#1078 Sergej Kotliar On Why Bitcoin Is Not Close To Global Adoption

Sergej Kotliar is the CEO of Bitrefill. In this conversation, we discuss the Circular Economy, Bitcoin the tool vs. Bitcoin the monetary movement, if the lightning network is overated, and all of the hypocrisies that exist in the Bitcoin maximalism space. ======================= Valour (formerly DeFi Technologies) represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at valour.com ======================= BCB Group is the leading payment services partner for the digital assets industry. BCB Group provides payment services in 30+ currencies, FX, cryptocurrency liquidity, digital asset custody and BLINC, which is BCB’s free, instant settlements network for the BCB client ecosystem. Find out more by visiting bcbgroup.com/pomp ======================= Compass Mining is the world's first online marketplace for bitcoin mining hardware and hosting. Compass was founded with the goal of making it easy for everyone to mine bitcoin. Visit https://compassmining.io/ to start mining bitcoin today! ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Sergey Kotliar is the CEO of BitRefill. In this conversation, we talk about the importance of a circular economy, how exactly the Bitcoin economy should learn from other circular economies, what the difference between Bitcoin the movement and Bitcoin the tool is, and why Bitcoin maximalists need to understand that there's a lot of nuance in the world. I really enjoyed this conversation with Sergey, and I hope that you guys enjoy it as well. Let's jump into this one, and let me know what you think once you're done listening.

• 0:38Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions, and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment, or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:02Anthony Pompliano?

  Alright guys, bang bang, I've got Sergey here with me. I thought a great place that we could start this conversation was around the importance of a circular economy. You gave a speech recently on Pizza Day, and I thought that that specific topic could use some more elaboration. And so maybe you explain what is a circular economy, and why is it so important in the context of Bitcoin?

• 1:22Speaker 02

  Right. Well, whatever vision I think that you may have for Bitcoin, for cryptocurrency, whatever it is, like, all of the benefits of it only really start to materialize in a big way in a world where money circulates within the internet layer, right? In a lot of ways, today, we're in this weird stage where most or much of the activity happens on a regulated exchange that is an extension of the banks, right? So you're like, you're doing the bank stuff to get your coins, and then you do your crypto stuff, and then you

• 2:03Speaker 02

  need the bank to get off, which is very weird and inconvenient, and creates this

• 2:10Speaker 02

  Hilarious irony of the industry saying fuck the banks on one hand, but on the other hand, please give us a bank account, right? And so we're always in this weird tension and it's in some ways it's like if someone invented email today with all the tech that we have and people would be like writing emails on paper and then like snapping a picture with their iPhone and emailing the picture and then printing it on the other side, like it's still useful for some stuff, but like once it can circulate in the cloud, that's when we really start to see all of the benefits in terms of, you know, the privacy, censorship resistance, flow of money, flow of value, all of these things.

• 2:55Speaker 02

  And so I think, and what we've been doing at BitRiffle for soon 80 years now is to try to further that, right? To create a world where people can be comfortable with keeping their money in Bitcoin, with keeping their money in the cloud, knowing that when it becomes time for me to buy something with that money, I will be able to do so. And, right? Because what kind of a shitty internet money do we have otherwise if you can't buy stuff with it? So we kind of like, the circular economy obviously is, it requires a full circle, we're part of that, you know, we're the chicken side of the chicken and egg, we still need

• 3:39Speaker 02

  eggs, we still need ways for people to get their coins, to earn them or whatever. But at least we provide the leading, to my knowledge in the world, place for people to actually spend their coins.

• 3:53Anthony Pompliano?

  So when we think of this circular economy, part of it is that the legacy finance system is a circular economy, right? If you take like the dollar-based system, I can get paid in dollars, I save in dollars, I invest in dollars, I spend dollars, I pay my taxes in dollars, and it always is, it kind of circulates within this dollar-denominated system and it works. Now, as there is a rise of, we can call the new digital financial system. In some way, we have to rely on that legacy system, bank accounts and some of these things. So there's connectivity or there's some foundation that is still being used. Is the thought process that eventually these two systems will completely splinter from each other?

• 4:35Anthony Pompliano?

  And the new digital financial system will need to stand on its own and be its own circular economy without any dependence on the legacy system? Or is there a world where we have a circular economy of, you know, using Bitcoin, saving in Bitcoin? But still, there is maybe some interaction, connectivity or reliance on the legacy financial system at the same time? Like, how do you see these two systems interacting with each other, maybe in the steady state, you know, two decades from now?

• 4:58Speaker 02

  It's an excellent question, and I think different people have different views on that.

• 5:04Speaker 02

  I think that interaction is good.

• 5:07Speaker 02

  But if, if, if we don't have our own, the others, the more cypherpunky thing to fall back on, then we will always be in a problematic situation when it comes to the power of the we will always be in the please give us a bank account phase of things. So in a lot of ways, it, it has a lot of benefits, even for the people that don't actively use it on a, on a, on a regular basis. The, the knowledge that there is a crypto economy where I can spend my coins without going back into, into the traditional system.

• 5:47Speaker 02

  So I think there is, I mean, obviously a lot of overlap and bridge points, right? And all of the different exchanges and so on are, are that.

• 6:03Speaker 02

  But yeah, I think, you know, a realistic scenario, I mean, look at how, I, I look at all of these things, like how internet technologies have evolved, and at least within my lifetime, which is like, yeah, we have the internet, you know, we still have phones, we can still, you know, we could have had this conversation over a phone call, over a traditional phone line, but we choose to do it over the internet because it's better. So there's still a postal service, even though you can send an email at, at zero cost. So it's good to be able to, to interface with the old world, and I think we will always need to. And the old world is super entrenched, right?

• 6:45Speaker 02

  I mean, if you look at the history of Bitcoin and the world in which Bitcoin arose and how it happened, I see it as one of these things that, you know, if you've ever worked with programmers, there is at some point a situation where a programmer gets fed up with a particular problem and he just coats a massive detour around it just to like fuck this thing, right? And Bitcoin is like that for money. But the nerds coded it all the way back from gold level and all the way up to the payments level and are trying to build their entirely own standalone thing.

• 7:29Speaker 02

  And so from that perspective, yes, it takes a lot of time. And obviously, the governments that control the monushions and so on are not going to be the primary allies of that. And probably the realistic best-case scenario is for them to let it happen. You know, the laissez-faire type approach that we've seen in many democratic countries when it comes to the internet, for example.

• 7:53Anthony Pompliano?

  What's fascinating is you're talking about this workaround, this idea of if you want to actually use software to go around a problem, an obstacle, some sort of friction, most people would say, cool, let's just go build a payment system. Let's go build, you know, some sort of financial service. And I think maybe in the fintech sector, that's what you see people trying to do. Is they're almost looking at the micro problems and they're saying, hey, banks suck. Or there's not a lot of good connectivity on the internet to the banking system. Let's go route around that with software. But Bitcoin, as you mentioned, is something that is a much more ambitious project. It's saying, no, actually, it's not just the micro problem. There's a macro problem with the money itself. And so we have to go all the way back in the most first principles approach possible and rebuild from scratch.

• 8:38Anthony Pompliano?

  Now, when we see that, how much of the folks and the companies that are working on the micro problem? How important are they? So if it's things like a Stripe or there's some sort of Plaid, which is like banking connectivity, those micro solutions that are definitely Improvements to the legacy financial world, but they still are using the old money or using some of the old system. Are they important as part of this movement? Or should every single developer at those companies kind of throw their hands up, say, hey, I'm working on a micro problem. Let me go and work on the macro problem, which is this Bitcoin project that, you know, if we really come at it from a first principle standpoint, is a completely different thing. Like, how do you think about the maybe value and contribution to pushing forward

• 9:24Anthony Pompliano?

  finance to billions and billions of people between micro and macro?

• 9:27Speaker 02

  I think the the overlap as well, like, I think at this point, it's very hard to say where where crypto ends and fintech begins and so on. They are the same and that is

• 9:42Speaker 02

  the course of it is that eventually it will merge entirely in the end. I mean, in terms of like companies, I'm a bit old school in the sense that I believe that companies' purpose is to generate revenues and profits for shareholders and some kind of benefit to customers, right? So in some cases, a company may see that, hey, let's go for the easy route where we can get instant traction versus working on this thing that, you know, requires massive society level behavioral change and whatnot, right? And so I don't think that they should be blamed for it in any way. I do think that it is helpful. Like, if we look at

• 10:27Speaker 02

  just the overall trend, trajectory of any money type system, you know, including airplane miles and so on, is that we're very clearly on a on a slope towards things that have higher liquidity, right? And whenever somebody tries to create a thing that has like bad liquidity, like airplane points, and somebody creates a marketplace for them, right, to make them tradable for other types of monies and other things and so on. So that's the same that fintech is, right? I mean, all fintech is just updating numbers in somebody else's database, right? At the end of the day, we don't produce a thing. We don't have factories. We just we just connect APIs, basically,

• 11:10Speaker 02

  and build UIs for these things. And that is, of course, useful. And I mean, who's going to say that a fintech that is used by tens of millions of people is not useful? Obviously, it's useful.

