How long before nation states buy bitcoin?

Duke of Marmalade

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@tecate @DazedInPontoon I fully accept that my one off "emergency" is in a different league to receiving regular remittances. But I would pause before calling WU "slime". Similarly I wouldn't castigate all pawnbrokers as slime. The former provide transfer facilities, the latter provide credit facilities to a certain constituency not serviced by mainstream banking and it costs a lot more proportionately, because the efforts and the risks are that much more proportionately.
Of course I would see anything that transforms this dynamic as being a good thing. If bitcoin had intrinsic and stable value it would solve the first for sure. It has neither and this initiative/stunt of Bukele has a huge potential to backfire on the poor people of El Sal.
 

Duke of Marmalade

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A separate question, I assume the price of goods will be higher in EL Salvador when bought with BTC vs $ to account for the spread built into BTC to account for price risk?
There is of course a spread in every FX pair. Whether that spread translates to an increase in retail prices depends on what is the unit of account. In simple terms the unit of account is the measure by which all transactions are measured. It is usually the local legal tender. El Sal will have three legal tenders but I would presume that the US$ will remain the unit of account and so, yes there should be a spread built into BTC retail prices. That will reverse if BTC ever becomes the unit of account. There would be no spread in colon retail prices as the 2:1 conversion to US$ is fixed.
 

tecate

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@tecate @DazedInPontoon I fully accept that my one off "emergency" is in a different league to receiving regular remittances. But I would pause before calling WU "slime". Similarly I wouldn't castigate all pawnbrokers as slime. The former provide transfer facilities, the latter provide credit facilities to a certain constituency not serviced by mainstream banking and it costs a lot more proportionately, because the efforts and the risks are that much more proportionately.
Of course I would see anything that transforms this dynamic as being a good thing. If bitcoin had intrinsic and stable value it would solve the first for sure. It has neither and this initiative/stunt of Bukele has a huge potential to backfire on the poor people of El Sal.
Use whatever nomenclature you're comfortable with, Duke. At the end of the day, the important item is a 10% slippage for people who can least afford it - making transfers on an ongoing basis. That's a significant loss for them personally and a significant loss for the country as a whole.

I don't see a major potential to backfire. This is a significant move - but most likely it will be a slow burner given that they're starting from standstill. Furthermore, on the risk that you perceive to exist with btc, nobody has to expose themselves to it - if they don't want.
There is of course a spread in every FX pair. Whether that spread translates to an increase in retail prices depends on what is the unit of account. In simple terms the unit of account is the measure by which all transactions are measured. It is usually the local legal tender.
For accounting purposes, everything will be represented in USD. In terms of slippage on the conversion, we will have to see. However, the President has stated that the objective here is not to make any sort of profit on this - simply to act as a market maker to facilitate the conversion and make the system work.
 

Duke of Marmalade

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However, the President has stated that the objective here is not to make any sort of profit on this - simply to act as a market maker to facilitate the conversion and make the system work.
Well yes, if the government guarantees that there is no spread as it does in the colon/US$ exchange rate then there will be no difference in retail prices based on the denomination of the legal tender being used. That is going to be one heck of a guarantee to administer.
 

DazedInPontoon

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there are a number of FinTech competitors closing the gap making it much more affordable (transferwise, worldfirst etc).
Do they support El Salvador, and if so what are the fees like? You can consider Strike one of these competitors.

So I assume the rhetoric on WU relates to workers in the US that are likely to be illegal workers earning cash in hand? ...
I wasn't assuming this.
However, to convert from $ to BTC on a recognized exchange requires a SSN, photo identity which the person is unlikely to be in the possession of or they wouldn't need to use WU in the first place. This will lead to the use of alternative sources to convert $ to BTC with much higher fees than established exchanges such as coinbase.
You might be right if indeed there are a significant number who have no other option of how to get BTC. For others assuming they can use the strike app, the founder is working under the assumption that fees will trend towards zero.
A separate question, I assume the price of goods will be higher in EL Salvador when bought with BTC vs $ to account for the spread built into BTC to account for price risk?
I assume it will be seamless in the app, whether you're paying from a USD stablecoin balance or BTC balance the payment amount would be the same to the recipient either way.
 

DazedInPontoon

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It's interesting to note some lightning network statistics now (source). Might be interesting to revisit them in the future and see whether it has grown or not:

Total Capacity: 1,465.74 BTC
Capacity Value: $51.8M
Total Nodes: 11,817
Total Channels: 49,003
 

Dublinbay12

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Do they support El Salvador, and if so what are the fees like? You can consider Strike one of these competitors.
El Salvadors currency is the USD so the issue is just international transfer costs, whether local banks accept international transfers rather than costs associated with converting currency.

Could you not either post the money home from the US or use a pre-loaded debit card in El Salvador given it is the same currency?


I wasn't assuming this.
Who are the users forced to use WU that you referred to?
 

DazedInPontoon

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I don't have a legitimate answer about how easy it is to send money from the US to El Salvadaor, I'm taking Jack Maller's word for it when he says it's difficult. Difficult enough that he went to live in El Salvador for 3 months because he saw it as the best example of where Strike would be of benefit.

Do you know for sure there are cheap, quick ways of moving money from the US to there or are you just assuming?
 

Dublinbay12

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I don't have a legitimate answer about how easy it is to send money from the US to El Salvadaor, I'm taking Jack Maller's word for it when he says it's difficult. Difficult enough that he went to live in El Salvador for 3 months because he saw it as the best example of where Strike would be of benefit.

Do you know for sure there are cheap, quick ways of moving money from the US to there or are you just assuming?

We are diverging from the point that EL Salvador accepting Bitcoin doesn't solve the problem of people who are forced to use WU as suggested by Tecate earlier. If anything BTC adoption in this case supports the continued mistreatment of millions of workers in places like the US.

I don't know, but I was querying that if the currency in EL Salvador is USD then the only blockage is how to get USD into the country rather than also exchange rate risk.
 

tecate

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Following on from El Salvador's move re. bitcoin - other central american countries are taking notice. Here's the front page of a mainstream national newspaper in Costa Rica:

la_republica_costa_rica.jpg
 
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