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Old 11-19-2021, 07:25 PM   #221
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A pretty cool development, yesterday Square released a whitepaper outlining a protocol for a Decentralized Bitcoin Exchange.

Essentially this is an exchange that operates outside of any 3rd party (including Government) control. Its another great step of Satoshi's vision of entirely replacing banks as intermediaries, and taking the power of money out of the Government and putting it into the hands of the people with a view to fostering global equality of financial transaction freedom.

Access to Bitcoin and the freedoms and utility it offers is still beyond the reach of everyday people (or at least not easy easy as it could be).

Right now, for many "laymen", getting access to Sats generally involves going through a
centralized exchange. That in turn then requires multiple asset transfers and results in transaction fees each step of the way. These are a prohibitive (or at least less than optimum) barrier to entry for people as they consider switching over from the fiat system to Bitcoin. Such processes arguably also enable established powers (banks and Governments) to prioritize the rate of Bitcoin adoption in accordance with the existing power hierarchy (Ie Governments, politicians, banks, super wealthy, HNWs, hedge funds, etc).

Better and easier access to Bitcoin needs to be provided to the average person. The Square whitepaper proposal enables "a better bridge into the future".

For those who are technically inclined see: https://tbdex.io/whitepaper.pdf

Actually nice and easy to read, so don't be put off!

The protocol makes no opinion on a person's identity as a feature or consequence of transactions. Instead, it allows counterparties to negotiate and establish the minimum information acceptable for the exchange. Moreover, it provides the infrastructure necessary to create a ubiquity of on-ramps and off-ramps directly between the fiat and crypto financial systems without the need for centralized intermediaries and trust brokers. This makes Bitcoin and related decentralized financial services more accessible to everyone, globally, on an equal basis, and is one more step towards preparing and strengthening the BTC ecosystem for monetary system switchover.
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Old 11-21-2021, 07:06 PM   #222
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Update on El Salvador who was the first sovereign nation in the world to adopt Sats as official legal tender earlier this year. They have now announced a USD 1 billion Government Bitcoin backed bond issuance.

Essentially they are creating a vehicle to convert cash over to Bitcoin, the bet being that the decline in the USD to BTC will be greater than the coupon rate they pay on the bond.

(So for example if the coupon rate is 5%pa, and BTC grows at 20%pa, they are increasing their purchasing power (as measured in USD) by 15%pa. Historically BTC has increased over 200%pa in value to USD over the last 10 years, so a great bet provided this trend continues.)

Meanwhile, we had Blockstream executive Samson Mow stated that we see over 100 countries issuing bitcoin-backed bonds eventually (with the game theory being that there will be a rush as to who goes first, with the "first-mover" obviously having the advantage. We may well see similar moves next from other countries in the Latin America region, or possibly small nations in the South Pacific - Cook Island, Vanuatu, Samoa, Fiji etc. Watch also for announcements from Miami and New York who are also competing to be first movers in fiat to BTC conversion vehicles.

The implications for us, as investors, is to figure out how such developments impact Bitcoin price. We know supply is fixed, hence the future demand side of the equation is what will dictate price.

https://www.reuters.com/markets/rate...ds-2021-11-21/
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Old 11-21-2021, 07:30 PM   #223
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The Cryptocurrency Thread

That’s really too bad. Given El Salvador’s smothering social problems, I feel sorry for its poor taxpayers who are going to be on the hook if Alexander the Great II can’t quite deliver on bitcoin-backed El Salvadoran bonds issued to make El Salvador the world’s financial center by building a new high tech city in one of the hemisphere’s poorest and most dysfunctional countries, powered on volcano energy. (The President said all those things and more in the article.).

What is the market for such a bond? What could possibly go wrong with such a maniacal Bitcoin Bro as a head of state? It seems a clear reputation risk for the public acceptance of Bitcoin itself, too.
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Old 11-21-2021, 08:12 PM   #224
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That’s really too bad. Given El Salvador’s smothering social problems, I feel sorry for its poor taxpayers who are going to be on the hook if Alexander the Great II can’t quite deliver on bitcoin-backed El Salvadoran bonds issued to make El Salvador the world’s financial center by building a new high tech city in one of the hemisphere’s poorest and most dysfunctional countries, powered on volcano energy. (The President said all those things and more in the article.).

