TFTC: A Bitcoin Podcast - #156: Matt Ahlborg

Episode Date: May 1, 2020

Join Marty as he sits down with Matt Ahlborg, founder of UsefulTulips.org, to discuss: - How the rolling blackouts in Venezuela last year affected bitcoin trading in LatAm + the US - How Venezuelan's are using bitcoin as a rail to move money - Why we've seen an increase in bitcoin exchange volume in Argentina - Argentina's history of capital controls - Cuevas - Do individuals using bitcoin in LatAm believe in its long-term viability as a digital money? - Increased bitcoin exchange volume in Kenya - Bitcoin usage in India - much more Follow Matt on Twitter Check out UsefulTulips Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app.

So freaks, it's your boy Marty Ben here to introduce this episode of Tales from the Crypt. I had the immense pleasure of sitting down with Matt Alborg again for the second time to dive into some of his research around Bitcoin usage in Latin America, particularly Venezuela and Argentina, how individuals in both countries are using Bitcoin differently, why they're using it, and how dollars play a role in all that. on top of that we touched a little bit about uh bitcoin usage in kenya and india towards the end i think you guys are really going to like this podcast uh matt is doing incredible work actually doing investigative journalism to to see how people in countries that are typically

underserved from a monetary perspective are actually using bitcoin bitcoiners like to believe that these people these people i'm sorry for that uh individuals within these countries are using bitcoin uh it's been surmised for quite some time matt is proving that yes people are using bitcoin maybe not for the reasons that you think they would be but they are using it nonetheless and it's a growing usage across latin america and in other countries around the world this episode of tales from the crypt is brought to you by good friends at the cash app you freaks already know all about them uh help me stack sats or help me send sats or help me receive sats or help you sell sats if you so please if you want to dump your sats you can do it at the cash app

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lacrosse that's al's lacrosse enjoy this episode with matt always a fascinating conversation he's doing some great work and go support him at useful tulips.org cheers You've had a dynamic where money has become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin.

If you're not paying attention, you probably should be. You probably should be. what is up freaks welcome back to tales from the cryptage your boy marty bent here on a wednesday morning very excited for this interview very timely interview considering the the content uh that we're about to talk about and when it was dropped i am sitting down with somebody who's been on the podcast already and somebody's doing incredible work i'm very excited to catch up with him and talk about the most recent articles he's written on bitcoin in latin america i'd like to reintroduce you freaks to matt allberg matt what's going on hey how's it going

hey everybody going good man i'm good like i said i'm uh very happy we're able to lock this down on such short notice you dropped your article on argentina i believe monday of this week uh maybe sunday um and yeah this i mean the stuff that you're writing about is extremely interesting and very important i think specifically when it pertains to bitcoin how bitcoin's actually being used in parts of the world where people think it should be used um so your last two articles you wrote last month on march 24th about venezuela and how the rolling blackouts that it experienced last year affected local bitcoins markets not only in venezuela but across latin america and across the world even outside of latin america and then again your your most recent

article was on argentina and sort of the the uh the uh legal markets for u.s dollars the blue markets for u.s dollars and the capital controls that that country has experienced throughout the years and how bitcoin sort of plays a role there they're a bit different and you asked uh the question in your most recent article will argentina be the next venezuela um so i think let's start with Venezuela and what you found out or the data that you sort of pulled from local Bitcoins after the rolling blackouts that happened last year. Sure. Yeah, that was a good introduction. So yes, there were massive blackouts last March. I believe they started on March 7th of 2019 inside Venezuela. The vast majority

of the power in venezuela comes from a single hydroelectric plant and due to poor maintenance there was a fire near it and it basically shut off power for the vast majority of the country there was a lot of blame on a bunch of sides for what caused it you know the government said it was foreign sabotage and, you know, independent observers said that it was just poor maintenance and brain drain of a lot of engineers who were supposed to be taking care of the system. They fled the country. At any rate, the effects were really profound inside Venezuela. It was for the most part out of power and the entire country was out of power for several

days. It started slowly coming online in the bigger cities, but it actually stayed offline or out of power on the countryside for weeks. What I wanted to do is look at the effects of the blackout on Bitcoin trading activity. There is this awesome website called netblocks.org. It basically tracks the active number of connections emanating from Venezuela IP addresses. And so during the time of the blackout, the number of active connections actually dropped substantially. I was able to take that data and pair it with, you know, line up all the timing and such, pair it with the trading activity on local Bitcoins. And what I saw was that there was a massive transaction drop at the exact same time as the blackout. This is probably what you would

expect during a massive blackout. Obviously, internet connections are all down and nobody's allowed to trade Bitcoin online at that time. So that wasn't a surprise. The surprising part was that trading across all, virtually all Latin American currencies also dropped off significantly during the time of a blackout inside of Venezuela. And what that meant to me is just on a very basic level, that these other countries or these other currencies were in some way connected to the situation in Venezuela. I've done a lot of interviews and talks and questioning of people both inside and outside of Venezuela over the last few years. And so I generally had an idea of what this could be, but it was the first time that I actually saw hard data kind of showing

