El Salvador abandons Bitcoin as legal tender

Do pro-bitcoin people still talk about goals of bitcoin being a currency that people use daily?

I don't follow it closely, but that idea seems to have faded and now it's just an asset to buy and hold while it magically goes up forever.

For daily usage, Bitcoin is simply inferior to Ethereum and other blockchains.

Those who continue to invest in and use the Lightning (layer 2) network think it will be used as currency but most see it as a long term storage of value, at least until infrastructure supporting layers 2 and 3 mature.

As for “magically,” there’s nothing magic about its increase in value as it replaces legacy technology, chiefly gold as a store of value.

That opinion is not shared by those who think Proof of Stake and no ceiling to supply are bugs vs features.

Those issues are not really relevant when it comes to factors like transaction speeds and the diversity of assets available to transact with, such as stablecoins, as well as DeFi platforms to actually use those assets on.

Why would anyone spend a single BTC/sat. if they know it could be worth 10x more in a few weeks/years?

It is not an asset that goes up forever.

It is permissionless, very liquid asset that the governments cannot dilute. For many people this is a very big deal. A significant part of the world population lives under regimes where the governments control the money flow, heavily dilute savings in the single local fiat currency and can confiscate savings under a guise of money reform.

While not nearly as bad, most democratic, developed countries dilute their fiat to the tune of 5-7% a year. Would I buy bitcoin if I have an easy access to a convenient currency with no (or at least significantly under the average GDP growth) debasement? Hell no! Otherwise, I will (together with gold, income-generating stocks, real estate, etc.) as an insurance against government spending run amok. My 2c.

It's false safety. If the government can't get their drop of blood by diluting their fiat, they will simply do it another, more direct way.

At best it will work as long as few enough people are doing it that the government doesn't care.

Except it has none of the properties of gold as an asset. The value of bitcoin is highly correlated with equities and anti-correlated with gold. It’s the opposite of what you want to be holding as a hedge against a stock market crash.

Because they need toilet paper today.

Around the time of SegWit, the “digital gold” camp won over the “digital money” camp — who moved on to ETH, SOL, etc.

It's like those people who collect action figures and never take them out of the box. I'm not trying to knock it, but I don't think I'll ever understand it.

I think people mostly realized that the more immediate priority is establishing Bitcoin as an international reserve commodity. Its usage as a currency, either directly or via intermediary layers, is kind of secondary to that. Bitcoin is making pretty good progress in that regard.

Selling a speculative investment for a necessity screams: "I don't understand personal finance."

I've got good news for those people, you can't buy toilet paper with bitcoin today. And they aren't getting paid in bitcoin today, either. And if they tried to exchange bitcoin for fiat to buy toilet paper, they'd be subject to incredible fees that would make such a transaction pointless.

Because if you/they knew that, then they'd be buying more bitcoin.

On a much smaller scale, your dollar goes up by 5% every year but you still use it everyday because all your monies are in dollars. If all your monies are in btc, you'd have to sell to buy things.

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You don't really believe that do you? The market disagrees as well

It is more rare than gold and getting more rare every 4 years.

What is the current supply of gold and what will it be in 2050?

It doesn't have to be "magic" that causes it to go up forever. People need a way to put large amounts of money in places that are difficult for governments to get to and /or easy to move across jurisdictional borders. Think: money launderers, people that are worried their corrupt government will seize their assets, people hiding money from someone they owe like a spouse in a divorce. These all seem to me to be reasonable use cases for bitcoin.

All the things that make bitcoin a pain to buy a pizza are irrelevant if your goal is to hide $100m in your shoe. Nothing can do that better than bitcoin and there is a demonstrated need.

If you assume the reason to use bitcoin isn't going away and the wealth of the world goes up-- while the supply of bitcoin is pretty constant-- it can keep going up without magic.

Sell enough at the top to last you until the next top.

Many of us in the BC is digital money camp argued the case that more transactions and a lower transaction fee could be most easily implemented, within the spirit of the founders intent, if we simply increased the size of the transaction buffer, mitigating an obvious bottleneck.

