TFTC: A Bitcoin Podcast - #430: Bitcoin vs the $156 Trillion Global Payments Industry with Sam Wouters

Episode Date: June 30, 2023

Marty sits down with Sam Wouters to discuss Bitcoin's rate of adoption for cross-border payments. Sam on Twitter: https://twitter.com/SDWouters Sam's report on River blog: https://blog.river.com/bitcoin-vs-the-156-trillion-global-payments-industry/ 0:00 - Intro 2:30 - Finding bitcoin through Runescape 9:22 - New educational resources in Bitcoin 13:27 - Diving into Sam’s report 17:51 - Structure of the report 21:39 - Chapter 1: Cross-border payments industry 31:53 - Comparing Bitcoin and internet adoption 41:37 - Remittance education 48:31 - Getting into charts on remittance volume 56:18 - Chapter 2: Global bitcoin adoption 1:07:58 - Motivation for adoption 1:13:39 - Chapter 3: Cross-border Bitcoin payments 1:23:13 - What makes bitcoin better for remittance 1:26:28 - Lightning services 1:30:26 - Bitcoin for payments 1:33:32 - Google search traffic for Bitcoin 1:39:17 - B2C 1:44:35 - Chapter 4: Growing cross-border Bitcoin payments 1:51:36 - Adoption funnel 1:55:33 - Marty tries to quote himself before wrapping up Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠CrowdHealth⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TFTC Merch is Available: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Shop Now⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the TFTC Movement: Main ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Clips ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Website⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Follow Marty Bent: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Podcast⁠⁠⁠⁠

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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. Sam Wooders, welcome to the show. Thanks for having me, Marty.

Happy to be here. I'm happy that you're here. I mean, you're one of the most prolific researchers in Bitcoin these days. Not these days, ever, I would say. Diving deep into a lot of the different areas of Bitcoin mining. you've heard a big mining report in the past but the most recent one bitcoin adoption global remittance the the landscape of of that part of of the bitcoin world before we jump into all that tell us a little bit a little bit about yourself sir what are you doing how'd you get here

how'd i get here um i initially found bitcoin through uh well how am i doing that's a brief one that's pretty good but how did i find bitcoin how did i end up here i initially found bitcoin through a friend of mine and i were playing an online game that had its own kind of trading economy and uh i was pretty good at the trading so was he um and you could actually exchange the money that you earned in the game for real life money because there were obviously people who preferred just not spending the time in the game to try to get some kind of resources or get some achievement they would just buy it with their cash so some kind of exchange market emerged there and i realized actually as a teenager through trading i could make money just by exchanging

this this virtual currency that's on here for real life money so that can be pretty excited and then after a couple years these people that would sort of act as a broker between the buyer and seller or just some of the direct buyers they started accepting all kinds of payment methods and And one of them at some point eventually became Bitcoin. So I first heard about that and sort of through my experience from the game, it very quickly clicked for me because the game itself also had scarce virtual goods that would never be released again. There was only a certain amount of them in the game and those started to accrue a lot

of value. A lot of the trading that happened in the game, people would put their money towards those rare goods because they knew they would likely appreciate over time. So for me, Bitcoin was super obvious, sort of the value proposition there. And as a result, I got pretty excited about it. But at the same time, I felt like this sounds too good to be true. Like, what's the catch? What if there is some kind of person behind this that can somehow rug everyone?

So I started learning about it, just a little bit more about the technology behind it. And I'm not a technological person by background. so I really struggled in the beginning as there was pretty much no non-technical explanation out there but then Andreas Antonopoulos started emerging and like I gave a lot of talks gave a lot of presentations I was like dang finally someone I can understand and Andreas like historically always super impressive with all of his talks and after a couple months of learning I finally started feeling like I think I get it but if it takes everyone who isn't technical this long to understand, then it's never going to take off. So I tried to sort of take that role,

figuring like I'm never going to be as good as Andreas, but maybe, you know, there's only one Andreas in the world. So there can probably be lots of other Bitcoin educators out there. So I started writing, started giving presentations, probably done like a hundred plus presentations for all kinds of audiences, like boards of directors at companies, management teams, public events, private events, in finance, in many different industries, and kind of looking at your Trojan horse right next to you. That was kind of my approach as well in the 2017-ish, 2016-2017 era, when blockchain became the hot thing.

I became a blockchain speaker, so to speak. But the only blockchain I could really talk about was Bitcoin, because it was the only one with sort of real life data on it and everything else was just speculation and theories of how it could be used so it sort of approached it from there are these open blockchains like bitcoin that are uh really interesting and out there and should be paying attention to it and then there's all this theoretical stuff that people want to do that probably doesn't make a whole lot of sense but as a result i sort of got into a lot of places that i otherwise wouldn't have gotten into and a lot of those people were ultimately just interested in bitcoin very often

actually the event organizer or the person contact person they would want me there just because they like bitcoin and this was sort of the the kind of way of getting that conversation going there so i've always been passionate about education and since roughly a year ago i started at a river which has been an amazing experience i've i've pretty much loved all of it and i've been doing research reports i have a bit of background in research as well from my first job which wasn't in bitcoin i worked at a consulting firm and we did tons of research there in all kinds of industries wasn't one of the big four we were smaller and were nimble and not as uh and wavy i like to think but probably all consultants say that so i kind of kind of

took a lot of skills and things that i've learned over my career and i think one of the main advantages i have in education is that english isn't my first language so i also i can't go really complicated in terms of language and how I explain and describe things because I just don't know the words or I'm not as fluent in using them as as a native speaker might be so that helps to keep it more accessible for people and I really try to be that bridge between the technical and the non-technical people and sort of helping people are eager to learn about Bitcoin at least understand a bit more about it yeah and you do a very good job of it and thank you as is evidenced by the research report we're going to discuss today, 72 pages.

And I didn't realize you had that consulting background. So it really shows in the way you present all of it. And it's got chapters and it's very well organized and has a flow to it. One question before we get into that. What video game are you playing? It was called RuneScape. Oh, RuneScape, yeah.

So at the time you had World of Warcraft, there was like the biggest MMO and then the second biggest was RuneScape. And my friends played that. i started playing it when i was like 12 i think and then by the time i was 16 17 or so all of them had quit but i just stuck around purely for the trading because it was a lot of fun at the time yeah um and i just kept doing that over the years yeah and uh you mentioned it but i know this just from speaking with you personally the few times that we've been able to meet in person

like your passion for education and like you mentioned it's really hard for people to get this stuff like trying to break it down the way and you do and many others do like andreas or um like somebody like btc sessions and uh bitcoin audible like i swan breaking it down like what what are your thoughts about the landscape of educational resources compared to like 2017 that are i think it's grown a lot like a lot of people have sort of found their niche because bitcoin itself has grown so much and you can definitely feel that when you hop around topics how sort of thinly stretched you very quickly get like when you dive into mining you realize there's so much more to mining that you don't know once you dive deeply into it and there's

many topics like this um so i think like in general there's there are a lot of resources what i think could be improved in general would be for people to understand what like what should actually be sharing with someone what is actually relevant for them versus like like what can i just explain to them myself because i see this a lot when people are eager about bitcoin they try to explain it to others they just very quickly dump a book on them or a podcast episode on them or like go listen to this this one hour conversation on bitcoin payments for example as we might have or go read this 400 page book explaining why the economy is screwed and and you know like what how bitcoin is a solution like typically when you ask someone about something like i don't know like how

does nuclear energy work they don't dump the wikipedia page on you or a 500 page book they just give like a relatively short overview of the pros and cons or something without coloring it really strongly like i strongly believe in nuclear and it's a future of energy and the moment you start going off like that people go like whoa like i'm i was just asking like i'm or not even asking and they get dumped that information on them so uh i think in general like the educators do a great job i think it's much more the audience in general could at times use a bit more evaluation of like what can i do myself without just immediately passing them off to some kind of educator who's probably going to do a good job taking a little bit more ownership of that like sort of like we

all have to do this together anyway we all have to educate the people around us and it's difficult but you know if you take ownership of it i think you can do a much better job of it than like i'm just gonna give them some one minute pitch and then i'll start dumping resources on them as that's not how everyone likes to learn some people love books a lot of people love podcasts but it's not always the first immediate step that you should hand over to them so uh that is not on the educators i think to tell their audience like you know don't send my episodes to potentially interested people that that's not really how it works but uh it's much more the listener i think we should think a little bit about like maybe this is too much information

to be handing this person immediately and i could take smaller steps yeah putting my listener cap on it's never worked for me historically like yeah here nakamoto institute guy swans like bitcoin audible like bitcoin standard fiat standard read all this and and then come back two weeks later like did you read any of it like no it was way too much yeah it is it's just quickly and everyone also tries to make the best introduction to bitcoin like the best articles and things there's so many portals platforms books um and even that can just be very overwhelming it's you know it's as decentralized as bitcoin itself in a way yeah no i've been i've really uh in the last three or four years been uh way less pushy about

pushing resources on people like hey if you want to learn download a wallet play around with it send some bitcoin from cash app or wherever strike river uh to to a wallet and um and play around with it if you have any questions ask me slowly but surely they'll come back like yeah what's going on here what's going on there you just start seeding seeding responses that way slowly but surely people learn people are going to have to learn but do you think uh i mean let's dive into the report what you found which leads to a broader question of like do you think bitcoin is going to be successful in achieving its goals being good store value and layered payments network um because i think one of the most interesting things that you pointed out in

this particular research report is that it's probably likely that there's way less like material bitcoin holders than many people are estimating right now yeah yeah that was one of the big i think findings for me anyways it was a bit of an eye-opener because you often see these numbers thrown around of like coinbase and binance have 100 million plus signed up accounts and And like estimates that say like there must be 400 million crypto owners, which is also like, okay, do they still own it today? Was that at the peak of the bull market? Like lots of people that really question the numbers, they just kind of share them without really thinking it through. So I thought like, let's like, as one of the parts of the report, let's challenge that a bit and dive into some of these things to really figure out like how many people have adopted Bitcoin.

