded from banking and relegated to use physical
| currency will now be included. If the economy is an engine and
| money is the oil, El Salvador, which had only some drops of
| oil, will now get a complete oil change with synthetic on top
| of that.
|
| You are 100% incorrect. Bitcoin is wildly deflationary.
| Therefore it does not encourage an economy to function, it
| encourages people to hold onto it with white knuckles. It's not
| oil for the economy, it's sand.
|
| > This means that the government now has to provide
| connectivity to all citizens and teach them.
|
| And when they don't provide connectivity and teach citizens?
| rawtxapp wrote:
| > You are 100% incorrect. Bitcoin is wildly deflationary.
| Therefore it does not encourage an economy to function, it
| encourages people to hold onto it with white knuckles. It's
| not oil for the economy, it's sand.
|
| In my opinion, that's the biggest lie that people have been
| made to believe to justify constant stealing of their
| purchasing power over time.
|
| People will always spend money for things they need, they
| will also spend money for things they want, our current
| system is forcing them to spend it for the sake of spending
| it causing unnecessary over-consumerism.
|
| It doesn't matter how much Bitcoin price will appreciate in 5
| years. If I need to eat, I'll have to spend _today_ , if I
| want to buy a house, I'll have to spend too. Instead, I will
| think twice on upgrading to the shiny new iPhone every year,
| maybe doing it once every 2-3 years, which is a _good thing_.
| reader_mode wrote:
| Yeah that's all fine and dandy until you need to take out a
| loan and on top of high interest you also need to account
| for deflation - good luck getting a house mortgage and
| falling wages. Deflation puta pressure on price of work as
| well - but people don't like pay cuts.
| maneesh wrote:
| When you're one of the 70% of people who are unbanked in
| el salvador, there are no needs for loans or interest --
| the concept barely exists.
| technotony wrote:
| It's very counterintuitive, but actually the more
| unbanked you are the more you needs loans/savings and the
| more complicated your personal financial balance sheet
| is. I'd recommend the book 'the poor and their money'[1]
| for the details on this, but essentially if you haven't
| got savings you are constantly borrowing and lending
| informally with your community to meet life needs like a
| new roof or school fees.
|
| [1] https://www.amazon.com/Their-Money-Oxford-India-
| Paperbacks/d...
| rawtxapp wrote:
| You know what happens then? House prices will fall
| because they won't have access to cheap money, so they'll
| end up being priced at their true value. Housing would
| stop being an investment, instead it would serve it's
| true purpose of providing lodging.
| reader_mode wrote:
| So you're going to end up paying more in real terms
| (since deflation), for a house that's going to be worth
| less, you're making less and you have to pay interest.
| Sounds like an amazing deal, would vote for bitcoin
| tomorrow !
| willmadden wrote:
| Correct. Keynesian economics is a fraud we're taught to
| disguise the fact that we're being robbed. You don't need
| an inflationary currency for a currency to work. Gold and
| silver worked just fine for thousands of years, and only
| ran into problems when corrupt governments and banks
| printed more paper receipts than they had reserves. Central
| banking just legalized this practice for private profit,
| and then the peg to gold and silver was eliminated once
| they had monopoly control.
| NicoJuicy wrote:
| Euh... HODL ? :)
|
| I mean, it's literally the #1 meme for cryptocurrency.
| rawtxapp wrote:
| I mean, of course hodl, but not at the cost of dying of
| starvation or missing out on having your dream home, etc.
| Bitcoin subreddit is full of stories of people buying
| their first homes or cars, I've seen many people start
| their small businesses with their gains.
|
| Life is short, you enjoy/spend what you have while you're
| here.
| ethanbond wrote:
| But currency needs to move in order to be, you know, a
| currency. The lack of upward price movement of e.g. the
| US dollar means that there is no advantage to sitting on
| it. Invest it, spend it, or lose it.
|
| Inversely, with BTC, you would want to spend as little as
| humanly possible. Make whatever philosophical arguments
| you want: this is not adding oil to the engine. This is
| adding sand.
| emptysongglass wrote:
| > Inversely, with BTC, you would want to spend as little
| as humanly possible.
|
| Sign me up. Hyper-consumerism has laid waste to our
| planet, commoditized every human interaction, and
| polluted our minds with its drivel.
|
| Behold Denmark and its glorious decision to punish its
| citizenry for saving any amount of money at all. Hope you
| weren't thinking of saving your pennies for a ticket out
| of the renter's racket, Denmark would prefer you stuff it
| in stocks and pay them their cut.
|
| It's time we seized control of the engine and refashioned
| it into a tool that serves our welfare.
| GhostVII wrote:
| It also encourages them to invest their money. The choice
| isn't either spend money on over-consumerism or lose it,
| the choice is either spend it or invest it so someone else
| can allocate more resources to what they are doing.
| rawtxapp wrote:
| For sure, but then you have to understand and research
| what you're investing in. We also end up with sky high
| (in my opinion unjustified) P/E ratios just because money
| doesn't have elsewhere to go and it creates all kinds of
| wild inaccurate pricing imo.
|
| In this world where the currency doesn't depreciate like
| ~95% over a 100 year period, only investments which make
| sense will get money thrown at them.
| jollybean wrote:
| This is not about incentives to spend or invest - it's
| about having a functioning basic unit of economic measure
| that is 1) stable 2) has integrity and 3) hopefully under
| the control over the government.
|
| BTC isn't good for any of that.
|
| USD is good for 1 and 2.
|
| The gov. can move to re-establish it's currency and have
| 3 as well.
| beckingz wrote:
| Looks like USD may be losing qualities 1 or 2 depending
| on how you define stability or integrity.
| pocoloco wrote:
| Yes, and this is exactly what Jeff Booth explains in this
| podcast way better that I ever could:
|
| How Inflation Is Stealing Your Wealth | Jeff Booth | Pomp
| Podcast #572 https://www.youtube.com/watch?v=RuCqFjU9Wi4
| Growling_owl wrote:
| > People will always spend money for things they need, they
| will also spend money for things they want, our current
| system is forcing them to spend it for the sake of spending
| it causing unnecessary over-consumerism.
|
| The worrying aspect is that the one thing that people want
| more than anything is to be the most rich and relevant
| person in a given area, hence the inflationary system to
| avoid people hoarding in order to reach this goal of
| theirs.