• 11:21Anthony Pompliano?

  When you see the circular economy, how important is it that people are able to convert fiat currencies? So take my dollars and buy Bitcoin versus maybe mine Bitcoin versus getting paid in Bitcoin? Right? Like, how important is the circular economy? Or what is the dependence on the insertion point of the money being paying people directly versus just simply converting old currency into the new currency? Is there a difference? Or should we really focus on one or the other?

• 11:51Speaker 02

  No, I think it's all good. I mean, I think we've done a pretty good job on the case where we convert other kinds of money into Bitcoin. Maybe not as much on the how to get paid in it and so on. And one thing that we've discovered at Bitrefill over the years in terms of like figuring out like how to market transactional cryptocurrency-based consumer service is obviously that not all cryptocurrency holders are going to be potential customers of this simply due to the fact that they, you know, they don't want to spend their coins. They want to save them because the price might, the value might go up.

• 12:34Speaker 02

  Right? So what we look at a lot is for people who have coins to spend. Right? And if you just think of looking at coins to spend, how can somebody end up with coins to spend? Well, they maybe bought Bitcoin five years ago and it went up in value, but maybe they get their paycheck in Bitcoin, right? And if you get your paycheck in Bitcoin, then you're almost certainly going to have coins to spend and you're going to be a factor in this, in this economy. So I think it is actually quite important. But as we discussed before the call, like I'm not a fan of sort of guilting people that this is what you should be doing in order to be, to be a good Bitcoiner.

• 13:19Speaker 02

  I think you should do whatever makes sense for you to live your life in, in the, in the best way. And I think when it comes to builders, then yes, I think it's important for builders to think about, you know, there are. People in the world today that will gladly take an income in Bitcoin. And who are they? What kind of work did they do? How can we provide a service for them? How can we market it to them? And all of these things, I think there's a lot of opportunity to build things. And some of my favorite projects in the space are things that are doing exactly that.

• 13:51Anthony Pompliano?

  Yeah, when I think about you, you have this framework that always sticks to the top of my head, which is the difference between Bitcoin, the movement and Bitcoin, the tool. You've talked about this during your P2 day talk and I've heard you mention it in other forms as well. Describe a little bit kind of this framework. What is Bitcoin, the movement? And how does that differentiate from Bitcoin, the tool?

• 14:12Speaker 02

  Sure. So when it comes to, I mean, a very simple example. I mean, Bitcoin is both, right? Bitcoin, the tool is the thing that you use. You send transactions, you keep them on a wallet and so on. And Bitcoin, the movement is, you know, you participate in conferences. You listen to podcasts, probably like this. You consume content, you learn about it, you're passionate about it, you wish to see it succeed. Right? That is the movement. Whereas the tool is, hey, I need to make a transaction or I need this guy to pay me. You need to solve this particular problem. And these are very, you know, in, I think in the beginning of the history of Bitcoin, they were very much the same, right?

• 14:57Speaker 02

  It was this hacker-y, scratch my itch type situation. And so the movement arose among people who are using the tool. Over the years, more and more people came in because, well, they bought Bitcoin and they want to see its value go up. So they're like financially motivated to be, and also they just want to be part of this sort of revolutionary society level change, right? So we have this movement that is very much about a tool, but where it's not necessarily required to use the tool to be part of the movement. Right? So, I mean, a simple example, like say, name any tool like scissors. You know, do you ever use scissors?

• 15:43Speaker 02

  Yes, do you ever go to conferences about scissors? No, why would you even do that? Would you listen to a podcast about scissors? No, why? Right? And so, and that's like the tool additive. It's just a thing. It just solves the thing that I needed to solve. And versus, you know, the movement where we have all of these discussions and so on. And with visions, ideology and passion and all of these things. And another way of seeing it is, you know, if you want to download. Let's take software that's not a movement connected, at least for me, like BitTorrent, for example.

• 16:23Speaker 02

  Say I want to download some piece of legal internet content in a big file. And I need a BitTorrent client. I would type into Google BitTorrent client and I would get the first one, right? And then I would download my file and I would be done. And I would move on with my life. I wouldn't necessarily engage with BitTorrent, Twitter, with whatever technical discussions about different trade-offs of different solutions and protocols and client implementations. And all of these things that we argue about within the community. Right? And so, and there are plenty of people that are part of the movement that don't necessarily use the tools, right?

• 17:08Speaker 02

  I mean, you can be, and many, like most people that are part of the Bitcoin movement, I would say are people that, you know, hey, I think it's cool. I want this to exist, like truly impassioned. I want all of this, the censorship-resistant money, free flow of value over the internet. I want it all. I believe in it and I want it to exist. But, you know, I get my paycheck every month to my regular bank account and I just split my Apple Pay and it's fine and it works. And, you know, I bought some Bitcoin on exchange and I keep them on a hardware wallet that secured really, really well, so I can never get my Bitcoins out, even if I really wanted to.

• 17:49Speaker 02

  And so then I'm not really using the tools so much, but I'm part of the movement, right? And it's... And when you, when you interact within the movement, it's sometimes very easy to forget that people who are part of the movement are not necessarily users of the tool. Yeah, right. So you, like, is the experiment is like, if you go to a conference, a Bitcoin conference, and just stop a random guy and say, hey, like, which brand of Bitcoin wallet you use? And okay, maybe which brand do you have on your phone? And then it's like, when did you last make a transaction? Right? And if it's on a conference, it's gonna be like, yeah, well, I bought a T-shirt

• 18:31Speaker 02

  five minutes ago with Satoshi's, but other than that, it's been, it's been six months. Right? So, so you'll have people that are members of the movement, but not necessarily users of the tool. And then on the contrary, you have a large group of people that are users of the tool, but don't care about the movement. Right? So say that you, you, like, recently I heard a story of a developer in Russia that needed to get paid for, for work, and it's impossible to do so. So, yeah, it's like, okay, well, I'll take Bitcoin. And so that's a user, right? And what is he going to do for his thing?

• 19:12Speaker 02

  He's going to type in Bitcoin wallet into the App Store or into Google or whichever. And he's going to download the first one that looks legit enough. And then he's going to get paid. And then maybe he's gonna at some point buy something with it or send it to an exchange or whatever. But that doesn't necessarily mean that that person is going to mega engage with, with the community, start hanging out on Twitter, going to conferences and all of these things. Right? And, and so this is kind of the, the distinction. And something that I think was kind of non-obvious, at least to us in the beginning. Because we spend all of our time hanging out with people who are part of the movement. And we hang out on Twitter, go to conferences, all of these things.

• 19:56Speaker 02

  So you only see the movement section, the movement part of the Venn diagram. And you never see the people at all, those who only use it as a tool and don't, couldn't care less. About any of the movement things. And so it's a good framework for, I think, when building especially like transactional services to be mindful of that. You know, you have your friends within the movement and they're great and they're your buddies. But then you also have your customers and they might not be part of the movement. They just want to use the thing for the specific benefit that it provides to them. Right. But the approach is very different in how you communicate with them. So.

• 20:38Anthony Pompliano?

  What's fascinating about this is you're essentially separating out as a user. You could be a passive user or an active user, right? It's kind of the way I think about it and the passive user is the holder and holding is definitely a use case. Holding is providing you the value of protecting your purchasing power and really kind of the store of value. Properties that I think people are very excited about Bitcoin. What you're highlighting, though, is there's a lot of folks.

• 21:04Speaker 02

  Not even all holders are going to be part of the movement either, right?

• 21:07Anthony Pompliano?

  Correct.

• 21:08Speaker 02

  There's a lot of people that like all this Bitcoin thing. I don't even know what it is and just buy some and then I hold it in my Charles Schwab account and that's it. Right. And you would never see them on Twitter or on a conference or anything. And probably like a big chunk of Bitcoins are being used by people like that as well. Right. So it's not sort of these things are kind of orthogonal.

• 21:29Anthony Pompliano?

  Well, what I think is interesting is not all holders are participants in actively in the Bitcoin movement. But all active participants in the movement are likely holders. Right. So they at least if you're participating in the movement and kind of the the social component to it. You likely at least hold Bitcoin.

• 21:46Speaker 02

  Yes.

• 21:46Anthony Pompliano?