like in which countries is that like just looking at absolute numbers rather than always kind of the comparisons of okay where people sort of relatively searching more or where there were meetups and all these kinds of things um so there's just been a lot of eye-opening things in general like i felt like it has at least touched on the whole store of value thing the report in general because i feel like reasonably confident there that like in my opinion that bitcoin is going to play a big role in it but it's much more about the medium of exchange where i just had a lot of questions as someone in bitcoin for a long time i like with all these reports so far i've always felt like there are just things that you tend to assume or you hear a lot over time but then as you dive into

them you challenge some of that stuff um and i guess like a really concrete example there is that you often hear about you know people pay huge remittance fees all over the world for just on average like to try to send money back home and then actually when you look into the data because you often hear these things like some people are paying like 20 percent or whatever on a remittance you look into the data and it's like actually it's a very small percentage of the total remittance market it's smaller than you realize which doesn't mean those people don't matter it doesn't mean it doesn't have a massive impact on their life but it does mean that sort of like when you explain bitcoin to people and you explain how it could play a role in payments that for the vast majority

of the population the value proposition is not for them specifically if it was in a case of remittances because they don't feel that pain they don't pay the 10% they might only pay or only like they might pay three four percent or something like that which is still significant but I mean like we have in many countries 10% inflation and apparently that's not significant enough for a lot of people either to sort of have a wake-up call so when you have that realization like actually the data is a bit different than I thought it might be you it sort of changes your perception of of bitcoin how it could play a role and shift some things there um and it's really like why do I do the research I also get this question from people sometimes like you know what why are you

diving into this what's what's in it for river what's what's the point of doing all of this and so far with the first one was the lightning report where we shared the insights from rivers nodes which are some of the biggest in the lightning network second one was sort of on the future of mining so what does bitcoin mining look like at 1zash and then this third one on payments they're all topics that are important for bitcoiners in the long run and we have clients who are bitcoiners who put like significant amounts of money in there and they want to understand like what you know what is the long term of the network look like how is everything going to develop is all of this like is it just talk or or is there a real substance here like

What are the meaningful developments? And I tried to dive into those things and make them digestible for people. And you could argue, well, 72-page report, is that digestible? It's much more about like sort of lifting out the relevant parts, giving them an executive summary, highlighting some pieces of that in separate articles. That's really what we try to do with it. The report itself is just the base for people who want to dive deeper and have all of the structure and all of the insights. but from there we can draw a lot and share that with people in in newsletters in social media posts in articles on river learn and all this kind of stuff so the idea i had behind the structure

for the report was like actually relatively simple like what is the sort of a venn diagram of you have the cross-border payments on one side as a pretty big chunk it's a quite significant volume we're talking like trillions and trillions of dollars every year and what i found interesting there was that there's a lot of estimations by really big firms among them consulting firms referencing earlier that all contradict each other on like what are the volumes like because they all use slightly different um methodologies to figure this out so they're never accurate numbers it's not like they aggregate all of the data from all of the banks and then figure out like what was the actual remittance volume in 2021 they literally just use all kinds of

extrapolations and estimations and just smaller scale research and then try to figure out what it like on a global scale um and like that whole space that's just like for me that was in a way a bit of a black box like i'd over the years being in bitcoin i'd read up on a lot of it just to sort of understand like what's going on there but i never really put the pieces together in the way i did in the reports and gave me a lot of clarity anyway to understand like what is happening cross-border payments rather than always just shouting um you know like bitcoin is going to be the most successful thing that's going to replace all of the financial institutions and we're all going to be using that for payments those are very easy statements to make if you're

a big believer in bitcoin but it helps to first have the context of how does the current system work like what kind of data can we derive from it where are the payments happening what are the actual hurdles uh if you just drill down into it and that's what i spent a lot of time doing in that first chapter to sort of get a feel for what you know what are we up against in a way because that's ultimately in the report it's like bitcoin versus the 156 trillion dollar uh global payments industry and it's yeah like in order to defeat that the big behemoth so to speak uh you have to actually understand what's going on there and then the second chapter i looked at sort of that second circle of the venn diagram like what is the state of bitcoin adoption what are people using bitcoin

for how many people are using bitcoin as we were touching on and then the third chapter kind of looking at the overlap between those like what like which people are using bitcoin for cross-border payments already in the different segments or in b2b and b2c c2b which is e-commerce and then c2c which is remittances so just getting a feel for that like what's already out there what is being developed and in the final chapter i looked at sort of how can we push more of that that remittance circle or sorry the cross-border payment circle into the bitcoin circle how do we grow adoption essentially so i figured that was a logical structure to kind of work through what is going on in that entire industry uh and alongside it just looking into bitcoin itself which a lot

of people are also curious about like where do we stand uh like how fast has it been growing how should we be looking at that is it you know are we looking at four-year cycles etc so uh that's sort of the structure i i set up for the whole report and uh we can like dive into the individual chapters and all kinds of things there yeah i mean let's dive in and i again i really like the number one you're doing this research and number two the way in which you're doing it because i completely agree like we can go out there and shout these platitudes and rah-rah but if it's not actually like computing with the reality of the world like we want to to be operating from a position of strength and that strength being driven by like actually like

good information that we're using to explain bitcoin and knowledge what we're up against and so yeah let's start with chapter one like the landscape of global uh remittance and payments networks it's got a spectrum from like government entities uh private companies different sort of interchanges fintech companies coming into the fray what's it look like and how did you find all this data because i imagine uh it's siloed in a bunch of different spots yeah through a lot of tears uh maybe to add on to what you said that's that's like the honest answer i had this question a bunch like how do you find the data it's it's hard that's the hardest part about what i do uh i think because we also reached out to a lot of companies even in the bitcoin space itself

to try to get data on some things and companies are competitive so they don't always want to share and they often don't want to share or they want to share qualitative insights which are a bit more you know they kind of talk a little bit about the things that they've done well from like a client perspective or a partner perspective but if you put together a big report with those kinds of insights it's not going to be super interesting for everyone because it's just a lot of opinions sort of gathered together um so yeah getting the data is the hardest part of it we can definitely to talk about that um and i think maybe to add on to what you were saying like the way the report is structured it's for me it's also important that it's a bitcoin focused report because there's a

lot of there are already a bunch of reports around crypto adoption and crypto uh sort of usage even for payment specific there's plenty of things out there about it but if reports in general are always about crypto and never focused on bitcoin then sort of looking from the whole consulting world the tech world etc that look at these kinds of publications if they only ever see crypto and bitcoin is a part of that then that's their perspective of where bitcoin stands it's a part of crypto and it helps you to understand a little bit about which it did for me anyway it helps you to understand why so many people are smart never really got that distinction like they're smart in their own respective fields but they never really understood like bitcoin is that separate from that

because everything I'm seeing, all of the reports, all of the articles on all of these websites, they always lump the two together and describe it as if Bitcoin is a part of that. So having Bitcoin focused reports really helps you to like make a bit of a stand there and say like, this is the data that's specific to what we care about, which is the Bitcoin industry and everything around that, like we're just not specifically looking at in this report. There is obviously some comparison to other methods, but yeah, that's kind of making a

stand in a way of where you know where bitcoin focus that's what we spend our energy on um and i wouldn't be able to do that anywhere i think besides river because that's kind of the philosophy of the company we don't shout that we're maximalists we just spend our time on bitcoin because that's what we believe in and your actions kind of speak louder than your words there um so that's always been a bit of the focus but anyway let's get into the the first chapter i think on the global crossword repayments industry and i've already done it in in this podcast so far you've done it too where you kind of switch up remittance and payments and one of the first insights that helps for people to understand is that remittance is just one form of payments so

you have the four quadrants that i mentioned the b2b which is the vast majority of the cross-border payments volume in the world today uh something like 96.7 so for me that was one of the first insights where my eyes just went wow that is insane like we are just a blip on the radar when it comes to just sending money between people because it's all between big companies and firms internationally and it helps you to understand a little bit about like why are those banks so focused on corporate clients and all of these kinds of products and corporate banking in general it's because that's where you know where a lot of the money is made where sort of relatively speaking a lot of the revenue is and that was for me one of the most interesting insights and i saw

is very much reflected when i looked at all of the reports that are out there about the cross-border payments market the traditional one because all of the reports talk about revenue they all talk about what is the revenue in the industry they don't talk about volumes they don't talk about how can we make this faster more convenient easier etc they just look at like how can we make money like how can we satisfy investor needs uh and all of these kinds of things so it gives you a very like they're just in a different world almost they don't think about the world of payments the way the average bitcoiner does they think of it very much from a business perspective and from an international settlement perspective and they've all just very much accepted that yes

it's slow and costly and whatever but you know we make plenty of money so yeah it's a means to revenue stream yeah yeah for sure um and i think like i looked at a bunch of reports i wanted to share much more data around how the how do payments flow sort of internationally between businesses because i was quite curious about it like you know what's it like how much money goes from the u.s to china to the uae to all kinds of countries but the tricky part is that all the data is like proprietary it's like if you want to get access to it you pay like five thousand dollars for a report and then you're not allowed to share it anywhere you can't publish it you can't talk about it or they'll sue you so it's like a report for industry insiders essentially and you can't

really get a feel for you know where the market opportunities so it very much protects them from even getting competitors in the market because they have such a moat even in terms of information like where do you start you can really only start if you've worked in the industry and you've had your hands on all of that data you can't really challenge it from the outside using the traditional model. So hence like Bitcoin doesn't specifically care about a lot of the data. Bitcoin doesn't care about borders, which is not really a concept for it in some ways. So that just naturally makes it easier to try to challenge it rather than working in such an opaque market, which is pretty crazy. So I kind of struggled there to find really good insights that I could share

in terms of B2B volume. And for me, that was kind of at the start of the report. That's where I started out a bit of a bummer when you realize like actually some of this stuff is crazy hard to find and get a bit of an insight into well like what type of information are they keeping close to the chest like because i imagine maybe this is just naive and uh naive of me it's just like for b2b it's just like one business has a bank account in one country the other business has a bank account another country and then they just do a wire you pay my my bank we'll do a fx exchange pay the fees and then boom transaction settled or has there been this whole fintech sort of ui ux layered on top of it that makes it faster it's yeah it's it's that too but it's

mostly like they just don't share like what like there are all kinds of questions you can ask about like how do businesses send money internationally for example how much of that volume is just literally uh some international conglomerate doing internal accounting i would be interested in knowing that like how much of an issue is that because we've had um at a company we run river lightning services and like we service all kinds of clients with that who are interested in integrating with the lightning network we actually had some people talk about like okay could this also be used for just settlement between our own branches in different countries and all kinds of things like is that even something that we should consider so you just start having questions there

