#652 How Crypto Will Fix South America’s Money Problems w/ Simon Chamorro

Simon Chamorro was born and raised in Caracas, Venezuela. He co-founded Valiu to make it easier to transfer money from Colombia to Venezuela by streamlining remittances using cryptocurrency. In this conversation, we discuss bitcoin, stablecoins, Venezuela, Latin America, hyperinflation, El Salvador, and what the true situation on the ground is from a monetary standpoint. ======================= Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy, sell, store, and earn bitcoin, ether, and over 40 other cryptocurrencies. Offering industry-leading security, insurance and uptime, Gemini is the go-to trusted platform for beginner and sophisticated investors alike. Open a free account in under 3 minutes at gemini.com/pomp and get $20 of bitcoin after you trade $100 or more within 30 days. ======================= MiamiCoin, the first CityCoin, is now live! This is a community-launched program built on Bitcoin, and it’s far more than a currency: MiamiCoin is a protocol, and a platform for innovation. So, the CityCoins team is announcing something pretty cool: MiamiCoin Makers Month is a bringing together hackers, designers, and creators who are passionate about creating apps to benefit the City of Miami. $25k in total prizes will be awarded to developers who build the winning apps. And, the winners will be announced by Ryan Hoover, founder of Product Hunt, and Bored Elon Musk, everybody’s favorite pseudonymous Twitter inventor and blockchain enthusiast. Visit MiamiMakers.co to learn more and sign up to take part. ======================= 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. Simon Chamorro was born and raised in Caracas, Venezuela. He co-founded Value to make it easier to transfer money from Colombia to Venezuela by streamlining remittances using cryptocurrency. In this conversation, we discuss Bitcoin, stablecoins, Venezuela, Latin America, hyperinflation, El Salvador, and what the true situation on the ground is from a monetary standpoint. I really enjoyed this conversation with Simon, and I'm proud to be an investor in the business that he's building. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Gemini. Gemini is

• 0:44Anthony Pompliano?

  one of those businesses you've just got to know if you're in the industry. I've interviewed a number of people from their team before, and I tend to think that they're taking the right approach to helping usher forward this industry. Gemini is a leading regulated cryptocurrency exchange, wallet, and custodian. That makes it simple and secure to buy, sell, store, and earn Bitcoin, Ether, and over 40 other cryptocurrencies. Their offering, industry-leading security, insurance, and uptime. Gemini is the go-to trusted platform for beginner and sophisticated investors alike. You can open a free account in under three minutes at Gemini.com/pomp and get $20 of Bitcoin after you trade $100 or more within the first 30 days. Again, you can go to Gemini and open a free account in under three minutes at Gemini.com/pomp, and then you'll get $20 of Bitcoin after you trade $100 or more

• 1:27Anthony Pompliano?

  within the first three days. Go check it out and let me know what you think. Next up is Miami Makers Month. It is a virtual hackathon for hackers, designers, and creators who are passionate about creating apps to benefit the city of Miami. They've got $25,000 in total prizes, which will be awarded to developers who build the winning apps on Miami Coin. What is Miami Coin? It's far more than a currency. Miami Coin is a community-launched platform for innovation built on top of Bitcoin and STX, the network that enables apps and smart contracts for Bitcoin. Miami Coin is generating real-world value. The protocol has already generated over $3 million in contributions reserved for the city, and the project is just getting started.

• 2:10Anthony Pompliano?

  You can visit miamimakers.co to learn more and get involved. Again, you can visit miamimakers.co to learn more. Miami Makers Month is definitely something that you're going to want to check out. Last but not least are our friends over at LMAX. LMAX Digital is the number one institutional crypto exchange. They offer clients the deepest pool of crypto liquidity on the planet. It's underscored by 100% uptime track record through volatility spikes. Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They feature a central limit order book, streaming spot Bitcoin, Ether, Litecoin, and Bitcoin Cash, all paired with US Dollars, Euro, and Yen. LMAX Digital. If you've never

• 2:55Anthony Pompliano?

  heard of them, it's because they only serve institutional clients. No retail. LMAX Digital, secure, liquid, and trusted. You can learn more at lmaxdigital.com/pomp. Again, lmaxdigital.com/pomp. Go check it out and let me know what you think. All right, let's get into this episode with Simon. I really hope you guys enjoy this one.

• 3:13Speaker 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.

• 3:36Anthony Pompliano?

  All right, Simon's here. How are you, man?

• 3:38Speaker 02

  Oh, good, man. Thank you for inviting me.

• 3:40Anthony Pompliano?

  Of course. Let's start with value. What are you guys building? What is the goal here?

• 3:48Speaker 02

  So, in simple terms, we are a business-first crypto payments solutions for Latin America. And we are focused in Venezuela, which is going through hyperinflation. And because of that, people are looking for stable currencies, right, for new solutions. And the interesting thing is that typically, vendors are the ones who set the medium and the currency that they want to accept, right? So, being a business-first solution is actually an interesting way to tackle this problem because we're focusing on giving businesses a way to charge in stable coins, their customers.