  But I think that you're highlighting another thing, which is not all active participants in the Bitcoin movement. Are active users of Bitcoin from a transaction standpoint. And so, again, not all transactional users of Bitcoin are participants in the Bitcoin kind of social movement as well. And so there's almost this like different factions. Now, generally, they're all working towards the same goal. They are likely aware of each other. But I think what you're really calling out is, hey, the people who use Bitcoin on a day to day basis. are not participating in the movement, they may just not care, right? They, they, the whole idea of like reinventing the financial system or any of this, like the big macro kind of importance or, or, or things that get the Bitcoin movement folks excited.

• 22:30Anthony Pompliano?

  The everyday user who is transacting in Bitcoin may just be like, look, I don't care about any of that stuff. I gotta go to work. I gotta get paid. I gotta, you know, uh, buy food for my family. And like, this is the best way to do it for whatever reason. But what I do think it also brings is the people who are participating in the movement. A lot of those people are investors. They are entrepreneurs. They are the ones who are trying to build the infrastructure and services. And you're kind of ringing the bell and say, remember the people at the conference are not necessarily all of your customers. And actually, if you build a product for the people who aren't at the conference, you may be better off than just simply building it so that the person at the conference is like, wow, look how slick this is. I can now buy Bitcoin using Apple Pay or, or whatever it is.

• 23:11Speaker 02

  Yeah, exactly like that. And the, um, I mean, it, it, it is natural. It's just that it creates this, again, that it's like, it's, it's a very obvious thing. But then like you spend all of your time consuming, consuming content from the movement and from the, uh, the tool people. There is content from the tool people as well, but you, you never see it. And we, we don't even, you know, like, hey, which wallet should you use and so on?

• 23:39Anthony Pompliano?

  Is it fair, is it fair to say that we need both? That we need the people using the tool and we also need the people in the movement? Like both of them are important in order for Bitcoin to be successful? Or do you think that we have over rotated on either side of kind of that equation?

• 23:56Speaker 02

  Yes, I agree. I think both are important. Uh, whether or not we've over rotated, maybe. Uh, I think at least in the extent of like what, what the discourse is about within the movement. Uh, it becomes less and less about the use and the discussion about the use is always about the holding use, not so much about the transactional use, right? Uh, which I think misses a very big point, which is that.

• 24:29Speaker 02

  You know, a Bitcoin that you can't transact over the internet is kind of useless. It's even useless as a store of value. Like, all of this is like, this is Satoshi 101. Sort of, all of this stuff was discussed within the first month of Bitcoin. If you think of like how Satoshi motivates, why Bitcoin should have any value at all. It's like, yeah, well, it's this scarce resource that you can teleport over the internet. And if it had any value at all, then it would be quite useful because I can buy it here and I can sell it there and I can send it over the internet. And that's pretty cool. And why would it get any value at all? Well, because it might make sense to get some in case it catches on, right?

• 25:14Speaker 02

  And I mean, that is the history of, in one and a half Satoshi posts, this is the history of the industry. But sometimes we get, and especially like, because everybody in the movement is a holder. So we all want to hear things about, on some level, we want to hear about the impending collapse of the fiat system. Or, you know, that the macro environment is such that we should expect the price of Bitcoin to be going up. It makes us feel good and it's interesting and it's an interesting topic.

• 25:53Speaker 02

  And so I think that like, a lot of content ends up being created about these things. Whereas some of the transactional use, like, yeah, but I don't even use that stuff. So why would I, why would I listen to content about something that I'm not looking to use anyway? And so.

• 26:14Anthony Pompliano?

  So one of the questions I have is, when you think of Bitcoin and you go back to maybe 2017, obviously, there was a lot of people trying to use Bitcoin from a transaction standpoint. Some of them were trying to buy it and move on chain between exchanges or some other former fashion. And fees exploded upwards. And that was one of the big problems was people saying, hey, my transaction is taking too long. Fees are too high. This is unusable from a transaction standpoint. The critics of Bitcoin pointed to that as a reason why Bitcoin would never work. And kind of we all, you know, if you've been around, you understand kind of how that played out. Now, today we look and fees on the layer one are actually incredibly cheap compared to the historical norms.

• 26:56Anthony Pompliano?

  One of the things that the Bitcoin community will point to say, oh, that's because of the rise of the Lightning Network. The Lightning Network is for, you know, smaller transactions, it's faster, it's cheaper. I know that you all at BitRefill have spent an enormous amount of time, money and energy, really investing in the Lightning Network and doing the best you can to see that come to fruition. I've invested in a number of companies that are either helping on the infrastructure side, that are actually using the Lightning Network, whatever. But what caught me, I think, a little off guard and many people off guard, was you had a very sobering talk about the use of the Lightning Network and kind of where we actually are in regards to where you thought we would be at this point. And so is the Lightning Network overhyped? Is Lightning Network not actually working the way that you would have expect?

• 27:42Anthony Pompliano?

  Or is this just the classic story of hard technology takes a very long time before it is used on a global scale? This episode is brought to you by Valor, which represents what's next in the digital economy. They provide simplified trusted access in crypto, decentralized finance and Web3 investment opportunities. Institutions and investors can gain diversified, secure, compliant and easily tradable access to a diversified set of industry-leading equity products and protocols, all through a single stock purchase on a regulated exchange. They currently are listed in the US under the DEFTF stock ticker and on the Canadian NEO exchange under DEFI. For more information or to subscribe to receive company updates and financial information,

• 28:22Anthony Pompliano?

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• 28:56Anthony Pompliano?

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• 29:41Speaker 02

  I think that some people interpret it in that way. And the way that Twitter works is that the most extreme version of something, and the most, what do you call it? Conflict inciting version is the one that gets traction. So in the end, that's what the message ended up being, even though it wasn't like I was talking to lightning builders at Bitcoin and Lightning Conference.

• 30:06Anthony Pompliano?

  You mean that the meme Sergey is anti-lightning is incorrect?

• 30:11Speaker 02

  Yes, Sergey is incredibly bullish on Lightning. And I think that, but also I think that we, we need to be, we the builders, need to be honest with ourselves with what's going well, what's going badly, what can we do better? How can we get it to grow faster? I mean, Lightning is growing depending on which metric, but like 2 to 4X every year. That's pretty good, right? Yeah, that's pretty good. But also like in the crypto industry, we every once in a while see things that just like takes the fuck off in a big hockey stick. And Lightning hasn't really done that. So it's somewhere in between. I think that.

• 30:50Speaker 02

  The thing that we need to understand is a lot of these things and like how you described twenty seventeen, I wouldn't entirely agree with all of that and I don't know if we should go into the details. Yeah, explain. Yeah, well, I mean, in twenty seventeen was a world in which before then transaction fees were negligible. And so nobody cared about optimizing anything to save on fees or fee estimation, things like that. And so suddenly there was a boom cycle and people were sending coins to exchanges to sell them. And there was no optimizations in terms of saving on the data usage of transaction. There was no optimization, like none at all.

• 31:33Speaker 02

  Optimizations on like fee estimation and so on and it created like a big mess. And what happened after that is that over the course of some years, there's been a lot of optimization. I think the biggest optimization that has happened isn't Lightning, it's not even SegWit. It's simply the fact that centralized exchanges have started batching their transactions. So when you're a big exchange and you have, you know, a hundred people doing withdrawals per minute, then instead of making a hundred transactions, you make one transaction with a hundred different outputs. And that saves like, you know, half, actually no, it saves like at scale ninety percent plus

• 32:13Speaker 02

  of the data usage. And so a big part of why you see load on the mempool being lower is is related to that. I helped create a dashboard called the transactionfee.info that tracks a metric called payments, which counts these individual outputs to better have a view of like how many, you know, transactions in the sense that people normally understand, not in the Bitcoin sense. As we call them payments instead, like how many payments are happening. That number is growing steadily, but it's not, you know, it's less than doubling every year.

• 32:54Speaker 02

  So it's growing at some pace. Lightning has a chunk of on-chain traffic that has moved over.

• 33:02Speaker 02

  But I think that a big part also because of like all of the events of 2017 being so deeply rooted in the psyche of the Bitcoiners and how we've, you know, at the time, Lightning was presented as this, the thing that will make its scale. And so in a lot of ways, it was a political thing because it was opposed to the other things that the other camp wanted to do, which was increasing the block size and stuff like that. So it became the case that Lightning is being marketed primarily to people within the movement.

• 33:42Speaker 02

  Yeah, right. And so then it becomes that the users of Lightning are the intersection of people who are users of Bitcoin, the tool, and also members of Bitcoin, the movement, which is definitely a non-zero group. And as we just established, it's growing. You know, it's more than doubling every year. So it's definitely growing. But it is in some ways having trouble reaching the people that are not in the movement. Because everyone in Lightning is so deep in the movement, and that was kind of the purpose of my talk, is like, guys, we're all great, but let's look at the bigger world.