like how big is that market out there like how many companies might potentially be interested in using something like that, where Lightning is just used in the background to settle their international transactions. But instead of waiting a couple of days before transactions get settled, it could just be much faster. So there's lots of questions like this that you might have around, like, as I was already saying, how much money is moving between certain countries? What kind of fees are paid on average? Like, where in general are people struggling the most with the whole flow? Like, where do the mistakes happen? And I just like, when I started to research i just started listing out all of these questions just off the top of my head that i have

that i don't understand about the industry that i'd love to know um and then you just try to dig into it and figure out like other data sources around this is there anyone writing about this that i could try and interview um and then you just start hitting walls everywhere where you realize this is actually a lot more difficult to get into than you realized so uh yeah there's i think there's lots of insights to be gathered there that could sort of help us in bitcoin as to understand like how can we better service sort of the service like it's a weird way of saying it but how could we be more appealing for b2b because that's one of my findings sort of in the third chapter is that b2b is like the lowest in terms of adoption there's like very like relatively

little traction there uh and this is you know this is one of the reasons why that's the case obviously because there just isn't isn't as much insight from the bitcoin world into what is that segment struggling with and how could we better convince them to join team orange so to speak yeah and it's the most massive market to go after in this payments world yeah it is it is but that's like in many businesses i guess it's often the b2b side of things is where the the big contracts are and the big deal so it's a lot of focus there but yes i kind of struggled a bit there but then i moved on to uh b2c which is all about like you know international payroll that one there's like a little bit more shared there because obviously consumers are a bit more willing to share data

around all of this uh so that gives you a bit of a an idea as well in what is happening in that segment and you know in general anyone who gets paid internationally just knows it like there's always a good foreign exchange fee on top there um and you quickly have jumped to that conclusion of okay but could bitcoin play a role there until you ultimately realize well there would still be some kind of fee at an on and off ramp somewhere in a lot of cases so there can be some challenges there but uh we can dive into that one a little bit later i think for me a really like kind of crazy insight that it kind of confirmed what i already knew but seeing it in numbers really opened my eyes is e-commerce so coming from a first world country like a western country you

like i'm based in the netherlands you kind of have this impression that most people use e-commerce like they'll buy things online and in the us as well has among the highest adoption in the world and you get this perspective of that's something that everyone does but then i saw the numbers and actually only 38 of the global population in 2021 had done an e-commerce transaction and that's like over over the age of 15 so it's not the entire global population but not too far off either enough for the population with actual money that yeah and then you very quickly realize like 38 after two decades of sort of or you could argue one decade since mobile phones have become a bit more prevalent uh you come to the realization like that's taken a long

time to get traction and in a similar way like everyone who expects that hyper bitcoinization is going to happen in a matter of a few years because money is more important than just kind of playing around buying things online perhaps uh but like there's just so many struggles and challenges and yes the fact that everyone almost everyone has a mobile phone like 85 of the global population i believe or 86 or so that helps it gets it in the hands of more people but still there are so many people who have just never done a payment on their phone and then you're going to get them on self-custody or even a custodial service and help them feel comfortable with a radically different form of money that's going to take more than just a few years so 38

that's what 2.7 billion people have only ever out of 8 billion that was in 2021 they only like update this is i think data from the world bank they only update it every four years or so because they're just massive massive projects to undertake uh that's also something that helps you understand like why are there relatively few data sources out there why do a bunch of them vary like double digit percentage points uh at the time so e-com commerce so what's that 62 of the world is not that's another way to frame it 62 of the world does not did not make an e-commerce payment in 2021 for running with this stuff that's pretty crazy yeah like e-commerce payment defined as like even something like downloading and paying for an app that's yeah just just any any kind of

digital payment to uh to a merchant is how they defined it yeah so it's yeah it's just a big realization that like obviously yes you know you didn't have the smartphone penetration worldwide during a lot of those years that e-commerce became a thing but nonetheless it just helps you to understand that any kind of new technology that comes up even anything like even cbdc's people are also concerned like this would be you know the government would just force it on you and it would be there within a couple weeks and everyone would be using it like that's just not how it works practically because you can imagine how the government would start sending you you know like flyers in your in your mailbox and all kinds of campaigns and explaining this this would take

years to roll out just purely from a user perspective and uh yeah for me it confirms what i always kind of felt like bitcoin adoption is going to take time but when you just see a stat like that you quickly realize like yes you know if you see it for something as simple as e-commerce especially with covet having happened you would think a lot of people like being locked down a lot more people would rely on something like this but even then still there's just lots of people that never engaged yeah it's a very important point to make yeah 2021 everybody was in their houses globally still 62 and not make an ecom transaction i find it hard to believe yeah i mean like the way i expect a lot of it to happen because i remember i remember when

especially in china early on there were lots of uh like they essentially started first with the lockdown so you started reading these stories about how they would sort of internally in a building organize themselves through a chat app where one person would sort of make a bulk order of food at a certain place and then i'm guessing everyone would just pay them in cash so you know It's kind of almost like the UTXO model in Bitcoin, where one UTXO could actually be held by someone who was holding Bitcoin for lots of different parties. So in a similar way, you'll see lots of that in the physical world as well, where there's that one tech-savvy person who does the online payments for their entire family, for example. And then when you survey a whole group, then they might say, well, I didn't do any digital payments, but I asked my cousin or something because he knows all about this stuff, or my son does everything for me. And you get all of those kinds of situations where it kind of gets lumped together a lot.

And the same in any kind of family, you might just have the man or the woman who does the online shopping and the other one doesn't. And as a result, they don't qualify. So when you take that into account, you do start to understand more, like, why is it such a relatively low number? As you're like, what you're saying just now, like, it doesn't sound right. I've had that so much doing this research where you just try to take a step back and like, does this number actually make sense?

or is it just totally ridiculous um and that helps you to scrutinize some of it and figure out like you know could i think of the arguments and reasons why it isn't higher than it is and when you do that thought exercise you yeah it helps you to understand like okay there's probably lots of people who depend on others to do that for them but then like again translating to a bitcoin context as we already know like everyone's seen it there's just lots of people that ask you could you hold my bitcoin could you hold it for me because i don't feel that comfortable like that's the same thing as asking someone like like i don't feel super comfortable shopping online can you order this thing for me it's uh no different there so it helps you to understand that if after all

these years people are still asking others to do the e-commerce for them probably like it's not a one-on-one comparison obviously it's not identical but you're going to see just a lot of similar behavior there over the years so it just takes time a lot of one to many transactions yeah that as well yeah yeah so for me like just diving into these types of questions it already helps me to understand more about the challenges we might face in bitcoin or how long some things can potentially take it'll probably be relatively faster um and people like to pull up that graph of sort of bitcoin adoption relative to internet adoption um and it's kind of like tracking along nicely sort of relatively speaking um and yeah those things are really exciting but then it's

also important to understand like where where is it different because bitcoin adoption like awesome that it's growing fast but it's just harder for people in the internet because they are trusting money to it that people don't like losing money whereas on the internet like what was the worst thing that could happen to you in the early years like well you come across a weird website that like either you get a virus or something or that you download off the internet or you come across something that scars you for life that's like just about the worst that's gonna happen right but losing your life saving that is terrifying for people so uh hey you uh you have a friend tell you to go to lemonparty.org and you don't know what it is you go and uh don't go don't go to that freaks

i don't know if that website's still up but yeah you get scarred for life um yeah but bitcoin much more intense you lose your money like prime trust some of the qualified custodians in the space can't even custody your funds correctly yeah our ceo alex put a pull out on twitter i think just might have been yesterday or a couple days ago i'm not sure about like people that have lost money from self-custody as well because that's the other side of it not using a custodian but self-custody most of them just lose it due to screw-ups in their self-custody setup and not because their keys have actually been compromised so it's like uh you know custodians they they struggle obviously even with with these keys and i was just chatting to him about it

earlier but uh people who do self-custody also screw up plenty of times so it's uh there's just such a learning curve and then to think that you know a lot of the population is going to sort this out in the near future there's a definitely major challenges there that we have to overcome oh yeah ux challenges ui challenges getting people comfortable with handling cryptographic material understanding what a private public key pair is i think excited to see more people experimenting with miniscript i do if like some like mini script we could do is today something op vault or opc tv that allows you to create sort of spending conditions that have fallbacks if you do mess up part of your your security is is very interesting i could see

that making it easier more approachable for individuals yeah and and just give people so much peace of mind that you know it's actually possible to mess up or you know if for some reason my keys get compromised there is actually some kind of fallback that's that's been the one thing that's always been so scary to people then it's so permanent um and having some i feel like you know especially vaults they have such an interesting kind of middle ground there to add this kind of comfort for people um so yeah definitely excited about that yeah i think like one other area where sort of like going back to the remittance stuff that i was seeing in the uh research is that there's a really big struggle for education

in remittance as well so the average fees that people pay globally for remittances is 6.24 which is like pretty dang significant 40 like you know just imagine that going out of your paycheck every month is just crazy it's like i think i did the math it was something like um a certain number of days a month out of like your working days i think like one out of 21 days or something like that is just to pay your fees which is kind of uh it's not fun um what's driving this is fx exchange just simple middleman rents yeah there's a lot of that and obviously it gets pulled up a lot through the correspondent banking system it is called where instead of people using some kind of fintech provider they just use the banking system and then

there's just massive delays of days because those banks are in different time zones uh which are also like those are simple things i never really thought of before like wire sort of like why it doesn't take days to send these payments internationally it's like well if bank a needs to go to bank b on the other side of the world and there are two or three hopes in between and they're in different time zones and they work on business days like business hours then it could be that a batch of transactions like it needs to be validated or something internally before it gets forwarded to the next one and those people are just at home eating dinner uh and they'll be up again the next day to send it to the next party that might again

not like have the policy where they check up on this every hour or something and so you very quickly start understanding like why do all those hours and things rack up um but you know i'm not going to defend their fees in any way uh because they're just like obviously they're just high but what was striking to me was that um there's some kind of indicator they call like the smart indicator or something some acronym i don't know exactly but it basically said that if all of the consumers were fully informed about their remittance options they could pay as little as or as little as sorry they worded it 3.31 percent so it's like three percent lower than what people are actually paying today on average so that shows that even in just traditional remittances

if people understood if i just look at what my options are to send money between this country in that country then i could take off quite a few percent and just pay cheaper but a lot of people they just find an option they're like all right i've managed to explain how this one works to my aunt or something that i have to wire money to or my dad or whoever um and like that's just what we're going to stick with even though we pay a couple percent more at least they get this then we don't have to switch or maybe i'll explain it to them in nine months when i'm back home or something but in the meantime they just keep using that thing so even there there's just a struggle for education as a lot of people never really orient themselves into cheaper options

