An important question when thinking about the El Salvador bill is what counts as receiving BTC.

On-chain? Sure.
Lightning? Ok.
Off-chain? Probably, or else popular wallets from exchanges wouldn’t count.

But if off-chain counts, then the $8B of wrapped BTC will count... 🤔
If off-chain BTC transactions count, such as Coinbase-to-Coinbase or Binance-to-Binance, then wrapped BTC transactions will count.

If wrapped BTC counts, then you can wrap BTC on Ethereum — or any of the new chains. Just like USDC is now present on four chains, including Solana.
If wrapped BTC counts, which it likely will, then every wallet for every chain which wraps BTC is a candidate for satisfying the law — so long as it also has L1 (and perhaps L2) interoperability.

So Polygon & Solana could be handling millions of wrapped BTC transactions.
From a liquidity standpoint, you might even rank them as on-chain L1 > off-chain > L2.

You can sell some BTC in a user-controlled wallet, or an exchange wallet, for USD.

It’s harder to liquidate satoshis held in a Lightning channel as you need an on-chain transaction or an IOU.
We’ll see what happens. All the theories of scalability will be tested with real stakes.

If El Salvador’s disposable income is $400/month, BTC L1 transactions are in the $4-40 range, and acceptance is *mandatory*, scaling is a necessity.

The budget isn’t there for high fees.

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More from @balajis

11 Jun
Bitclout actually has an interesting possible counter to cancel culture.

Long-term holders of someone’s creator coin now have a financial incentive to defend them if attacked unfairly.

All holders suffer downside if a cancellation crashes a creator coin price, so they defend.
Blockchains take us from the slippery slope to the crypto cliff.

An attacker can no longer pick off one party at a time; attempted seizure (or, now, cancellation) is an attack on all holders.

This gives a monetary incentive to defend another’s rights. ImageImage
This is what *some* of the defense of Elon is about.

I generally support Elon’s work in rockets & cars because I think it’s technologically pioneering. I hold no TSLA.

Others support in part because they are TSLA holders, so attacks on the CEO can hit them too financially.
Read 7 tweets
10 Jun
Communist Capital: you must submit.
Woke Capital: you must sympathize.
Crypto Capital: you must be sovereign.
As the rising third power in the world, India has the potential to be the center of a new Aligned Movement — an upgrade to the Non-Aligned Movement that aligns every neutral country behind Bitcoin and decentralized crypto protocols.…
Crucially, Crypto Capital isn't anti-American or anti-Chinese for that matter.

There are Woke Americans & Crypto Americans, Crypto Chinese & Communist Chinese.

The Crypto American is much closer to the average Chinese hodler than to Warren, Trump, or Xi Jinping.
Read 4 tweets
9 Jun
The El Salvador experiment will be interesting to watch.

My hunch is that scaling will be “solved” by de facto custodial wallets with peering agreements and infrequent L1 events.

But so long as redemption is feasible, this is like a digital-gold-backed digital currency.
Here’s one scenario for the logistics:

N custodial wallets are hubs and the M citizens are spokes.

If a user of wallet 1 sends a transaction to a user of wallet 2, then the transfer looks instant on their screens.

Bulk settlement happens later on-chain between wallet 1 and 2.
Let’s say there are N=10 popular custodial wallets & they all do bulk settlement with each other every 24 hours. That’s N*(N-1)/2 = 45 pairwise on-chain Bitcoin L1 transactions per day, which is feasible.

Also, add in N daily on-chain transactions with the state’s Bitcoin fund.
Read 9 tweets
9 Jun
Wokes try to get you to say "Latinx".
Chinese nationalists get mad about Taiwan.
And coin maximalists want you to be a billboard for their coin.

All these social media religions devolve to language policing. But I believe in free speech.
All these social media religions (wokeness, MAGAism, maximalism, Chinese nationalism, etc) are just variants of Twitterism.

Ever notice their behavioral similarity despite the ostensible difference in ideology? They're taking direction from the algorithm.
If you walk up to someone on the street and randomly yell "FU!!!", you might get punched, jailed, or even shot. There's downside.

But if you do it online, you might get attention. There's upside.

This social reinforcement drives anti-social behavior.
Read 4 tweets
9 Jun

If I’m reading this right, all economic agents that are technologically capable of receiving BTC as payment *must* accept it as payment — though instant conversion to USD is made available to anyone who doesn’t want to take price risk.

A mandate for Bitcoin!
See my earlier post on “sovereign apps”.

The state of El Salvador has just mandated that all merchants in a country of 6.4M people accept BTC (with instant conversion for those who don’t want price risk).

This is a legal flippening. From “banning” Bitcoin to mandating it.
How does this interact with the ethics of voluntarism?

So long as vendors can opt out by instantly liquidating, they still have free choice. The onus on them boils down to installing an app to receive BTC.

The move shifts El Salvador’s defaults to robustify against inflation.
Read 4 tweets
8 Jun
The new listing decision is making a cryptocurrency your government’s legal tender.

Cryptonetworks are attaining the scale (millions of holders) & resources (billions of dollars) to start conducting foreign policy.

Like digital proto-states, negotiating with nation states.
There are advantages for both decentralized and semi-centralized networks in this process.

A decentralized network can just be adopted. Any country can just stockpile BTC.

But a semi-centralized network, or a DAO, can offer billions in listing fees to incent national adoption.
Companies like Tesla, Amazon, and Google have negotiated with governments for some time. There are carrots & sticks on both sides. And often there is a binding promise of investment, made by a (centralized) CEO.

Cryptonetworks can now do similar things with on-chain commitments.
Read 7 tweets

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