|
| If you transition to an deflationary system and people fall
| in love with it....well there is a whole lot of room to go
| on the downside.
|
| First people start giving up vacations, then dinners, then
| cars, that Netflix subscription, then the smartphone
| purchase, then the app purchase.. all in the name of
| hoarding.
|
| Pretty soon the entire economy becomes a giant game of
| mental posturing to see who can go the distance without
| spending.
|
| Paradoxically in this scenario the most rational thing to
| do is to spend like there is no tomorrow because society
| would be headed into chaos, so when the fecal matter hits
| the fan , at least you'll have good memories
| Empact wrote:
| Is it really so difficult to imagine a world where people
| spent less conspicuously, and invested more prudently?
|
| In a sound currency world, interest rates are set by the
| relative availability of funds for investment - that is, they
| are counter-cyclically market-determined: if there is little
| investment, rates will be low, if the economy is booming,
| rates will naturally rise.
|
| Secondly, the rate of deflation is determined by the rate of
| increase in the economy: if the economy is shrinking over
| time, there is no deflationary incentive to hold - so here
| again the currency is counter-cyclical, discouraging rapid
| growth while allowing for measured growth.
|
| Is that sand? Or sanity?
| jerry1979 wrote:
| People in El Salvador will simply have the free choice to put
| their money into BTC. If people in El Salvador make or lose a
| bit of money because they diversify their exposure, will they
| not have contributed to the overall price signal process of
| the free market? Why is it bad to give people options?
| clpm4j wrote:
| I wonder what percentage of people in El Salvador have
| enough money to "put into BTC". Wouldn't most of the poor
| population be living essentially hand to mouth and spending
| their meager amount of money on daily food and shelter?
| thehappypm wrote:
| Yep, impoverished people can't acquire BTC to begin with.
| This doesn't help at all.
| season2episode3 wrote:
| On the question of principles vs practicals... the
| principles sound great and all. I also appreciate that
| this takes advantage of the large number of mobile
| devices already out there, and encourages the development
| of rural internet.
|
| But, I predict that the practicals are not going to be
| good. Bitcoin transaction fees are high. If anything,
| this is a gift to large criminal organizations with a
| large footprint in the country which will be far more
| able to make use of their BTC. The law enforcement arm of
| this will not be ready or able to deal with it.
|
| There is a role for cryptocurrency in helping the
| underserved gain access to banking. This plan does not
| sound like the right one to me.
| ItsMonkk wrote:
| > Bitcoin is wildly deflationary. Therefore it does not
| encourage an economy to function
|
| With the rapid increase of the Money Supply of the USD, this
| is no different than any other Asset, especially Buyback
| driven stocks(where the supply diminishes over time!). To
| store value you also need to hold onto them with white
| knuckles. It also does not encourage an economy to function,
| hence why our GDP growth has slowed to a halt.
| baybal2 wrote:
| > You are 100% incorrect. Bitcoin is wildly deflationary.
| Therefore it does not encourage an economy to function
|
| That a widely, blindly believed economist mantra without much
| basis.
|
| People now don't want to spend money even at the time when
| interest rates are near negative.
|
| The few countries still with relatively high rates, and
| credible economy are the ones which register growth.
| dadoge wrote:
| Remittances, things like wire transfers, account for 22% of their
| GDP.
|
| Bitcoin will give that money back to the people with the way
| lower cost of transfers, esp through the Lightning Network that
| is planned to be widely used.
|
| Elizabeth Stark boldly said 7 yrs ago and Bitcoin is like TCP and
| needs an http, and then built Lightning on top of Bitcoin and
| this is super exciting to see.
|
| EDIT: removed "fees", it's just remittance based
| jollybean wrote:
| People in the US sending USDs to El Salvador would be much more
| efficient than any other scheme.
| gjulianm wrote:
| If I'm not mistaken, that 22% is not fees, but the actual wire
| transfers from people abroad [1,2]. IMHO, it doesn't indicate
| that transfers are too expensive, but that a lot of people
| can't find enough work or support in El Salvador and they need
| to rely on family/friends that emigrated. I don't know how that
| is going to be solved by Bitcoin.
|
| 1:
| https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?lo...
| 2: https://www.imf.org/external/pubs/ft/bop/2005/05-09.pdf
| dadoge wrote:
| They will literally have more money in their pockets.
|
| Good things happen when people have more money in their
| pockets - people save more, invest more, build more.
| thehappypm wrote:
| Is it actually cheaper to send BTC than it is to wire money
| directly?
| ceejayoz wrote:
| I have a sneaking suspicion the folks with "more money in
| their pockets" from this are most likely to be President
| Bukele and his friends.
| bogota wrote:
| This seems to be a more and more common "argument" these
| days. X is happening and it has benefits for Y but it
| probably has more benefits for Z who i don't like so its
| bad.
|
| Additionally ill ignore your point completely and only
| address Z now.
| dadoge wrote:
| PayPal charges in to 10% for transfers of USD to Eur in
| Spain.
|
| Check you financia privilege before making comments like
| that
| ceejayoz wrote:
| Why would you use PayPal for remittances?
| dadoge wrote:
| Just one example, PayPal is also for peer-2-peer
| transfers
| ceejayoz wrote:
| The World Bank provides a table of remittance fees to El
| Salvador.
|
| https://remittanceprices.worldbank.org/en/corridor/United
| -St...
|
| MoneyGram is _free_ if you do it to a bank account.
| https://imgur.com/a/6B5G2ax
| kerng wrote:
| Bitcoin gives them a free bank account. A bank account
| most can't have or afford.
| dadoge wrote:
| Too bad 70% of the population does not have a bank acct
| there
| ceejayoz wrote:
| That sounds like an easier problem to solve than tapping
| a volcano to mine Bitcoin.
|
| Perhaps the President should focus on _that_?
| pietrovismara wrote:
| > Perhaps the President should focus on that?
|
| If his actual goal was to improve people's lives,
| perhaps...
| [deleted]
| defgeneric wrote:
| No, it's a growth-oriented move designed to attract
| capital to the country.
| garydevenay wrote:
| > the folks with "more money in their pockets"
|
| I would argue that the population who can now operate and
| opt-out of a USD system where their money is being
| debased by 20%+ in the last year by a foreign government
| will be quite a bit better off.