so there's definitely a struggle there i think for people who do remittances in general to like they're not going to go out i think in a lot of cases and research like how does that bitcoin thing work and how could i potentially you know pay less transaction fees to receive this money from the us in my specific country um that's just like it's it's a really hard and long journey to get to the point where you understand bitcoin enough to be able to say all right that's how i'll receive my payment and i'll go to this local exchange or whatever and turn it into my fiat currency locally here so you know that's not a journey that a lot of people can take themselves and there's also often education lacking in a specific language for a lot of these countries

where there might not be any local exchanges and they all just use something international so lots of challenges there but it just puts it in perspective if people are even struggling in traditional remittances to figure out what's my cheapest option then it's kind of a stretch to think that they're going to put some time into understanding bitcoin because so many people have talked about it um it's just not a a thing in a lot of minds that's not what they're they're focused on it's like how could i get the cheapest possible payment could bitcoin play a role there um yeah they've got their mind yeah they're not even thinking about it the uh the ability to cut your your cost by 50 if you just look at the cheapest option but yeah exactly this goes back

to greg maxwell's biggest worry for bitcoin like how could bitcoin fail it's simply apathy people are just so apathetic they don't care they're like yeah whatever yeah and that's that's actually for me it's also a bit of a concern with cbdc's in general is that you know bitcoiners are going the ones who are loudest against cbdc's and in a lot of the public's eyes that don't even care about bitcoin in the first place they're just going to be like oh you guys are just worried you know that you're not going to get even richer because you invested early and now you're trying to defend your thing like in a way you could actually get some some strice and effect yeah like it can get pretty weird there i think but yeah i don't know remains to be seen like we have

to not do too many i told you so's i think perhaps um but like one of the other things about remittances that i think is really important to point out is that 79 of all remittances they go to low or middle income countries so like people think like it's not low in terms of us um paychecks it's not like or in the middle or anything we're talking like less than 10 000 in in gdp uh per person per capita yeah per capita uh that gives you a bit of a perspective of that is much lower than what a us standard of a low income might be um but 79 goes to like so to countries that have that kind of average or like typically even lower than that and it's very similar to inflation where inflation tends to hit the poorest people the hardest like in a similar way here a lot of these

remittances they go to the poorer countries and there you know all these companies like the western unions etc they make another like they just tax like a large part of the gdp there are some countries i have some graphs on the report uh because i can pull one up where something like uh 70-ish sorry not 70 like 30 or so of all the gdp is just remittances so imagine like your entire country 30 of the gdp you get another six percent tax on top of that that just goes to a financial institution it's kind of crazy yeah um if i'm remembering correctly that was it india mexico were the two yeah i'll just yeah those are the top ones i'll just share my screen here real quick logan's gonna pull it up yeah so where you have the top 10 remittance receiving countries by

volume and again it's in 2021 we'll probably get an update by 2025 but then in black it shows like the volume that they've received so india in 2021 was by far the highest mexico as well like over 50 billion dollars china pretty similar and for china it's actually you know it's a really small percentage of gdp which is the golden dots here golden line because they just have such a massive gdp as a country in general and they have their capital controls and whatnot so people don't really like to put their money into china they'd rather get it out of there but nonetheless it's really big country so it adds up to a lot of volume but then when you look at the countries that have the highest share of gdp uh from remittances it's like there's a lot of smaller

ones like tonga lebanon's not that small i think tajikistan here kyrgyzstan jamaica el salvador as well which is why you know bitcoin is such a significant case there and i can talk a little bit more about the data of like how much share of this has bitcoin captured uh later uh so far anyway guatemala really big one in volume and still you know like almost 20 of their entire gdp is from remittances there just mostly from the u.s so you can also with the data sets you can dive into like specific countries like how much of this is coming from the u.s etc um i think like towards the end of the report i have some tables for that where you can look into it like Let's pull up a random one here.

Like Guatemala here, you know, it's 91% from the U.S. So it gives you a bit of an idea, you know, if you know kind of jumping ahead there towards the end. But to grow adoption, it could be super interesting to find Guatemalan communities in the U.S. and just like have a talk, like get to know them, see what their problems are. Do they know people are sending money back home

and how much are those paying, et cetera. And a lot of cases like those big corridors they'll have pretty decent like decent like relatively decent rates and fees that people are paying so the need for bitcoin may be lower from a remittance perspective but they probably do understand decently well that money is kind of broken and maybe uh it's worth looking into some solutions yeah this is fascinating because you can just look at the chart for anybody listening at home just looking at the country the percentage of their economy is driven by remittances and where they're coming from yeah that's you know that's a ton of people moving

abroad to help provide an income for their family back home like those people they're going to understand that money is messed up and it's you know it's not always due to inflation uh there's you know there's just lots of where's the economic opportunity if you go work abroad and you earn x times the income that you could could earn to it back home then some people will do that obviously yeah i'm just looking at like the top one on this chart haiti makes a lot of sense haitians got a lot of opportunity there so they moved the us the dominican republic in chile that's where all the remittances are coming from yeah and then as you go up the list it's like very often it's the us that's obviously the biggest one uh and you can kind of also see

that in the sort of the graph by total sending volume it's like the us is massive there so 200 billion dollars was sent in 2021 from the us and remittances but again like massive it's relatively speaking because i mentioned in the beginning the global remittance volume it's like 156 trillion dollars or so so like 200 million dollars out of that is relatively small but you know to people this is very meaningful um but also what's also interesting i think that stands out is like saudi arabia and the united arab emirates here that have a pretty big percent of their gdp is sent in remittances so it's like for saudi arabia it's like six percent or so uae something like 11 that's a lot of money that's just flowing out of the country to a lot of the families in you know

like India, Pakistan and whatnot that are like building those countries up and that are the foreign workers there. So also just interesting stuff that is a bit further removed from like, especially, I guess, like the Twitter, the Noster crowd, the conference crowd, the typical people that you speak to everywhere, you know, they're not between these types of corridors and in these kinds of locations. What do you mean by that? People aren't...

Yeah, for example, how many people that are into Bitcoin have you spoken to that are based out of Saudi Arabia, for example, that could tell you a really accurate or an interesting perspective on how is Bitcoin regarded there and what are the differences with the US, for example. That's just for a lot of people, that's less prevalent. They don't have someone like that in their life who could give that kind of perspective insights so just like generally bitcoin adoption is lower in some places and as a result sometimes we miss some perspective from these places to figure out like what's big what is sentiment

around bitcoin over there if that makes sense yeah it does make sense and it seems like i mean looking at this chart looking at the percentage of um remittances as a percentage of gdp in saudi arabia in the uaa it's like hey maybe we should be over there trying to figure it out um yeah yeah definitely and maybe like the volume one i hadn't shown earlier but just to like reiterate like how little this is of all the global volume so the black one here is business to business so that's just been growing like that's also crazy to have a bit of insight into how much has the cross-border payments volume been growing over the past years it's like in 2018 it was somewhere around like 125 ish 127 or so trillion dollars and by 2021 i'm sorry 2022 we're like at 156

trillion dollars so that's pretty big increase there like 30 trillion dollars just over those years and then i immediately wonder like okay how much of that is due to inflation you know like it's great that the number goes up because we're all just trading more internationally and whatnot but if it's all being measured in dollars then like yeah it's not hard to just keep going up there um but yeah you can see like the little bars at the top here it's like barely visible like 0.8 trillion dollars in remittances in 2022 so that's just 800 billion dollars of which like 600 plus is between those lower income countries so uh yeah there's some perspective there it's up by 30 trillion 124 to 156 but it's at 156 150. i'm sorry my eyes are yeah it's so

it's 150 b to b 150.7 but then with the others one added on top you get to 150 5.9 yeah yeah but what's the purchasing power of that 156 trillion exactly compared to 2019 2018. yeah How much oil is that getting people? That's where I have some questions. And again, you can very clearly tell with a lot of the numbers. It's like, these are estimations. It's extrapolated based on smaller data sets and whatnot. So the real numbers, they're probably going to vary a good bit.

But this is the best you're going to get out of a lot of reports and research out there. Yeah. So this is the state of global cross-border payments by volume. and obviously we dove into some granularity with the individual countries what is the state of bitcoin where are we with bitcoin yeah let's dive into that i'll uh knock off the screen share here um what i thought was interesting like i mentioned in the beginning a bit you know in bitcoin a lot of people talk about you know it's like 100 plus million or hundreds of millions of users in general and i figured okay what can we actually sort of find and reverse engineer or verify in

some ways ourselves and uh you're probably familiar with glass node so they for for people who don't know glass node they make all these graphs around on-chain data that they can find like how many you know people are holding bitcoin how much bitcoin is held by exchanges um or rather how many people in certain wealth brackets are holding bitcoin like they do all of these distinctions and whatnot uh they track miners they just track everything they can see on-chain and they did some research that they first did back in 2020 where they tried to figure out how many active entities are there in the blockchain so how many different actors are there transacting on the blockchain itself and they can't notice for certain all they can do is like

just data analysis and figure out like which what's actually an individual entity or what is you know a bunch of people mixing their money etc what is just a really big exchange that's receiving a lot of transactions from people but they tried to sort of map this out and uh i don't exactly recall back in 2020 i think the number was something somewhere in the low 20 million of active entities so that is not the same as users um but then by 2023 it was 32.9 million active entities on the blockchain and to give some context there were about 44 million UTXOs with a usable balance, so not with dust on them. So for me, that was the first where I was like, hold on, that doesn't make sense. That would mean that the average entity has something like

1.2 or 1.3 addresses or something like that. But if you think of the average Bitcoin user, it's like, well, they have dozens of addresses. They have different wallets. They have their hardware wallets uh like to me that intuitively didn't make sense so i really started digging and trying to figure out like how is that possible uh like there's got to be something wrong here like could they be wrong in their analysis and then i quickly started realizing with the entities as well is that there's like there's there's different ways of of looking at those entities and you quickly realize that especially the exchanges they hold you know that's just one entity in a way and they hold a large number of bitcoin in general uh trying to

recall i think it's something like uh 2 2.3 million or so so that is more than 10 sounds large but it's yeah something like that um but it's a pretty meaningful number that they have there and there was some there were some polls some like surveys etc to try to figure out how many people are storing Bitcoin and exchanges. And that was pulled somewhere around 70%. So 70% of the users are just putting all their money at some exchange, then that leaves quite a lot of addresses for sort of everyone else to be using. And if a lot of people like you have some kind of custodial wallet, you know, they do have a wallet, but it's custodial. And then ultimately, they don't have their own address either. So once you start looking into that, it makes a little bit more sense. But to

day i still question some of that data but then i was wondering like well 32.9 million entities you have a bunch of big exchanges but glass node also said like we don't know how many exchange how many users those exchanges have that are actually holding bitcoin there so that is not disclosed and then you start diving into the reports from coinbase and binance to figure out how many active users do they say they have versus how many accounts are there um then i figured like well actually if we know publicly verifiable on the blockchain How much Bitcoin do they hold that is constantly being tracked? And then how many active users do they say they have?