what I thought might be happening. And what was happening, or what the blackout revealed was happening, was that mostly Venezuelan migrants, so the country has lost 10 to 15% of its population due to immigration over the last few years, due to the declining economy. They flee to other Latin American countries, whichever ones they can get to, uh, based on their previous social connections. Um, you know, if you're, if you're poor Venezuelan, you probably go to Columbia, uh, maybe Peru. If you're, uh, maybe more educated or you have kind of family connections, maybe you'll be able to make your way to Chile or Argentina, uh, places like that. Um, but, uh, Yeah, essentially, they fled the country. They started earning income in the new country currency. So if they fled to Colombia, they would get a job in Colombia, earning Colombian pesos. And then they would regularly, because their family's still back in Venezuela, they would purchase Bitcoin with those Colombian pesos.

They would then, so that would be a first transaction and what I characterize is like a two transaction process. So they would first take the Colombian pesos that they earn, they would purchase Bitcoin. They would then turn around and immediately enter into a second trade where they would sell that Bitcoin for somebody in Venezuela who is willing to send Venezuelan bolivars to their family member's bank account. And so this is the reason why during the blackout in Venezuela, you saw also a massive drop off in other Latin American country transactions. It's because this two transaction event requires communication with the person inside of Venezuela, which was severed at that time. And so that is essentially the conclusion that I came to. and it was really cool to see how the data showed what I had thought was happening for years yeah no it was fascinating and that article you wrote you have some great sort of not flow charts but great diagrams of how these transactions work and you really highlight the bitcoins just being used as a rail to move money between these countries between these individuals so that

can get access to the native currency like you just described and yeah exactly um and that is a point that i really did try to drive home in the article is that uh in this situation at least for the most part bitcoin is being used as a vehicle currency and what that means is that uh people are uh trying to um they acquire bitcoin just so that they can acquire yet another fiat currency so So they go from one fiat currency to another fiat currency in like this value transfer process that crosses borders. Yeah, and it's, again, going back to the different ways in which different people use Bitcoin,

like here in the first world, a lot of people are using it as a speculative asset, maybe a savings vehicle. But in Latin America particularly, it's strictly, or not strictly, but mainly a a a rail from which to move money and um so how how do you think this affected venezuelans um during the blackouts like do you think they uh had a harder time actually getting access to money and then getting goods from that like was the blackout times like a

particularly uh uh bad time for for economic activity within venezuela too as i would imagine For sure. Yeah. So as far as I understand, and obviously want to let everyone know, I am an American. I've never been to Venezuela. So all of my knowledge on this is from people who do know Venezuela or who do live in Venezuela. But from what they told me, yes, all activities stopped. It was honestly very similar to this pandemic where everybody stayed home, businesses stopped, things of that nature. An interesting thing that did happen during the blackout was that because all of these electronic rails were down, and this even includes bank-to-bank payments inside of Venezuela, despite Venezuela being in a very dire situation and behind the times in certain aspects, they do have mobile banking that is actually pretty successful and efficient. So when people make purchases at grocery stores and things like that, they are normally able to purchase goods with boulevards through their phone. But even during the blackout, even that was down. And one of the kind of consequences of that was that people who were storing cash dollars under the mattress in Venezuela during the time of the blackout, They kind of started using cash dollars because that was something that actually worked.

Obviously, physical paper is always available to use no matter if the power is on or off. And so during that time, there was a large amount of a large increase in the in the amount of dollars changing hands openly in public. Whereas previously in Venezuela, at least historically, the government had cracked down on people using dollars, especially in public, and they had a very negative view of dollars. And so when a blackout came around and they started using dollars again, the government didn't really step in and punish them. And in fact, they had actually relaxed those anti-dollar laws in the previous fall, but it hadn't really kind of caught on yet with the public because in a country like Venezuela, when they change the laws frequently and oftentimes even the laws are not enforced and sometimes things that are not even a law are enforced. And so there was a lot of confusion around if people could transact in dollars and get away with it. And they found out during the time of the blackout that they could use dollars and get away with it and not be punished. And so afterwards, Venezuela kind of moved on this trend of increased dollarization where it was more safe to use dollars in public.

and so this is cash too are you noticing any more like stable coin usage hearing any anecdotes of that in venezuela particularly so if there is increased stable coin usage it's something that i would have a hard time seeing um a lot of these stable coin volumes they're just aggregate numbers you can't see which countries they're actually being used in there are some peripheral ways you can look into stable coin activity you can you know look on google trends and see if stable coin related terms are trending higher in google you can go to the stable coin type of websites and you can look at the alexis statistics and see if they have a high percentage of transactions coming from venezuela or high percentage of visitors that is um so i can't