| ceejayoz wrote:
| > opt-out of a USD system where their money is being
| debased by 20%+ in the last year
|
| You know Bitcoin has taken a 40% tumble in the last
| _month_ , right?
| garydevenay wrote:
| Valuation and debasement are two very very different
| things with very different effects.
|
| The US created 20% of all the dollars that have ever been
| created, ever- last year. This is infinitely more harmful
| than a reduction in price compared to another currency.
| gjulianm wrote:
| > They will literally have more money in their pockets.
|
| That's a big if. Bitcoin transfer fees might be cheaper,
| but you need to add the cost of converting dollars to
| bitcoin, plus the volatility of the coin, plus any fees
| from intermediaries and Lightning nodes.
|
| > Good things happen when people have more money in their
| pockets
|
| High amount of remittances are not a cause, but a symptom
| of underlying problems. Would you be as cavalier about the
| effects of this on ES economy if it was, say, Western Union
| saying they'd reduce 10% their transfer fees?
|
| It's always the same thing with Bitcoin, apparently it's
| such a great technology that it can change anything despite
| the fact that the only "new" thing it can do is to be
| decentralized. Somehow the argument always ends up being
| that decreased transfer fees will revolutionize everything
| (despite the fact that transfer fees might not be lower,
| and that we've had continuously decreasing transfer fees
| for years and yet that didn't seem to bring any
| revolution).
| dadoge wrote:
| Sooo... do you think it's better to have higher transfer
| fees?
|
| Seems like a no-brainer win though? Even if it doesn't
| revolutionize the country
| gjulianm wrote:
| Obviously I prefer lower fees. But integrating Bitcoin is
| not a guarantee that actual, practical fees will be
| lower. Given the risks of adopting Bitcoin (volatility,
| fixed economic policy, complexity, difficulty of use), I
| think potential benefits must be higher than "we maybe
| get lower transfer fees, or not".
| danso wrote:
| Your original comment claimed that El Salvador spends 22%
| of its GDP on transfer fees. You've since corrected it to
| say that the 22% estimate is for the remittances
| themselves. So why are you acting as if "higher transfer
| fees" is an accepted premise?
| TomSwirly wrote:
| > Sooo... do you think it's better to have higher
| transfer fees?
|
| So many conversations with Bitcoin advocates involve them
| putting ridiculous statements into the mouths of others.
|
| No one said that or anything like it.
| dougk16 wrote:
| Good analogy with http. But keep going. After http people
| realized the importance of https. Sending credit card numbers
| and passwords in cleartext over the Internet was clearly a bad
| idea. So what is https in this analogy? Monero, PirateChain,
| Aeon, Wownero are the major contenders.
| Tenoke wrote:
| Monero yes, the other 3 do not seem like all that serious
| contenders. LTC with mimblewimble would be a way better
| example.
|
| Of smaller ones, SCRT which is a whole privacy-focused
| smartchain would be my other pick.
| thehappypm wrote:
| I've never heard smartchain before, that's terrific
| marketing, I bet it's gonna fool a ton of people.
| ArkanExplorer wrote:
| Your Abuela isn't going to be able to take her .05 Btc down to
| the local Bodega and buy groceries.
|
| El Salvador already uses the US Dollar as its official
| currency. A migrant worker in the USA is going to face a lot
| _more_ fees, scams, and difficulty to buy and send BTC than
| just wiring the same currency he earns to to a relative who can
| then spend in the same currency.
|
| This Bitcoin thing is a marketing ploy from the corrupt
| Salvadoran president, and an attempt to get a few crypto whales
| to move to the country and cash out, and buy real estate.
| dadoge wrote:
| A lot more fees
|
| That couldn't be more wrong.
|
| Look into The Lightning Network
| oh_sigh wrote:
| Are you familiar with transfer fees for remittances? I sent
| $1000 to a friend in Ecuador and paid $1014 total. Will the
| transfer fees be below 1.4%?
| helaoban wrote:
| Can we all take a moment and appreciate this headline.
| silentsea90 wrote:
| Glorious! We're living in a super cool sci fi storyline.
| kasperni wrote:
| Every day, this is getting more and more ridiculous.
| atatatat wrote:
| This is an incredible power move, have to applaud the audacity.
|
| US-protected elections in 3...2...
| fasteo wrote:
| Tagging it as "ridiculous" calls for a minimal clarification
| xwolfi wrote:
| Like maybe there are more pressing problems than making
| bitcoin with this electricity supply. I dont know but it
| feels wasted on a fad.
| celticninja wrote:
| You live in a country with a functional banking industry
| open to almost everyone and a function currency run by your
| government. You have no frame of reference in which to
| understand how things work in El Salvador. 70% of people
| don't have a bank account, the official currency is that of
| another country. A major source of their GDP is money sent
| back to El Salvador from people workit abroad. Just because
| it doesn't seem like a pressing problem to you, does not
| mean it isn't a pressing problem for some people.
| bogota wrote:
| They are doing it to make money how is making money a fad?
| The reality of living in a poor nation like this is that
| unless they take a gamble they will most likely continue
| with the same level of violence and poverty. Its very easy
| to look down on people from an ivory tower though and call
| it a waste.
| cratermoon wrote:
| > They are doing it to make money
|
| In no scenario does "they" refer to El Salvador's poor
| population, especially not the indigenous peoples. The
| money will go to the colonizing foreign investors and
| circulate in things like CDOs. A few crumbs that fall off
| the table will go to improving the lives of the upper end
| of El Salvador's people, and incidentally some crumbs of
| the crumbs might fall down to the rest of the population.
| Trickle down, eh?
| bogota wrote:
| You defeated your own argument :) I'm referring to the
| whole nation as poor which it is. Poor people rarely
| benefit from any government economic policies but in
| order to have them the government needs to be in a place
| to offer them to start with.
|
| There's some other points to be argued such as people now
| are holding an asset that is volatile but deflationary in
| nature by default and they have the option to convert and
| hold a currency which will lose value over time (USD).
| I'm not saying "bitcoin is going to save them" but its at
| least a novel approach that i think is worth exploring
| for countries in this position.
| cratermoon wrote:
| Some crumbs of the crumbs doesn't invalidate my argument,
| it just demonstrates rising inequality: in other words,
| the benefits will disproportionately accrue to the wealth
| foreign investors.