• 34:25Speaker 02

  And there's a lot of people that might use our things, but never get a chance to because they never find out that they exist because we are so focused to sort of people that are like us. We're in reality, many of the people that are like us in the movement are actually not users of transactional Bitcoin tools. And so like in terms of like user development, like their feedback is, can be counterproductive. Yeah, right. You should talk to people that are like 100% user demographic. And so that was kind of a little bit what was the purpose of my talk then. I think that I'm still incredibly bullish on Lightning. I still think that it is,

• 35:11Speaker 02

  you know, the technology that is most likely to be what brings cryptocurrency to many people in a decentralized way. It's definitely far ahead of the equivalent Layer 2 solutions in the Ethereum world. I'll say that. But yeah, I think it's important for us who are building. And Lightning, I mean, Lightning by definition is a transactional tool, right? If your only usage of Bitcoin is to hold it in a hardware wallet or hold it in your Charles Schwab account, then you're not going to be a user of Lightning, by definition, right?

• 35:55Speaker 02

  And some people might do it as a gimmick, like, "I'll spin up a node." Or, you know, "Hey, I heard Sergey said on the POMS podcast that to be a good Bitcoiner, I should run a Lightning node, so I'll do that." Right? And so they do that, but it's not natural, right? And so I think that that's like the important thing is to be mindful of the people that do use Bitcoin or other cryptocurrencies on a transactional basis. And again, you know, the question of like, "Oh, are they using other cryptocurrencies and shitcoins, this and that?" Like, look, people who use it as a tool,

• 36:40Speaker 02

  we've already established, like, most of them couldn't care less about any of the things that we are arguing over and which of the coins has the better decentralization properties or whatever. They just want to get their thing done. And so a good example that I've brought up is to look at the wallets that are being used in transactional usage, right? There's different ways of getting that information. I think the fairest one is to just, you know, open the app. App store on your phone or the Google Play Store and type in Bitcoin wallet. And then you can see what the algorithm seems has decided is the most likely that you will download.

• 37:24Speaker 02

  Right? And that is what most people will download and what most people that couldn't care less are going to use. And that paints a clear picture, you know, because all of the wallets that we discuss in the in the movement, in the community. And they, you know, some of the, some of the best ones are there, sort of in the top 10, at least, say, hey, you know. But like, hey, they're not anywhere near the top three. Yeah. So, and, and, and so that, that also means, even though we've spent all of this energy on education and, and preaching and explaining. And this is why you should use a wallet that's open source. And this is why you should care about this security property or that security property, all of these things, right?

• 38:06Speaker 02

  But again, the people that only want to use it as a tool, they never hear those things. Yeah, right? They, they don't get exposed to that. They just typed in Bitcoin wallet in the, in the app store. And that's that. They're done. They, they, they got their job done that they wanted to get done, you know? They, they got paid or they made the transaction that they wanted to do and they're, they're done. They moved on with their day. Uh, you know, we're discussing, you know, who's, who's really a Bitcoiner, you know? And what are the criteria to fulfill for that? But like, nobody cares. And, and they don't probably identify as Bitcoiners and, you know, we can argue, should we count them as Bitcoiners? And who, who cares? It's just words, right?

• 38:48Speaker 02

  And so I think that it's like, these things are kind of like important to be mindful of. But, and then also, okay, once you picture, and I think you can, like to some extent, by seeing a wallet and like, maybe some geographical data and so on. You can a little bit picture the user, right? I mean, you don't even need to know their age or gender or whatever. Those are like the least interesting things. And you, you, you just kind of like, okay, it's the user I got in the blockchain dot com wallet. Okay, what's that person like? Yeah. Okay. Interesting. And then you can. Kind of like, eh, okay, they're in Nigeria. Okay, they kind of like eh, come backwards a little bit and like, okay, but how do we reach that user?

• 39:31Speaker 02

  How do we, you know, create something that that user might eh eh think is interesting to use eh in a completely transactional, non-loving way eh, right? Eh, use is an excellent word here as like an opposite to love. Yeah, they're not going to love eh Bitcoin and I don't think that necessarily it's a requirement that everybody in the world, eh, what is it, eight billion people should all eh love and be passionate about Bitcoin. I think most people are going to use it as a thing eh and care about it just as much as you and I care about scissors. You know, scissors are great, but eh, we go about our day.

• 40:10Anthony Pompliano?

  No scissors conference. Uh, this begs the question of, uh, when somebody Googles and uh, they go for Bitcoin wallet, some results come up, but in order to get global adoption, do we need people to, instead of Googling Bitcoin wallet, Google payments or uh, Google something that is non-Bitcoin related? And so they don't even know that they're necessarily using this new payment network. They don't know that they're using a different asset. It's just kind of pushed into the background and they simply know that they're using a payments application that is cheap and fast and it's better than, you know, whatever other products are available to them. And I kind of think of this in the sense of, uh, when I go to a restaurant and I go ahead and I purchase something,

• 40:54Anthony Pompliano?

  I have no clue. Are they using the Visa network? Are they using a different network? All I know is I either give them cash or I give them a credit card and I'm able to buy what I want to buy and, you know, to your point, I don't care what the network is, right? It works. It did what it needed it to do and and I'm out of there. Uh, how important is it for people to understand they're using Bitcoin or or Googling Bitcoin wallet, Bitcoin payment app, something like that versus just serving the need and actually them knowing that it is Bitcoin may not be as helpful as maybe we think it is inside of the movement.

• 41:24Speaker 02

  I think it is kind of important, because in the beginning of the conversation, you were asking me about fintechs that don't start all the way from the bottom, but to start from some part of the incumbent system. And I think like a general rule of decentralization, let's say, is that a centralized solution will always be able to do technically everything that the decentralized can do, but it can also do more things, right? So the centralized will always be faster and better from a UX standpoint, right? Where decentralization wins is in the areas where decentralization shines, right? So if you don't have access to the other things for whatever reason,

• 42:08Speaker 02

  there's a lot of reasons why you might not be able to use these things as a fallback, right? And so in some ways, like, "Oh, but you can use Bitcoin." It is useful in that sense. And, you know, the other part, it will kind of happen anyway, that we're already seeing the challenger banks gradually adding Bitcoin functionality, gradually adding send and receive and so on. Even though they too are metrics-driven and they see that most of the users of the Bitcoin functionality just want a number that goes up in value over time, and so we don't even need to build deposits or withdrawals. We just need people to buy it like a stock.

• 42:50Speaker 02

  But over time, that will change. But I think it's still sort of, it is important that it has that brand. You can abstract it away, but then you just end up building a new brand, right? So you end up, for example, like if you're watching El Salvador, where the dominant wallet is the government wallet called Chivo, and there's people that are like, "Yeah, well, we accept Chivo here," right? And that's maybe an easier message, and it also is, you know, the easiest one for 80% of the people to understand, and they don't need to care about what this Bitcoin thing is or...

• 43:34Speaker 02

  Or any of that, but then you you need to recreate the brand. The the benefit of Bitcoin is that it is a brand. It is an open source thing that people know. Yeah, just like internet is a brand or the web or or whatever. And so there is definitely a value in in using that. Yeah, I think both things like, I don't know.

• 43:56Anthony Pompliano?

  It's a hard one. Yeah, it's a hard one. And and I don't think there actually is a right answer as much as what I get from your answer being. Sometimes it's important for the Bitcoin brand and and Bitcoin's brand is an advantage. And then other times, maybe there's a different brand or it doesn't matter as much. And somebody just wants to be able to have the functionality and whether they know it's Bitcoin or not might not be as important. And so it's kind of a case by case basis. But but what I do think is important is that that violates the thought process. I think of a lot of, at least the companies and the entrepreneurs that I talk to in the Bitcoin community.

• 44:32Anthony Pompliano?

  One of the biggest pieces of feedback that I constantly tell folks is your entire marketing message is towards what you would call the Bitcoin movement, folks. Everything is it's Bitcoin, use it because it's Bitcoin, it's Bitcoin, it's Bitcoin, it's Bitcoin. And I keep saying, listen, if you want mainstream adoption, if you want to get 50 million consumers using your payments application. There's a lot of people who see that it says Bitcoin and they just scroll to the next thing, right? They are not going to use it because it says Bitcoin. And so it's a blessing and a curse in some way.

• 45:04Speaker 02

  Well, I mean, I don't know if there's people that would not use something because it has Bitcoin.

• 45:09Anthony Pompliano?

  A hundred percent. There are people, especially in the developed world, who if you just go on Twitter, go talk, go look at like fintech Twitter. They hate Bitcoin. They think Bitcoin is the dumbest thing in the world.

• 45:21Speaker 02

  Okay, so but by that reasoning, you would have expected Cash App to have declined in user numbers since they added the Bitcoin option.

• 45:29Anthony Pompliano?