• 4:29Speaker 02

  And in a way, we're creating this marketplace dynamic within consumers and businesses. And the the final objective, let's say, is to create crypto economies in Latin America. So that's, yeah.

• 4:42Anthony Pompliano?

  How bad is the situation? So Latin America, obviously, is multiple countries that make up this. Do you want to talk about Venezuela first or kind of the whole region? Which one's easier to talk about?

• 4:51Speaker 02

  Phew, so from, this can be tackled from political perspective, from an economic perspective. I think that we can talk about Latin America as a whole.

• 5:03Anthony Pompliano?

  Okay.

• 5:03Speaker 02

  Because our objective in the end is to to serve the entire region. But Venezuela is kind of the initial market, so whichever way.

• 5:12Anthony Pompliano?

  Okay, so let's do Venezuela first, then we'll talk about the kind of the entire region. Everyone knows Venezuela has gone through hyperinflation. It used to be the richest country now in the region. Now it is not. And it feels like those who could leave have left. And there's some folks who just can't leave for whatever reason, so they're stuck there. How bad is the situation on the ground? And like, what do you see on a day to day basis around the currency or other businesses?

• 5:36Speaker 02

  Yeah, so the situation is really bad. It's been bad for 20 years. We have, we had dictatorship, narco state. The Venezuelan regime is sanctioned by OFAC. They all have prices on their head, right, by like the FBI? And and that's, and they have control of everything. They have total power. So a good example to like, try to bring people from the US to what it is over there. So the minimum wage is $1 currently in dollar terms.

• 6:17Speaker 02

  And some years, the price inflation gets up to 10,000%. So, yeah, in 2019, it was 10,000%. So imagine trying to live with $1 a month, right? Like 12 months a year, $12 a year and 10,000% price inflation.

• 6:37Anthony Pompliano?

  How do people do it?

• 6:38Speaker 02

  I don't know, man, like, it's, it's really hard, like, people are starting businesses. There's a lot of entrepreneurship, that's kind of like one of the brightest sides of things. There's a very entrepreneurial vein, I would say, and because you can start selling food, arepas, like cakes, to your families, to your friends. So you have this like hyper-local communities of people selling goods and services to their community, and everybody sells to each other. So that's a way some, some of these communities are like maintaining themselves. And more recently, since 2019, the, the country started to get dollarized, informally dollarized, which means that there's, there's no direct relationship with the Fed.

• 7:24Speaker 02

  It's, it's a dollarization that is coming in cash and that is coming through unknown sources. And so you have kind of like this elites having stability, and that stability within the elite spreads through the kind of like people around them, right? So that's another way people are kind of like getting by.

• 7:50Anthony Pompliano?

  So slowly, the country becomes more and more dollarized, even though there's not this direct relationship, and also it's a sanctioned country, but as simple as somebody came to the US, they got $10 in their pocket, they go back, now they have a 10, you know, 10 single dollar bills, and then they spend it and it gets into the economy, there's like very low-level examples, and then I'm sure there's very complex ways that dollars get into the economy, which I don't want to go there. But there is some dollarization. For the average person in Venezuela right now, as they watch, and as you mentioned in 2019, 10,000% inflation, what currency do they want? Do they want boliviar, do they want dollars, they want gold, they want bitcoin, they want the euro? Like, how do they think through the evaluation of their options, given that their currency

• 8:34Anthony Pompliano?

  is basically being destroyed right before their eyes?

• 8:36Speaker 02

  Yeah, so for many years, they've, they don't want, they haven't won, been wanting the boliviar, the, the local fiat. And

• 8:46Speaker 02

  In twenty sixteen, twenty seventeen, there was a small, especially in the young population. But Latin America is quite a young population in general. And people were starting to adopt Bitcoin mainly in peer-to-peer exchanges. That was kind of like the main way to do it. And because dollars were not an option in Venezuela specifically. While Latin America is highly dollarized. And, you know, Argentina, you have access to dollars. Ecuador is fully dollarized. El Salvador, you have access to dollars. But Venezuela, that was not an option. So at the time, crypto was the only option.

• 9:29Speaker 02

  When the country started to get dollarized. And because of the fact that the dollar is trusted by most people outside of the United States. Everybody started to want the dollar. Specifically because Bitcoin price volatility currently is too much to sustain for people that can't save. Essentially, they don't have the ability to save. They need their money.

• 9:54Anthony Pompliano?

  Because they don't make enough. And then there are expenses, there's basically no delta. If I make the equivalent of five dollars and my monthly expenses are five dollars, I have nothing to save, right? That's why they can't save.

• 10:05Speaker 02

  Exactly, which is an opportunity, actually. Because the, there's, the middle class is actually decreasing. Recently, there was an article that Sequoia launched that says a rising middle class in Latin America. And there's a bunch of buzz around Latin America. The reality is that it's not rising, it's decreasing. And the reason why it's decreasing is because there's multiple kind of like reasons why that is decreasing. But a good solution for that is lending. Lending money to small businesses and medium businesses.