What is the market for such a bond? What could possibly go wrong with such a maniacal Bitcoin Bro as a head of state? It seems a clear reputation risk for the public acceptance of Bitcoin itself, too.
Time well tell. Its a bold move.

For now, the Government's adoption has benefitted the country, both in terms of the increase in value of its reserve assets, as well as the inflow from BTC investors and fintech companies globally. The BTC powered Lightening Network has massively reduced the cost of foreign remittances in and out of El Salvador. And they are now seeing an increasing number of people in country becoming employees in IT tech industry. They are also seeing a real pick up in people from overseas buying property (paid for in Sats).

As for the market for these bonds, it comes down to how much yield an investor is prepared to accept for the return, factoring in perceived risk.

So to me, I view this as a positive development both for El Salvador and for Bitcoin. If they pull it off, it would show that investors clearly have faith in a bond backed by Sats (meaning essentially that they believe Sats will hold, or increase, their value over time).

As for Bitcoin per se, it doesn't care who, or what, adopts it. It simply keeps performing in a perfectly neutral way, according to its algorithm ever since the day of its conception (the immutable certainty of which is of course is an important utility it offers in the field of finance). So that extent, any increase in adoption is a positive in relation to future price.
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Old 11-21-2021, 09:46 PM   #225
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As for the market for these bonds, it comes down to how much yield an investor is prepared to accept for the return, factoring in perceived risk.
Latin American countries don't have a great track record for paying back bonds they issue so I would be concerned about the details.

Even if I believed bitcoin would keep going up, the backing is worthless if the government does not hold adequate bitcoin in reserve for the entire life of the bond. This means they get nothing at issueance and effectively only gain from being able to spend down reserves when (if) the increase in price of bitcoin is realized. This means the bond is a drag on their economy initially which is not something they can afford. It seems more like a stunt than sound government policy.
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Old 11-22-2021, 12:36 AM   #226
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Latin American countries don't have a great track record for paying back bonds they issue so I would be concerned about the details.
Bond traders are big boys. I think they will do a fine job balancing risk vs reward. That is, after all, their job, and how financial markets work.

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Even if I believed bitcoin would keep going up, the backing is worthless if the government does not hold adequate bitcoin in reserve for the entire life of the bond. This means they get nothing at issueance and effectively only gain from being able to spend down reserves when (if) the increase in price of bitcoin is realized. This means the bond is a drag on their economy initially which is not something they can afford. It seems more like a stunt than sound government policy.
Not quite correct. Half of the Billion to be raised will be spent on infrastructure and services, both of which will benefit the people of Salvador, both in terms of jobs, living conditions, and long term infrastructure that supports future innovation. The other half will be invested in Bitcoin. So there is immediate benefit to Salvador from the money raised. As with any bond, El Salvador must repay in accordance with the agreed coupon rate. You are correct, that there is a risk the bond will not be repaid. As stated above, this is something that investors will weigh up and decide on before subscribing.

The term "stunt" is of course subjective, but yes, to some extent this initiative definitely creates publicity - that I think we can agree on. All part of the plan I believe. Puts El Salvador and its leader on the map, which they hope will lead to further investment inflows, tourism, company relocations etc. Same with Miami. Same with New York. At this point, any publicity and discussion, even trolling or skeptical comments etc, are a positive for BTC as they help foster discussion, awareness, and ultimately more interest, curiosity and adoption. "Any publicly is good publicity" as the saying goes.

On a related note, Professor Jordan Peterson (who recently became a "Bitcoin believer") recently gave a great quote on the statement that "Bitcoin is like the tulip bubble". He stated, that: ...such comments come from ignorance. To compare a localized event related to the price of flowers, that happened for a brief period of time in the 17th century in Holland, to a global monetary revolution which enables value to be sent in any amount at almost zero cost to anyone in the world virtually instantaneously, is what I call "argument by dismissive analogy".

I had to smile when I heard him say that, and I made a mental note to remember that phrase.
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Old 11-22-2021, 03:59 AM   #227
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Ecuador also plans to setup Bitcoin mining powered by... a volcano? Or geothermal energy, to be more precise, which I think has been done before. But datacenters also need cooling, so it still seems like an odd choice.