  Like, I don't think. No, not necessarily, because I think that most people who use Cash App aren't, they don't use the Bitcoin functionality.

• 45:37Speaker 02

  That's what I mean. So like, it's just a feature, right?

• 45:40Anthony Pompliano?

  Yes. But Cash App, I don't think like this Cash App's a good example. Cash App doesn't present itself in 100% of its marketing as a Bitcoin app. What they say is Cash App is a payments application and oh, by the way, we have this feature around Bitcoin. What I tried to get across to a lot of the founders and entrepreneurs that I talked to is they show up and on the front of their slide deck is a Bitcoin payment app. And I tell them, I say-

• 46:08Speaker 02

  They're presenting it to you.

• 46:09Anthony Pompliano?

  Of course, but even after I'm an investor, I tell them, listen, that is not going to get you tens of millions of consumers. Because the people who don't know about Bitcoin or the people who are the Cash App user who don't use the Bitcoin functionality, you're essentially boxing them out. And so instead, if you were able to say, hey, we have the cheapest, fastest payments. And you don't even talk about Bitcoin. It just happens to be the thing you use. And the people who care will go figure out that Bitcoin is the network underneath it. My guess is that you're likely to get more users on a global basis than running around saying it's a Bitcoin app. Because it's all marketing, right?

• 46:48Speaker 02

  Absolutely. And I mean, marketing is one of these things that is, you know, because our movement is so tech centric. We tend to idealize the tech and we always like, all of us are techies in some way. Even those who are non-technical are kind of techie enthusiastic and we kind of want to solve all of the problems with tech. Right? So like people are still solving the Bitcoin scaling problem. But like, hey, I get news for you. The Bitcoin scaling problem was solved in like five different competing ways in 2018. Like move on, like Bitcoin has a marketing problem, which we need to solve in order to get to the scaling problem. But, but I think I digress a little bit.

• 47:32Speaker 02

  I mean, you are absolutely right. And this is because we're part of this movement. Our friends are in this movement. The people that we interact with are in this movement. We want their love and respect and adoration, right? We want them to like us. It's a natural human instinct. But it's important to be mindful of whether or not- Not eh sort of eh if your customer base eh is hundred percent within the movement and there's plenty of businesses that are eh very successful that are like that. Where they're like, no, no, this is specifically for Bitcoin community members and we're going to market it by becoming popular on Twitter. And that's great, you know, eh and eh then then everything eh syncs up.

• 48:15Speaker 02

  Yeah, but if you're building something for the bigger audience, well, then you need to figure out how to reach eh the the bigger audience and and that is non trivial. And eh you're probably right that eh you know, the people that seek out Bitcoin are going to seek out Bitcoin and there's a lot of people that seek out different properties eh right, but but there's also that eh you know, some of the properties of Bitcoin eh are are not things that you can market really well.

• 48:42Anthony Pompliano?

  Yeah.

• 48:43Speaker 02

  Right, eh you like eh make the transaction that I want you to make, ah you know, put don't put that on your eh app store landing page, yeah. But eh but there are plenty of use cases eh eh that that are completely unproblematic, like, you know, pay anybody in the world, you know, or get paid from anybody in the world, like eh companies such as ours that have people eh I think now in twenty six, twenty seven countries, like, yeah, well, figuring out how to pay people with the local payment system in a lot of their countries is a lot of eh a lot of work. It's easier for us to say, look, we can pay you in eh in Bitcoin and you figure out how to receive it. Eh it's it's part of the job is figure out how to get your paycheck. That's fair enough, right?

• 49:27Speaker 02

  Eh and especially if you if you you you happen to live in a eh country that's not like one of the biggest countries in the world, it's like, yeah, you kind of have to figure out a little bit how people will be able to pay you to participate in the eh in the global work environment.

• 49:40Anthony Pompliano?

  Yeah, that makes sense. I I've heard you a couple of times eh say the word crypto. I heard you say Ethereum E eh when describing something else. Eh you've also made a couple of comparisons and growth rates between maybe other areas eh of the crypto ecosystem that have exploded and and maybe something in Bitcoins only two to four X. Eh in the Bitcoin maximalist kind of most extreme eh view of the world. You're violating and you're committing blasphemy by even mentioning the word crypto, Ethereum or anything else. Is it important to look at what else is happening in the crypto ecosystem? Not necessarily to go and buy the assets or to trade them, but to understand growth rates and understand where users are flowing and what is working and what's not working from a technical

• 50:24Anthony Pompliano?

  basis? Or do you think it's all noise and instead people should just focus on Bitcoin and not look at anything else?

• 50:30Speaker 02

  I think it is important to look and I mean, what we've used at BitRiffle is always to like, look at real transactional metrics because that's what cares, what matters for us, right? The thing is that, I mean, I think that part of the reason why Bitcoiners hate altcoins is because that it's a shadow of a dark thing that exists within Bitcoin. Like it is the same, you know, like a lot of the, a lot of the energy in Bitcoin is this desire to like make, make money, right? You make an investment and the number goes up and suddenly you became richer. And that is,

• 51:11Speaker 02

  you know, what, what altcoin community took and refined and packaged and iterated on and, you know, made it, made it pop more. And like in most cases in scammy ways, like let me be very clear about that. I'm not recommending that you, you, you, you jump in headfirst to the shiniest object. But it does lead some, in some cases, to easier, like product market fit type interplay. And I can bring up one example. So one of the largest crypto wallets by active

• 51:54Speaker 02

  users is Metamask, right? Which is, which is a wallet that supports ERC tokens and it supports Ethereum, but also the chains that are EVM based. So Binance Smart Chain and Polygon and some of the others. That's why I say Ethereum me.

• 52:15Speaker 02

  Metamask has grown in this way. Because like in that community, the sort of the thing that you do is to invest in different assets. And then you you you hope that they they go up in value and then you sell them, right? And but you hold those assets within the wallet. And and so the wallet becomes a center of interplay. And so because they've managed to package people's desire for number to go up. With like a web connected wallet, they've seen seen traction. They they appeal to this greed element that that that makes it very successful.

• 52:58Speaker 02

  Fine, like we we can argue a lot on whether or not that's a good thing, whether or not that's desirable or or whatever. And but I think we can't argue about the fact that, well, it has a lot of users. And and that means that they need to figure out user experience type type issues. And so even if you want nothing to do with any altcoin cryptocurrency, whatever, other than Bitcoin, it does make sense to to to look at how how some of these things have been solved in in in that world, where there is a lot of pressure by users. And my my attitude with, I mean, with company building and product building is that you don't really know anything until you expose your product to users, right?

• 53:42Speaker 02

  And so and I believe that I believe in incremental growth. And I believe in finding something that somebody wants to use. And even in the early imperfect form. And then if they want to use it, but something bugs them, then they will complain. And that complaint is is product development feedback. Like these are the things to to work on. And and so things that are used a lot tend to get their kinks ironed out a lot more. Like a dirt road that is traveled a lot will be pretty flat. And versus a dirt road that gets traveled rarely. And and so, you know, but it does create this tension.

• 54:23Speaker 02

  Because on ethical grounds, a lot of Bitcoiners don't want to create speculative tokens. Because, well, that's not what we're about. And we we didn't show up here to build this decentralized token casino type thing. And so we're kind of like, ah, that's something else. But I think it is important to be mindful of the fact that a very, very large chunk of Bitcoin users will also use these things. And I'm not saying that it's a good thing, that I'm not saying that it's desirable. So I'm just stating a fact. And so you can't, you need to figure out, right?

• 55:08Speaker 02

  At which point, it's a little bit like, you know, like leadership, like you can't show up to somebody and like you're an asshole and punch them in the face and believe that they're going to like your ideology. Right? So you need to figure out how to meet people where they are. And then, you know, figure out how to steer them in a direction that you would like to steer them. But I think that it is a bit of a problem in that the Bitcoiner ecosystem or part of it really has like kind of like isolated itself and like, look, we want nothing part of that. We want to build our entire new thing blank from the start and we start from bottom up.

• 55:49Speaker 02

  But then in the end, it still ends up like, we can't, I think, decouple Bitcoin from crypto. Like, I would argue that maybe it would have been desirable to do, but if we should have done that, we should have done that in 2013, 14. At this point, it's like all of the infrastructure is the same, all of the, all of the users are the same, all of the, most of the investors are the same. Like a lot of the things are the same, and so it becomes really, really painful to decouple. And so if, you know, we can't, I mean, if, say that you have a company that is a shitcoin exchange, let's say, to pick the word specifically.

• 56:34Speaker 02

  We can't go to them and say, you guys are assholes, you're scamming people, but also can you please add lightning?

• 56:39Anthony Pompliano?

  No, that's, no, that's exactly what Bitcoiners do, though. That is literally exactly what they do.