• 10:42Speaker 02

  That have been squeezed by the large businesses in general. There's a huge wealth inequality. And and so if we land in stable currencies such as the US dollar or in stable coins, people are going to have the ability to save, especially if those savings have interest-bearing yields. So that's a huge opportunity for crypto companies to kind of like help the middle class grow. And so, yeah.

• 11:15Anthony Pompliano?

  And when you think about what you guys are doing, explain how you're giving people dollar exposure in that country.

• 11:21Speaker 02

  So we essentially give them a digital dollar and people, the way they see it is a digital dollar. They don't really care if it's a stable coins in the back. What we do is that we partner with Fireblocks, a company from Israel. And we essentially back our value dollar, we call it the value dollar, which is an IOU, is centralized. And because of the fact that it's centralized, it allows for people to send it to each other at no cost. It's not like on-chain transactions. Because our objective right now is to prove that people and businesses at large, like in the economy, they are going to be able to transition fully to a dollar-based or like digital dollar economy.

• 12:05Speaker 02

  Once that problem is solved, which is much harder than just creating a token. Most companies just create a token and then they figure out, oh, let's see where can we put it. For us, it was more interesting to figure out how can we make people and businesses trust in this digital dollar? How can we make them use it every day? And so we essentially created this IOU backed in USDC in Fireblocks. And once we reach critical mass, we may think about like, hey, let's now just give them exposure to this token, which is going to be interchangeable for any other cryptocurrency that they want.

• 12:42Anthony Pompliano?

  And how's it going so far in terms of the, and I should have said this upfront, I'm an investor in value. So I'm a very big believer in this, but how's it going in terms of getting the merchant adoption?

• 12:51Speaker 02

  It's been really good, actually, yeah. So, an interesting thing that I'm gonna allude to really quickly is that we started with remittances to Venezuela. Because we now have about 6 million migrants, 6 to 7 million migrants. This is about 1 in 3 Venezuelans, or 1 in 4 Venezuelans have left, migrated. Wow. These people are typically 18 to 40-year-olds, the productive class. And the people that are staying are younger people in high school, or older people that are not working as much. So, our hypothesis was, you know, these people are gonna completely depend on remittances.

• 13:36Speaker 02

  Let's help the people that are migrating send stable coins, rather than send them bolivars, which is a hyperinflationary currency, which is what's already happening at large. Venezuela became the second-largest remittance recipient after Mexico in the entire region, and Mexico, of course, holds the number-one place because of the US corridor. And so, that was our hypothesis. Let's dollarize Venezuela through remittances as a vehicle, using kind of like crypto as a bridge. We realized that we could do it immediately, immediate remittances because of the fact that it's on crypto. We could do it on stable currencies, which is a stable of remittances.

• 14:19Speaker 02

  But the price, it's actually not great. Because when you wanna send money, remittances using crypto as a bridge, you have to go through the on-and-off ramps. And you have to on-ramp from fiat in the country of the sender, and you have to off-ramp in Venezuela, because people are not using crypto as a means of exchange. And it's not being used as a unit of account in the country. So, you end up paying 6% in the on-and-off ramp fees, 1 in 1 country and the other 1 3 in 3. And that's not super effective, compared to like Western Union and other systems. So, we realized that remittances can only be effective in crypto if...

• 15:06Speaker 02

  The recipient country has, uses crypto as a means of exchange. So we've said to ourselves, let's refocus the entire business and to help businesses use this product. And it's going really well. We changed this this year at the beginning. Now we have a business account and a personal account, very similar to Ben Mo here in the United States. It's just backed in stable coins. And we're signing up about 150 businesses per day. And out of those 150 businesses, 50 of them are getting to the aha moment. Like experiencing the core, the core value of the product, which is protecting themselves from inflation.

• 15:50Speaker 02

  They're buying stable coins with their body bars or they're charging their customers with body bars. So it's working. It's working really well. And our entire focus is to focus on retention. Because in reality, as I mentioned before, technologies change, right? Like they will continue to change. So for any form of money, retention tells a pretty clear story on if people really trust in this product. So now that's what the entire focus of the company is, is on retention for businesses. Yeah.

• 16:27Anthony Pompliano?

  What questions you guys got?

• 16:28Speaker 03

  When you're kind of on the ground, right? And you're talking to some of the people that live in these countries and Venezuela and others around there. What are you hearing from them in regards to how they feel about crypto specifically? Versus kind of the traditional assets or currencies that they're used to?

• 16:42Speaker 02

  It's interesting because initially in 2017, we're getting to the point where crypto already is an unstoppable force. It's already too big. Everybody has heard about it. And in 2017, it was kind of like the Bitcoin adoption. Then we got dollarized and because of the fact that the dollarization is informal and it's highly inefficient. Because it's in cash, people don't have change because the cash bills are limited. You don't have ones and fives. People have like twenties and fifties. So there's a bunch of problems with this dollarization. So people are turning against, again to see, okay, what are the other forms of money like stable coins? And they're now more interested in Bitcoin.

• 17:24Speaker 02

  They're asking us a lot about like, hey, can we, can we get Bitcoin in value? So I do believe that.