| danlugo92 wrote:
| Whats the alternative, no crumbs? Lol
| sklearncowboy wrote:
| I think this is a real problem in the West.
|
| Consider how much brain power and resources have been spent
| on quant finance and crypto now in the past 20 years.
|
| Imagine if all those resources had been spent on something
| more productive.
| garydevenay wrote:
| This is undoubtably a bold move by El Salvador, but I think
| dismissing it at "ridiculous" isn't very productive.
| kragen wrote:
| I wrote a couple of comments yesterday exploring the
| environmental questions related to Bitcoin in depth:
| https://news.ycombinator.com/item?id=27450417
|
| The short summary is that the environmental effect of Bitcoin
| mining is very small at present (12 GW consumption out of the
| world's 18 TW), but probably positive, because it slightly
| accelerates the renewable transition. But this could change.
| jerry1979 wrote:
| I read through your answers in that thread and really enjoyed
| them. Thank you for taking the time to do that work. Have you
| considered consolidating those ideas into a blog post or
| similar? It sounds like you have some expertise in this area or
| maybe just like to research. Either way, I think others would
| really enjoy having access to your seemingly well thought out
| analysis in a place that isn't the HN comment section.
| kragen wrote:
| Thanks! Yeah, I've been thinking about that, especially
| because of the profoundly unrewarding nature of that
| conversation. A number of my previous HN comments are in
| Dercuano, Derctuo, and Dernocua, though those mostly consist
| of things other than HN comments, and some of the HN comments
| they contain are pretty embarrassing.
|
| Generally I feel like the HN comments section is pretty
| aggressive and conformist, and there's a lot of people
| trolling. The social dynamic rewards rapid reaction,
| trolling, and conforming to the popular opinion (and
| especially cheering for it and denouncing those who disagree
| with it), and punishes the kind of careful investigation and
| thoughtful conversation that I value. I think it brings out
| the worst in me.
|
| http://canonical.org/~kragen/dercuano
|
| http://canonical.org/~kragen/derctuo
|
| http://canonical.org/~kragen/dernocua.git
| lucasnortj wrote:
| Looks like El Salvador is on a mission to make itself the world's
| fool. crypto "currencies" have no use case except for gamblers,
| stop wasting everyone's time. There is literally nothing more
| useless that this electricity could be used for
| enchiridion wrote:
| So, I'm going to choose to be an optimist when it comes to crypto
| energy consumption.
|
| There has literally never been a more direct reward for efficient
| energy production.
| JamilD wrote:
| Why is this a more direct reward than generating energy to
| sell?
|
| In mining, revenue = efficiency * potential energy * BTC per
| unit produced energy
|
| In selling energy, revenue = efficiency * potential energy *
| USD per unit produced energy
|
| I don't see the difference, other than the fact the former just
| adds to the pool of required energy (it's strictly additive to
| the energy produced by the second)
| ajkdhcb2 wrote:
| Transporting power is extremely expensive and infeasible over
| large distances. So power needs to be generated near industry
| or homes. However, cryptocurrency can be mined anywhere and
| then sold.
| xwolfi wrote:
| But it s like there's ONLY the reward. You imagine if there was
| a way to make gold with electricity? We d live in the dark just
| to get more of it...
| enchiridion wrote:
| Well, not exactly. There is the utility of enabling the
| chain.
|
| And there is nothing stopping us from extracting gold using
| electricity. It's in basically all soil and sea water. Sure
| there are some required materials, but I'd water a guess that
| those materials are no harder to obtain than GPUs.
|
| The only thing that stops this reckless mining are the forces
| of the market, and the same is true with crypto. Crypto
| miners tend to be extremely frugal, and I doubt any are any
| who are doing unprofitable mining in expectation of crypto
| going up.
|
| Now from a crypto maximalist perspective, which I don't
| necessarily hold, isn't the cost of the electricity worth
| having a decentralized currency which enables all sort of
| different markets?
|
| Crypto is always held up as wasteful in terms of energy, but
| I'd be curious to see the energy cost in comparison to
| current payment processing systems.
| kemotep wrote:
| If anyone is interested, Visa reports that their payments
| network (and supporting infrastructure) uses 740,000
| Gigajoules[0] in a year.
|
| Can't quite find a one for one measurement for Bitcoin, but
| due note this is the energy needs of all of Visa's
| operations and they process in excess 100 billion
| transactions a year and Bitcoin (in 2020) averaged around
| 300,000 transactions a day[1].
|
| If interested there is this[2] digiconomist article with
| more numbers (no clue as to the veracity of them).
|
| [0]: https://usa.visa.com/dam/VCOM/download/corporate-
| responsibil.... [1]:
| https://www.blockchain.com/charts/n-transactions [2]:
| https://digiconomist.net/bitcoin-energy-consumption/
| enchiridion wrote:
| So let's do the rough math and figure out the comparison
|
| 300k per day is around 100 million transactions per year,
| three orders of magnitude less than Visa.
|
| BTC uses 110 terawatt hours per year right now[0], which
| is 396,000,000 gigajoules, a three order of magnitude
| difference in the other direction. Assuming everything
| scales nicely, if Bitcoin were the size of visa it would
| use ~6 orders of magnitude more energy.
|
| OK, so that is way worse than I thought. I'm still not
| sold on the idea that it's a bad thing, but it's nice to
| put numbers to the situation.
|
| [0] https://www.google.com/amp/s/hbr.org/amp/2021/05/how-
| much-en...
| pyrale wrote:
| > There has literally never been a more direct reward for
| efficient energy production.
|
| Yeah, too bad this happens not long after we discovered that
| energy production creates massive issues with regards to our
| future on this planet.
| sanderjd wrote:
| It's a direct reward for _energy production_ , which has always
| been well rewarded. There is no reason to think PoW mining in
| any way rewards _efficient_ energy production more so than any
| other use of energy.
| acjohnson55 wrote:
| It's actually a complete waste. All it produces is more
| security for the blockchain, which is of low marginal value.
| They could use that energy to produce something of actual
| value, like hydroponic food, or desalinated water, or run a
| data center, or literally anything else.
| wcfields wrote:
| Aluminum smelting and concrete production both take an
| immense amount of energy.
| bogota wrote:
| Bitcoin has value that they can spend on doing all of this.