We argued against the complexity of SegWit and Lightning Network.

I think greed and politics won rather than engineering or economics good sense - people didnt want cheaper transactions, it now costs around $15 USD per BTC transaction.

Despite the proliferation of alt-coins using essentially the same code-base, with shorter block-times and larger buffers.. and more programmability - ultimately proof-of-stake might be a better implementation of the block minting process, than proof-of-work.

Yeah the rest of us can continue geeking out over layered network protocol design and technologies like Lightning or Liquid. There is so much going on under the hood but it is so much easier to take the piss and learn nothing. That is no surprise, with the current state of the world.

If you suppose that BTC would be a widely adopted currency, you wouldn't "sell" it, you would simply exchange it for the good or service. But in this case if BTC is deflationary you would still hesitate to spend it. USD is inflationary, so there is hypothetically a small pressure to use it.

Gold has a utility, used in a large swath of electronics. Can always be sold to make something. Bitcoin can only be sold if there is a fiat currency trading in it

While people will always need to buy the essentials, I do buy that a deflationary currency could discourage discretionary spending. Maybe people are slightly less likely to splurge on a big purchase or a nice dinner. I don't know what the delta would be in GDP growth compared to now; it certainly could be negligible.

Electronics didn't exist for the thousands of years that gold was used as currency. The fact is, it only has most of the value that it does because it was rare, malleable, particularly shiny, and because metallism was simply the easiest way (or at least one of the easiest ways) to invent the concept of currency and a monetary system.

When most people hear daily usage, they think groceries, bills and paycheck, not day trading on an exchange, defi or centralized.

In this regard, crypto currency is not really a currency that people can use for their daily lives without worry and risk from volatility

But that doesn't distinguish Bitcoin from other cryptocurrencies. The thing that distinguishes Bitcoin is fame, pure and simple. Everyone has heard of it.

yes it is, just use stables. frankly it is a much more convenient way to move money if the other person has it as well

e: and i’m no crypto obsessive really, i don’t think it was usable even 3 years ago but it’s pretty handy now, can easily send $20 in usdc on base or use it to purchase carbon offsets or use it on election/sports betting or use it to purchase deepseek r1 credits…

It used to be that buying a Bitcoin today would net you 10000x more if you waited a bit.

Then it was 100x more.

Now 10x more is the best people can dream of. The possibility of getting super rich from Bitcoin is now gone unless you're already rich to start with. Turning $100 into a million dollars made the whole world interested. Turning 100k into a million isn't anything interesting and it's out of reach of most normal people, and those who can throw 100k into something are already investing in other things with similar returns. As a normie, putting in $100 with the hopes of Bitcoin reaching a million would only get you $1000. That's not much different than a couple scratch off lottery tickets.

It'd be much smarter to find the new secret thing that costs $5 now and will net you a million dollars ten years down the road. There's loads of stuff out there that people aren't paying attention to yet. Crypto isn't one of those things.

you don't want your currency to be useful though. the value inherent in a currency is its ability to be verified without trusting the counterparty.

Transaction fees have been about as low as they can possibly be for months. It costs roughly $0.15 to move a UTXO right now.

The people who argued for increasing the block size were making a tradeoff between decentralization and "low" transaction fees. Increasing the block size makes the chain grow faster which causes several problems: the time to sync new blocks goes up, initial chain download time goes way up, and block verification takes more CPU.

The parameters were initially set so that anyone could run a full node for as many years as possible which is the most important part of the ecosystem by far. If you make it harder for the average person to run a node it doesn't matter how cheap the transactions are if ultimately a small group of people are capable of running it. You could argue that doubling or quadrupling the block size doesn't hurt decentralization, and maybe you're right, but that also doesn't move the needle much for transaction throughput either at least not enough to make a difference for adoption.

Bitcoin can and should be scaled in layers. The detractors are just impatient.

If all you care about are transaction speeds then use the lightning network. Instant settlement of bitcoin and much lower fees. There are protocols like Cashu [1] that allow you to transact offline anonymously for no fees and settle on the lightning network.