• 17:33Speaker 02

  Stablecoins is the best segue to other cryptocurrencies and sound money as Bitcoin. But the trend is looking better now towards like what people think about Bitcoin. And in general, in Latin America, what's interesting is that we've been studying how people use crypto a lot. We've been trying to solve hyperinflation for four years in the company. And the most of the volumes in Latin America, which actually are not very large in terms of global, like we only hold like 7% of the global volumes, one of the lowest regions.

• 18:13Speaker 02

  But most of these volumes happen in peer-to-peer exchanges and they happen in through retail. And what we're seeing is that people are trying to use crypto not as a speculative asset to trade, but actually to pay, to protect themselves from inflation, to save, which is an awesome opportunity because it really, those are the properties that money serves, that cryptocurrencies should serve. And so, yeah, I'm highly, highly positive about the future of crypto in that time, yeah.

• 18:49Anthony Pompliano?

  That's great.

• 18:50Speaker 04

  And then it seems like the goal is to replace their current currency, which is the Boliviar.

• 18:55Speaker 02

  Correct.

• 18:56Speaker 04

  Is that how you say it? Can you talk about like just the digital switch that Venezuela is seeing from kind of that cash perspective of handing over the 20s and the 50s versus using any type of digital?

• 19:06Anthony Pompliano?

  20s and 50s.

• 19:08Speaker 04

  20s and 50s. He said there's no ones and fives. Yeah, so can you just talk about like the digital switch and how like how important is that obviously to when you're trying to go to a stablecoin or Bitcoin and use that as the currency?

• 19:19Speaker 02

  Yeah, so that's a really good question. So I'm gonna really quickly talk about the dollarization in Venezuela.

• 19:30Speaker 02

  So there's two ways. The first one is cash, which you just mentioned. The second one is that Venezuelan elites, most of the elites, have been flying to the United States, opening bank accounts here, getting offshore accounts, and now they're using Venmo, Sell, the Interbank app, and they're going back to Venezuela and they're kind of like exchanging goods and services with each other, paying with Sell and Venmo. And it started with elites, and now it's spreading through kind of like the, I don't know, I wouldn't call it the middle class, but like other entrepreneurs and things like that.

• 20:12Anthony Pompliano?

  And so they, these are people who go open up US-based bank accounts.

• 20:16Speaker 02

  Yeah.

• 20:17Anthony Pompliano?

  Come back to Venezuela, and then they're transacting, but it's in the US-based accounts rather than in the Venezuela accounts.

• 20:23Speaker 02

  There, I think there's an economic theory for that called the milkshake theory, which is like, you know, the United States is such a large power that it's basically sucking in a few other economies, like people and businesses in emerging economies wanna transact in half dollars. So this is a perfect example of that.

• 20:42Anthony Pompliano?

  Got it.

• 20:43Speaker 02

  And it's happening at large. And another thing that is happening is because we have a large migration, especially now in the US. Recently, the United States announced that all the people that are, were living here that are Venezuelan are gonna have a really easy way to become residents, and you can also get like political protection, because Venezuela is like this crazy place. And so you have a bunch of migrants from Venezuela here, actually in Florida, and these people are renting their Sell accounts, they literally rent them to people in Venezuela. And people in Venezuela are paying up to 30% to use a Sell account.

• 21:23Anthony Pompliano?

  Wow.

• 21:23Speaker 02

  So of course that translates into higher prices. And so that's a way people are kind of like moving into the digital dollar economy and

• 21:35Speaker 02

  And it's becoming like a trusted way of doing it. The cash dollar economy is very interesting because, as I mentioned, people don't have cash. And because, um, so if I go and pay in a, in a supermarket and the product is worth eight dollars, eight and eight and fifty cents, the supermarket prices is at ten dollars because they don't have, um,

• 22:01Anthony Pompliano?

  They don't have the ones and the fives.

• 22:02Speaker 02

  But I need my one dollar and fifty cents because it's a lot of money in Venezuela. So I end up not buying and it, you know, reduces kind of like commerce. And, um, so, and then the supermarket says, oh, I'll give you, uh, your, um, change in bolivars, but I don't want the freaking bolivars. Um, so it, it just has a bunch of loopholes and, um, but I'm, again, I'm really positive of like the path to stable coins because of this specific dynamics that I just mentioned.

• 22:41Speaker 02

  People see stable coins as digital dollars, period. And they see the benefits of it. They see that they can pay in exact amounts. They see that they can hold it in their phones. They don't have to carry large amounts of cash. Businesses sometimes do like they have to, uh, pay their providers in cash and their providers charging large amounts of cash in dollars. And so sometimes they have to drive, uh, from state to state with a bunch of money. And they're just like scared all the time.

• 23:11Anthony Pompliano?

  So you don't know this, but now you do. I carry this in my wallet. This is a fifty bolivar, right?

• 23:18Speaker 02

  Yeah.

• 23:19Anthony Pompliano?

  I also carry in my wallet. This is a ten billion dollar Zimbabwe.

• 23:26Speaker 02

  Zimbabwe.

• 23:28Anthony Pompliano?

  So fifty, ten billion, um, both worthless. How many of these do I need to? Pay for things in Venezuela. So it's only fifty.