• 56:44Speaker 02

  Right, but but like, and and so you you kind of need to pick one of the two.

• 56:50Anthony Pompliano?

  Yes.

• 56:50Speaker 02

  Right? And and some people have understood that and they're like, you know what? Fine. We we don't need to have Lightning on Binance. And let's build our own, our own network. It's gonna be better. It's gonna have sharks and lasers and and whatever. And and again, it is growing, like, the the Lightning network currently is multiplying every year steadily by any metric. So it's not that it's not working. It's just that like, if you look at it from the outside, it's like you have this massive casino-type galaxy and and and this small little solar system that is the Bitcoin-only economy.

• 57:32Speaker 02

  And like, that's the question is like, if if if that's desirable, well, then we need to figure out. But but even then, you you you know, they do interact via the fiat system, right? So they like part of the Bitcoin-only meme, it's not actually Bitcoin-only, it's Bitcoin and fiat. Right? They they don't try to distance themselves from fiat. They just want to distance themselves from from other things. But I think that from the purpose of of the vision of a world in which millions and billions of people interact with money through their wallet on a on a daily basis, like, probably somebody who currently use this uses this with Ethereum

• 58:16Speaker 02

  is easier to convert than somebody who lives deeply into the fiat world and wants nothing to do with anything crypto.

• 58:25Anthony Pompliano?

  Well, I'll take it a step. I'll take it a step further, and people get real mad when I say it. But there are companies that claim to be Bitcoin-only, but they take user funds and they store it in a custodian that is not Bitcoin-only. Right? And so in some way, the Bitcoin-only company, which is now a marketing message, because obviously they're not Bitcoin-only, is paying a shitcoin custodian, according to their definition, right? So like, you're literally-

• 58:49Speaker 02

  It's a marketing message and and it's successful and I'm of the school that, you know, to some extent, like, don't hate the player, hate the game.

• 58:56Anthony Pompliano?

  One hundred percent.

• 58:58Speaker 02

  I think that we're in a world where Coinbase was very dominant in the US and now it's being attacked from multiple directions. And one of the directions is from the Bitcoin maximalistic side. And so it definitely makes sense to do something like that. And I think from what I can see, it's working well. But that's the thing is that it's very hard, right? To really, really, really distance yourself. But maybe it doesn't matter. Like in some ways, like I think, I mean, I've struggled with this stuff as well quite a bit. Like I think I've landed at the point where, but this is like my own. I'm not arguing that other people should have the same ethic. Like my ethic is that, like, don't promote altcoins, right?

• 59:43Speaker 02

  Yeah, I don't, Bitcoin doesn't, we never have. Yeah, but yeah, we do acknowledge the fact that there are people that use these things. And if they choose to use these things to make cryptocurrency payments for real world things, then we will provide that service for them. And not to sort of say that this coin is good, this coin is bad, you should invest in this or that. We don't promote any investments whatsoever. We're a tool, we're a thing. You can use it if you want, and if you don't, it's fine.

• 1:00:12Anthony Pompliano?

  What's another good example, I think, is take a Coinbase, right? And a lot of people in the Bitcoin community have problems with Coinbase or whatever. Uh, they are responsible for onboarding a lot of people to Bitcoin. Now, do they onboard the most? Are they still onboarding as many people as the previous? Like, there's all these nuances to the debate. But at the end of the day, in the United States, Coinbase, for a very long time, if somebody said, okay, I'm finally convinced, whether it was a podcast, Twitter, my friend, I read something in the newspaper, whatever, I'm finally convinced to buy Bitcoin, they would go to Coinbase and that would be their entry into the world. And so I think that that is hard to kind of reconcile with the people who are upset at Coinbase for doing whatever. Um, but I think it's an interesting data point.

• 1:00:57Anthony Pompliano?

  Another example, and again, you get kind of in this world where like sometimes you don't even have all the information, but there's a company that helped a public pension buy Bitcoin, which sounds amazing. And they say that they are Bitcoin only, but then in the announcement, it says that the pension bought Bitcoin and Ether. And so, again,

• 1:01:15Speaker 02

  You're a sister company.

• 1:01:17Anthony Pompliano?

  Well, again, like, the question becomes like, if that company's the one who helped them buy Ether, does that, should they then be blasted for not actually being Bitcoin only? Or is the thought process, hey, we went in, we explained to them Bitcoins, somebody on the investment team said, okay, fine, if we're gonna buy Bitcoin, we also want to buy this other thing. And so, as a necessary component to getting them to buy Bitcoin, we helped them buy Ether as well. It goes back to kind of like, is there a purity test? Or is the goal, yes, other things will exist, and it doesn't mean you have to promote them, it doesn't mean you have to necessarily push them forward, but you have to at least understand that pushing Bitcoin forward is not in a vacuum, and it doesn't mean that you have to kill everything else. Other things are going to exist, like, for whatever reason,

• 1:02:02Anthony Pompliano?

  gold is still going to be around in 10 years, right? But I don't see a lot of people saying, let's destroy gold, gold is a scam, you know, let's go and get rid of it. They may say that it's gonna go down in value, they may say it may get demonetized, but that seems like a very different argument than maybe what's being argued about everything else. And so, it begs the question, like, is the other stuff and focusing and attacking all the other stuff just a distraction from the ultimate goal of pushing Bitcoin adoption kind of forward?

• 1:02:32Speaker 02

  I mean, I think you're digging into a very hairy subject here that probably would require several long-form conversations about, I mean, a lot of this stuff goes back to the history of Bitcoin and the history of altcoins, things like pre-minds and so on that have been seen as unethical, because in most cases, vast majority of them, it was.

• 1:02:57Anthony Pompliano?

  Of course.

• 1:02:59Speaker 02

  So, and that's something that's different from, say, gold, you know, gold is gold, it's been gold for thousands of years. So, it's not that somebody is peddling you gold that they invented themselves. And I think that there is definitely, you know...

• 1:03:17Speaker 02

  I mean, you can't blame people for arguing things according to their ethics, right? And some things are complex, right? Some things are both good and bad, especially companies usually are. And you can definitely, you know, salute them when they do something good and complain when they do something that you consider to be bad. And just because somebody did something good in the past doesn't mean that they get a free pass to do something that you consider to be bad either, right? So it's a complex question and I'd like to really understand it, especially if you're new into the space. You really got to like study like the early days of it and how it evolved and so on.

• 1:04:03Speaker 02

  And at the same time, like maybe the interesting question isn't that, yeah, right? And I think that in this time where people are arguing about words and phrasings and so on, maybe the interesting thing is like phrase your personal mission statement. Like, for example, like my mission statement is for more people to use Bitcoin. Or my mission statement is for fewer people to use altcoins, right? And maybe both of these. You know, there's all of these different variants and so on that get mixed up, right?

• 1:04:43Speaker 02

  And in a lot of ways, again, some of these things are kind of outside of our control because of market dynamics, right? I mean, like Binance, as far as I know, is still the fastest growing company in the history of companies. Or at least was in the beginning. And they were that because they were the best access point to the crypto token casino. And so.

• 1:05:10Speaker 02

  It's tough, you know, it's very tough to argue on sort of on moral grounds against market dynamics and the fact that humans are kind of flawed and greedy and just looking for the the fast way to get rich here. And you think there's a place to explain and argue, here's why I think this is good, here's why I think this is problematic. And I think that there's a lot of cases where the Bitcoin only type movements have actually, you know, helped people to avoid getting trapped in things. So it's, it's, it's it's complex, right?

• 1:05:53Speaker 02

  There's, like, to me, I think, for me, the interesting question is about transactional use and like I want more people to transact with Bitcoin. Like on a regular basis, like that's my personal mission statement. And so if somebody chooses to transact with with another cryptocurrency, that's not, that's an opportunity for, you know, for achieving the mission statements. And probably going on the offense isn't the best way of achieving that goal, but people can differ in this and it's it's a, it's a delicate subject and you kind of like need to

• 1:06:35Speaker 02

  to keep a lot of things in mind. If there was an easy answer here, we would have already seen it. Like in the end, it's like a political question, you know, should you, should you conservative or should you liberal or should you Austrian economics or should you Keynesian economics, like these are few things that people argue about and have different views on. And and it's, it's a little tough, I think, to say, like, I think it's, it's more interesting to approach from, like we're talking before, like practical, from marketing standards and so on, like what is, what is affecting, effective at achieving a certain

• 1:07:16Speaker 02

  a certain goal, a certain change that you want to see in, in the world.

• 1:07:23Anthony Pompliano?

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• 1:08:06Anthony Pompliano?