Because if we have some kind of estimation of those two, then you could potentially reverse engineer how many people are actually holding Bitcoin on those exchanges on average. Because if you know, like in the case of, I think Coinbase, it's like under 10 million active users per month, which an active user, they call like someone who's actually doing some kind of transaction

or some kind of interaction with a platform. I think it was somewhere around 8 or 9 million at this point. And then Binance, I kind of derived from a previous report of theirs, which is like to your question earlier, how do you get the data? I looked at Binance in, I think it was 2021 or 2022 when they had something like 29 million monthly active users. I used like Wayback Machine to figure out what was their monthly traffic volume on the site at the time.

And then compared it to now, and you could see a pretty clear, like 30% drop there. So if you take that off to 29 million, then you might arrive somewhere around 20-ish million active users per month. So sometimes you have to get a bit creative there and just give the necessary caveats to people like, you know, this is not exact. These are estimations, but that's reasonably accurate. And if you think about it, like Coinbase might have 8 million-ish or so. So you compare the traffic on Coinbase to Binance as well, that almost lines up perfectly to how many users they might potentially have. So then you have like a somewhat clear indication of, okay, how many people are actually using

this thing? But then you still have the question of, okay, are the active users also the ones holding Bitcoin? Or there's a lot of people who created an account two years ago, bought $50 worth and never touched it again. And without the exchange actually communicating anything about this and saying, okay, out of our users you know like x percent hasn't logged in over the past year but they hold this much of the bitcoin they don't report that obviously and they probably never will or even disclose any

bitcoin specific data in general because their narrative their focus is of crypto they don't report on that's one of the issues with the big exchanges they never report on bitcoin activity they report on crypto activity because they want that narrative to be top of mind and not like kind lift bitcoin above the rest in a way even though it's often you know the majority of their trading volume the majority of their revenue they uh yeah they don't they don't really do that so then you have to think like okay what you know what if what if all of the people who are holding bitcoin on such a big exchange what if they're the active ones like if you take that kind of number then how many users might there be holding bitcoin on an exchange and what if it's only half of them

So what if only half of the active users are holding the Bitcoin supply and the other half is held by people who haven't logged in in over a month? So you kind of get a range there of what, you know, how many users might that exchange have? If you divide the 2.3 million Bitcoin held on exchanges by the number of potential users in total, and then you get to somewhere around 48.8 to 97.5 million people holding Bitcoin on an exchange. that's kind of that range between the 50 percent and 100 percent and some people might say it's not 50 percent sam it's you know it's only 20 percent is held by people who are active on the exchanges and the 80 percent by people who haven't logged in forever like okay fine then you can update the estimation but then there's going to be even less holders likely so i don't think that's necessarily realistic um but then you get into some kind of insight there okay let's say between 50 and 100

million people holding bitcoin on an exchange assuming of course that those exchanges aren't insolvent and that people think they're holding bitcoin in exchange but they aren't um so that's you know again like you're building a lot of assumptions on top of each other and i'm just clear about this in the report like it's just an approach to try to get an estimation that doesn't just do a public survey which you know people who are younger and more tech savvy are more likely to respond to and as a result you get just higher adoption numbers in general um or you get people who say yes i have used crypto in 2021 then it's like they bought some some nonsense coin once left it in some wallet that they lost the access to and like you can derive bitcoin users from that

it doesn't make sense but that is often how it gets done today um so i looked into that and you get like okay like 50 to 100 million users on exchanges but then the question is a lot of people they hold bitcoin on exchange they also hold it off an exchange in their own wallet some of them hardware wallets and then you have to dig a bit more okay how many people own hardware wallets and then on i think it was on what bitcoin did uh the ledger ceo when they had that episode where they were talking about the ledger recover thing with matt rodolfo yeah exactly and i think you mentioned in there and i just checked afterwards as well but there's like less than 10 million hardware wallets that have been sold over like 6 million by ledger 2 million by trezor or so and

then 1 million collectively by the others or something like that so it's under 10 million and then you have to think of like i think i have like seven or eight hardware wallets exactly right so then you've got it down further and you start realizing like okay actually out of those 32.9 million entities that glassnode feels pretty comfortable with there's gonna be you know less than a quarter that actually does self-custody on a hardware wallet and then you start pulling in all kinds of surveys like is this accurate uh you know how much do they say that people are holding in cold storage how many are using hot wallets and that's a pretty big percentage apparently like 80 percent or so so 70 percent hold it on exchange 80 percent also hold it in

their own kind of wallet but mobile something like that yeah but it'll or desktop and they but mostly mobile and that'll often be custodial as well so then you start to figure out like actually out of that 50 to 100 million like i still need to cut off a slice here of people that are both on an exchange and off an exchange, if we want to get the total number of people holding Bitcoin. So it's not likely that it's actually a hundred million. It could be because you have to add it up to the 32.9. So you could say it's up to 132.9 million users, but then probably you take a pretty big slice out from people who are just on both. So likely to somewhere around 80 ish million or so is my best uh approximation so far yeah it gives a bit

of perspective yeah you you had to imagine i mean you don't want to double count people there's definitely people yeah and because he's thinking of the flow like the river flow you upload your dc on river now you guys have auto withdrawal like that would be a monthly active user for you somebody engaged in that but then they also be sending it's like a new address every time hopefully um they'd have to go in and reset it but um so they're they would be double counted in most people's data it's like two different holders but it's really one person yeah yeah exactly and that's like that stuff's hard i'm not smart enough to do like a super deep analysis on this maybe if the guys at glassnet if they put their mind to it they could get some kind of

closer approximation but i do think the model like the sort of the approach itself has some merit as you know we don't know exactly from the exchanges themselves what is the actual data how many people do we have that are holding bitcoin they won't disclose that but still just by looking at how much bitcoin are they holding even looking at the average address if there's 44.4 million with usable balances like what's the average bitcoin held on an address like how does this map out etc you can get to some kind of estimation um so that's yeah that's been pretty insightful for me to get a bit of a feel of how does that work like how can you sort of evaluate the industry there yeah so if it's 80 million people is your estimate that's what point

one percent point one or point oh one point one percent of the global somewhere around there yeah yeah very small penetration yeah and then people always like to say we're still early and it's like well in a way we are on the other hand 15 years yeah it's been a while like how many years are you going to keep saying that just waiting for people to get it like they're if they're smart and it didn't show interest so far then that's kind of my whole point of what we were touching on earlier with the education like maybe you need to re-evaluate how you're educating people and because i hear this so much from people where they go like oh uh i'm just putting off my family and friends when i talk about bitcoin or like they're not interested i can't

get them interested and it's like well are you trying to sort of convert them are you trying to orange pill them i'm not a not really a fan of that term because it sounds like you're trying to do something to someone whereas it's like are you just trying to have a conversation with this person and understand like what are their their hopes and dreams like what are they trying to accomplish in life and like you know is money in some way giving them obstacles to do that like is it which it often is like are they struggling to save are they struggling to to send money to their family back home like what what is it that they're struggling with in what way is money broken for them in their life without getting super philosophical with them about it but

it's like getting a bit of a read on them and what i often like to do uh going on a bit of a tangent there but instead of giving a pitch about bitcoin when someone's interested i just ask them like what do you know about it and they just start talking and you hear like all of the usual headlines that you read in the news like uses a lot of energy uh it's It's, you know, like it's expensive. There's lots of scammers, all of these things that you hear. But then you get an idea immediately of what is their perspective of it. It gives you time to figure out like what's an interesting topic or opening to get going

about it rather than you come at them with something that you're super passionate about. Like maybe you're, you love lightning and you're talking about, we could do micropayments. They're like, okay, but like, I've never done a micropayment in my life. What do you know about HTTP 402? Yeah, super cool, bro. Right. So just having a conversation with a person and seeing like, where are they coming from? What might be the intersection where, you know, it's maybe interesting to talk about Bitcoin. I find that such a more like successful approach for me personally anyway, than coming at them with some kind of like, you know, financial system is screwed. Inflation is ridiculous. Like we're all going to be screwed if we don't switch to Bitcoin, but that's going to be the solution is going to fix everything. people just go like i have no idea what you're talking about man like please don't do this i really that that's the um the most successful tactic and again this is what i've adopted in

recent years is asking the questions like hey what do you know what do you want to know and even even when they ask me like oh can you explain bitcoin to me or something like well what do you i still ask them like what do you know about it already because then it's also easier to start talking about it and it forces them to think a bit about, yeah, actually, what do I know? Rather than you have to pitch it to me and then I have to be convinced. It sets a very different dynamic. Anyway, Bitcoin adoption. I think one other thing that I also find interesting, in a payments context of Bitcoin adoption, because that's something I was also curious about, coming back to Binance, they had a report in 2021 where they estimated that about 11%

percent of the users actually use bitcoin for payments so that's like you know it's a pretty low percentage you can ask a lot of questions around like why is it that low why isn't it higher and you know in the us there's a really obvious answer it's just that the taxable event thing is just uh for a lot of people it's a big hurdle to even bother thinking about it um and lots of you know chicken and egg problem of the for merchants tend to be eager if they really get it but then people like to hold because they're expecting to make a lot of money so that's historically been challenging

but I think in general Lightning adoption growing and people getting a sense for just the UX improving etc and people understanding this could actually work at a larger scale it has certainly improved over the years there's been a lot of efforts by e-commerce players payments players etc to keep improving this space uh but it's hard it's like an uphill battle i don't envy people in those businesses to try to get bitcoin e-commerce going in general it's uh that's a tough fight i think yeah but