• 23:41Speaker 02

  There's a really good picture on Google if they want to look it up.

• 23:44Anthony Pompliano?

  We have, we have the picture, I think. Where's the chicken with the, with the Bolivar? We'll, we'll, we'll pull it up here in a second.

• 23:50Speaker 02

  Yeah.

• 23:51Anthony Pompliano?

  How, how much is a chicken?

• 23:52Speaker 02

  So it changes all the, all the fucking time, like.

• 23:57Anthony Pompliano?

  Is it true that the, the prices in the stores almost change in like near real time? That they have like these digital prices and they basically just can change them as the currency changes?

• 24:07Speaker 02

  At one point in time, that was happening, like you would go to the store in the morning and in the middle of the day, it was a different price and at night it was a different price.

• 24:15Anthony Pompliano?

  High.

• 24:16Speaker 02

  Sometimes they even didn't have details. So the, the store owners would have to like just change it by hand or whatever. And it was crazy.

• 24:23Speaker 03

  Find out the price at the register.

• 24:24Speaker 02

  Yeah.

• 24:26Anthony Pompliano?

  Just find out the loaf of the bread at where he gets the register.

• 24:28Speaker 02

  It's, it's, yeah, it was definitely crazy. Now the inflation of prices is not

• 24:35Speaker 02

  as crazy as it was one point in time. The past three months, the inflation in prices has been about

• 24:42Speaker 02

  twenty-two percent during a three-month period.

• 24:48Anthony Pompliano?

  It's crazy that that's not bad.

• 24:50Speaker 02

  No, that's really good for Venezuela.

• 24:53Speaker 03

  I was, I was just looking up the numbers earlier and it says that, uh, so, so there was certainly, uh, what you said earlier about ten thousand percent in twenty nineteen, but it says since twenty sixteen, the overall inflation rate has increased fifty-four thousand, no. Yeah, fifty-four thousand percent.

• 25:09Speaker 02

  There's a really interesting way to explain this, which is, um,

• 25:13Speaker 03

  Wow.

• 25:14Speaker 02

  The one dollar today is four million Bolivars.

• 25:21Speaker 02

  Sounds, that sounds like a lot, but.

• 25:24Speaker 02

  Oh, that's a chicken, yeah.

• 25:25Anthony Pompliano?

  Yeah, pu- pu- pull it up.

• 25:27Speaker 02

  To buy that chicken, that's how many Bolivian you need.

• 25:30Anthony Pompliano?

  On that day, it changes.

• 25:32Speaker 02

  Yeah.

• 25:32Anthony Pompliano?

  To buy it. That is a wild photo.

• 25:36Speaker 02

  Yeah.

• 25:37Anthony Pompliano?

  That you literally need twice the space to carry the cash there to buy it than it takes to carry it home.

• 25:44Speaker 02

  Yeah, so now you see Bolivars in the streets, like, um, just thrown in the streets. You see people doing like handbags with it because it's paper, right? And it works for art and for other things. So people are trying to like make, uh, make the paper worth something.

• 26:01Anthony Pompliano?

  Mm hmm.

• 26:02Speaker 02

  Um, because the denomination is worth nothing. So going back to the four million thing, let's just.

• 26:08Anthony Pompliano?

  So one dollar is four million Bolivian.

• 26:10Speaker 02

  Four million Bolivars. In October 10, I think we're going to, the government is going to take out, uh, six zeros out of it. And, um, and so the one dollar will be four Bolivars.

• 26:28Anthony Pompliano?

  Um, so I'm laughing because this is so fucking absurd.

• 26:34Speaker 02

  Yeah.

• 26:35Anthony Pompliano?

  But

• 26:38Anthony Pompliano?

  the Venezuelan government says one dollar equals four Bolivian. We're gonna make it, or I'm sorry, four million Bolivian. We're gonna make it one equals four. So we're just gonna slash the six zeros off and pretend they don't exist.

• 26:53Speaker 02

  Exactly. This is the third time they're doing this to control, uh, inflation. But it's really just like a way for people.

• 27:03Anthony Pompliano?

  Psychologically.

• 27:04Speaker 02

  To, yeah, it's psychological and I guess, uh, it's a way for them to give strength to the, to the Bolivar. Because now people are gonna be able to use cash. They're potentially gonna print some, some, some, some bills. Um, it's gonna quickly and rapidly go back to millions, which has already happened. But, uh, this is the third time they do it. They've already taken eight zeros, um, five in one opportunity, three in another opportunity. So in reality, when we're talking about, uh, one dollar, we're talking about, uh, four plus fourteen zeros. And if you, if you can correct me, I believe that's forty trillion dollars, uh, forty trillion dollars. Um, or forty trillion Bolivars per, uh, one dollar.

• 27:48Speaker 02

  Um, and yeah, that's that's the inflation we're experiencing. So um it's the ideal breeding ground for uh new new forms of money.

• 28:00Anthony Pompliano?

  It is nuts to me how bad the situation is. If Venezuela had been Bitcoinized, would any of this have happened? Like, is it simply a monetary policy just undisciplined? We can get rich if we print a bunch of money. So we're gonna do it and enrich the government?

