Once again, El Salvador is using lightning network which enable almost instant and practically free Bitcoin payments. PoS isn't perfect either and has it's own sets of problems.
Lightning is a horrible kludge to deal with the fact that Bitcoin is terrible at being a currency. It essentially boils down to this process:
1. Pay huge fees to take your money off the blockchain.
2. Whiz it around a new, totally independent, centralized network where you need an always-on connection to anyone you're paying or receiving from and need to trust any intermediaries you're using, with brand new fees for every transaction and even at rest (so you can pay a "watchtower" to help make sure you don't get cheated).
3. Pay more huge fees to put your money back on the blockchain when you're done.
4. Wonder how you got yourself into a situation where you have all the disadvantages of Visa and Bitcoin, with none of the advantages of either.
We already have existing coins, like Nano, that can handle transactions instantly, for zero fees, and with nearly no energy use, on the main chain.
Channel factories will open/close many channels at once, so you'll only pay a fraction of the blockchain transaction cost. It has the advantages of Bitcoin's security and p2p network speed.
Security and trust are a lot more important for currency, nano doesn't have that. It has easily been spammed [1]. It barely has a market cap of ~1B$ and has never recovered to it's 2017 prices, so it's not even remotely close to being an ideal candidate for a country's currency.
Eh, it got spammed and transactions slowed to BTC level (but still with no fees) for a couple months. Spam is a solvable problem. A hard limit of 4 transactions per second isn't.
Ya know what doesn't have security and trust? Putting your entire country on two custodial wallets and having all your citizen's wealth in the hands of two foreign companies (channel factoried or no). No one in El Salvador actually owns any Bitcoin. It baffles me how anyone could get on board with the original ideals of BTC, then defend what's happening now.
It remains to be seen whether lightning network will actually work for this. If it does, then I'll allow that only the volatility and energy waste are the reasons this is a bad idea.
But yeah, if you sell this to me as a test of lightning at scale, then I'm definitely more interested in it, while still thinking a super volatile asset is a bad currency.
It does work, they have been using it in El Zonte town for quite some time now [1].
The volatility will come down as the market caps get larger, but it'll never go away (I mean even fiat currencies and gold's price fluctuate on a daily basis).
The energy usage (not waste if you consider it to be a useful thing) will only go up as the price goes up, but it'll use increasingly renewable % and stranded energy and even bankroll new renewable power plants that wouldn't have been profitable to start.
This "volatility will come down as the market cap gets larger" keeps getting thrown around, yet Bitcoin just lost 50% of its value at a market cap of 1 trillion USD. What market cap is required for Bitcoin to stop being volatile?
Well, how little volatility is needed to be called stable? Over a few years, large swings can happen with major forex pairs. Take GBP/USD for example: High of 1.71602 in 2014. Low of 1.14926 in 2020. It currently trades around 1.4.
So, not the same kinds of returns and drawdowns as BTC/USD, but enough to make one's eyes water and stomach churn. Forex has always had a reputation for volatility.
Gold is not a used directly as a currency anymore, in part for the reason that it's hard to control the value of an asset. It turns out that having some control over a currency's inflation/deflation is very powerful and good for economies to function.
Fiat currencies fluctuate too, even a big pair like USD/EUR has a high of ~0.9 and low of ~0.8 this year and if we are talking about smaller currencies like say the Turkish Lira, you're looking at much larger changes.
Gold isn't used directly because it's not convenient, are you gonna transport a heavy metal that you can't divide into small portions to pay for stuff? No! Lightning network wallets makes even tiny payments of couple satoshis very easy/instant/almost free.
1. Pay huge fees to take your money off the blockchain.
2. Whiz it around a new, totally independent, centralized network where you need an always-on connection to anyone you're paying or receiving from and need to trust any intermediaries you're using, with brand new fees for every transaction and even at rest (so you can pay a "watchtower" to help make sure you don't get cheated).
3. Pay more huge fees to put your money back on the blockchain when you're done.
4. Wonder how you got yourself into a situation where you have all the disadvantages of Visa and Bitcoin, with none of the advantages of either.
We already have existing coins, like Nano, that can handle transactions instantly, for zero fees, and with nearly no energy use, on the main chain.