On The Brink with Castle Island - Kyle Powers (LibertyPay) on building remittances on Bitcoin (EP.113)

Episode Date: August 17, 2020

Kyle Powers is the cofounder and CEO of LibertyPay, a Boston business that powers remittances to Brazil and Mexico – settling on Bitcoin, rather than traditional financial rails. LibertyPay has settled nine figures worth of value in its history – and most users never know their transactions are settling via Bitcoin. In this episode:  How LibertyX began with the cofounders standing beside a Bitcoin ATM in South Station in 2014 The origins of LibertyPay and how the cofounders realized that Bitcoin-based remittances were a viable product How LibertyPay determined the most viable channels for their Bitcoin remittance product Why Brazil is a goldilocks zone for Bitcoin-powered remittances In which domains Bitcoin-based remittances outmatch the traditional system Why LibertyPay uses Bitcoin as their bridge currency and not another asset Why obtaining banking in 2014 was such a challenge Whether there was a coordinated attempt to unbank crypto companies in 2014-15 Whether Kyle is optimistic about the future of digital cash Whether XRP will ever grow into its promise as a touted bridge currency Why Kyle views Bitcoin's base layer as more of SWIFT analogue rather than a payments network Why owning Bitcoin gives you exposure to all of its descendants, in the case of a dispute Why Bitcoiners should be excited about stablecoins

Hello and welcome back to On the Brink. Today we are hosting Kyle Powers, who is the co-founder and CEO of Liberty Pay, which is a local Boston company that has quietly settled nine figures worth of retail store remittances. So Liberty Pay grew out of a discovery at Liberty X, which was a company that Kyle founded with his co-founder Chris Yim after they dropped out of Wharton in 2013. So Liberty X was initially a Bitcoin ATM company and then they moved towards creating software to allow other regular ATMs. to serve users Bitcoin and allowing Bitcoin to be distributed at a variety of retail locations like CVS pharmacies and Rite Aid's. And now they're supported in about 20,000 retail stores across the US. So over the course of running their Bitcoin ATM business, they realized there was actually an informal remittance flow, which was utilizing their distribution points for Bitcoin. And they decided to actually pursue that remittance angle as a business, in particular through the Brazil, Massachusetts channel. And that's grown into a really vibrant business in its own right. This is such a great story because Bitcoin is being treated as a bridge currency here. It's more

efficient than alternative rails for a number of reasons, but the end users are just concerned with their remittances being cheap and efficient. For the most part, they're not even aware that Bitcoin is being used. It's just another great story of industrial usage of Bitcoin to penetrate a market, which might be inefficient for reasons we'll investigate in the episode. This is actually Kyle's first ever podcast appearance, despite him being in the Bitcoin community for over seven years now. So we're super lucky to have him on. Let's dive right into it. brought down by bad mortgage investments. Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion.

This is a different kind of market and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people started to worry. So out of this worry, we have something called the Bitcoin. Kyle, thanks so much for joining us. Welcome to the show. Thanks for having me. I'm a big fan.

ODB is my go-to podcast. I haven't missed an episode. That's great. I'm glad that we could be your first podcast host. I feel like Liberty, both pay and X are pretty underrated. in the crypto industry. You guys aren't necessarily that well known. You don't do a lot of PR. But you've been striving away at it for a long time. And you've been a lot of people's first interaction with Bitcoin.

But they're not necessarily the loudest constituency. So tell me about both Liberty Pay and X. And maybe just tell me about the start of your journey and how you decided to get into the industry. Sure. Well, like everybody in Bitcoin, the first two times I heard about it, I dismissed it, which is super painful to go back and look at. But the third time was when I was talking with Chris at business school. And he was like, I should probably take another look at that. And so I went to the library.

13 hours later, they're kicking me out at like 3 a.m. I was like, holy cow, this is our internet. And so Chris and I fell down the rabbit hole together in late 2013 during that bull run. There was a moment like the night before our exams at like 3 a.m. where one of us texted the other guy like, oh my God, did you see this thing happening in Bitcoin? The other guy wrote back immediately. It was like, yeah, oh my God, that's crazy. And then we were like, well, what are we doing here?