you know like it's yeah as a user it also has to start with yourself like do you you know do you often make payments in bitcoin you will i will but just a lot of other people that are kind of at the sidelines they're like i'll put a little bit of money into it then they already feel like i've already gone through the effort to buy a bit of bitcoin like i'm not going to spend it then i have to buy it again like i'm not going to deal with it i'll just use my my card whatever well that well apple pay was the big one i was going to bring up you're competing with apple pay which is like click click done paid like that ux yeah that's a rough one it's very hard to compete with yeah and you get the you know you get fancy things like a ring that you could

do like nfc payments with and like people will come up with cool stuff but still yeah it's it's hard to compete with for sure yeah so what uh god oh no i think you were gonna ask the question like what yeah yeah what is the state of the lightning because in the report you don't only mention lightning network you mentioned uh fediments too is something that's sort of emerging as well yeah like so so looking at like what's happening with bitcoin cross-border payments and specifically kind of like segwaying in there um i think like at first i just did a comparison like a model of what do bitcoin cross-border payments look like and i can share my screen to pull it up it's just like you know for people in bitcoin

it's not new but it's also good to keep in mind that you know the models and the things in there They're not always for Bitcoiners, so to speak. Like there's, you know, there's people who look at this from an outside perspective and are like, all right, what, you know, what's going on in this industry? How does this thing work? So like there's often these kinds of models from the traditional industry where they talk about the typical cross-border payments structure. and for people who are listening it's a model that shows the flow from users to the front end that they interact with to then use a certain back-end mechanism to the international transfer which then arrives again at another service provider with another user and that's often where the

correspondent banking network comes up swift as you've heard about plenty of times probably and then there's you know there will be other kinds of solutions and technology providers and fintechs that integrate with these things to make it easier but there's a lot of these models but they're you know people haven't really bothered to make them about bitcoin too much so made a similar one bitcoin's cross-border payments flow where you know you have kind of a distinct thing here is that you have an acquisition phase like how do you get your bitcoin you can earn it or you can buy it at various places you can have it in like a custodial or non-custodial wallet that doesn't matter a ton for the actual flow itself um you can have a node that it gets sent to it

can be your own or it can be the node of a third party which is then often an exchange for example or a service and it can get sent over to bitcoin blockchain which is traditionally what we've done and that's how anyone outside of the industry thinks that you know bitcoin payments are sent they are sent through blockchain with the big air quotes they always call it but you know they've never heard about the lightning network probably they don't understand what's happening there they also don't understand the new innovations that are coming up in e-cash that are just using a different kind of model to transfer the bitcoin between people um so this helps to sort of visualize it for you know you might have consultants of various firms that pull out such an image

to talk about their you know their the comparison between this and the traditional model So just putting this into a visual there. But then what I started talking about is indeed like a Feddies model, etc. And how Bitcoin could potentially compete with fintechs. Because actually one thing I hadn't touched on there is what fintechs do really great. If you look back at this traditional model here, is they set up some kind of, it's almost like an accounting trick. They have an account at one bank in one country. And then they have an account at another bank in another country.

you pay them in one country and they pay out the user in the other country and then you get that kind of feeling of oh you know this is an instant payment or it's within an hour or something or it's really fast but in the background the money still moves really slowly it's still just you know taking the same days as it would for those consumers to directly do the transactions with each other really get some kind of a fast lane business treatment i have no idea probably not they're competing with the banks but like they just make it look as if it's better and for a consumer that's good enough so from their perspective you know if they're if they're using a fintech service like wise or something and they can just instantly send money to someone else

in the world for a pretty low fee like they don't have to worry about the back-end shenanigans here and what's interesting is that with the lightning network actually a similar model is now emerging where we're just learning from out of index to it um well that's what like in the fintechs they are able to create this almost instant user experience because they're not going to charge back themselves so they're willing to yeah there is no risk they're taking on really it's just a waiting period so what you're seeing in bitcoin is like it's a custodial flow that's important to understand but you know the question is that i think a lot of people have to ask themselves like if those payments worked over bitcoin yes they're in a custodial kind of way

but it helps a lot of people especially the poorest around the world to save money that they are otherwise spending on high remittance fees is that still you know bitcoin being used for good and i would argue yes it is uh that doesn't mean that those people are you know holding any bitcoin in self-custody and in fact in a lot of cases they won't understand anything about bitcoin and that's really the beauty of this model i think because what happens here is that you have someone who wants to send their local currency to an exchange or broker just some kind of front end that will then use the lightning network as a back end to send it to another service in another country and that service will then just pay out the person in their local

currency so that is what strike has been pushing for together with a bunch of our exchanges that have joined in on this network and i made a map in here somewhere let me just scroll over to it over here i think it has like expanded ever since but this map gives you a bit of an idea of like where they base like you have strike in the u.s here you have coin corner on isle of man uh you have get bit in vietnam pouch in the philippines you have bitten up in nigeria that services a whole range of countries uh pipa and brazil here is connected with zebedee and pouch as well so you just start seeing these networks emerge where these exchanges use lightning to transfer like between them to just settle their differences where bitcoin is used as their sort of reserve

asset in that case and you know hal finney was talking about this back in 2010 2011 or something we're saying like ultimately people probably won't be able to have their own utxo but we're going to see the emergence of bitcoin banks that just use bitcoin as a back-end settlement system and then a lot of the users they may not even need to understand anything about bitcoin because all they see this company's marketing to me they're saying you know you can send your dollars to guatemala or something for this little fee and they'll just receive it within a moment in their wallet there and then they can extract it to their you know their mobile money account or their bank account or something and that's it so like this is you know this is just in a way

it's learning from what the fintechs are doing but in this case we're applying it to bitcoin and there's a custodial aspect in a sense that you know you're trusting that service to briefly hold your money, your fiat currency. But, you know, ultimately for them, it's also a matter of reputation and you can withdraw your money from that account. But what you'll likely see is that a lot of those companies involved in this,

they might become banks themselves in the future as people start feeling like, well, you know, if I could pay from that service and, you know, do e-commerce, do all kinds of transactions, then why would I take my money off of those accounts? So that's how you'll see a lot of people just become custodial users over time.

But they just keep their money in those accounts or they keep a mix of currencies because their local currency is inflating. So you're seeing that model emerge. It does have, you know, it has its challenges. It means that instead of the individual taking the sort of fluctuation risk that you have in holding Bitcoin, which a lot of people like to talk about, oh, you know, everyone could use Bitcoin for remittances, like, well, a lot of people just don't like the volatility. So they use stablecoins instead, especially in South America.

hugely popular um and that's just not something the individual wants to have to think about some will you know you might you might feel okay about it but you just have to accept probably that a lot of other people don't want that kind of risk so what this model does is it puts that risk in the hands of a business but the business you know like they're the ones holding the bitcoin it's on their balance sheet but they just need enough liquidity or not even if they use some kind of service provider, but they just need to make sure that they're okay, that they're earning small enough fees to offset any kind of risk that they might have from Bitcoin price dropping. But, you know, they're familiar with the space. They understand how it operates. They understand the long-term

of it. And they're far better equipped to handle volatility risk than the individual user who might not understand anything about Bitcoin. So personally, I think it's, you know, it's a super interesting model that's emerging. It has its challenges because it's, you know, it fully depends on banking relations being proper and you know if there's issues there or if countries try to start working against bitcoin then you know the whole thing can pretty quickly unravel um you know if the whole choke point 2.0 thing just keeps getting pushed through and these exchanges are not allowed to send anything from the u.s anymore then you know what can be done there's not much that can be done the model doesn't work then but in the meantime if we can help people i think

that's great to see so uh it's definitely something i wanted to highlight because there's a very interesting similarity to the way fintechs operate um that we're now sort of replicating in the bitcoin space well you touched on the similarities what is the core difference that makes it a superior product in your mind yeah i think speed is one of the biggest ones the instant settlement also for those businesses involved because even for uh you know for a fintech they still have to wait all of those days for the transactions to settle it's a lot of capital that's just isn't being used um i think where both still have challenges and probably bitcoin more so is in terms of liquidity because a lot of what you see when you dive into the traditional remittance

market is that a lot of remittance flows are what they call unilateral so they're just like from mostly from one country to the other and there's like a struggle to um because that's i believe initially how wise emerged was literally just saying like okay if people send a certain amount of money from uh this bank in europe to this bank in the u.s and a certain amount of money in reverse then we can just cancel those two out against each other and we never even have to move the money we just add it all up at the end of the day and then only a certain amount needs to be moved so that lowers our general risk it frees up more capital to be used for other things um but in And in Bitcoin, if you're sending Bitcoin from the US to Nigeria, for example, there will be a lot less Bitcoin that gets sent from Nigeria to the US.

So then you have to start figuring out like, okay, where do we get the liquidity, which they have to use OTC desks for and whatnot. And there are certainly solutions, but there are also just lots of challenges in many places to make sure that they can get enough Bitcoin for their local currency. And that you're not just in a way subject to foreign exchange again in the background that increases the margin for these businesses to offer this model, which then kind of pulls the fee that they have to ask users up to pretty close to what traditional finance might. Because then, yeah, like how much are you gaining ultimately? It'll be the most beneficial to countries where there are no alternatives and no better solutions. So for them, it's amazing. But for first world countries, perhaps the impact will be a bit smaller then. or might not even be there so well it's still early but this is uh it's an encouraging chart

though seeing all these connections it's good to see and some people might point out uh i think at bitcoin miami jack mallers he presented you know they were going to go live in i think something like 60 plus countries so you know why are there only like 10 ish here or something or 15 i don't know the exact number and the the core difference here i mentioned this in a report is well is that uh you know there's no on and off ramp integration in those countries that they're still going to be adding so people there can only have a bitcoin balance in their their wallet but they you know they can't sell it for their local currency in there so then it's not quite part of that model yet but in time they'll find partners in all those places likely and then the whole

thing will just build out and keep growing and growing so uh yeah i'm definitely interested to see that and like from river like going back to why did we make the report from river's perspective we're also interested in it because we have our lightning services and then you know we're looking to help companies on board onto the lightning network without having to run their own infrastructure so from our perspective it's also interesting to see this model grow and like what is the potential of it does it have long-term viability and if so then probably a lot of institutions and even traditional financial companies may want to join in on those networks but you know they might have the internal expertise or the the resources to want to dedicate to something so new and they

can just easily get started with uh rls so uh yeah it seems like it seems like there's been a validation of that model via the competition that's been erected you have rls obviously a strike has an api light spark the market voltage other providers and it seems like yeah i mean we run and operate our own node here at tftc but we've been in the space for a while it's not easy it does take quite a bit of yeah absolutely interactivity yeah absolutely but you see like sort of without this model a lot of people are like well you know i want the non-custodial version i want uh bitcoin to work non-custodial for everyone if you make a comparison there like if you compare bitcoin's lightning network which is the only thing you can fairly

compare to these other models because the bitcoin base layer like it has historically worked for cross-border payments but like at the moment like if you look into the future it's unlikely that most people will be using the base layer for payments that's just kind of how everyone sees it that it becomes more of a settlement layer and payments move to a different layer so a lot of reports especially in the traditional world they like to compare bitcoin on the base later they just say seven transactions per second can't work so i guess we just give it a the lowest score in our report and just like ship it off it's not important so actually what they should be comparing is bitcoin's landing network and then i made this distinction between like what

is the native speed with like if you send within the system itself without having to interface with the traditional financial world and that's really like where bitcoin and also stable coins lose their competitive advantage in terms of speed is you can very quickly send it between services but then when you need to withdraw it from an exchange in a lot of places you will often still wait a day or a couple days before it's actually in your bank account or something and that just makes it hard to do bitcoin remittances today for you know or just like digital cross-border payments today like also for businesses etc e-commerce uh payroll there's just a delay there And, you know, from the user perspective, you can say you can send money super fast around the world, but then actually you still need to wait a couple of days to get it in your bank account.