• 28:18Speaker 02

  Yeah, no, uh, I I'm definitely uh of the train of thought that like uh Bitcoin fixes this for sure. Um, and uh, the only, the only kind of um, the only problem is that to get to the Bitcoin standard, uh, as I mentioned, uh, we need uh, uh, a rising economy and uh more uh wealth generation being created so people can save, so people can invest, uh, etc. So uh, it's it's a simple of like, give people in emerging economies a stable coins to level the playing field, um, and then give everyone Bitcoin. That's that's the master plan, really.

• 29:01Anthony Pompliano?

  Yeah.

• 29:02Speaker 02

  Yeah.

• 29:03Anthony Pompliano?

  And then what about the other areas in the region? So Venezuela, uh, people can feel it, like, it sucks, right? It's a horrible situation. You guys are doing a great job of trying your best to provide a currency that doesn't get devalued, trying to get it into people's hands, educate them, etc. What about the rest of the region? What what's the situation?

• 29:20Speaker 02

  The the situation is um, uh, is is very interesting because Colombia, Peru, and um, and for example, Chile, where countries that were smaller in GDP, and uh, the past 20 years, they have been increasing because they were just like really small. Uh, Brazil, in the contrary, was already a big uh economy, but it's decreasing, uh, as uh similar to Mexico, um, and Argentina. So um, the reality of of Latin America is that um,

• 29:56Speaker 02

  The middle class continues to decrease in growth. Wealth inequality continues to increase. Currency instability is happening in every Latin American country. So, you know, price inflation, for example, in Colombia and a few other countries is not as bad. But the currency depreciation against USD or other stronger forms of fiat is really bad in Brazil and every country.

• 30:27Speaker 02

  So fiat currencies tend to have really low network effects in Latin America, like nobody wants them. And so the the opportunity for Latin America as a whole, and again, if you look at the on-chain data, a lot of the on-chain data is showing that depreciation of USD, of the currency against USD relative to the usage of crypto in peer-to-peer exchanges is highly correlated.

• 31:04Speaker 02

  And so I do believe that

• 31:10Speaker 02

  all the problems in Latin America, like the foundational problem we have to solve is solving money.

• 31:14Anthony Pompliano?

  Yeah.

• 31:15Speaker 02

  Commerce is still at 6% online commerce, which is not super high. But the good thing about Latin America, so I've been talking about all this shit. The good thing about Latin America is that we have an established middle class. It's decreasing in growth, but it's more established than India or other regions.

• 31:39Speaker 02

  We have a GDP that is twice the size of India. A population that is twice the size of the United States. An internet penetration that is higher than China and India, at 70%. One of the highest engagements of internet usage in the world at nine hours per day. So a relatively young population. So the only problem we need to solve is the freaking money problem.

• 32:07Anthony Pompliano?

  Because basically people are online, they know how to use the tools. You have a young, large population, it's growing quickly. The problem is they don't, the money is wrong.

• 32:15Speaker 02

  Exactly, exactly.

• 32:18Speaker 02

  Um. So so that's kind of like the general situation down in Latin America. And um, uh, another cool, cool stat is that uh, in the past six months, uh, B C money has increased a lot. I think nine billion dollars were invested, uh, or even more than nine billion dollars in B C money in highly, in high-risk startups that are solving this type of issues. We have about two dozen unicorns, about twenty-four unicorns, which is kind of like new for the region. And um, out of those twenty-four, about three are crypto startups or exchanges.

• 32:56Anthony Pompliano?

  So twenty-four unicorns in Latin America, three are crypto.

• 33:00Speaker 02

  Yeah.

• 33:00Anthony Pompliano?

  It's pretty big.

• 33:01Speaker 02

  It's pretty big compared to other regions. So um, hopefully, uh, we're gonna see more of that.

• 33:08Anthony Pompliano?

  Value will be a billion-dollar company.

• 33:10Speaker 02

  Of course.

• 33:11Anthony Pompliano?

  Let's go.

• 33:11Speaker 02

  Of course. Um, it's a winner-take-all crypto economies, for sure.

• 33:16Anthony Pompliano?

  What do you think about El Salvador in terms of them obviously embracing Bitcoin? Um, mostly we just hear the Western perspective, like the North American perspective of just, hey, uh, Bitcoin is good, El Salvador is embracing it. How do you think about the way they're doing it, the fact that they're doing it? What were your thoughts?

• 33:34Speaker 02

  Yeah, so the, um, the law is going into effect in about five days, right? I think the, um, I, I am not like super into the whole like political regulatory thing and like reading the laws and all that. I'm, I'm kind of like more like ten thousand feet above, above that. And what I can say is that

• 34:00Speaker 02

  interestingly enough, Bitcoin is being adopted first by dictators. Um, and uh, you know, in Venezuela, it's similar, like, um, there's nothing we can do about it anyways. Bitcoin is open, right? It's, uh, which is an interesting thing, right? Um, nobody can do anything about it. If they wanna use it, that's, that's okay. Like, it's an open system that is not controlled by anybody. And but um, in El Salvador, um, I think just because your listeners potentially are mostly American, I really just wanted to say that, um, it's really easy, easy to kind of like, um...