Clearly our mind's elsewhere. There's a window of opportunity. at the time we actually felt that we had almost missed it and that we were super late. So, you know, we pulled up and looked at the space and said, where is nobody built any company that should be built? And for us, at that moment in time,

there was a window in the retail store channel. And so we took, we dropped out, took indefinitely whatever you want to call it, and launch in South Station a few months later. If you go back and look at the slides that we used to get into the Mass Challenge incubator, we had, okay, first we're selling gold 2.0 and then we're going to sell remittances. At a time, there were no reliable counterparties. So you couldn't do, reminses was just an idea.

So you had to start with the goal 2.0 off ramp, and that was how we started Liberty X. So I feel like the South Station story has reached infamy at this point almost, that ATM. It's not there anymore, right? No, it's definitely not. We couldn't leave it there overnight. It was like literally a Lama Su that was on top of this $50 Amazon table next to our $50 Bitcoin and $30, second sign and we rolled it every night to the Greyhound storage and then rolled it back out the next day. So it was definitely not a long-term position, but it was a great place to network.

You know, I think we sold half of Fidelity, their first Bitcoin, which, and we met, that was back when you could fit all of the crypto executives in a room and a lot of them visited us there. We met the commissioner of banks. We met Bill Foster, who was on the financial services, committee and recently wrote a letter about stable coins to J-POW. And we also got a really good understanding of our customer and just the very basics, fundamentals of that business. So for context, South Station is directly next to Fidelity HQ on 245 Summer Street. So in, well, you know this, but our listeners may not know that.

So I guess in 2014, Fidelity was just taking the first baby steps into trying to understand Bitcoin. Then they ended up mining some and then many years later created Philly Digital assets. But back then, their internal strategy team was thinking about it. And they instructed, I guess, some executives to acquire Bitcoin and try and go buy things in Boston with it. And so I guess they got their Bitcoins from you. And so when you rolled out that Bitcoin ATM, you actually stood by it. You were there. You didn't. just kind of like leave it to its own devices you kind of shepherded it. Yeah, well it was sort of like planning a a Bitcoin flag on the moon. So Chris and I

rolled this thing out the first day. We installed it and we looked around hoping that people would come up and buy it and they just looked at us like we were crazy like some UFO had landed on this table next to us. But somebody took a picture of the machine and all the bitcointers came out of the woodwork in Boston and Cambridge. And then that got us into the Wall Street Journal, front page of Investopedia, Boston Globe, NPR and all this. And that sort of, that was the initial splash. At that time, you had this kind of inkling that you wanted to do remittances with Bitcoin.

But initially, it was mostly Bitcoin ATMs, getting Bitcoin into ATMs. That was the business as you intended it. Yes, we wanted to sell Bitcoin through the retail channel. how exactly that was going to play out or how exactly remittances would eventually play out we had to work our way through the idea of Maze on that. So fast forward to today on the ATM business.

Now you don't operate ATMs, you create tools for other ATM companies and other stores and merchants to give people access to Bitcoin in a direct way. So you're not operating hardware, I guess, but you are still in the kind of Bitcoin ATM business. Yeah, we realized pretty quickly that an asset light model was a lot more scalable. We love the ATM form factor at the beginning.

Our original vision was to, you know, the current mantra is Bitcoin on every block. We didn't have that phrase, but that was the original vision. You can't get there by lane fresh hardware out on every block. You need to leverage the existing infrastructure and spare capacity at the register. So, you know, we were hoping that we would do that by the end of the year. Chris has really just accomplished that for us in the last year or so. So American consumer finance just takes time in terms of the fixed costs of regulations, getting your compliance right, enterprise sales cycle, and just Bitcoin itself maturing. Tell me about the current state of the business on the