  Over to exodus.com/pomp for your free download today. Again, that's exodus.com/pomp. Go check them out for your free download today. This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of liquidity and they have 100% uptime track record through all the volatility spikes. LMAX Group's liquidity relationships and ultra-low latency technology means that LMAX Digital is the market-leading solution for institutions across crypto trading and custodial services. LMAX Digital: secure, liquid, and trusted. Go learn more at lmaxdigital.com/pomp. Again, that's lmaxdigital.com/pomp.

• 1:08:47Anthony Pompliano?

  What I appreciate about your viewpoint is just at the onset, the world is complex. It's not black and white and there's lots of nuance. And actually, two things can be true at the same time or two things can be true at different times. Your comment about a company who maybe people don't like can do something good and a company that people do like can do something bad. And that's really hard to have that conversation on Twitter in 280 characters. And it's also really hard, I think, when the movement is kind of forcing a certain type of conversation because it runs at sometimes counter, right? You can imagine if everyone really, really likes a company.

• 1:09:32Anthony Pompliano?

  Within a movement and they do something kind of out of step. It's unpopular to say, hey, actually, I don't agree with that thing or vice versa. Right. As if everyone rails against a company in that movement and they do something good. It seems off or it takes courage at times to say, hey, that company that nobody likes actually did something good. And we should celebrate the good thing they did. But but it's it's complex, I think, to your point. And unfortunately, the Internet does not allow for super nuanced conversations to allow people to have that usually.

• 1:10:03Speaker 02

  I had someone proposed to me a theory, I forget who it was, unfortunately, about like the recent developments of the past couple of years. That during the years where where the world was plagued by by COVID, there were no conferences and so on. People weren't meeting in person. And so conversations happened mostly on Twitter or maybe in one or form on podcasts. And in at least on Twitter, it's very much so that you can't like a nuanced

• 1:10:38Speaker 02

  analysis of something is anti viral. Like if you're right, here's some good things and also some bad things, it's going to go nowhere. What you should do is instead make two different tweets, right? Here's what's great about this thing and what makes me bullish. And it's going to go to the moon in that group. And here's what I hate about that thing and what sucks about it. And you're going to get all the haters, right? And both of those messages are going to be viral. The newest one doesn't. Whereas in a world where people are meeting in in person, having conversations with with humans, it's quite like it's easier to establish nuance. It's easier to establish human relationships,

• 1:11:18Speaker 02

  ties, like mutual understandings of of ethics. You know, like, hey, this is, you know, a dude that I've met, you know, 10 times in 10 different countries over over five years. We've gotten drunk and had adventures, this and that. I somewhat understand this person and what what he means when he says this and that.

• 1:11:42Speaker 02

  Even I might not disagree with that and so on, right? Whereas i- in a world where everything happens on Twitter, eh, everything gets like super polar- polarized. You're evil here and you're good here, but eventually, kind of like eh, given the principle that one strike, you're out. And everybody ends up in the eh, in the, in the evil crowd. Yeah, right. And there's not even like, uh, there's not, you know, like the eh, the recent eh, uprising against eh, the maximalists. But like, maximalists are not a uniform group. They disagree and fight with each other a lot about all kinds of stuff. And like, there, there's eh, like, there wasn't even a successful attempt at defining what maximalism only like, I know it when I see it and so on.

• 1:12:26Speaker 02

  So it's, it's tricky eh, and I think that a lot of newcomers to the space eh, something that people don't always re- recognize, I think. Eh, is that the crypto space is like eh, it's, it's a web eh, of personal relationships, right? And these personal relationships span eh, across the camps. They really do eh, you know, that like eh, you, you're gonna see. You know eh, a guy eh, fight with another guy and they hate each other and call each other the, the most horrible things eh. But you don't know that, you know, they have like two hundred common friends and most of them think that both of them are pretty good guys eh, right?

• 1:13:05Speaker 02

  So you, you don't see these things eh, if you're just observing from eh, from Twitter eh, and you, you don't sort of eh. Until you've hung out in the sort of eh, eh, speakers eh, eh, sessions and seen how people actually like hang out with each other. Yeah, when it's not eh, you know, that every word that they say is being scrutinized eh, eh, for eh, for potential heresy. But can actually like talk and like discuss eh, controversial ideas. And sometimes it helps when con- discussing controversial ideas, it helps to be drunk, you know? Cause then you can always eh, like, hey, I was just being drunk, you know, this is the best defense eh.

• 1:13:45Speaker 02

  So eh, eh, so, so these things eh, like eh, I think that we kind of like. Into such a direction and so like the influencers that bubbled up were those that were like peddling one specific message over and over, over again, finding a certain demographic and so on. They kind of bubble up to the top, whereas the people that have like nuanced conversations about uh about things and are ca- capable to assessing from different uh perspectives kind of like phase out uh and but now so- sort of the world is like waking up again, people are meeting up, hanging out and you're like, oh yeah, did you also think that that thing was bullshit? That is actually in our in-group? Uh yeah, yeah, me too. Uh let's not tell anyone. We're just trying to discuss this.

• 1:14:30Speaker 02

  Uh right? Uh and it's like these conversations are happening, right? And these bonds are forming uh over uh bonds of people that that know each other in the physical world and have friendship and mutual respect and appreciation. Uh and and again, these things are uh very hard if you're a newcomer to to understand and and and see and to assess. Yeah, and and social media is one of these things where you you know, you like the people that rise are those who focus on it uh professionally or or full-time, but that's not necessarily that doesn't necessarily mean that they are the ones with the best views uh at all times, right? Uh I mean, people

• 1:15:14Speaker 02

  I mean, I I guess I'm biased, but I mean, I I like people to build things. Yeah, and uh like like companies or products or or or whatever and like, yeah, well, if you spend all day, every day building stuff, you're gonna have less time to spend on Twitter. Yeah, right? So those people's messages get a little bit um uh muzzled down in in in such a world uh with a few rare uh exceptions of people that are like exceptional speakers and they manage to get to get it across, but like, yeah.

• 1:15:45Anthony Pompliano?

  I think it makes a lot of sense. When people listen to this and they get mad at us for whatever random thing, we'll just tell them that we both were drunk and it'll be a good excuse. Before we finish up, one of the things I wanted to talk to you about was Bitrefill's been doing a lot of work in El Salvador. And everyone gets all excited about El Salvador. There's some people who think it's the greatest thing ever. Some people think it's an absolute dictatorship and not going so hot. I'm less concerned about El Salvador itself as much as this idea of the circular economy. And I know that you all are spending a lot of time, one, trying to understand what's happening, but also, two, being helpful. Maybe you can describe a little bit as to what work you guys are doing there and what you're seeing that is working and maybe where

• 1:16:27Anthony Pompliano?

  you're still seeing obstacles or challenges as you try to help.

• 1:16:31Speaker 02

  Sure. So I mean, when all of this ruckus about the Bitcoin law started happening, we kind of had several big team discussions. And I mean, again, our goal is a world in which it's as natural to transact in cryptocurrency as it is to have a conversation over a video call. And it's so rare to have an environment where there's a country where, okay, there isn't, first of all, there isn't a big incumbent payment network. The competition is physical cash and the government is not trying to put sticks in your wheels, but actually, you know, trying as best as they can to help and push these things, right? So we were like, you know what?

• 1:17:14Speaker 02

  Let's make a visionary strategic bet on this. We go down to Salvador, we see what we can do to get a circular economy going and to get it to spread, right, to the mainstream, to the people that don't necessarily participate in the movement, that don't necessarily love Bitcoin or anything like that, that just that might use it as a tool that lets them live their life in a better way. So we went down there in the in the fall of last year, I guess soon a year ago, we set up a local subsidiary, we hired one person at first and then two more.

• 1:17:55Speaker 02

  Members flew over and we set up a bill payment solution in El Salvador by partnering with a local company that that does that. And and so what it achieves is that you can pay your, you know, your utilities or your your mortgage or your your credit cards or what have you with with Bitcoin. On top of many of the other things that Bitrefill has, which is the gift cards for for digital goods. There is also very popular, especially games were very popular among the youngsters in El Salvador. Even before we we showed up and made a made a concerted effort.

• 1:18:36Speaker 02

  And so what we're doing there is again, like trying to create a circular economy, like trying to get, you know, thousands, tens of thousands, hundreds of thousands, millions of people to use Bitcoin on a regular basis. And we're putting a lot of energy, much more than is appropriate for a country that size. But like what we say is that it's, you know, it's as easy as it's gonna get and it's still really freaking hard. Yeah, right. So the goal is if we figure it out there, then then we will have learnings and a playbook that we can apply on on other countries that we can use for for spreading the Bitcoin dream

• 1:19:19Speaker 02

  outside of the core group of of movementarians. And so we've been there, trying to do marketing. I mean, it's a, I very much recommend for for Bitcoiners to go down there themselves. I think all of this becomes a lot more clear. It's a great country. There is beaches and surfing and Bitcoin stuff. And there's, you know, even if you don't go during the time of Bitcoin conference, there is always going to be a little Bitcoin meetup going on almost every night of people are also there and exploring. It's like a great hangout. So I very much recommend somebody planning a vacation to to consider going there.