answer really the the are they using stable coins on the ground um they do use digital dollars and and um that digital dollars and and we are entering a phase where the definition of stable coin versus digital dollar versus crypto dollar versus you know these are all kind of uh competing terms for a class of ways that people are using money. But inside Venezuela, it is getting more common to use essentially dollar apps, where it's like an app in the United States that Venezuelans just happen to be using because they have some sort of connection. Their cousin opened up a bank account in the u.s a long time ago so now they can use uh zelle application to to move money in venezuela and things like that um yeah that's fascinating how creative people are getting

and that's one of my favorite parts of the the article uh on venezuela is like the different types of use cases you talked about anyi um who's a documented venezuelan migrant residing in chile She's making pesos and then using her Chilean bank account to buy Bitcoin on an exchange in Chile to then send over local Bitcoins to a family member in Venezuela who can then liquidate that for pesos into their Venezuelan bank account. And then you have Eduardo is working for Bitcoin in Argentina and he's able to send deposit Bitcoin to a local Bitcoin account owned by his family member in Venezuela who could then use that to liquidate into pesos and just a bunch of different unique use cases. And again, the creativity of how people are sort of scrambling to move money when the state and governments have made it very hard to do so is infinitely fascinating. Yeah, it absolutely is. And that's why I do this stuff. It's, um, it's, it's, I feel like a detective when I'm finding this stuff out and, um, you

know, every other week there's something crazy that I find that, that is just super interesting that I never thought about before. So it's pretty neat. Yeah. And so another thing you found out through your research, um, informally, anecdotally, you're finding that these money transmitters, uh, average thousands of recorded trades on local Bitcoins. like how much how like active are these trans like so people are obviously uh trying to facilitate

this movement like how how active are these individual traders i mean a lot of them it's their full-time job um they are professional informal money transmitters and that is their livelihood i would say the majority of the the traders on local bitcoins they are of that class And because it really is, it is a bit complex to do this whole process efficiently. There are a lot of ways that you can make mistakes, you can lose money through arbitrage, or you can pay high fees and not realize that you can get scammed without realizing it. So these people are professionals. And yeah, one of the things I noted in my article, and again, this is the sum of, I think it was five anecdotal accounts. And that is the proportion of trades for these professional informal money transmitters, the percentage of trades that they, of their total Bitcoin trades that they actually do on local Bitcoins is actually pretty small. And so as in less than majority. um and so what that says to me is that you know in looking at the local bitcoins data we're

only seeing a slice of the action we're only seeing the tip of the iceberg in relation to the the total amount of impact that bitcoin is having on venezuela and other countries yeah that's the crazy part local bitcoins may only be the tip of the iceberg They're using apps like WhatsApp, Telegram, Facebook groups to facilitate all this, which will be interesting to see if any of these apps prove to start censoring that activity. It doesn't seem like it's going to happen. I honestly think it is this game of cat and mouse,

but the only problem is that oftentimes the app that these groups are using, it's an app from another country. So it's very hard for Venezuela to stop this activity if it's an app that's made in the U.S. or if it's an app that's made in China. And then, of course, the Chinese and the Americans, they don't see as much of a problem with this taking place because it's not impacting their government. And in fact, it's probably helping their government in a way because it's increasing the network effects of these technology companies and even their own currency and things like that. So yeah, it's this global game that is being played and it's very difficult to stop. Yeah. And another interesting thing,

I keep saying interesting things. It's all very interesting. But you also sort of teased out that A lot of these money transmitters having done thousands of trades, whether on local Bitcoins or via other apps, have really had a lot of touch points with Bitcoin, the network, and a lot of them are turning into long-term believers. What were some of their stories, particularly around Bitcoin and their belief in Bitcoin as a network and a system moving forward? I mean, at the end of the day, they understand Bitcoin or the proposition of Bitcoin better than almost anybody. And because they were born and raised in these terrible monetary environments, it makes perfect sense to them. Andreas Antonopoulos has a really good quote. He said, you know, he travels around the world and gives Bitcoin speeches everywhere. And he says, when I travel around the world, all of the topic of all of my Bitcoin talks is why Bitcoin?

and he said but when i go to argentina was his example he said when i went to argentina i didn't have to tell them why i just told them how because they already understood the why um and so yes uh even in writing both of the articles um on venezuela and argentina i was really trying to drive home the point that it is a vehicle currency it's not a store of value um and a couple of them did interject and they said hey uh yes it is a vehicle currency but uh i do use it as a store of value and i do believe in it and they you know to a certain extent they insisted that i kind of put that in the article for a full picture because they really did believe in bitcoin and they wanted it to be stated in the article so wow it's uh that's incredible and it's thank you

for doing this work and again going back to if you freaks haven't listened to our first episode let's touch on uh the way matt sort of finds this information is is truly detective work it's like actually good journalism which is hard to find these days so uh for freaks who have not listened to our first episode matt why don't we uh walk them through your process of sort of finding these traders and getting information out of them sure uh yeah so both local bitcoins and paxful they they do provide their trading data uh through a public api so you can connect into that and you can see which currencies are you know showing a lot of trades and stuff like that so you can make basic volume charts from that stuff additionally on local bitcoins and paxful

mostly local bitcoins, you can go into the actual advertisements of these trade offers. And oftentimes these people will post their WhatsApp phone number or telegram number in the advertisement. And they'll say, hey, if you have any questions about the trade or the trade terms or conditions or whatever, call me up or text me and we'll get over the problem. And so I went through these ads and I started calling or I didn't call. I texted mostly these people on LocalBitcoins and Paxful and I got them to kind of agree to open up about what they were doing. And then later on, that did evolve into phone calls and video calls and things like that where they slowly kind of warmed up to what I was doing.