ATM side on the X Liberty X side what is the you just recently had this rollout to convenience stores right so what what does that product kind of entail well you should have Chris on on another episode to because he deserves a lot of credit in the distribution breakthroughs of the last year or so but if you go to the app store and download Liberty X the Liberty X app you can see some brand name convenience stores we're in a lot of non-bank traditional ATMs where you can pay with your debit. I bet most of your listeners walk by Liberty Ex-locations every day and don't even realize it. So on the Liberty pay front, you kind of have two businesses and one. This is something we've talked about on the show, kind of a fair amount,

is this notion of Bitcoin as this alternative or parallel financial infrastructure that can potentially penetrate some remittance channels that, for whatever reason, are in a few. or don't work very well. And this is something you've crafted your business around. And this actually blew my mind when I first met, actually when I met Chris and he told me about it probably something like two years ago. Because this is actually something that the ripple folks had been pitching for a long time, the notion of using ripple as a bridge currency. But here you guys were and you'd been happily doing it with Bitcoin and using Bitcoin exchanges and Bitcoin is that bridge currency, but to move Fiat currency around. So tell me about the genesis.

of that idea and how it kind of developed over time. Well, originally, I think we had the same idea of a lot of people in Bitcoin. I don't know if you remember, but there were these like side-by-side Western Union versus Bitcoin memes, and they would go to the top of our Bitcoin, and everybody thought that users would come in and buy Bitcoin and use it for remittances. We didn't see that initially. We thought that originally it would be anybody that gets into the remittance. business first things it's going to be Mexico at the time there wasn't a mature exchange

ecosystem in Mexico and so there wasn't a reliable counterparty and so if you don't we only had half the equation and our half was very nascent as well so it just didn't make any sense and we actually gave up on the idea or put it on the back burner for a couple years and then in late 2015, Aaron, our kind of OG ops guy, hands me the phone, and he's like, how you got to listen to this? And so I pick up the phone and there's this store owner, let's call him, Joao, who is like, why do you shut the amount of account? You know, we're just sending money to our family. Like, what's wrong with that?

Da-da-da-da-da-da. And I was like, okay, Jo-Wal, calm down. What's going on? He's like, yeah, you know, just call this exchange owner. You know, look at our accounts. You'll see everything's fine. And I said, okay, first off, you know, our computer shut you down. It's just a compliance algorithm.

We'll take a look and we'll give you a call back. So we look at the blockchain and sure enough, it's going to this exchange that he claimed. And I called the owner. And the owner is like, Kyle, I've been waiting for your call. And I was like, oh, really? That's pretty cool. And he explained to me his side of the story. In the early days, we had this distribution partner,

and Chris and I had gone back to back, calling every single store to tell them about what we were selling. And neither of us spoke Portuguese. So we couldn't really communicate very well with this store owner, who happened to be Brazilian. There was a moment, a window, kind of like how there used to be a kimchi premium, where there was a, let's call it an Amazon Arb.

And so there are exchange owners trying to get flow into Brazil. And none of the banks down there, the banks have since closed this window. But none of the banks were participating. And so, Zhuao here was helping make the market more efficient and using it as an alternative to Western Union. And he was actually a Liberty X store. He didn't even realize. So he was sitting there, started selling a ton of Bitcoin that was not like we had seen elsewhere. and it was just an anomaly.

And so, you know, we needed to pause and do a manual review. And so that's what we did. And then I call, so I call Joel back. And it turns out he was the model that he was doing where the cinder wasn't doing it himself was could be money transmission. And so I said, sorry, we got to shut you down. And then we went out to go get the first forbidden licenses. You realize that they're, that these store owners where,

you were live in terms of giving access to Bitcoin, these informal remittance networks had developed around that and around Bitcoin. And that was potentially more efficient than other remittance services. Yeah. So the next thing we did is we went out and got the first rebittance licenses in Florida and Massachusetts. It just so happened that there were a ton of Brazilian Americans in our backyard here in Boston. So Florida gave us the first license in late or mid-2016. I sat down with Chris and we said, okay, let's south station this.