| You are falsely saying the only value it provides is
| blockchain security when im sure that isn't even a reason
| they thought about when doing this. Its to produced more
| money for the government and hopefully that translates to
| better public infrastructure.
| nitrogen wrote:
| _Bitcoin has value that they can spend on doing all of
| this._
|
| Money doesn't directly convert into food. Someone still has
| to consume the energy to actually make things. By using
| energy to mine bitcoin to buy food, one is potentially
| doubling energy consumed.
| randomhodler84 wrote:
| I'm sorry you don't see that it has value. It has value to
| me. In fact, I need a secure, permissionless, censorship
| resistant, non-state backed value storage system more than I
| need hydroponic food or desalinated water. The problem is the
| disconnect between your wants/needs and the needs of others
| in the world. Waste is entirely in the eye of the beholder.
| bootlooped wrote:
| I don't think want vs need is as subjective as you say.
|
| I could assert that I need a Maserati and no other vehicle
| will fit my requirements, and it would be pretty easy for
| others to counter that either my supposed need is really a
| want, or the requirements are arbitrary and unnecessary.
|
| Likewise I think your needs regarding crypto are more of a
| want. What would be the consequence if you didn't get that?
| Would you die? Would your quality of life significantly
| decrease? How did you live most of your life already
| without Bitcoin?
| randomhodler84 wrote:
| Life without bitcoin: one can watch as the value in the
| output of ones labor encoded in fiat decreases over time,
| punishing saving and devaluating our lives work; or One
| can opt-out of this and store it in something that does
| not, and rewards saving. It also has the benefit of
| security, integrity, audit ability, censorship
| resistance, transferable over arbitrary communication
| channels, etc. Most folks live paycheck to paycheck, and
| so don't feel savings inflation and the cruelty that this
| implies.
|
| This has been invented. If it didn't exist now for some
| reason, it would significantly decrease quality of life
| -- I would be powerless to watch my saving erode into
| nothing. I would be powerless when the state decided it
| wanted to adjust interest rates to be negative (again,
| attacking saving). I would be powerless when any state
| decided that another state should be disconnected from
| the legacy financial networks. I would be powerless when
| they payment card networks started enforcing morality de
| jour. It would be like being arrested - some liberty
| taken from the individual and make them beholden to the
| state.
|
| They call it being "orange pilled". Once you get it,
| there is no other option to avoid growing poor slowly.
| acjohnson55 wrote:
| There are now other cryptocurrencies that provide that
| without wasteful proof of work.
| randomhodler84 wrote:
| Ok, hold up. Energy usage is a good thing and provides
| security, actually. You can't ditch the energy and retain
| security. I'm sorry, but PoS is a bad and the wrong model
| for censorship resistant, non-state stores of value.
| acjohnson55 wrote:
| That's simply not true. Proof of work is nothing but an
| extremely expensive to randomly select the entity that
| gets to finalize the next block. The system leaks value
| like a sieve. Either the miners have to be compensated by
| printing money, or by the transaction fees of a system
| that has a hard practical and ideological limits on its
| transaction capacity.
|
| Avalanche already provides a compelling and less wasteful
| alternative, and it might not even be the last word.
|
| This idea that Bitcoin got it all just right has become a
| quasi-religious belief, fueled by the motivated reasoning
| of monetary interest and ideological fantasy.
| JamilD wrote:
| Are the benefits of proof of work worth the additional cost
| over other consensus algorithms, to you?
| rawtxapp wrote:
| PoW keeps things fair, you have to spend money on
| hardware and energy or become irrelevant.
|
| In other consensus systems like PoS, whoever has the most
| capital controls pretty much everything and has 0
| incentive to sell what they get since they aren't really
| spending any energy for their cryptographic signature.
|
| It literally says "rich gets richer" in the protocol
| which is fundamentally broken in my humble opinion.
| JamilD wrote:
| Compute power requires money though, no? Whoever has the
| most capital now controls the BTC blockchain, which
| happens to be mostly miners in China. It's a lot easier
| for me to stake ETH than to buy hundreds of GPUs.
|
| And my reward is linear with how much I stake or put
| down, whereas with economies of scale in mining the
| reward is more like quadratic. Seems to me that with PoS
| the rich get richer linearly, with PoW the rich get
| richer ~quadratically.
|
| If I spend 0.01% of what the Chinese miners spend on my
| mining setup, I'm not getting 0.01% of the rewards.
| rawtxapp wrote:
| The thing is, let's say you spend 100M$ on mining
| equipment today, that equipment is worth a lot less in a
| year from now and is worth practically nothing in 5+
| years, so you can't just sit on it, you have to keep
| spending. Likewise with electricity, it's not free, you
| have to source it and spend money on it.
|
| So whatever Bitcoin reward you get barely covers your
| running cost + small profit margin. Imagine like you're
| running from a monster, you can't stop or you'll become
| irrelevant.
|
| Whereas with ETH, I can buy 100M$ worth of it, I'll get
| say 5% back which means I'm making 5M$ every year, thing
| is I don't have any pressure to sell it whereas the
| poorer stakers will have to sell to cover their cost of
| living or other reasons, so over time the % of my stake
| in eth grows. Things get even worse when you include
| custodians into the mix, exchanges will have much larger
| wallets and get much larger rewards which they may not
| share with the actual holders or keep a small % for
| themselves.
| jerry1979 wrote:
| The other consensus algorithms all follow the same
| consolidation logic of capitalism. Specifically, power
| consolidates year after year similar to banks, media
| companies, communication companies, etc. It looks to me
| like the PoS systems algorithmically codify this logic,
| and since the consolidation exists digitally, I would
| have a hard time coming up with a plan to break up the
| PoS oligopolies. The reason why the digital consolidation
| hurts people in the PoS system comes form the fact that
| consolidation of money in PoS directly relates to
| consolidation of actual voting power in those systems.
|
| PoW on the other hand will lead to consolidation around
| inexpensive energy: volcanoes in El Salvador, hydro in
| some northern countries, solar somewhere else, etc.
| However, those places will have some abstract voting
| power in the Bitcoin world, but exchanges, people, node
| operators, and businesses also have abstract voting power
| to balance against the cheap energy locations.
|
| I should mention that the upside of all of this is that
| we can now choose the option to have accessible digital
| banking around the world, and people who print money will
| have less of an impact on world affairs.