They kind of put their guard down a little bit and opened up to me to a certain degree about how they do what they do and for what reasons and things like that. So, yeah, that is where I get my juiciest nuggets of information is talking to these traders on the platforms. Are you having conversations in Spanish or are you finding a lot of them are bilingual? So, yeah, I don't speak Spanish. I do have, through my network of contacts in Latin America, I have a lot of people that I know who have been able to do Spanish interviews for me. So for the Venezuela article, for example, I had Alejandro Machado, who I think has been on the show before. He was the one interviewing these Venezuelan traders for me. I gave them a list of questions, and Alejandro obviously knows what questions to ask as well.

And so, yes, for the most part, I do these in English. A lot of the times, these traders, they do tend, at least to a certain degree, speak English. The traders on these platforms, they do tend to be kind of a little bit more privileged in their society where they had some sort of experience where they were able to travel to another country at some point in their life. And that's why they have multiple bank accounts in multiple countries, which is a really good thing if you're a local Bitcoins trader, if you have access to different bank accounts and different currencies. And so, yes, they did. A lot of them do speak English, but yes, it is a challenge. I do speak Chinese, but it's really rusty. I used to do it professionally. So I was able to talk to a couple of Chinese traders in Chinese.

But aside from that, it's all in English. It's fascinating. Shout out to Alejandro and the people around Bitcoin who are doing important work to tease out this data. Because that's what people wonder, right? Are people actually using Bitcoin outside of speculation? And it seems like they are. And I think this is a perfect time to transition to your article on Argentina because they've had all-time high volume in U.S. dollar equivalent in the peso recently.

And so they've had, you mentioned, Andres Antonopoulos went to Argentina. doesn't have to describe the why, it has to describe the how to Argentinians or Argentines particularly because they've been through many, many instances of hyperinflation and capital controls throughout the last couple of decades. So, I mean, you did all the research and wrote a whole article on it. So, what is going on in Argentina and how does it differ from Venezuela? Sure. Okay. So, yeah, Argentina has, they have seen a slow uptrend in volume, even in the beginning since 2014. They have seen an uptrend on local bitcoins since that time. However, it has started accelerating as of last fall in particular.

and what happened last fall was that so yeah to give a little bit of more basic background Argentina has had struggles with hyperinflation over the last few decades they've had a lot of economic economic stagnation they've had capital controls that have come in and then they they repeal them and then they place them back so it is a constantly evolving situation in Argentina But it has been struggling for many years. And last fall, one of the more economically free-minded presidents in recent history by the name of Macri, he lost an important primary vote in August of last year. and it's it was a very good indicator that he was going to lose the election to the opposing party and the opposing party is more left-leaning and more in favor of capital controls and things of that nature and so when that happened

the night of that primary vote the Argentine peso once the results were out the Argentine peso lost something like 25 percent of its value overnight the stock market crashed 40 or 50% in a single day. It was a very big, it was a surprise result and a very impactful result. And a couple of days after that, the president, even though he was still in power, he was on his way out. He did institute some new capital controls, first capital controls, and I believe four or five years. And then after that, he added another new set of capital controls a month later. Two months after that, the new party took power and they implemented even more capital controls. And just so the viewer understands, capital controls, essentially,

there are laws based on what you can and cannot do with your money. They usually relate to transferring money in and out of the country. Many countries have capital controls and things of that nature. But in Argentina, they are particularly strong right now. So yeah, when you start placing rules on what people can and cannot do with their money, they start going around your rules. And Bitcoin is one of the ways that they have been doing it. And so we've been seeing increasing volumes since that time. yeah before we get into the bitcoin use uh usage in argentina let's talk about the capital controls of the past and the development of the dollar markets within argentina so in 2001 you had an

event known as the coralito where the government froze people's dollar accounts and uh basically forced them to convert them to pesos overnight they just uh did that without asking anybody without anybody being able to do anything about it. And so since then, you've seen sort of informal markets, U.S. dollar markets specifically, pop up in the form of Cuevas, which are the money exchangers, money transmitters on the black market within Argentina.