Why do you need "diversity of assets to transact with"? Go to any store in almost any country and they usually accept a single currency. Maybe in some they take local + USD. You're arguing for something the market doesn't seem to care about outside of speculative trading for fiat gains.

And even if you really want stablecoins they've been added to bitcoin via the lightning network and taproot assets. Tether for example can be used via bitcoin [2]. There's a reason Bitcoin makes up well over 50% of the total crypto market.

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1. https://cashu.space/

2. https://www.coindesk.com/business/2025/01/30/tether-brings-i...

You "can" do all these things on BTC. Almost nobody does. All of Tether & USDC usage takes place on other blockchains. The lightning network is notoriously tricky to use and isn't trustless. A diversity of assets enables things like PAXG, an ERC-20 token backed fully by real-world gold, as well as things like tokenized stocks, bonds, and t-bills, the last already existing, and the former surely coming in the near future.

Additionally BTC isn't "over 50% of the market", it's over 50% of the market capitalization, which is a huge difference. BTC doesn't have the raw TX speed to make up 50% of actual market activity.

I do.

While it's not here yet, Vitalik's future plans for Ethereum involve making it possible to run validators on smartwatches[1], which is far more accessibly decentralized than BTC could be and far more possible with Ethereum's PoS consensus as opposed to PoW, without needing to cripple transaction speed to boot.

[1]: https://vitalik.eth.limo/general/2024/10/23/futures4.html

Also nobody can premine it, no coalition of big stakeholders can lock you out of your coins, a 51% attack is less likely feasible than for any other PoW coin, the bandwidth needed for its blockchain is smaller than most alternatives, and it's less likely to conceal unknown cryptographic weaknesses. It's kind of shitty in some other ways, though.

And eventually the math will be solved and every bitcoin will be worth zero.

Fame is part of it, but it's more that it's IMO probably the only truly decentralized cryptocurrency. Not just in terms of the nodes and miners being well spread out between organizations and parts of the world, but also in terms of its development and governance. Sure, there's a relatively small group of core contributors to Bitcoin, but they don't have much fame or personality cults around them like Ethereum's Vitalik does. They are really just restricted to maintaining and adding well-agreed-upon new features to Bitcoin. Eg when Segwit happened, a lot of miners held out on supporting it for a long time becasue it was a bit controversial. Meanwhile with Ethereum, if Vitalik really pushed for some controversial change, it would probably happen. Once you go further down the list than Ethereum, things get really bad, with many cryptos' development being entirely driven by a small group of people in a for-profit company, with miners and users that will blindly update to the newest version regardless of what's in it.

When I think of the "properties" of gold I don't think of how the price behaves, but rather that the total supply of it is limited (though Bitcoin actually does a much better job at limiting supply, since gold'll keep being mined for a long time and the supply is hard to predict) and that, other than theft, there's no way for someone else to take it from you (compare to eg money at a bank that can collapse or in a stock of a company that can go bankrupt)

While that's conceivable, Merkle-graph systems like Bitcoin are surprisingly resilient. It's been almost 20 years since MD5 was thoroughly broken, but still nobody has published a second preimage attack. For SHA2 and SHA3 nobody has even published a collision attack. And SHA-256 (what Bitcoin uses) is post-quantum-safe (Grover's algorithm still needs 2¹²⁸ time) though AFAIK there isn't yet a post-quantum cryptosystem deployed for signing transactions, which will require a hard fork.

Presumably if quantum computers (or better DLP algorithms on classical computers) start breaking keys, that will become a priority.

So I think there's an excellent chance that even if the math is solved Bitcoins will retain their value. Perhaps even without many of them getting stolen in the process. This is a big difference from many other uses of cryptography; if someone breaks IDEA 20 years from now, they can decrypt your PGP messages from the 20th century, and there's nothing you can do now to prevent that.

Because people are mortal.

Money laundering, tax evasion, and alimony avoidance. Yes there is a demand for those I suppose...

Eth famously forked and reversed txns due to someone getting scammed.

It is getting less less rare every 4 years.