• 34:40Speaker 02

  Be excited about this if you haven't lived through the bad things that have been done by these people, right? If you really don't know the history. El Salvador is not Singapore, right? Like, they're both dictatorships. And, you know, it's great that, you know, a dictator can say, hey, now everybody will use Bitcoin because I say so. But again, it's a very different thing from doing that in Singapore, where there's like wealth and one of the highest GDPs per capita compared to El Salvador, which is highly poor. And the entire power is controlled by their brothers and this guy.

• 35:22Speaker 02

  So I am interested to see how this will happen, but I'm highly skeptical of Bitcoin being good as a whole. I think there's just like, like similar to Venezuela. We had the first regulatory entity in Latin America for regulating crypto. It's now happening in Cuba and across like the board, you can just see that these laws are not necessarily to help people, but to like make money.

• 35:54Speaker 02

  And so, you know, I'm just dropping some like real facts here.

• 36:00Anthony Pompliano?

  What do you think are the important things for people to pay attention to as it gets rolled out? Are there specific things that you would say, hey, you know, these are going to be the ways that we know whether this is a net positive or a net negative?

• 36:14Speaker 02

  I think we're gonna have to see some on-chain data. The solutions that are there, I think, are Strike. I think the Salvador government is launching their own wallet. I don't know if that wallet is gonna be, I think it's built on top of Lightning Network, but there's another interesting kind of, I guess, moral thing, right? Like, they're highly KYCing people, but in the end, I do believe that it's better to give people optionality to have Bitcoin than not having it. So it's better to have it with KYC than not having it at all.

• 36:57Speaker 02

  Things to pay attention to? I think, um, yeah, we're just gonna have to uh wait uh wait and see is I I will have I will be waving my magic hand here. It's just like it's it's uh after living I lived in hyperinflation myself in Venezuela and you know and.

• 37:17Anthony Pompliano?

  What did you do when you're living through hyperinflation like what do you do?

• 37:20Speaker 02

  Um, I was very young at the time, so um and so what the first thing you start to do is try to get your money out of there.

• 37:31Speaker 02

  So my parents started to, for example, invest in real estate outside of Venezuela. That's the only thing they knew kind of how to do um and uh you start thinking about like getting the hell out of there.

• 37:45Anthony Pompliano?

  Out of the country itself.

• 37:46Speaker 02

  Out of the country um because hyperinflation is just a byproduct of total mismanagement of the monetary policy and the country in general. So uh but while you are there, um, people tend to spend all their money, which is interesting like people don't have like uh saving starts to become something less uh interesting and when you don't have access to other stronger forms of money, which happened in the early stages of inflation in Venezuela, twenty ten, twenty uh from twenty ten to twenty fifteen, people would just spend their money. They would rather go and uh go to a fancy restaurant or spend or buy a bottle of rum

• 38:31Speaker 02

  um instead of just keeping their cash. Um, so yeah, it creates behaviors uh that are not good for um for for people, you know, uh, yeah, it pushes people to have those uh bad uh financial behaviors.

• 38:45Anthony Pompliano?

  It's crazy. What uh you guys got any other questions?

• 38:48Speaker 03

  No, that's.

• 38:49Speaker 04

  One person, someone asked uh, someone in the chat asked that I thought was really interesting. What is like the medium of exchange? Like, how are people as like two friends and they wanna exchange money? Like, how are they doing? Are they using those like Venmo and Zelle apps or are they using the Oblivion with Cash? Or are they trying to use like? How are they like kind of interacting with each other?

• 39:07Speaker 02

  Yeah, so if it depends if you are in kind of like the in the one percent uh you use Venmo and sell for sure um if you you can also use cash cash dollars uh it's it's been used a lot. A lot of the people from the one percent uh fly to the United States, open a bank account, get as much cash as they can. Sometimes they even fly with more than ten thousand dollars, which is a legal uh thing. They just take all the cash possible to Venezuela that they can. Uh so yeah, cash is also used. And uh but I do wanna mention something interesting, which is we do, we have a uh product in Venezuela, interbank product called PagoMobil.

• 39:47Speaker 02

  Uh PagoMobil is like sell in volibars. And people um that are not living in the capital, which is Caracas, um use it a lot. Eighty percent of the transactions that our businesses are reporting that they are receiving through PagoMobil in volibars is still. They're still using the volibar, just a digital form of it. Um and you still see that trend in the hoods, or let's say on the on the less wealthy neighborhoods of of Caracas, which is basically most of of Caracas uh of the make of the capital. Um and so a lot of people still use volibars. Um and businesses are using uh are getting paid in volibars at eighty per eighty percent

• 40:31Speaker 02

  of their transactions. So they do have a treasury to manage uh in hyperinflationary money. And uh again, that's another opportunity we're trying to leverage on and just kind of like help all these businesses start to adopt uh stable coins and and digital dollars.

• 40:47Speaker 04

  Yeah, good luck on that.

• 40:49Anthony Pompliano?