So can you... I just did a terrible job of describing that. Could you do a better job of describing the dynamics of these markets? You did pretty good. A couple of things I would add is that these black market for dollars, they have been around for longer than just last fall. I believe in 2012 is when they really started ramping up and so they from 2012 until around 2015 16 they were very popular way the way it works is that so in Argentina you are allowed to hold US

dollars in your Argentine bank account however as I stated before they have all sorts of rules that they apply to what you can do with those dollars in those accounts. They had all sorts of different fees, different taxes, different limits, things like that, which basically vastly reduced the functionality of those dollars. And as a result, so I'll give you one example. One of the capital controls that they placed last fall was that any one Argentine citizen is not allowed to convert more than $200 worth of their pesos those into dollars per month. And so what that means is that if somebody in Argentina does want to get more than $200 per month in US dollars, they have to turn to these black markets. And

so the exchange rate that is offered through the banking system is a different one that is offered on the black market. And it's a really good reflection of, um, the difference, uh, in value that pesos actually might have, uh, in terms of their buying power for us dollars. Um, so yeah, they, they, they were very, uh, they ramped up a lot and, uh, were very common and from 2012 to around 2016. Then this new kind of open market type of president, you could say at least relatively speaking in Argentine terms, he took power. And so the black markets kind of abated for several years because you did have more freedom with what you could do inside of the banking system there. But last fall, it was reintroduced. The capital controls did start

getting reintroduced. And so you've seen a huge increase in the usage of these black market cuevas, as well as other avenues such as Bitcoin and things of that nature. Yeah. So let's get into the Bitcoin aspect. How are Argentines using Bitcoin in these trying times as capital controls are ramping up? Sure. So, I mean, the way I see it and the way that I wrote it in the article is for a lot of these Cuevas, it's becoming just another tool in their tool chest in transferring money across borders. So these Cuevas oftentimes, they'll, you know, it'll be in a low key place inside of some Argentine city, maybe somebody's apartment. They'll normally have, you know, cash on hand, both dollars and pesos. And then they

also generally have accounts open offshore in banking accounts in different countries and so whenever a customer comes in and wants to do something with either their pesos or dollars they have this wide array of options for moving money around the world and so bitcoin is is becoming a part of one of the tools in their tool chest you know if they if they don't have a connection to a certain bank for whatever reason maybe bitcoin can somehow help them to get a connection that way or maybe they can they can use stable coins in some way to offset their risk in trading when they are they have large cash flow of dollars on any given day maybe they want to offset that with holding an account and in stable coins or things like that just so that

they can control their risk. Beyond that, I don't know a ton about how these Cuevas are using Bitcoin. I talked to two different people who knew a couple of people at these Cuevas and they told me that they, yes, they confirmed that they were using Bitcoin, but beyond that, I don't know the exact specificity of how they're using it. That's something that I am trying to look into. But aside from that, aside from these money transmitters using Bitcoin, they are also kind of, in fact, middlemen in this process. And so that's where Bitcoin can kind of appeal to maybe a more retail user. They have to be a little bit technically sophisticated, of course, if they understand Bitcoin and such. But Bitcoin can serve as a

Cueva of sorts for retail users in Argentina, in that they can trade on these peer-to-peer platforms, they can acquire Bitcoin, and then they can, if they would like to, they can convert those Bitcoin into US dollars by opening accounts with American banks. It is tricky sometimes to open accounts with American banks, but they can throw those Bitcoin into an exchange where they can acquire stable coins uh they they can um they might hold the bitcoin themselves even if they do believe in bitcoin uh but yes that that it's bitcoin is is the another option for them to use uh and it does find its use in different scenarios and situations yeah i think you just answered the follow-up question i had to your description earlier of

how Quavis were using Bitcoin to get access to bank accounts. So you're saying that basically Bitcoin allows them to get exchange accounts that act as bank accounts or quasi-bank accounts? Yes, yes, that is likely. It's also possible that there are specific companies in the space that Argentines can open up an account with. And I don't know if you want to call it a U.S. bank account, But they can, like, for example, they could move Bitcoin to Uphold.

And Uphold, and if they want to acquire U.S. dollars on Uphold, they can do that. And then Uphold will, if you give them a certain amount of Bitcoin, Uphold will put a certain amount of U.S. dollars into their account and kind of hold it for you. So it's things like that that are possible. um it in the way that a lot of these kind of very similar to hawala networks and it is a hawala network in fact um it's this mixture of uh all of these people have different connections in different countries based on you know their family history or business history or educational history um and they leverage those accounts that they have in other countries uh in order to kind of open up their ability to, you know, move money around the world. And Bitcoin is one of those

things that they can use to do that. And so I really love the end of this particular article, because you had somewhat of a call to action of how builders should be thinking about helping Argentines and Venezuelans out with Bitcoin specifically. So what do you think Bitcoiners need to build to serve these markets better? Yeah. So I am sponsored for a lot of my articles and Paxful has given me a sponsorship. And one of the things that they told me that they would like to learn is how can we serve the customer better? So in doing my research, I did think of a few things that I felt were probably really good ideas, not only in Argentina, but I do believe they would work well in Argentina. So I'll just go through, yeah, my list here. Number one, I think