| megameter wrote:
| I've gradually come around to the side of PoW being
| important as layer 1, because it's as close as we're
| likely to get to Lockean labor theory of property being
| directly manifest rather than built on a legal-deeds-and-
| titles national framework, and that has an immediate
| effect of building trust out of speculative value. PoW
| can be made more efficient along some axes, but not all
| of them. As such it puts every economy in a Red Queen's
| race to do things with available energy and computing
| power that are of more value than speculation.
|
| However, PoS has an important role as the layer for
| specific applications and markets, since it acts more
| like central banking with the tradeoffs of such.
| randomhodler84 wrote:
| You got it. PoW is critical for layer 1. Ongoing capital
| expenditure requirement is critical to prevent ancestral
| oligarchies. One cannot retain censorship resistance or
| decentralization with oligarchies.
| thehappypm wrote:
| Honestly, why do you need BTC? You can't actually buy a
| whole lot with it, and you gotta convert to real currencies
| do anything meaningful anyway, which defeats the whole
| argument.
| randomhodler84 wrote:
| A) Ensuring the time-value of my labor is not eroded by
| the state through inflation. Yes, there are day to day
| risks of fluctuations in value, but one just needs to
| compare the trend line of where BTC is going vs fiat
| currencies in the longer term. I'm not worried about 50%
| draw downs on an asset that appreciates > 100% pa.
|
| B) ensuring that third parties like banks are unable to
| steal my funds. Through fees, charges, unauthorized
| transfers or just plain theft...
|
| C) portability of funds around the globe, independent of
| foreign or domestic currency. Ever tried to wire funds
| globally on a weekend? Trade?
|
| You are still looking at bitcoin like it's a dollar bill.
| It's not -- it's digital gold with more computational
| security than any system ever built by humanity.
| thehappypm wrote:
| A: Bitcoin has inflated 40% in value in the last month.
|
| B: This is probably the strongest argument for Bitcoin
| and the original vision.
|
| C: Sending BTC is immediate but since you can't really
| use BTC to buy much (yet) you still need to sell and wait
| for funds to clear, which takes about as long as just
| wiring money.
| zoomgyal wrote:
| When OP talks about "inflation" they're talking about the
| amount of money entering the money supply. Bitcoin didnt
| "inflate" even though it got more expensive. The price
| did, not the supply. The supply of BTC is algorithmically
| programmed and there will only ever be 21 million
| produced. You can't print more Bitcoin at will but a
| government can print their fiat currency, for better or
| worse.
| wyager wrote:
| Bitcoin subsidizes the creation of constant-output power
| sources (geothermal, nuclear) which are not usually
| economical for highly variable consumer/industrial power
| usage. Long-term, these sources will probably power the grid
| during peak hours and power Bitcoin hardware during off-peak.
| bootlooped wrote:
| It also subsidizes the use of dirty power sources. The
| greenwashing of Proof of Work cryptocurrencies is insane.
| It's using the same amount of electricity as Argentina.
|
| https://www.vice.com/en/article/pkby7z/a-fossil-fuel-
| power-p...
| Dma54rhs wrote:
| PC gaming alone uses the same amount, there are many
| useless activities (well the both provide entertainment)
| that could be stopped if you want lower energy usage for
| the world. Ban gaming and obviously ban fashions since
| that is close to catastrophic catastrophe regarding
| greenhouse gasses.
| wyager wrote:
| Green energy sources are cheaper when you don't have to
| scale demand hour by hour. The overwhelming majority of
| Bitcoin power usage is already green and that will only
| increase.
|
| Claims like "Bitcoin uses more electricity than <some
| poor country that doesn't use much electricity>." are
| totally irrelevant. Good. I want humanity to climb the
| Kardashev scale. If we have an invention that can help
| fund the creation of billions of watts of efficient
| energy capacity then that's great!
| bootlooped wrote:
| > The overwhelming majority of Bitcoin power usage is
| already green and that will only increase.
|
| Is there any source for this, the first part, that it is
| currently powered overwhelmingly by green energy?
| Anything I can find suggests otherwise. And the part of
| the claim that Bitcoin will use a greater share of green
| energy in the future is not very meaningful if you expect
| that is also true of every other industry.
|
| https://theconversation.com/bitcoin-isnt-getting-greener-
| fou...
|
| https://www.infokreek.com/green-bitcoin-the-impact-and-
| impor...
|
| https://medium.com/crypto-lucid/enough-with-bitcoins-
| greenwa...
|
| https://www.motherjones.com/environment/2021/05/bitcoin-
| mini...
| wmil wrote:
| Right now there's a chicken and egg problem where cheap power
| is not near things that need it.
|
| Crypto mining will allow places with cheap power sources to
| build up energy production. Once that's established it's
| easier to build up infrastructure for things like data
| centers.
| bootlooped wrote:
| I think it's somewhat of a Tragedy of the Commons
| situation.
|
| Everybody would benefit from power being built in remote
| places, but nobody wants to be the one to pay to build it
| there. I'm not seeing why crypto mining is any different
| though; it's a for-profit endeavor like anything else.
| X6S1x6Okd1st wrote:
| Yeah it's a really good point that additional security for
| the blockchain has low value. Really the total mining reward
| (txfees + subsidy) should adjust to offer just enough
| security. We now have the mechanisms in place to do something
| like that through DAOs, however it seems hopeless to apply
| that to Bitcoin, they are so resistant towards any change
| what so ever.
|
| It's wild that it took the bitcoin subsidy less than 2
| decades to become far too high proportional to it's
| externalities.
| adrianN wrote:
| "Efficient" energy production in practice today is energy
| production that maximizes externalized costs.
| munificent wrote:
| This is true exactly to the degree that landmines reward
| efficient blood donation.
| enchiridion wrote:
| I mean it's not a perfect analogy, but I'd be willing to bet
| a lot of lessons from battlefield medicine has made it's way
| into civilian trauma care.
| geofft wrote:
| Yes, but it undermines the point of energy production, because
| the energy produced is not going to existing consumers of
| energy, it's going to feed the insatiable-by-design blockchain.
