They're using Strike, which has no fees, nearly instant transfers, can send globally (again for free) and only need a name and phone number. Isn't that better than a bank aside from clawbacks?
But you see that's the problem. With Strike you aren't tranasacting on the Blockchain, you're transacting through Strike which I then would settle the transaction for you. Yes it has the advantage of no fees, instant transfers, etc. But you aren't really transacting on the blockchain, at least not directly.
El Salvador picked BTC because of it's popularity, the problem is BTC is a terrible currency to actually use for something like this because of slow transaction speeds and high fees, so to get around that they augment it with Stike, which takes the decentralization out of the transactions, which makes the whole thing moot in my mind.
Strike is a custodial wallet. However, it is fully interoperable with self-custody bitcoin and lightning network wallets. I can send and receive payments with any other bitcoin wallet. Strike is the "rails" to/from traditional finance. It is possible to deposit USD and withdraw true bitcoin immediately. In my opinion, it is a good balance.
The biggest problem to me is that it is REALLY hard to understand the lightning network. I have tried most of the lightning wallet apps[1] and they are not very clear about where your keys are, how channels are managed, and what tradeoffs have been made. I am optimistic the infrastructure and technology will get there quickly. I think the lightning network will be kind of like email. Decentralized but most people use a few big players. I have been able to bounce back and forth tiny payments (less than a dollar worth) between most of these wallets in seconds. It's pretty amazing.
[1] Muun, Phoenix, Wallet of Satoshi, BlueWallet, Breez, Lightning Labs (beta, no longer available)
They may also have picked bitcoin because of its liquidity and its stable techno-social scaffolding.
Also, I assume that users will have the option to move funds from Strike into a hardware wallet (or similar) of their choosing. Either way, if El Salvadorans get in on the ground of floor of the state adoption phase of bitcoin, they are gonna make bank.
Yes, it's a smaller problem to lose even all your ransom money, than to be physically captured and put in jail for decades. Can't we just agree on that?
Also "fairly trivially traced" can be naive. Here's one scenario from a million possible scenarios. You hate politician John Doe and happen to know me. I have a stash of millions in ransom money on my public anonymous wallet.
So I start sending money to organizations close to John Doe, and John Doe himself, implicating him in crime. You give me cash personally for a job well done. I just laundered some of my money and used the "trivial to trace" money against someone else.
Things aren't as simple as you may believe. Sure, if you're stupid and directly cash out your coin to your persona, you'll get traced and caught.
But money is money, it's a resource you can use in countless ways to move the pieces on the board around and get someone to pay you for it.
Here's another example. I start donating 100k USD worth of coin to bunch of charities. You may assume one of those is a pawn. But you can't prove who it is. Well, I happen to know one of the charity owners. I give him 30%, I just laundered 70k. I also lost some, but eh? I can blackmail some more people. Other people's money are cheap to me when I risk nothing by taking them.
Those are relatively simple schemes. If you sit down and think, you can come up with much better ones.
For example what I use this ransom money to pay for some other criminal activity? Like kill someone. I move the problem to them, but they can pass the ball around more until you can't prove WTF is happening. You have no idea whom those wallets belong to and why are there transactions happening. You can trace the money but you have no idea after some point if the recipient has any clue about the origin, or if there's criminal intent.
Here's another weakness. Who has worldwide authority over crime? No one. So if I shift my coin to the opposite side of the world and cash it there, due to fragmentation, lack of cooperation and so on, I may have cashed out before someone manages to even make the right calls to begin negotiations on cooperation.
If your end goal is to get to cash it's quite difficult without doxxing yourself. For eg. imagine you do a ransomware hack, you have a BTC address with the BTC on it. Law enforcement as well as the company hacked both know the address. From that point they can follow where the money goes, it really doesn't matter how many different ways you elaborately transact.
You might try and run the BTC through a coin mixer however these attract attention and afaik are unreliable against an opponent like Chainalysis.
You can send the BTC to an exchange like Binance where you have not done KYC, however two issues with that. Firstly, law enforcement can contact the exchange and request halting the account. Secondly, without KYC you'll have very low daily limits and it will likely take a while before you can swap the BTC into something more private like XMR.
All your examples don't consider that we can trivially follow a wallet, get notifications when it does something and follow where the money goes. Yes law enforcement could absolutely knock on the doors of organisations that receive tainted BTC.
Speaking of global fracturing, partially true but I would still ask how do you intend to cash out? The only way that would work would be on a p2p website where you can directly sell to other users. This won't work if your somewhere off the map where there is not a lot of wealth. And somewhere where there is wealth you open yourself up to being caught if you have many large swaps.
The article claims that WU's fees in El Salvador average 10% of the remittances. You can read about my experiences with bitcoin vs. WU in https://news.ycombinator.com/item?id=27448744.
> the charges are ten dollars or so, that's bearable.
Sorry, but no that's an extraordinarily privileged take. $10 is a lot of money for just transmitting some USD. And it goes a long way in El Salvador. I highly doubt the average remitter is sending more than $500/month, so it represents a 2% tax. I only consider $10 an acceptable fee if I'm sending tens of thousands of dollars.
There isn't any currency conversion because El Salvador's official currency is USD. Assuming it's WU on both ends there's no settlement risk. It sounds like pure greed.
Honestly, I have completely given up on criticizing BTC - there was a reddit thread about post-apocalyptic society, and the BTC zealots were arguing that was the perfect place for cryptocurrency.
The argument was that, after society had completely collapsed, and people were killing each other over food and water, there would still be a need for wealth transfer and escrow services.
That is when I realized that I shouldn't take most BTC/crypto arguments seriously, because the people are way too invested personally and economically to be rational.
Instead of being a jerk and trying to shut down a conversation, and making completely unwarranted assumptions about people participating in it, perhaps you could actually make the case. Yeah?
When Bitcoiners bring actual facts to the table, people ignore it.
Bitcoin has been used in the El Zonte town for some time now and lightning is functioning and allows almost instant and practically free Bitcoin payments, yet if you read half the comments here, Bitcoin is very slow/inefficient system and is only used by criminals.
Maybe before such an ad hominem you need to become a bit more familiar with recent developments in El salvador. Associating this government initiative with criminality is a very reasonable thing to do.
I read the article and then I did some more research. His government was elected with a significant majority. Per the constitution they have a legal right to replace judges and even though the article skips those facts they never actually claim criminality - since there is no evidence of such.
Looking back at history, El Salvadore was devastated by a 12 year long civil war [1] in the 1980’s funded to the tune of $1-2 million USD per day by the US Government (Carter and Reagan administrations) funding child soldiers and such - let’s talk about that criminality.