that Bitcoin products, which make access to US dollars a lot easier, those are winners. Because as i said in in a lot of my research um as i've learned in a lot of my research in many cases that is what people are desiring it's it's they want to get their hands on u.s dollars uh or at least something stable and and there is kind of a difference and um if you not every dollar is the same there are many different types of dollars in the world there's physical dollars there's digital dollars there's dollars in bank accounts there's dollars in online wallets um there's dollar derivatives etc so they all do different things and they all have different pros and cons if for example um you made an app that simply uh served where they

used bitcoin somehow uh just to as a pure store of value they wanted it to hold value you would create some sort of dollar derivative uh where you would deposit bitcoin in and it would go into this kind of smart contract where it would guarantee you that whenever you pull it out five months later, you would get the equivalent amount of value that you did when you got your money back. So that's a stable coin functionality, you could say. And that's good. And that is what a lot of people want. But sometimes this functionality is not complete. Oftentimes, people want US dollars or they want something stable but they also want something which they can spend and so if you gave them this dollar derivative for

example they can't take that dollar derivative to Netflix to buy a month subscription they can't take that dollar derivative to buy goods online because these stores online don't accept these kind of you know complex instruments right they just want regular dollars in wallets that they understand so if you wanted something a dollar that you could spend maybe you could uh get dollars in a paypal wallet paypal is accepted in most places so that's great uh but then paypal has its own limitations so uh yeah it's it's um uh like i said there's not every type of not every dollar is the same and not every they they rest in in different places and so these bitcoin companies in the space they

need to acknowledge that that is the challenge that they have in front of them and they have to make it not only hold value but also be spendable for accepted in commerce another avenue that I think is is shows a lot of hope and potential is the ability for citizens and emerging economies to engage in investment markets in the developed world and so a lot of people aren't aware of this but if you're if you do live in Argentina it's very difficult to buy Tesla stock or buy Microsoft stock and things of that nature because obviously the Argentine government does not want capital leaving the country

they want to keep it trapped inside of their economy but that it gets in the way of people's right to use their money the way that they want. So if people can make Bitcoin products that somehow allow people to invest in products all across the world, that would also be a very good thing. If Bitcoin companies can offer accounts that bear interest in some form or another, that would be great. Most emerging markets in the world, they have currencies that devalue by you know four to seven percent a year on average and in the worst case it's over 50 so just think about if you could uh have an an interest-bearing account that would gain three percent a year instead of losing five percent just by holding your own currency that would be massive

so yeah there are many options there are many opportunities out there and i do see companies moving in that direction, but they're going to have to do it really well. Yeah. And you also said that there's a vibrant Bitcoin development community down in Argentina specifically. So are these companies moving to solve these use cases or are they sort of heads in the ground just trying to get people access to Bitcoin in the first place? No, their heads are not in the sand. Not in the sand. They're nose to the ground working hard. Oh, nose to the ground. Okay, got it. Yeah, I think they are. Even after I published this

article, a couple people reached out to me and told me like, hey, you missed a big thing in Argentina, which is that there's a lot of DAI trading taking place, MakerDAO DAI. And that is actually pretty popular in Argentina. And there are not only exchanges in the space, but I think MakerDAO is down there doing work. So yeah, they're definitely trying to innovate in the space. And when I say vibrant community, crypto community down there, that is true. But But it also presents another opportunity in paying salaries to these developers, even if they're not working inside of Bitcoin, just any remote software developer would probably prefer, would very likely prefer getting paid informally in Argentina. You know, what I mean by that is if they would much prefer you transfer either cryptocurrency or some online dollar, they would rather be paid in that than some, like if they're working

for an American company, for example, the traditional channel would be the American company would do a wire transfer, you know, converting U.S. dollars into Argentine pesos through the banking system there, that would be extremely inefficient way to pay a software developer. And so the entire freelancing software development market down there, I think there's a huge opportunity if you can find some sort of payment solution or salary solution that involves, you know, paying them informally. And it's already taking place. They already do because they're very creative they already do get paid informally in in many cases but if you could find a really user-friendly way to do it or a very easy way to do it that would

be a big winner well it seems like correct me if i'm wrong here something like ptc pay server with uh liquid integrated and then liquid tether integrated as well maybe sort of the base building blocks or something like this, right? There, yes. There are many options out there in terms of building something like this up. Just with everything, you need that first trickle of network effects. You need to capitalize on something that is already happening a little bit. And so it can start snowballing because that's the one thing i've i've seen in crypto is there are a million good ideas and there are a million good products out there it's just that they many of them lack the network effects to

really get the snowball rolling and so those companies that in some way they can get some sort of magic to get that ball rolling where it snowballs that's that's where you know the big payoff is so yes the the solution you offered is uh it's definitely up there um if somebody wants to to start working on that um go for it because it is there for the taking yeah and the best part about btc pay server is it's open source so anybody who wants to contribute a lot to work for a company can start contributing to that uh but like everything in bitcoin is just it's going to take time, right? And so I guess that's a good transitionary question here is, are you impressed or sort of disappointed with the state of the protocol of Bitcoin and the products that are