|
| Imagine if there were a cryptocurrency based on proof-of-
| driving-things-between-cities with a mining reward, and Los
| Angeles invested in it. There would be an incredible incentive
| for expanding LA's highway infrastructure, and you'd expect LA
| to get a lot more highways, to but there would be no positive
| impact on actual commuters trying to use those highways to get
| around greater LA, and quite possibly a negative impact,
| because the more direct incentive is to use whatever highways
| are there - building more highways is an indirect incentive.
| defgeneric wrote:
| That analogy would hold if the additional energy produced for
| bitcoin mining had some negative impact on the existing
| energy infrastructure. It doesn't. If anything it creates an
| incentive for making energy production more efficient. The
| fact that energy is produced and consumed is not bad in
| itself. The Sun could be said to be "wasting" energy by
| sending it off into space.
| bootlooped wrote:
| > If anything it creates an incentive for making energy
| production more efficient.
|
| How is this different from any other consumer of
| electricity? Every consumer wants to buy the cheapest
| electricity, and every producer wants to produce the most
| of it per energy input.
| geofft wrote:
| I'm not disputing that it creates an incentive for making
| energy production more efficient. It does! In the analogy I
| gave, there's definitely an incentive for building more
| highways (" _There would be an incredible incentive for
| expanding LA 's highway infrastructure_") - it's just that
| this incentive is, at best, completely useless to existing
| commuters taking the highways.
|
| I'm also not claiming that it's bad for energy to be
| produced and consumed. It's not! It's just irrelevant if
| you're looking to consume electricity, and someone else is
| producing and immediately consuming it. And it's bad for
| you as a consumer if production goes up and consumption
| goes up by even more.
|
| I have no idea what your point is about the Sun.
| jollybean wrote:
| There has literally never been a more clear and obvious way to
| waste energy for no reason, something which is happening at
| scale, during a time of energy crisis.
|
| This has Easter Island written all over it.
|
| 'Hey, let's use all our resources to build Giant Heads! The
| person with the most heads gets to be the King!'.
| IfOnlyYouKnew wrote:
| > There has literally never been a more direct reward for
| efficient energy production.
|
| Not having to pay for the inefficiency in producing the energy
| you actually needs seems to be... more direct?
| hulitu wrote:
| Is this paper a subsidiary of the Onion ?
|
| "100% clean, 100% renewable, 0 emissions energy from our volcano"
| . So when a volcano is depleted you plant another one ?
| hungryhobo wrote:
| depleted might be the wrong word, becomes inactive perhaps? I
| agree with your general assessments though, volcanic activity
| doesn't seem like a reliable source of energy.
| hvacarchivist wrote:
| >Volcanos have zero emissions
|
| Volcanos are only emissions.
|
| I would like a one-way ticket to Mars, please.
| drexlspivey wrote:
| I hate it when volcanos are depleted and I can't mine any more
| bitcoin
| willcipriano wrote:
| If extracting heat from the earth's core isn't sustainable,
| nothing is.
| dadoge wrote:
| Do you work for the onion?
|
| You can say the same thing about the sun and solar
| StavrosK wrote:
| Speak for yourself, this is the third sun I've planted this
| millennium and you guys need to take it easy with it.
| bluetwo wrote:
| Write the New York Times headline on this whole affair in five
| years:
| danbruc wrote:
| How much money is there to be mined per year? On the order of 10
| billion dollar? What share of the total hash rate could you
| realistically buy and power with your volcano? One percent?
| Probably not ten percent. What would the investment for the
| hardware be? I have a hard time imagining that you could make a
| noticeable difference this way even for an economy like
| Salvador's. And there are probably many better ways to spend
| money than buying mining ASICs.
| 29athrowaway wrote:
| Mining more bitcoin won't make its market capitalization go up.
| mtalantikite wrote:
| I think this is only one part of the story for them. If 70% of
| their country is un-banked, many transactions are probably in
| cash, and there probably are a lot of undeclared sales and
| income that is not being taxed.
|
| If they can really get their population using tools that would
| make it easier for the government to collect taxes, make it
| easier for tourists to visit and spend money, etc then the
| mining rewards are only one small part of their plan.
|
| Of course none of this really needs to happen with crypto, they
| certainly could solve these problems in other ways, but I can't
| really blame them for trying this out.
| sanderjd wrote:
| Even if crypto is a good solution for all this, _bitcoin_ is
| a bad one.
| defgeneric wrote:
| I understand this argument, but if I had to choose _right
| now_ which coin would be the best for my country, I would
| still go with Bitcoin. You don 't get to choose which coin
| has the most backing, or the most diverse set of players
| from around the world.
| sanderjd wrote:
| But those are not important metrics for a legal tender
| currency. Bitcoin is a fine deflationary asset but a very
| bad currency.
| charlesdm wrote:
| Maybe. But it is better than the alternative? It's the
| quickest solution. Have a look at what happened when
| Venezuela ended up launching the Petro.
| sanderjd wrote:
| There are other possibilities between poorly executing a
| bespoke cryptocurrency and using bitcoin even though it's
| not a good currency. There are options that already exist
| which have low volatility, low transaction costs, and
| don't require injecting more and more energy for
| security. If those options don't seem mature enough (they
| do to me, but I dunno, maybe they're not), then a good
| option would be to wait.
| adrianN wrote:
| If taxing and replacing cash transactions were the main
| goals, they should maybe use GNU Taler instead of bitcoin.
| sanderjd wrote:
| And if you're going to rig up a volcano for power production,
| maybe use that power for something useful in your own country.
| deviantfero wrote:
| Geothermal power in El Salvador represents 25% of the
| country's total electricity production.
| vidarh wrote:
| And that's been rising rapidly.
| sanderjd wrote:
| Excellent! Seems like they could go further if they have
| extra to use for asics running hashes.
| deviantfero wrote:
| there are storage and distribution limitations for
| producing even more energy, that's why surplus is sold to
| neighboring countries currently.
| sanderjd wrote:
| Is it a distribution problem? They can't build enough
| power cables, or they've already built them over as far
| an extent as is manageable? I can see how it's easier to
| just put a big data center on site, but it seems like it
| would be better to invest differently.
| Andrew_nenakhov wrote:
| From what I've heard about Salvador, investors who plan to mine
| cryptocurrencies in El Salvador should include an armed to the
| teeth private army in their projected expenses, or else their
| mining equipment would soon change owners.