What's a reasonable number before we call it? And we said, okay, let's see if we can sell 50,000. $50,000 worth, yeah. I look in the database and, you know, we had met some Brazilians by that point. There were a couple guys. in the LibertyX database that had bought Bitcoin for themselves. I bought them tickets to Miami, got an Airbnb, an Avis renter car, and we went door to door,

basically getting rejected with the very basic MVP until we got our first store. And by the end of the year, we had sold half a million. So we said, okay, this is a real business, you know, for regulatory purposes, for branding and sales purposes. Mentioning Bitcoin actually confuses and hurts the sale for people that really don't care about Bitcoin and just

want money to get to their family cheaper and faster. And so for that reason, we kept it as a separate wholly owned subsidiary. So you were selling into the remandes agents and you weren't really telling them that the flows were

kind of settling in Bitcoin. And then I guess when the actual end users were remitting funds to their family back home, they weren't really aware that it was powered by Bitcoin either. You know, obviously the first two guys that I went to Miami with were aware of it, but they just don't care. You know, they don't go to Western Union and say, you know, are using Swift to fulfill the payment to my family? They just want to know that, you know, okay, these guys are licensed. They're credible. They give me a good price deal. So what, what is the advantage of doing it with Bitcoin on the back end as compared with the with the

traditional rails that exist? How is how is it sufficient? Is it the economics or the efficiencies? What what makes the difference basically? It's efficiencies and also market structure. So on one of your earlier podcasts, you were talking about how miners decide where to place their miners. You said imagine the surfaces of the globe as a topographical map where the lowest points are the areas where there's cheap's electricity. So if you got chief electricity in Venezuela, a mining armada is going to land there the next day, assuming that they're within the radius of the chip foundries. What we did with Liberty X was something similar, but it was for financial services for the retail channel, which is kind of underbanked, unbanked folks.

And it just so happened that, you know, the Brazilian corridor was one of the least efficient. Not so inefficient like Venezuela, where you could never have a reliable counterparty or, you know, Africa is sort of a similar setup. But and not so efficient that you're looking at, you know, Europe, for example, but there's, in that kind of Goli Lock zone where our model of revidences could make sense. And we asked ourselves, you know, why Brazil? And it turns out Brazil has the highest concentration for banks on the planet. Second, I think maybe to Luxembourg, but that's a tiny, tiny country.

The top five banks have 82% market share as of a couple years ago in climbing. And if you narrow down to a given product, you might have a monopoly or a duopoly effectively. The Brazilians down there, to their credit, understand that this is an issue. They have an open banking initiative, which is similar to how I imagine, you know, you or, like, Bology would want to see Twitter develop where you can kind of own your data and port it around to the social media. They want you to own your banking data and port it around to the banks because they see that this concentration issue is problem. And so what Bitcoin did is it reopened that market structure a bit. It also settles faster and cheaper. So you can take out a lot of working capital. And I think regulators, when they understand

it, would like this model because we're still subject to the capital requirements and bonding requirements of a much slower rail. Yet we settle super fast. So, The consumers is, their funds are way overprotected relative to historical regulatory standards. It also allows for Bitcoin to work within the existing system and all the same stakeholders still have a seat at the table. Whereas sort of P2P or stable coins are super exciting, but will require greater change before they can have a mainstream user. So I guess to synthesize where you're saying, there's a couple conditions that have to hold in order for the Liberty Pay model to be to work.

So there have to be crypto exchanges, I guess, on both ends. So there's obviously very liquid exchanges here in the U.S., but then there has to be a Fiat crypto off ramp in the local jurisdiction. And then the other thing is that the banking sector, it helps if it's sclerotic or oligopolistic and hence inefficient. So are those kind of the necessary factors that there are any other factors for the Bitcoin channel to be better than the traditional channel? I think the trading opportunity gave us a unique stepping stool to step over the historical scale barriers. That are the reasons why a lot of the competitors you see to are, you know, the most recent ones are from the a aughts or, you know, the leading one is,

was originally a telegram company. This allowed us to step over those historical barriers, but on a go forward efficient basis, that kind of, that stepping stool is gone now. It still remains more efficient. It just takes time for these things to play out with a new technology, for everybody to get comfortable with it, for you to find the right relationships, to get the right counter parties to get the right model, to get distribution. It just, it just takes time. So what are the prospects for crypto-powered remittance in 2020? Is this an industry which is going to be settling exclusively in Bitcoin and maybe USDC or something in the next couple of years? Or are these existing providers going to just continue to stick around, you know,

based on the swift and the correspondent banking system. Well, the financial industry isn't like the tech industry in that it changes at a much slower pace. I would bet good money that your grandkids are going to be making fun of you for carrying around plastic in your wallet. So the existing payment methods change very slowly, especially ones that require in-user behavior change. I think where we decided to play initially requires the least amount of change.