  Well, uh I got two questions for you, then we'll wrap up. Uh first one is what's next for value? As you guys continue to build, what's kind of the plan moving forward? And how can people who are watching this help you?

• 40:57Speaker 02

  Yeah, so currently, we're focused on the lower hanging fruit, which is uh SMEs, small and medium sized businesses in Venezuela uh who don't have access to any form of digital dollars. The larger companies, retail companies, huge, uh they do have access to US banking. So we're focused first on this group. Um and after that, we're going to start focusing on the larger retail businesses, because while they do have access to USD, They have all these issues that I'm not gonna get into right now with their treasury that we can solve with like crypto infra and like stablecoins.

• 41:36Speaker 02

  So, um, once we start tackling the large businesses, we're gonna have a vertically-integrated uh, payment supply chain, which is kind of like the the checkmate for retention for this currency, for a new type of money. Uh, when a business that is receiving payment from their customers in stablecoins can also pay their providers in the same stablecoin. And, um, so that's kind of like what's going next for us. And after that, we're going to start thinking about monetization. And that's when we start to think about how can we lend to people? We're gonna have enough transactional data to create risk models.

• 42:18Speaker 02

  Um, so we're gonna start lending, ideally increasing the middle class. We can start providing interest-bearing accounts. And once we have this kind of like, we're gonna be able to monetize in multiple ways. Uh, once we have this in place, we're gonna start to think about Brazil, Argentina, and Mexico. Uh, and, uh, and that's how we plan to win in Latin America, basically.

• 42:43Anthony Pompliano?

  I think you're gonna do it.

• 42:44Speaker 02

  Yeah.

• 42:45Anthony Pompliano?

  Uh, last question. What do you think Bitcoin's price hits by the end of the year? We're sitting around 50,000 right now. What's your end-of-year Bitcoin price prediction?

• 42:53Speaker 02

  Let's say 100K.

• 42:57Anthony Pompliano?

  100K?

• 42:58Speaker 02

  100K, yeah.

• 42:59Anthony Pompliano?

  Alright, so we go from 50 to 100K by the end of the year.

• 43:01Speaker 02

  Yeah.

• 43:02Anthony Pompliano?

  If Bitcoin hits 100K by the end of the year, what changes in Latin America for people with Bitcoin? Is it just seen as an investment in people who are holding Bitcoin? Obviously, it appreciates, they're excited. Uh, does that change the way that people think about it, adopt it, or nothing changes?

• 43:17Speaker 02

  Oh, yeah, it's definitely gonna continue to, uh, uh, increase trust, which again, trust is, is everything in any form of money. Um, is going to help a lot of people that have exposure to Bitcoin and that are not necessarily wealthy. Most of the people that are love crypto and Bitcoin are like middle-class and elites, but you still have a portion of people that are, um, kind of like poor, uh, that have somehow adopted Bitcoin. So if that happens, it will continue to take some people out of poverty, which is awesome. Um, and, um, and-

• 43:51Speaker 02

  I think that what I really want to see is like at one point, at one point in time, is Bitcoin gonna be, what is the floor of volatility? And if the floor of volatility starts to reduce every time, you know, there's like a bull market or a bear market, when the bear market, you know, hits the bottom, if it's less of an aggressive percentage over time, it's gonna be seen as a more or less volatile currency and in turn it's gonna be used for like payments ideally with Lightning, Lightning Network and those things. So yeah.

• 44:28Anthony Pompliano?

  It feels to me like Latin America, the statue laid out with the internet penetration, just the unbanked population, and then also this like macro tailwind of a really bad economic situation naturally forces people to look for other alternatives. And so whether it's the stablecoin, whether it's Bitcoin, just these rails, this industry, this technology ends up pretty much capturing people's imagination, saying, yes, this is the solution.

• 44:53Speaker 02

  Yeah.

• 44:53Anthony Pompliano?

  Right?

• 44:54Speaker 02

  Yeah.

• 44:54Anthony Pompliano?

  So it's pretty cool. Where can we send people to find you on the internet?

• 44:58Speaker 02

  Twitter, Simon Valiu. So Valiu is V A L I U and Tim on Instagram. And you can log up Valiu on my profile as well and find us there. The website is in Spanish, I think, and all these things are in Spanish. But yeah.

• 45:20Anthony Pompliano?

  I'm putting your, for anyone who wants to follow him, I'm putting him right now in the chat, his Twitter account. So make sure you go follow him. And you actually linked, I think, is the slash E N, right? Yeah, slash E N. So they'll get it in English rather than than me who I type in Valiu. And I always get it, I have to remind myself that while I live in Miami, and Miami is arguably the actual language of Miami, or Spanish is, I can't, I can't speak it. John's working on it. John's getting closer, right?

• 45:52Speaker 02

  Yeah.

• 45:53Anthony Pompliano?

  All right, man. Listen, thank you so much for doing this. I think obviously the, the problem is really, really bad in Latin America, Venezuela specifically. And I think there's, you know, millions and millions of people who can be helped. So keep going and I'm excited to be along for the ride.

• 46:05Speaker 02

  Thank you, man.