| defgeneric wrote:
| If you want to opine on a country at least learn its name: "El
| Salvador".
| Andrew_nenakhov wrote:
| It does not have 'El' in my native language, just Sal'vador.
| Also, if salvadorians want english speakers to call their
| country with 'El', they should probably start using 'THE
| Estados Unidos' and 'THE Gran Bretana'.
| defgeneric wrote:
| In English the name of the country is "El Salvador".
| graderjs wrote:
| It just gets better and better.
|
| - ES makes BTC fiat
|
| - ES taps volcanoes to mine BTC
|
| What next?
|
| - ES uses natural wormholes to plot the future timeline and win
| Earth?
| personlurking wrote:
| An attempt to answer your "what's next?" question:
|
| "What about you guys floating $1 billion in "Volcano Bonds"
| (backed by future #BTC mining output) for El Salvador to pay
| off the IMF loan - so they can tell the IMF to beat it."
|
| https://twitter.com/maxkeiser/status/1403023717429559299
| gjulianm wrote:
| It's a $1B loan to a country with a low debt rating. It's a
| risky investment already, and now you add Bitcoin with its
| price volatility? I don't know how that's a good idea from
| the investors point of view.
| PretzelPirate wrote:
| The loan could be specified in BTC and not pegged to an
| exchange rate. Then as long as long as El Salvador kept
| mining they'd be able to pay it back with interest. I
| suspect many BTC holders would be happy to participate in
| that type of loan.
| oogabooga123 wrote:
| I would buy some bonds just because of the idea that a
| nation could be free from international banking debt. Like
| a charitable donation, almost
| gjulianm wrote:
| Good luck getting $1B to El Salvador as "almost
| charitable donations".
|
| Not to mention the effect that trying to sell $1B-worth
| of Bitcoin could have on the market (even just a portion,
| Bitcoin is accepted nowhere for so they'd need real
| currency).
| oogabooga123 wrote:
| I think the idea is that they would take funding in
| whatever currency they want, pay off the IMF with
| whatever currency they want, and then investors would get
| BTC, which is what they want. No need to sell $1bn worth
| of BTC.
| gjulianm wrote:
| That'd solve the "selling Bitcoin" problem but not the
| one of managing the risk of a US$ loan that is paid back
| with Bitcoin. I mean, ES could pay you back in time
| without defaulting and you could find yourself losing
| quite a bit of money. I think people would be asking for
| far higher rates in that case.
| [deleted]
| jMyles wrote:
| > makes BTC fiat
|
| Did I miss a memo?
|
| Or is this a sort of Freduian slip wherein you said 'fiat' when
| you meant to say 'official'?
|
| It seems to me that we've been conditioned to conflate the two.
| NovemberWhiskey wrote:
| If Bitcoin is money, then it is absolutely fiat money and
| always has been.
|
| The alternatives would be that it is commodity money (which
| is not the case because you can't use a Bitcoin other than
| exchange it for something else) or representative money
| (which is not the case because Bitcoin isn't backed by
| anything else for which it can exchanged).
|
| Up to this point, it's been a rather degenerate case of fiat
| money because the agreement that it has value has not been
| governmentally backed.
|
| But now that's no longer the case. Congrats, Bitcoin, you now
| absolutely meet all the requirements of fiat money!
| jMyles wrote:
| By whose fiat can the supply of Bitcoin be inflated?
|
| And are precious metals fiat by the standard you've laid
| out? Or are they commodities strictly on thin premise that
| you can use silver as a disinfectant, etc?
| NovemberWhiskey wrote:
| > _By whose fiat can the supply of Bitcoin be inflated?_
|
| That's not what "fiat" means in this context. Fiat money
| is simply money that is asserted to be valuable. Control
| over issuance of money by those who assert the value of
| money is not an essential element of fiat money.
|
| For example, the US dollar is adopted as the currency of
| the Republic of Palau, and yet the Republic of Palau has
| no control over the US dollar. Does that suggest to you
| that, in Palau, the US dollar is not the fiat currency?
|
| > _And are precious metals fiat by the standard you 've
| laid out? Or are they commodities strictly on thin
| premise that you can use silver as a disinfectant, etc?_
|
| Precious metals are not money; they're commodities. No-
| one thinks they're money. The question "are precious
| metals fiat?" is meaningless.
| oogabooga123 wrote:
| That's what "fiat" means. Did you have a Freudian slip
| wherein you said "fiat" when you meant to say "debt based
| central bank monetary system"?
| [deleted]
| vidarh wrote:
| ES has not "made BTC fiat". It is making it legal tender. All
| that means is debts can be settled with BTC.
|
| As for "tapping volcanoes" it's a PR exercise - El Salvador is
| one of the countries in the world with largest geothermal
| generation capacity.
|
| "Tapping volcanoes" here in effect simply means mining bitcoin
| with part of their geothermal generating capacity. But "tapping
| volcanoes" got this a whole lot more attention than it
| otherwise would.
| NovemberWhiskey wrote:
| A more historically supportable outcome would be a coup by a
| military junta and/or a civil war.
| lowbloodsugar wrote:
| (noob here) How does this work from a key security perspective?
| Can one person just walk off with the country's entire wallet?
| Does an HSM become the thing in the vault where the gold used to
| be?
| cartosso wrote:
| I can't believe people still don't see the obvious issue that PoW
| has no sense and it's impact gets progressively worse as the
| market cap of BTC increases. The more adoption BTC will have, the
| more incentive will powerful entities have to take part in mining
| (obvious analogy: US dollar, the people who control it have the
| most power in the global financial system). Also, the more
| valuable BTC becomes, the more new miners will join in the mining
| race, since the average payout per kWh spent should stay at a
| relatively constant % of market cap. Both of this observations
| lead to the clear conclusion that energy spent on useless hash
| cracking will continue to increase, which is just plain stupid.
| Humanity cannot afford to waste energy in such an obviously non-
| nonsensical way; if you want to keep the crypto train going,
| fine, but at the very least switch to PoS.
| iabacu wrote:
| The argument about POW energy is overblown.
|
| There's an exponential decay of rewards of mining BTC (50%
| every 4 years).
|
| Do you think the price of BTC will increase exponentially,
| faster than the decay over the long term? I don't think so.
|
| This implies that the energy consumption of bitcoin mining will
| eventually decay exponentially too.
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