Here's one good use: I looked into leaving the US to become a citizen elsewhere. I have about $15MM in my retirement. I would have to pay a penalty on my taxes for early withdrawal, and be taxed when I renounce my citizenship. In theory I could cash everything out, buy a huge amount of BTC, move to another country (within a week, or quickly!!), and then cash it out in their currency. Of course, all sorts of alarm bells would go off if a normal schmoe like me tried to move that much money out of my investment account, because I'm not rich enough to break finance laws like people worth 10x, 100x or 1,000x more than me can do without going to jail. And I'd be terrified that the other country would OOPS my deposit like in the film Blow with Johnny Depp.

the fact that eth classic was created from this incident and still exists does inspire some confidence that ethereum's governance is somewhat decentralized also, to be fair.

And IIRC it wasn't a "scam", it was a bug in a smart contract.

So your one good use is... tax evasion. Huh.

It's not illegal to move money out of your investment accounts, it's just reported so that yes, you can have a tax liability.

I too, would like tax-free investments and funds.

To me its inevitable. And just a matter of time. Any year there could be a breakthrough that quickly leads to missing math.

Yes! That's my one good use! :)

Seriously, that's all I got.

One man tax evasion is another man escape from illegitimate capture.

Bitcoin's utility is that you can both hold it in your hands and send it across the world in 10 minutes with no intermediaries. Can't do that with gold.

There is an infinite supply of computer algorithms. Gold is an element.

I literally use USDT daily. Use it to pay for food delivery, for a massage or a manicure, or exchange it for cash delivered to my home. Literally 90% of my spending goes through it.

We still don't know if P = NP. You seem peculiarly certain it is, which is odd given that most of the people who study the topic strongly suspect otherwise. They could of course be wrong, but what makes you so sure?

Yes a smart contract bug. Hacked might be a better word. Or outsmarted?

Your comment indicates that you fundamentally misunderstand BTC. I recommend reading Broken Money by Lyn Alden.

Yes, some Bitcoin people still hold on to the idea that somehow layer 2 or layer 3 systems will somehow make Bitcoin practical for regular payments again.

But largely that's been abandoned for the "store of value"/"number go up" speculative use-case which is easily 99.99% of the point of Bitcoin today.

Sure they can criminalize bitcoin possession or use their police force and state apparatus to serveil and track all bitcoin usage. But that is way more effort than simply turning on the money printer.

I was emailing rent to my roommate 6+ years ago for zero fees with GPay, it's hard to see it being easier than that.

Fame and security. Bitcoin is the hardest crypto to attack socially and economically.

ETH forked because the contract was poorly written and they didn't want to honor the contract because their buddies would have lost a lot of money and the project would have gotten an egg to their face.

It's much simpler than that, they simply make selling bitcoin a capital gain event (which it is) and tax it. They could even make a separate special rate for cryptocurrency pretty easily. Now maybe you think this is easy to avoid, in which case I would ask why you aren't already committing tax fraud.

Proof of Stake etc are a bit irrelevant for daily use. If you want to do something like make a bet on polymarket the newer chains are faster, easier and cheaper than bitcoin or ethereum on the whole. Polymarket uses polygon for example which is a fork off ethereum but it doesn't matter much which such network you use and the bets are denominated in US$. Bitcoin lightning is ok but more awkward to use than polygon et al.

Proof of Stake and no ceiling to supply are important if you are going to hold the thing for decades which is a different issue.

USDT isn't Bitcoin.

The reason tax evasion with regular currency is so difficult is because pretty much all banks/financial institutions report your income to the state. But with crypto, especially anonymized ones like monero, the decentralized nature makes it almost impossible to track income and who it belongs to.

It currently costs <1 USD to perform a Bitcoin transaction:

https://bitcoinfees.net/

well, it is. for instance, for my rent rebalancing i have to pay more than $2500 and gpay doesn’t allow that. the fees would be fractional cents.

in fact short of wiring i have not found any service allowing me to send more than that in a day and certainly not with instant deposit

gpay takes 1-5 days to appear in account, i can spend the money i transfer here immediately

I think the government is figuring this out and has access to a lot of info about BTC from the Binance settlement. That's just speculation on my part, it may not be true.