While tulip bulb is a far fetched analogy, Bitcoin is speculative. There are other cheaper and faster payment methods using apps, so I don't expect Bitcoin to do well there. Maybe in international transfers, or something still being developed.
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Old 11-22-2021, 04:09 AM   #228
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OverThink - good points on the volcano. I had similar thoughts. As you alluded to, the plan is essentially to capture free and renewable geothermal energy (and then use this electricity to power servers, mining equipment, and yes cooling too). The volcano makes a good Twitter meme, but its basically power that is being harnessed.

Yes, Bitcoin is inherently speculative - no doubt about that. Its the difficulty of creating bitcoin and the energy required which gives it its value, and hence its scarcity. There was recently a billion dollar transfer done at a cost of $1 (which is amazing value for the transaction cost). And the Bitcoin Lightening network outperforms Visa and Mastercard in terms of transaction volume and cost. Bitcoin should primarily be considered as a base layer store of wealth, with second layer technologies for payments to be built on top.
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Old 11-22-2021, 06:56 AM   #229
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Below is a live video of the announcement from President Bukele of El Salvador making his announcement to the world of his "Bitcoin City" vision.

Take a look, and make your own conclusion. Personally I was inspired and impressed enough that I am now considering investing in the country. But I can also imagine some comments already along the lines of "what kind of a President delivers a speech wearing a baseball cap, backwards". Even some of my pro-Bitcoin friends are commenting along the lines of "highest murder rate in the world - you will get shot if you go there, etc", but to me therein lies he deep value and opportunity. What to you all think?

President Bukale announces El Salvador's Bitcoin City vision live. Channel - Coindesk. 21 November 2021.
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Old 11-23-2021, 12:02 AM   #230
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Not quite correct. Half of the Billion to be raised will be spent on infrastructure and services...
So the bond issue is only HALF backed by bitcoin. I infer the rest is backed by the full faith and credit of the Guatemalan government. How reassuring.

Watch out London and New York, Guatemala is gunning for you to be the world financial capital!

In case you are not aware, the mainstream financial media in the US are openly mocking this announcement. (One quote I heard: "Developing at the base of an active volcano...what could possibly go wrong?") I have yet to find one report on this in he regular financial media that is treating it as anything but a joke.

Sad to see the Guatemalan people get hurt and for priviledged residents of developed countries to selfishly delight in a development which is clearly not in the best interest of Guatamalans. If they pull off the bond issue the half billion would best go to fighting crime and corruption.
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Old 11-23-2021, 12:16 AM   #231
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Even some of my pro-Bitcoin friends are commenting along the lines of "highest murder rate in the world - you will get shot if you go there, etc", but to me therein lies he deep value and opportunity. What to you all think?
I lived much of my life in the southwestern US. I have met many Guatemalans. Where I lived they were one of the most common national groups after Mexicans. They are very gracious and industrious people.

But even a cursory look at the desperate pace they are fleeing the country in recent years should give you pause. Sure, investing to support the people is admirable. But the reality is the money you invest in the country will only support one of the most systemically corrupt governments in the world.

I suggest you do some research with some of the NGOs that report on these matters. You will find Guatemala near the bottom of most global corruption lists.

Yes, I am a skeptic of bitcoin but that has nothing to do with my comments in this post. Even if you decide the investment risk is worth it I would urge you to consider the issue more broadly.
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Old 11-23-2021, 01:05 AM   #232
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I have yet to find one report on this in he regular financial media that is treating it as anything but a joke.
Here are some examples where some very reputable media have reported on El Salvador's plans in a neutral and professional manner:

The first is an article from the BBC: https://www.bbc.com/news/world-latin-america-59368483

Second is an article on CNBC: https://www.cnbc.com/2021/11/22/el-s...coin-bond.html

There are many more examples. That is not to say that many will not be keenly watching this development. It is certainly a bold move and one that has people talking with interest.