And it's like, OK, why don't I just do the bank thing then if I'm paying fees to buy the Bitcoin or to convert it or whatever? So there's some challenges there. And I think looking through the whole thing, like comparing Bitcoin's Lightning Network to all these other systems, there's like it's a matter of tradeoffs in some ways. It's like we haven't quite figured out a way to sort of beat the other options in every single category. But there are some places and ways where there just aren't any alternatives. And that's really where Bitcoin shines the most. It's in countries where, you know, they don't have the options to use something like a Western Union because the closest office is an hour if they can hitch a ride on a bus or something because they don't live in a city. and you start getting into all of these kinds of cases

where people just don't have alternatives, they can't afford a credit card, they don't have a government-issued ID to open a bank account, they don't, you could say, well, they get sold in time, and it's like, yeah, how much time, like 10 years? In theory, they could get it now, maybe. There's so many open questions there, but I think in general there's some interesting areas,

and I outlined those in the report as well, and I'll stop sharing for a bit. it's where bitcoin makes sense for payments regardless of what anyone's opinion is so you might be super you know as a payments expert as a someone who works for the government you might be very opinionated on like well people aren't going to use bitcoin for payments like well people are using bitcoin for payments and it doesn't matter what your opinion is like it doesn't matter how if you have 20 years of experience in payments and say this is never going to work because they are still using it because they don't have a better option

And it's not because they are trying to do stuff that the government doesn't allow. Very often, there are just things that they need to buy where they might not have an alternative option to get it, coming back to e-commerce and all kinds of things. There's plenty of countries where you wouldn't be allowed to buy a certain kind of medication, like medical marijuana or something. There's plenty of countries where that's illegal, but there's plenty of people and studies that have shown that there are benefits to it so yeah those are the kinds of gray areas so it's like what what do you want them to do yeah or you have the um which i would actually argue or not argue

i would assume is probably one of the the bigger cross-border payments like peer-to-peer especially is individuals living in the united states from countries that are sanctioned by the united states and trying to get money back yeah that's that is indeed the thing like you know it's it's been pretty tricky to try to figure out like what's you know what's the volume there i've also tried to look into this like what's the volume between these types of countries or and yeah that's just super hard to track to to get a bit of an idea of what is happening there which you definitely saw like some people have been tracking this with the uh russia ukraine situation like how many more how much more bitcoin activity is there uh in russia around sanctions and whatnot and

that were like internationally levied um so people do try to look into it but i find in general like the data often isn't conclusive enough or not not really detailed enough or not really meaningful enough to really draw good conclusions from without having far more context and then i just opt to not like go too deep into it or not even include it if it's if there's no way to validate it or no real way to have a good insight there but in many cases like even if there are sanctions it's often still you know it's at a it's at a relatively small scale there will be increases but you know still relatively small uh in general and it's the same with inflation like you see inflation rise in a certain country turkey i think is a good example where inflation has been pretty

aggressive for years and years now and you do really actually see that you know bitcoin adoption in general has been rising faster there um which is like i have a bunch of graphs on this too kind of looking into what are the main countries in terms of uh search volume and just interest in bitcoin in general that's certainly see it's that like let's pull it up because it is fascinating yeah sure uh over the years and turkey i always do this i turn off the screen share and then i think of the next thing to share and then you get turkey just hit what they just hit their interest rates up to like 90 or something like that something crazy yeah um so this is a comparison of google

search traffic over time and the bitcoin price which is like over the years kind of tracked each other uh pretty well so you see like generally when there's been a peak in the bitcoin price this is like exponential uh sorry logarithmic you see like the peaks kind of happen at the same time so we made the joke like as long as people just keep searching for bitcoin and google then the price will go up uh it's not really how it works obviously but um we were just looking at what like what's the distribution of bitcoin adoption so what's important for people to understand about google search traffic is that it is like uh like google trends i mean sorry is that you have a difference between absolute numbers and then over here you have relative

numbers so when you search google trends you get to see this so you get to see nigeria as the country and el salvador those two are the countries with the most search volume is like how a lot of people interpreted it but then we think about it like el salvador is like a couple million people living there like how could it possibly have more search volume than the us which is not even in the top 10 here how does that make sense so then it's good to understand how google search works so what it actually does is looks at how many how many google queries where they're in total in this area or in this time frame for this specific keyword and then what share of that was about bitcoin in this case or what share of it was about bicycles or cars or

whatever and then the country that has the highest relative share there of the total search volume that gets the score 100 and then everything else is scaled based off of that so you can basically read this as someone in let's say slovenia or south africa here they are about half as likely to be googling about bitcoin if they're googling than someone in nigeria or el salvador so that gives you a bit more of a perspective of where is bitcoin a bit more top of mind where like on a per capita basis it's not quite it it's like on a per query basis are people just more often searching about bitcoin so this gives a different perspective than just looking at the absolute graph here or the absolute overview it's how many people per month are searching for bitcoin in the

u.s that's estimated to be about 1.9 million could be that it's more or less like these are this is by RFs or HRFs, which has a lot of website analysis and whatnot. So they get estimations of this and then you see Brazil, second there, 1.2 million, Turkey, 1.1 million, Germany, almost 800,000. So like those are obviously, you know, they're countries with much bigger populations than El Salvador, Nigeria, obviously an outlier there as it has like, I think 200 million plus inhabitants. Yeah. But it gives you a bit of an idea of like, you know, where's almost someone

more likely to be a Bitcoiner than somewhere else, like in terms of average search interest. So it gives a bit of an idea and a very different perspective. And I also made this graph here, which kind of maps that out over time. Yeah, this is the one I was referencing. But it kind of shows how that has fluctuated over the years, how some countries have been in the top 10 for a long time so people are just consistently searching more there and i tried to do a bit of a breakdown of you know why is that the case like where for example the netherlands switzerland uh austria germany etc where why have those more

often been in the top 10 historically and very often it's like they have strong local exchanges that you know do a lot of education there that have a lot of stuff in the local language so people are just more likely to be engaged there's a whole thing of who has the most disposable income plays a big role too uh in this adoption in general so there's a couple reasons like that why some of them tend to hang in there but typically it's you know it's a mix of reasons it'll be high inflation you know just messed up local currencies and some of the former things that i mentioned so it's a bunch of uh interesting insights in there i think yeah there's no like what i didn't try to figure out like is it you know is there some kind of

ideal mix of factors if is there some you know if we if we get these components going then that's definitely a winning model and we can implement this everywhere it's not that simple you just sprinkle sprinkle of high inflation a little bit of uh bank account freezing you have some bank runs then boom some more exposed uh disposable income yeah it is fascinating how it evolves over the years too and it's very that's one of the things bitcoiners do say and i do believe is like i'm not going to want bitcoin until you need it and that's probably why you see in places like lebanon turkey that trends are increasing nigeria obviously with their attempt to go to the cbdc el salvador it's a legal tender it's sort of um yeah the issue is being forced down there

um so how do we how do we turn this venn diagram into a circle that is just bitcoin yeah that's that's kind of like how i'd like to see it i thought about making like a gif where it just eats it up but um yeah that's that's going to be an interesting one maybe before we get into that there's one more thing i wanted to touch on which i thought was pretty interesting is um it's about b2c so one thing that we touched on a bit was payroll if you actually look at payroll in bitcoin like that to me is one of the most impressive things so far where you know e-commerce is a really big chicken and egg problem but in payroll if you look at a provider like bit uh bit wage they have like a really i think like you know i i don't know them i don't

i don't have any personal relations there but if you look at the product that they've built where people can literally get paid out in the mix of currencies that they want so you could say like i want 20 of my paycheck and bitcoin and i want 80 of fiat currency or something like you can do that and you don't even need to onboard your your uh your employer yeah yeah your company like they don't need to be involved you could just set up some kind of bank account like a generated bank account or something with bitwage i believe and then they just forward that payment to you um so the fact that you're able to do that like it just solves the consumer problem so i don't want my full paycheck to be in bitcoin i only want part of it and my employer is never

going to want this so uh like i can't use it or something like they've solved essentially a bunch of the hard problems there i think and as a result like all that's really needed there is just more education and if you look at their numbers it's sort of like it's just growing over the years just because there's more people that get educated on bitcoin in general and then say okay i want part of my paycheck in this so it's actually like i think an interesting segment where sort of for me like i knew this from the early years that they i don't believe they had both of those benefits yet where you could do the exact mix that you wanted and your employer didn't need to be integrated i think the latter was not there yet but now that it is it's like what's what's

your excuse almost to to not do it so for a lot of people it's just education or they don't want their employer to know like exactly how much bitcoin they're earning or whatever like there can be all kinds of reasons and uh totally respect those but i thought it was interesting to see how out of all the segments that's one where i just don't see what the hard problems left are whereas all the other segments like b2b you have so many stakeholders that need to be convinced to do bitcoin in uh e-commerce it's like well people don't really like spending bitcoin yet and get the taxable event thing and remittances still complicated and you know not without cost because you still have that last mile that adds fees and especially in lots of countries if you want to