What I think a lot of people don't realize is that the US government is not very interested in going after people who do tax evasion in the $5-50 m range. People like that can afford lawyers and representatives, it will take years, and never get any headlines. They love to go after people for $5-50k evasion because they just get paid.

They would just patch the software.

That's true, but you could say the same thing about a Van Gough painting. There are lots of old pretty paintings. But if you paid $xxm for your Van Gough you can be pretty sure its still worth a lot in ten years. There are no guarantees. But that's not just true of Van Goughs and bitcoins.

That's true. The claim that Bitcoin is useless for everyday transactions is obviously correct. It's more like digital gold.

However, I find time and time again that HN crows is absolutely unaware of how useful crypto can be in everyday life, so I offer my perspective.

It is almost trivial for a 3-letter agency to track bitcoin flow. Every transaction is entirely public with only pseudonyms to obfuscate identity, and with the current KYC laws good luck not getting doxxed while buying BTC. We need to move this discourse away from "crypto" and towards Monero specifically if we want any progress on adoption

And it doesn't work unless you buy your bitcoin peer to peer, as any exchange will just leave a log relating your buying to your wallet, and liquidate it peer to peer as well. Any transactions with regulated institutions will doxx your wallet and then it's over, you can't use those funds anymore without being tracked (or at least trackable) by the feds.

No, I get it, thank you very much. Early adopter of BTC here, I've read the whitepaper and all that, sodl when I realized what an energy pig it had become.

The only thing that separates BTC from all the derivative shitcoins is hype and stories we tell about it. Bitcoin is itself interchangeable with an infinite number of related algorithms/schemes.

Gold extraction definitely has its problems, but it's a fundamental element of the universe.

In 100 years, I know which one will definitely still hold value.

Assuming P != NP we still don't have any proof that sha-2 etc can't be reversed (obviously there is a loss of data). It's implausible for now but someday I guarantee we will have the math that makes it trivial. It does not require P = NP.

Even then it had a utility as jewlery. Bitcoin fails on that.

Too many malicious actors in crypto for it to become mainstream, sorry, not sorry

The community needs to self police and remove this problem if they ever want me to give it a third chance. There are several other fundamental issues in crypto, so not sure this will be enough on its own to reach mainstream adoption

For example, I don't want my transaction history on a public ledger, encrypted or not

"Crypto needs to self-police and remove malicious actors" and "Crypto needs to stop having a public ledger" are two contradictory actions where achieving one would make the other impossible.

You can't patch the rules for the existing bitcoins. People would have to move them to new rules.

That is not necessarily how this works. The only thing required to happen is that a super-majority of the miners running the bitcoin software voluntarily update to a new version. This is how changes have been done to BTC before.

How so? Plenty of private system are fully capable of removing bad actors, if anything they become easier together

Isn't a wallet just a private-public key pair? One could easily generate those on a whim and start transacting using them. I assume the KYC laws apply to exchanges but what about individuals with bitcoin directly trading with each other? No way to track that

I already have stable digital dollars in my bank account, why do I need another one that costs me more money to use?

I did lookup the BTC transaction fee, but it looks like 15 USD was completely wrong .. my bad.

Checking now :

https://ycharts.com/indicators/bitcoin_average_transaction_f...

This says, afaict, the average BTC transaction cost today is $1:40 USD

The 5yr chart shows it spiking at $128 in April 2024.

If BTC transactions reliably cost 15c per transaction, it might make for a viable electronic money... but that is clearly not the case, so I think my point stands.

Yes - I buy my bitcoin using a decentralised exchange over Tor. All the authorities can see is that I send a random person some money to their bank account. They have no idea what it's for, and would have to individually track down and successfully interrogate each different person I send money to, to discover how much bitcoin I had bought and even then they can't prove I own it.

In what way? I assume you know how the minting of coins work with miners

Are you going to stop using AI because it consumes too much energy?