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"Developing at the base of an active volcano...what could possibly go wrong?"
A good resource where you can learn more about how geothermal energy works is here:

https://www.nrel.gov/research/re-geo...roduction.html

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Sad to see the Guatemalan people get hurt and for priviledged residents of developed countries to selfishly delight in a development which is clearly not in the best interest of Guatamalans.
You may wish to brush up on your knowledge of geography. (Guatemala and El Salvador are in fact two different countries).
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Old 11-23-2021, 01:47 AM   #233
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There was recently a billion dollar transfer done at a cost of $1 (which is amazing value for the transaction cost). And the Bitcoin Lightening network outperforms Visa and Mastercard in terms of transaction volume and cost
Please link to an article about this $1 fee to transfer $1 billion! I find it stunning, and I think it undercuts a primary argument against using Bitcoin (or crypto) for payments. To be fair, it's more accurate to quote the average transaction fee and average transaction amount. But the $1 free sure stirs the imagination.
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Old 11-23-2021, 02:30 AM   #234
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Please link to an article about this $1 fee to transfer $1 billion! I find it stunning, and I think it undercuts a primary argument against using Bitcoin (or crypto) for payments. To be fair, it's more accurate to quote the average transaction fee and average transaction amount. But the $1 free sure stirs the imagination.
Lots of examples of this occurring. Here's a recent one.

https://cointelegraph.com/news/someo...or-less-than-5

Quite impressive compared to how long it would take to do this via traditional banks via interbank global transfer before final settlement let alone the fees they would charge. Currently the fee would be around $3.

You can see a whole bunch metrics related to the BTC Blockchain here: https://www.blockchain.com/explorer

Go take a look - its quite fun. You see the hash-rate of the Bitcoin network, the number of transactions per day, the total value of transactions per day, the latest block mined, the latest transaction conducted. All 100% transparent, open and visible to all.

You can view how BTC transaction fees have changed over time here:

https://www.statista.com/statistics/...-fees-bitcoin/

Check out the Lightening Network also. BTC transactions per se will become rarer over time, with BTC being more a base layer store of wealth, with second layer solutions scaling to enable hundreds of thousands of transactions per second at virtually zero cost being built on top of the Bitcoin blockchain.

https://cointelegraph.com/bitcoin-fo...w-does-it-work
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Old 11-23-2021, 10:08 AM   #235
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El Salvador’s debt it is already junk rated.
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Old 11-23-2021, 11:52 AM   #236
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Please link to an article about this $1 fee to transfer $1 billion! I find it stunning, and I think it undercuts a primary argument against using Bitcoin (or crypto) for payments. To be fair, it's more accurate to quote the average transaction fee and average transaction amount. But the $1 free sure stirs the imagination.
To wire $2,750 Euros from US to Europe last Friday took until Monday due to Europes Banks already being closed and the fee to me was $52.00. Using Bitcoin app could have done it in a minute for $5.90, assuming I converted USD to Bitcoin, sent it and it was immediately transferred to Euros.
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Old 11-23-2021, 12:25 PM   #237
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Two transactions of a billion dollars, one for $4 and another for $0.48? I never suspected the fees could get that low. I've noticed for ETH, gas fees vary based on how patient you are willing to be. I guess there's a tradeoff of speed versus cost, even for Bitcoin.

The last I read about Lightning Network, it was rolling out in the U.S. but hadn't caught on elsewhere yet. Maybe next year it will get more interesting.
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Old 11-23-2021, 04:54 PM   #238
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CNBC shows a Bitcoin ETF in their quotes along the bottom of the screen.

That's not tied to Bitcoin directly right, only to Bitcoin futures?
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Old 11-23-2021, 05:01 PM   #239
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If it is BITO, then it is futures. No actual bitcoin ETF approved in USA. Some in Canada. GBTC holds bitcoin but it is a closed end fund. Many, including Fidelity, have applied for ETF.
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Old 11-23-2021, 09:56 PM   #240
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Meanwhile, over in Australia, the topic of pension funds making their first moves into Bitcoin is being frequently discussed. Looks like it is about to happen, especially as a greater demographic over time are seeking such allocations.

https://www.businessinsider.com.au/r...nal-investment

Again, as we see time and time again, once there is a "first mover" the pressure is on or other funds to make similar allocations. To be clear, the allocations will be small - I would think they dip their toes in with 0.1-0.5% allocations. But all these moves are small steps in what will be a bigger trend over time.

We say the same dynamic as Australia's largest (and most conservative) retail bank started offering a bitcoin wallet as a standard feature in their banking app a few months ago.
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