Although I do think, you know, five to ten years out, you know, stable coins, I know you've spent a lot of time thinking about this are interesting, where they might be ready for the end user. As far as, you know, which blockchain we use, we can transverse blockchains without too much effort. what we care about is where is the liquidity? There's no liquidity in a lot of these alt coins or even the stable coins in the emerging markets. So in Bitcoin is still the reserve currency that everybody has integrated. So it's still winning. You know, we come from the Bitcoin camp. But Liberty Pay chooses Bitcoin to do a job, not absolutely.

of ideology. So with Bitcoin, you're not necessarily doing it because you want to advance the cause of Bitcoin per se, but it's just that in Brazil, for instance, there may not be liquid rail to USDC or any other stable coin markets. And I guess it's that last mile, which needs to be traversed for the remittance flow to actually work. That's right. I mean, if it could help me provide a lower price to our end sender, we would use another rail. So you guys have had an interesting journey. I mean, you had to go out and get MTFs in a bunch of states. You got the BIT license, which is, I would say you guys were one of the smaller and

leaner outfits to get the BIT license, which is, I guess, encouraging because it means that maybe it's not necessarily. You don't have to be an enormous institution to get one, which was kind of my impression initially. But you also kind of had issues with getting banked, I think, like a lot of startups did, and kind of 2013, 14. Can you tell us a little bit about that? And the difference starting a crypto company today as to kind of six or seven years ago?

Okay, that was a lot of questions. So I think the first one was the bit license. I'll start with that. That was a heavy lift. And it's true that it helped to have a billion dollars to get one of the first bit licenses. We weren't the first. I think we were like the 12th or 13th or something.

But we did get it the same day as Robin. So we were punching above our weight a bit. We're operating in New York before Fidelity, which was cool. It took about five years. It was a ton of work. But now that we've gotten it, no one really questions our compliance because they know that we've been put through the ringer, that we've been background checked, we've been reference checked, our cyber policies legit, and we have like sort of policy upon policy

on policy and we're happy to be back with Liberty X in New York selling Bitcoin. The second question around banking, no one talked about this until recently because they didn't want to be seen as someone that was unbankable. Like if they're the only one talking about it, they look bad. But it's public knowledge now that the Crack and CEO came out and talked about this. A number of others for a billion dollar company executives have come out and said, look, there was only one bank banking crypto in 2014 or 2015. SVB was banking Coinbase and it was because the billionaire investors in Coinbase, you know, leaned on them to do so. But obviously not having a billion dollars, it was challenging to be banked in the U.S.

I remember renting a car and driving around Massachusetts and just going bank to bank and saying, hey, we're an MSB, yes, we trade virtual currency, and they wouldn't even look at our compliance at all. Until I met Dan Matashevsky's old boss, actually. And he happened to be on the board of the local bank and allowed me to sit down with some of their leadership and they actually looked at what we were doing. They're like, oh yeah, it's totally illegal. It's totally legit. Let's bank you guys. And so they allowed us to get started here in Massachusetts. This kind of opposition you ran into almost coordinated. Was it just a function of the fact that crypto or Bitcoin was a toxic word to these people? Or was it more

sinister than that? Did it seem like a more coordinated blacklist on the industry? Well, there were there were two things at play, right? There was Operation Choke Point, which said basically don't bank MSPs. That has since been repudiated by all the leading federal regulators. They said, hey, you know, these MSPs are providing very important services. You should bank them. But that was only like the first federal regulators that were saying, that were repealing that, were coming out and saying it at that point more have come out since so there was still like a big holdover in aversion to msbs at the time um on the bitcoin front you know there was i don't know because i wasn't on the other side but i do know that i was telling my story of what i was doing to to this