being built on top of and around it? Do you think development pace is going well right now? I think so. Like you said, it all takes time and it takes time to build network effects as well. And so, no, I'm not disappointed. I'm not. I think there's, I said this in your last podcast, there's a huge concentration of smart people working in this space. and, uh, uh, they're a ton of ambitious people working in this space. So I, I really don't, uh, have any problems with, with, um, the way that they're going at it or the pace, uh, you know, it does take time to change the world. Uh, if there's one thing, you know, I would recommend is just, um, and I'm not saying that these companies are not doing that, but, um, some of maybe could do a little bit better is just you know get yourself out there in your in your perspective customer community you need to be talking if you

if you're marketing a product in a particular country obviously you need to start talking to the users and understanding the market I had I had a company call me up and they wanted my opinion on a product that they were were building and um they uh they were building it building something that i i felt like and they had been working on it for like a year and a half two years it seemed like they were uh seemed like there were a lot of resources that went into the product um and i just talked to them for about an hour they told me of the product um it sounded really slick and but it just the way that they were building it it did not make sense from my perspective for the users that they were going

after um you know so i think like i said they need to they need to talk to their customers first before they start building the product yeah solutions looking for problems is never a never a good product roadmap um but yeah going back to adoption again you tweeted out about kenya this morning a nice little short tweet thread about kenya's p2p bitcoin activity and seems to be exploding as well so this is very um bullish in my mind what what are you seeing there yeah so i would love to do uh more extensive research on kenya i know quite a few things already um but i don't have a polished enough heavily researched enough opinion to really declare what i think is happening there but um having said that

i think in a very general sense um what's happening in kenya is the same thing that's happening in all of these other countries that are seeing exploding adoption and that is that they are local governments um are not uh compatible in a global world where a lot of these small and medium businesses um they are talking to companies all across the world they're doing business with different companies all across the world. And it's not just small and medium businesses. It's a ton of retail interest as well, maybe majority retail interest. But what I'm saying, though, is that the local laws are not ready to communicate with an international market. And so if you want to do business in a lot of these countries, it's a ton of bureaucracy.

It's a ton of limitations, and it is also a ton of maybe a dash of oppression in that the government is acting in the government's interest instead of in the interest of the people with the way that it crafts these laws. and oftentimes they do favor the big multinational corporations who they do have the budget to pay for these lawyer fees to get these permissions to do business on a multinational level but that is what i would suspect is happening in kenya just as it is happening in every hot bitcoin market right now in emerging economies it's this people are turning to bitcoin because they have a ton of bureaucratic uh friction um and they don't want to deal with it so yeah i mean the numbers the u.s dollar equivalent numbers in volume they're pretty 11 growth week on week from this week to last week so it seems like something's happening do

I think that's the one question I had in my mind earlier and forgot about now just resurfaced. Do you think the usage of Bitcoin, how Bitcoin is used in these areas changes in a bull market? Like if we're about to turn into a bull market, do you think more and more users within these countries begin to speculate more? and the sort of percentage of overall use between use cases shifts a bit? Absolutely. I'm sure that happens and I'm sure it will happen if a bull market takes place. You will see, just as you do in the U.S., you will see a bunch of people who want to speculate on the Bitcoin price. And even in Kenya, in every country this takes place, but in Kenya in particular, there are even aside from just you know bitcoin speculation there are all sorts of these

bitcoin related ponzi schemes that people get tricked into investing to and that i cannot deny is probably also a pretty large component of the volume in kenya as well there's one that i saw in the recent months it's called bitcoin loophole it's what it's called and basically it's you know you so you acquire bitcoin and then you throw it into this i don't know exactly how it works but you throw it into this website or this piece of software that supposedly trades bitcoin for you and like you know guarantees profits and all that stuff and so yes um that stuff is ever present um but it is uh it that type of stuff also strengthens during bull markets as well and a lot of people get swindled and so that there's definitely a downside

to a lot of this stuff to do yeah another plus token another one coin yep god damn it's i wish there were ways to reach out to these traders maybe via local bitcoins or paxful you think they'd ever like put up warnings on their sites like probably stay away from these types of activities they they don't tend to end up good i think that'd be a great idea um yeah maybe i'll i'll mention that to them um yeah i think that would be a terrific idea um you know but there there really is a lot of these types of things that happen and and honestly at the end of the day um people do want to gamble no matter where they are in the world or what socioeconomic class they're in in no matter how many warnings you give them um they they see you know they see

potential or they see something uh and they want to throw their money at it and so it's you know at the end of the day it is hard to stop all you can do is hope that um uh you know they even if they do get scammed they they learn a lesson from it and they become a better person and a more responsible person and that's kind of one of the things that i um i think is good about bitcoin is that it does teach you you are in control of your money you need to be responsible for your private keys you need to be responsible for what you do with your with your money if you lose your money in any way shape or form it's not anybody else's fault it's your fault and i think bitcoin is very good teacher of, you know, you are in control of your life. I completely agree. And you learn