• 1:20:01Speaker 02

  I think in in practice, I mean, we see that it's not so easy. Even if the the government is is trying to help, but the government is the government. And governments are not usually famous for being great at pushing technological innovation on towards people, right? And so it's it's a little bit tricky. They don't always move in in startupy ways, because governments can a government. And so the the reality is that there are definitely people that are using Bitcoin,

• 1:20:36Speaker 02

  even outside of Elzonte and Bitcoin Beach and all of all of these areas. It's still not that like everybody does, right? So even though the law says that every company has to accept Bitcoin, but most companies don't and they don't get persecuted for that or or or anything. Yeah, but it's kind of like encouraged from a from a system level. Yeah, but it's still hard, like we're still fighting there against many of the the classic Bitcoin issues like we, you know, first time I heard a taxi driver there say that, yeah, I have some Bitcoin in my wallet here that customers paid me, but like I'm not going to buy anything with them. I'm going to save them in case it goes up in value. Yeah, right?

• 1:21:19Speaker 02

  Yeah, and it was like very like, ah, OK, yeah, fair enough. This this is the same. It's the same here as it is in anywhere else with these dynamics. And there's also other dynamics that we're fighting against. I think the biggest one is that for people that are unbanked, which is like seventy percent of the population, like the notion of money is the notion of green physical dollar bills that you carry in in your pockets. Yeah, and and and so switching to a notion of money as being a number on on your phone, even more a weird number with decimals and stuff. Yeah, but even like just the idea of like that money is a thing that lives on on your

• 1:22:02Speaker 02

  phone is is is hard for people to trust. Yeah, because is it real money if I can't feel it? Yeah, and so. That's the sort of things that we're up against. There's certain parts of society that, you know, are a little bit wary of Bitcoin because they perceive it as a government thing, which is a kind of interesting. So they're like, I don't know, the government, you know, even if we support them, who knows what they might do and so on. And so there's like a big effort from companies like Strike and Bitcoin Beach Projects and so on to promote alternative wallets that are independent and so on.

• 1:22:45Speaker 02

  But then again, you have the question of Bitcoin brand and how does Bitcoin work? And all of these things that make it tricky. So again, it's one of these things where, you know, when you have something with an exponential growth and you're in the early stages of it, you can make an excellent case for why it's going insanely great. It's, you know, it's like five X every year. Yeah, you know, you can also be like, ah, but it's still tiny, you know, 99% of society isn't using it. And both of these things can be true. So it depends on kind of like how you choose to frame it, whether or not it's going well

• 1:23:31Speaker 02

  or not. It's still a massive challenge. And the companies that are there, I know that they're trying stuff, trying marketing, trying business models and schemes and so on to figure out, you know, how to get it into the hands of people. And there's a lot of, still a lot of different chicken and egg type problems. I'll give you an example, I guess, like we're trying to figure out like, how can we get? Because El Salvador is a country where a big chunk of the population immigrated and many of them live in the U.S. now. And so like 20 or 30% of the economy is actually remittances, which is immigrants that now live, for example, in the U.S. sending money back to their relatives back home.

• 1:24:15Speaker 02

  And so this seems like a pretty obvious thing that Bitcoin would be very useful for that. And then the people who receive it can then use it to pay their bills or to shop with it or whatever. And it can actually fuel this circular economy because you'll have people that have coins to spend. But then it turns out that, well, it's actually really hard for a Salvadoran to buy Bitcoin in the US. Because in order to use any of the dominant buying Bitcoin services, you need to have, I forget, an American social security number, which maybe you don't have. And so then you don't pass the KYC stage and then you can't actually get Bitcoin. And so the only way that remittances, I think, maybe some will correct me on this,

• 1:24:59Speaker 02

  are flowing is actually through like the government Chivo wallets that they put in places in the US where you can buy Bitcoin with cash. But like, it's again, one of these things where, you know, it shows the tension that we have when we don't have a circular economy and we're kind of tied to the current system and the regulatory framework. Some things become hard to do, right? And I mean, the Bitcoin dream is a world where remittances is not even a thing, right? We're not here to fix remittances, we're here to get rid of it, to obsolete that concept and put it next to long-distance phone calls on the shelf of history.

• 1:25:42Speaker 02

  Because what do you mean you can't send money from here to there? Obviously you can, or, you know, like, hey, I get paid here and I buy pizza there. What's problematic with that? I mean, that's what we're heading towards, but it's hard, right? And it's hard and the companies that are offering by Bitcoin in the US are also struggling, you know, to figure out the regulatory things and they need to be on the right side of the law and all of these things. And so a lot of this stuff, it's not trivial. I think it is moving in a very promising direction. We're continuing to invest in our efforts in El Salvador

• 1:26:25Speaker 02

  and doing a lot more marketing experimentation there.

• 1:26:31Speaker 02

  Where we're seeing some uh some progress. I'm pretty sure that we're the number one thing that people buy uh with Bitcoin uh in El Salvador. Just as we are uh anywhere else in the world, but it's still a, you know, a very small uh sliver of uh of society that that uses Bitcoin on a on a regular basis, but it is growing uh at at at the good pace. And I whether or not we'll be able to sustain it and how fast it'll grow. Uh that remains to be seen and we're we're doing everything that we can to make sure that uh that we we we do grow in uh in in these ways. I guess that's a bit of a like uh the the real talk uh uh probably this is going to get edited out because it was not bullish enough.

• 1:27:16Anthony Pompliano?

  No, no, look, it it.

• 1:27:18Speaker 02

  But uh but uh we're having the nuanced conversation here, uh so I'm giving you the nuanced answer, right? Uh some things are insanely great, uh some things are tricky.

• 1:27:26Anthony Pompliano?

  Yeah, it it is um uh it is closer to the truth than the extremes that are presented on Twitter. Right? And and the bulls and the bears both have extremes that are presented.

• 1:27:37Speaker 02

  And they're both true, like they're both uh representations of the same objective truth. Uh like we are somewhere on the early stage of what might be an exponential growth. You know, that is where we are.

• 1:27:49Anthony Pompliano?

  Yeah.

• 1:27:49Speaker 02

  Yeah, and the the rest is a question of what kind of glasses you use to to look at it. Uh it's uh uh like the old, I mean Bitcoin is like that, it's the the old elephant meme, right? Where like five blind guys uh stand next to an elephant and it's like this part is rough and this part is smooth and it's it's pointy and whatever, right? And so it kind of like he brings out whatever it is in you. Uh and I mean, there's a lot of things to discuss, obviously, about, you know, uh the the politics of Salvador. Uh I don't think I'm uh I'm the best person to do so. I think it's been well discussed on uh on the internet by other people. And Bitcoin isn't part of politics, I think.

• 1:28:33Speaker 02

  I think most of the Bitcoin people that are in El Salvador are there for Bitcoin and for El Salvador rather than uh for the government per se and. Maybe if the government is smart, they will see it that way as well. But again, it's complex. Even the government is not one thing. It's a lot of people that are interacting in different ways and have different understandings of things and so on.

• 1:29:00Anthony Pompliano?

  I could not agree more. Where can we send people to find you on the Internet or find out more about BitRefill?

• 1:29:06Speaker 02

  Just go to bitrefill.com or find BitRefill on Twitter and you can find me on Twitter as well. I'm sure there will be a link in the show notes at Zigamon.

• 1:29:19Anthony Pompliano?

  Awesome, Sergey. Listen, thank you so much for taking the time to do this. I really enjoyed it and I think, you know, your nuanced view and kind of what I perceive as your constant pursuit of the ground truth is admirable and I think important. And, you know, it's fun to screw around on the Internet, but at the end of the day, we do have to build products. We do have to continue to improve the tools so that people continue to use this stuff. So I appreciate not only one, your and your team's contribution in terms of doing that, but also your ability to just kind of remind people, hey, the tool is important and the movement is important too, but we do need to build stuff. And I think that a lot of people appreciate that message. So thanks so much for sharing it.

• 1:30:04Speaker 02

  Thank you so much, man. Thanks so much for the opportunity. It was a lot of fun.

• 1:30:08Anthony Pompliano?

  All right, we'll definitely do it again in the future. Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify or your favorite podcast player. And if you're looking to transition into a brand new job in the Bitcoin or crypto industry, we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know to break into the industry, including live interview prep and resume review. Our students have been hired at over 75 of the world's best Bitcoin and crypto companies. Go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io.

• 1:30:50Anthony Pompliano?

  If you enjoyed today's episode, make sure you share it with your friends and I'll see you all for the next episode.