bank uh representative and he he turned his screen around he said look it says do they deal in virtual currency okay then show them the door basically and this was i imagine i think most of them had this as part of their onboarding policies and procedures for a few years there so so yeah there was a technology specific ban as far as i could tell at the time how that came about i i don't know the exact details but you know this is not a specific phenomenon for for bitcoin if you go back and look at prepaid cards or e-wallets, this is the same story. Pre-paid cards were originally called candy for criminals, and now the government mandates that benefits be distributed on them.

PayPal got an e-waltz got similar pushback, and now everybody uses them. So it wasn't as dispositive as it might have initially looked. If you look at the regulatory winds that are blowing, granted there has been some liberalization around these digital cash-like instruments when initially there were questions as to whether such things could exist at all. But then the other countervailing trend is that the FATIF is potentially saying, hey, look, I don't even know if VASPs can transact with non-custodial wallets. we might just have to mandate the virtual asset service providers transact with each other and pass information back and forth. So to me, that would be a massive blow to just the nature of the industry and the nature

of these protocols that exist. So I mean, what is your, are you optimistic about the prospects for digital cash instruments? And, you know, if not, is it just a function, are we going to have to as an industry you kind of band together and try and fight these things in court. I don't think you can fight it in court. I don't think that's a good use of startup resources. You know, I am, today I'm, I'm optimistic. There are banks that are chasing Bitcoin companies now.

And so it is a completely different world from 2014. So, you know, now does that mean you should go out and start an exchange business? If you're a new entrepreneur, probably not because the window on that is closed. But what it does mean is that it makes it easier for existing exchange businesses to shift more value into the digital layer to where you can have a sufficient market size and sufficient number of users that you can have a digital only or crypto-only business. Yeah, I guess the challenges are very different today, as opposed to seven years ago. initially the challenge was just being ignored by the financial industry entirely and just

completely shut out and then you had to figure out how to find your feet in the face of that reality and today there are banks dedicated to you know crypto companies in the US they are banks that custody crypto in places like Switzerland and I think potentially Singapore but there's other more favorable jurisdictions so the financial industry is starting to embrace crypto. But that brings the new challenge that it might be a smothering embrace. And we're going to have to start passing much more metadata back and forth. And, you know, everything is going to be wholly surveilled. So I don't know. Maybe we're going to be nostalgic for the cowboy era when it was the Wild West. And, you know, these crypto businesses

survived on the fringes, but they weren't really subject to the same kind of requirements. that it looks like are going to be the norm today. There will always be compliance when you step foot in the Fiat system. And every exchange needs to be compliant. We are compliant and will always be compliant. And there are also some use cases that don't serve, you know, the privacy-minded sort of libertarian crowd like the Liberty Pay. The Liberty Pay senders really don't care about,

about providing information. They're happy to if it means that, you know, as long as there's not too much friction. Yeah, so in terms of picking new jurisdictions and determining where you want to expand to, do you have a methodology around that? Or is it just kind of opportunistic seeing where those user demand? Or have you just remained true to the one main channel

that you establish with Brazil? You know, it's still very early days. It's funny to think that we thought we had missed Bitcoin back in 2013, we're still very, very early on in this story. This is like a career long megatrend. And with pay, you know, it got started halfway through the Liberty X story. So it's just early days. There will be other corridors, but you can't tackle everything at once. We've raised a small amount of money. And the majority of our, what we spent has come from our customers. And so this keeps us very much.

very honest on are we focused on what the customer wants, on what the market supports at that time versus, you know, chasing butterflies or generating hype or whatever. So I have to ask this because you guys are a remitter and use cryptocurrency as the bridge. Will XRP ever be a bridge currency and if if not why not well there are two parts to ripple right there is the swift competitor that is sort of traditional it's the x current or ripple net i think is the new name and then there is the crypto bridge which was x rap and now i think is odel they i mean look if there's liquidity and not too much friction in setting it up and they do a good job of adding corridors and partners. You know, I think that it remains to be seen. Currently, it's not as liquid as Bitcoin.