quick, especially if you mess up during a bull market and you lose your sats due to one of these scams or some other type of, uh, exchange exit scam or something like that. You only have to learn that lesson once like, damn, look at, look at what I missed up, missed out on, on the upside because I wasn't taking care of this stuff, which maybe in the long run is more beneficial to learn lessons quickly then yeah it's it's a harsh take for sure um but i've seen it happen several times i remember one one tweet in particular where some bitcoin critic uh published you know some uh 21 year old in the u.s he he said oh i i uh i i bet all my savings on i forget what coin it was but turned out to be an exit scam or i think he got liquidated on bitmax is what happened

and it was this like 21 year old's account i think he posted it on reddit which a critic then uploaded to twitter but he was talking about he said yeah all my savings are gone but it's like you're 21 years old and you live in the u.s and like the the kid had even mentioned like he was still like you know he still had this like summer internship that he's doing it's like you have a lot of good things going in your life this will be a very small road bump and i it probably has taught you a lot. Um, I think I, I, I tweeted back something like, you know, this will make him read the fine print and whatever mortgage he signs in the future, because, uh, at the end of the day that it's a good lesson for him. And so, yeah. Yeah. No, I mean, I'm just from my own

story. I was one, I was that 21 year old at one point learning those hard lessons. Um, that's important like you said this is always always fascinating sit down and shoot the shit with you matt uh before we wrap up here i know you're writing something on india right now you don't want to disclose too much to sort of ruin the the uh the launch of of your article but what can you tell us about what you're seeing there and what you're working on sure uh yeah so um What I'm discovering is that no matter what country I look at, a lot of these principles apply globally. But what I am seeing in India, and this actually does relate to a tweet that I saw in the last couple of nights, somebody came out and said, you know, Bitcoin is only for the rich right now. And Alex Gladstein, I'm not sure if he's been on the show before, but he's... it's been on a couple times okay yeah so he he uh made a good rebuttal about this you know

person living in uh rich city and in north america i don't know where he's from but said you have a very u.s centric view of bitcoin and it's because you know that's what bitcoin is and in the developed world but in the developing world it's it's much different and people do use it and the lower classes do use it and people do use it for the disadvantaged do use it a lot and it is helping people and so for my indie article I'm gonna dive into this thing that I call digital microservices and that is a lot of people with very little means in their life they are working online and they're getting paid you know 25 50 75 cents an hour uh and they are earning money online earning bitcoin online and cashing it out on these peer-to-peer exchanges uh earning you

know five bucks a week something like that and it is making a big difference in their life um and that is oftentimes um their livelihood is is working for this for these various websites i i'll dive in more in the article and i'll show uh that this there are thousands tens of thousands people who are subsisting off of this way of living um and it is a great rebuttal to somebody in the west who thinks that it is only for rich people ah that's great to hear um no because i it is uh that is a common meme out there and it's it's great to hear that that is bitcoin is serving uh more than just the rich it's not to say it's a bad thing that it's serving the rich but uh it should be serving whoever needs it for whatever

reason and the research that you're doing particularly seems to be proving that out um so again matt i want to thank you for all the hard work you do and legitimately like hard detective good i don't want to call you a journalist and paint you with that picture but actually good research that it's a pejorative, uh, good research that's, uh, hoping people better understand Bitcoin, how it's being used. Yeah. Uh, thank you. And thank you for shedding light on this stuff. And, um, yeah, it's, it has been a pleasure for me to research this stuff and, um, I hope I, I, I don't get things wrong. I hope that I, um, I try my best not to be a bitcoin shield too much i try to show prove that uh these things that i say are

happening are actually happening and try to show supporting data so um yeah i i hope uh that is coming through and um yeah where i think it's definitely coming through um but where can the freaks find out more about what you're doing how can they help uh what what do you want to get out there before we wrap up here about how we can find you and help you out sure so uh i have a website it's called useful tulips.org um if you go there you can that's kind of the nexus of all the work that i do so once you get there you on the home page you'll see articles all the articles that I've ever written. You'll see links to those articles. That is, you'll also see some kind of select tweets that I've tweeted about before. I'm on Twitter and at Matt Allborg. And the

biggest thing about the website is you can actually open up different tabs and see volume trends in different currencies all around the world. I think it has like some between 100 and 150 different currencies that bitcoin is trading in on local bitcoins and paxful so you can go in there and look at the volume trends yourself i also have additional data layers and stuff like that so um yeah and uh last request would be if you are a person using bitcoin for utility reasons then reach out to me and tell me uh what you're doing with it and i will um i'm a nice guy i'm not gonna publish anything that you don't want to be seen um i on i have honored that in the past but with people who've talked to me um also tell me if i'm wrong

if you uh if i publish anything that you disagree with so i i won't be afraid to publish that stuff either um so yeah that's it bang bang again matt thank you for all the work that you're doing i think it's incredibly important and is beneficial for Bitcoin in the long run. Thank you for your time this afternoon. Always a pleasure sitting down and speaking with you. Thanks, Marty. Appreciate it. That's all we got this week, freaks. Peace and love.