And so we haven't used it. But, you know, if they can save our senders money, I'll keep an open mind. It's a very, very diplomatic answer. In terms of Bitcoin, so when you started, like the things you could kind of do with Bitcoin or you could, you know, tip your friends and you could do internet payments. You could use it as savings device, obviously. That's been the main value proposition. And then you have wholesale uses like yours. What is your assessment of the stage we're at in terms of Bitcoin migrating from these early, somewhat crude use cases to, you know, financial application, so to speak. Where are we in that life cycle? Long-term on-chain payments will compete more with Swift. We're still in an era that it can compete with every rail. I think, but as time goes on,

there are a lot of very smart people thinking about layer two, be it liquid or lightning or, whatever other layer two method there is, where it will start to service different in-uses according to their settlement finality needs. But today, everybody's using Swift. So in your view, you're of the kind of safety school of thought or maybe the Halifini school of thought that Bitcoin is destined to be a settlement network. That's probably at least at the base layer, that's the use case that's going to win out. Yeah. And the more volume that we have on layer two, that in the more batching and economic value that can settle that each on-chain transaction can represent, the better we are in the long term. The good thing is that it doesn't really

matter who's right on this issue. Bitcoin's going to figure it out. So we will hit a point in the future where either we have enough transaction fees to secure the chain or we don't. and there will be, if we don't, there's going to be a fork between the hard money OGs and the transaction inflationistas. And the crazy thing is that everybody that holds Bitcoin would actually probably make more money in that fork. Just like what happened in 2017, which was super surprising and counterintuitive. And it was driven by the fact that there's just not that much float on the minority chain. So because a lot of people don't go through the work of splitting the coins. So if you're worried about the value of your Bitcoin, you can sell whichever chain you don't like

and you'll end up with more sort of US dollar value than before. Or you can ride both. That's a very optimistic take. So by owning Bitcoin today, you get exposure to all of its descendants in theory, assuming that we use this fork-based diplomacy when potentially a conflict of visions develops. The last thing I wanted to ask you about was stable coins. So there's about $14 billion worth of stable coins that exist on public blockchain today, mostly on Ethereum.

A lot of them on Tron for some reason. Still haven't figured that one out. And there's a variety of methods to create them. So obviously, if the Fiat backed approach and then the crypto-collar, a lateralized approach, which is more crypto-native, so to speak. What do you make of the growth of stable coins? And, you know, how sustainable do you think that phenomenon is? Look, I think you're more of an expert on stable coins,

but I think the growth of stable coins is very exciting. I think, and if you're a bitcoiner, you should be excited about the growth of stable coins because they're educating the end users on, you know, in a stepwise fashion, as like with the bridge technology, to custody their own keys and have their own wallet and hold their digital funds on their phone, for example. And it's not as big of a leap once you do that to say, okay, I'll have some of this for my day-to-day spending to meet, you know, rent or payroll or whatever, but then I'll have a fixed supply

for my long-term savings technology, and that's Bitcoin. So even if the stablecoins are Fiat backed and they're not, you know, Bitcoin derivatives the same way die is the derivative of ether, that's still net-not good for Bitcoin because Bitcoin is still this big liquid asset and stablecoins are an on-ramp in there a way to educate people about Bitcoin's existence. a viable capital efficient synthetic crypto dollar would be incredible for innovation we just haven't seen it yet at scale I would like to see it a lot of times when you try to suppress volatility you're either capital inefficient or you're just delaying volatility and it's going to be a lot more later

But, you know, look, there are a lot of really smart people thinking through this. If there's a way, we'll see it. So, Kyle, this has been fascinating and I feel very privileged to be the first podcast that you chose to do. How can people follow you and follow your work at Liberty Pay? Bankers, exchange owners, and talented engineers from anywhere should email me at Kyle LibertyPay.com. I'm at Bitcoin Powers on Twitter. And, of course, download the LibertyX app from the App Store. Well, thanks for coming on the show.

Thanks for having me.