cash it out at some mobile uh money market or some you know some western union office or whatever you still end up paying the fee there um but like actually b2c like kind of solved just need a lot of education there so i felt like that was a pretty interesting like for me at least a pretty interesting revelation compared to the other segments where it's like all right this is actually you know pretty pretty solid pretty well done um so worth a call out i think shout out to bitwage yeah get it done and others too like strike's got a cash app's got it yeah it's uh it's becoming more popular yeah for sure and i think one other insight that i found was very relevant in terms of like you know who actually benefits from bitcoin payments because i was

talking earlier where do people not have any alternatives and i was talking to alex gladstein and he said like when we pay out our grants in bitcoin to people we're not screwed by sort of the fixed exchange rates that happen there where you want to send money to a country but they use a fixed exchange rate and instead of sort of donating a bunch of money to a non-profit they just instantly receive like 20 or 30 percent less because of the fixed exchange rate like that is killing for a lot of businesses internationally and for a lot of non-profits etc because you just get another massive haircut just because the government says this is the exchange rate and this must be enforced um so that's been pretty interesting to look into as well like how you

know how bitcoin can help in general a lot of places where black markets have emerged because of fixed exchange rates that's it does play a big role there but people are a bit like you know are still apprehensive or slower to catch on um but there's definitely a lot of potential there and what's interesting is that in the um in the report i kind of challenged the european central bank because they said like bitcoin is the least likely holy grail of cross-border payments so to speak but they just had like two misconceptions about it that like it uses too much energy so it couldn't process all of these transactions which is like remarkable that someone you know in such a prominent role would make that claim and just not really get it.

They said that Bitcoin's comparative advantages like fully rely on regulatory gaps that will all be closed, but they're, you know, they're not looking at, you know, all kinds of advantage. Like it's helping people that just don't have another option. They just look at it from the perspective of, you know, all those black markets will eventually disappear and any kind of use cases that Bitcoin has where money can be sent, they'll all be closed off and we'll use CBDCs or something.

that's kind of how they see it yeah if we've learned a lesson from history black markets disappear and they uh they just go away yeah magically because the government does a great job and there's no more need yeah that happens so how do we how do we compress the venn diagram yeah like in order to figure out i was kind of looking at you know out of those four segments we've talked about the b2b b2c c2b c2c like where where can we most quickly kind of get traction what is working like where do you i think it's like this thesis of mark andreessen where he was saying like if you start some kind of network or app or whatever thing you're struggling with the chicken and egg problem like how should you do when you focus on a niche like

you go into a specific kind of thing where you just get traction where it's working well and then it grows from there and it starts expanding to lots of people and that's what you see with Gnoster, which starts with a niche of Bitcoiners that understand it. And then maybe next up, it's a crowd that's very focused on privacy, and then it just starts growing and growing from there. So what's already going well in remittances? I think an interesting data point that I shared in the report was from the, I think, the vice president of El Salvador's central bank, which was interesting that a number came from him. But he shared that in the first half of 2022, roughly 52 million dollars in remittance volume was sent through the Chivo app and I did the math

there to figure it out and it's about 1.6 percent of all the remittance volume in El Salvador so you could call it 1.6 percent adoption at a relatively early stage and a lot of people might be like oh you know that's not much it's like hell yeah it's much like you think people who have to send money back home that they're going to trust some new system that they've never used to get money to family which is absolutely critical if you're already at 1.6 that is a really meaningful number like i was actually quite a while to find a number there um obviously you know we don't have the way to verify it that was his statement there but um nonetheless i think like that's super interesting to see where people actually feel a need for using this and uh you know there's some

kind of lasting impact because this was i don't know how long that was after the announcement or were they switched over? That was September 2021 or something? Yeah, I think it was July or September of 2021. So it was just a year in. Yeah, exactly. So personally, I'm impressed when I see that. So for me, how can we grow the Venn diagram or just make it disappear, just have one circle, one big orange circle? It's very much about trying to put our focus... As Bitcoiners, we get very enthusiastic about onboarding as many of our friends and family as possible. And that is, you know, it can be important, but the hardest part is that they often don't see

or want to see the pain of money, the pain that fiat money is causing them. And this is what people always say, like in order to explain Bitcoin to someone, you first have to explain to them that money is broken. And it's like having to do that exercise. It's like, well, not easy. A lot of people don't want to hear it. nobody wants to hear it yeah so and and bitcoins have largely kind of focused on like okay who does see that money is broken but maybe not as much as as we could be i think uh and that's really like what we're advocating for in the report is try to figure out like who already understands that money is broken in some way if they have to go work in another country to provide for their

family back home then they kind of understand like there's something not right there like with money and with the fees that i'm paying and there's already some underlying frustration with money where they figure like you know what if we could build out local communities and stuff and maybe like sharing something with them like what's happening in el zonte or what's happening in guatemala for example at bitcoin lake or any of these kinds of initiatives just a fun video like i think his name is uh kinetic finance on youtube like uh julian figueroa or something on twitter he made like a really cool documentary of bitcoin lake for example and that's a really engaging video to watch which is like you know something any tick tocker or person that likes watching

youtube videos or something like they would totally watch that because it's it's really well made like it can just be something fun like that or if you're like wouldn't it be cool you know if instead of having to go work abroad to try to earn an income for your money back home you could get some kind of project going locally you have a local community and you you know you use something like bitcoin or it doesn't even have to be bitcoin but just instilling the idea in their mind of possibility back home like that can be a really powerful tool for them to start feeling some kind of energy around hey maybe there is potential in bitcoin maybe or at least in some of the thought process behind it uh or some of the the characteristics that it has and if they're

open to that then you can have far more conversations i think but it's about finding that angle that resonates with the person rather than trying to push the angle onto them that that resonates with you for me that is like just the core part of bitcoin education and something i want to spend a lot of time helping people understand is like what are just practical tips that you can use practical things to help someone understand bitcoin or be interested in it or open to it in some way and i'm not pretending that i always have the answers that are better at it than other people but i've done you know a lot of in-person teaching and you just get all the obvious questions from people and you see their faces change when you say certain things like

sometimes for the good, sometimes for the worst. And you just start to get a feel for where do people think you're insane and you're just way past their frame of the world, the things that their day-to-day stresses, their job, their kids, everything that's going on. How can you fit something like Bitcoin in there? And does it even make sense for them?

Because it's for anyone, but not for everyone, they often say. So is it for them at the right time, right moment? or am I just pushing a lot of information onto them? Yeah, I was going to say, for the American freaks out there, I think you just let it come to you. I think the last few years, obviously COVID was a big wake-up call for a lot of people.

We're printing trillions, we're locked down, inflation's going crazy. That obviously created a wave of Bitcoin adopters, a new wave of adoption. I think that'll just continue. yes i do understand the the urgency which many people feel including myself to get people into bitcoin if you do view the incumbent financial and banking and monetary system as something that is a bit fragile at the moment and you don't want to see loved ones get hurt but

just historically from my experience 10 years in now like they need to come to it and come to you with questions and just be prepared to have the correct questions to ask them and then the answers on the back end as well yeah yeah i've dug into this a bit in the report as well to try to visualize it a bit made this uh bitcoin adoption funnel which is a kind of a model to figure out like how you know what does that journey look like when people discover bitcoin and you know where like you said we're uh like over a decade in and most people have sort of discovered bitcoin they've heard about it they know it exists like in terms of branding and name it's done quite well but a lot of people like they have a first

reaction they're like curious about it because they're just generally an open-minded person or they might be somewhat receptive or just kind of see what happens you know they'll passively hear the headlines come in but they don't really care too much but some people are also just very dismissive or prejudiced because it's new because it's tech because it's you know it's not from the government so they're just a bit more apprehensive but in general people like some you know a lot of people will drop out of the funnel here at the top when they just discover it they hear about it but they just can't be bothered and it's not always for bad reasons it's just good to keep in mind what i said earlier a lot of people have a job they have kids family you know like the wheel of

life with the all the different charts of the different parts of the pie how do you balance all of that and then cram bitcoin in there that's like kind of important to keep in mind so a lot people they just never get to the learning part but when they do it's like and often this is spared a bit like people discover bitcoin through some new segment uh some article that they read somewhere and that has a really big impact for a lot of people because they're like okay you know like is this is this just deceptive information that's in bitcoin is going to boil the oceans within now in three years uh or like is it overhyped or is it somewhat nuanced so the funnel just has a bunch of different stages to for people to go through like perception like you know what

are they left with after that initial learning period um do they use bitcoin themselves as a big part of this journey as well like like you said like sometimes you just send them the wallet immediately they kind of straight up skip to this part but then the question is do they actually go back to learning they actually like they've played around with it a bit but do they understand at all what is happening or what they should know about it uh so that is still important and then like what they do with their knowledge you know you're going to play an active role in the industry where you educate others where you build a company or you're going to become some kind of detractor that tries to get publications and media to say negative things about bitcoin like there's a

negative aspect as well it's not just let's push tons of people through this funnel and educate them about bitcoin as much as possible and that will only ever help because it can also hurt if force bitcoin onto people they might be like why are you so pushy like you know like are you trying to get me in your your pyramid scheme or something or are you trying to make money off of me like what why are you so aggressive about it or something so it's much more i think about thoughtful education and about figuring out what resonates with people then just trying to figure out how can we orange bill as many people as possible and send books and resources to them to get them to consume everything and have the same worldview as me so for me that's a really

big part of like not just cross-border payments in bitcoin but just bitcoin adoption in general growing that it's trying to do it the smart way and not hacking it in the short term with sort of mass market pushes and where a lot of people just ultimately you know they're not disciplined enough to go through a journey like that that's also an issue like who is gonna spend the time spend a couple dozen hours or 100 hours to really understand enough about bitcoin that'll be a limited subset of all of humanity i think because a lot of people just don't spend that kind of time so it's yeah it's all about trying to optimize for that and figure out how can we make the best possible bitcoin learning experiences for anyone that might have limited

time but they're still interested in it and they want some kind of angle that resonates with them So for me, that's like a sort of a personal mission and something that I love building out at River. Well, you're doing an incredible job of it, sir. Thank you. What did I say to you at the conference? I have to find the DMs. What did I say to you?

I want to get it correct. What did I say? i missed it i must have sent it somewhere else or maybe you said it to me i think it was something uh i did say to you in person yeah maybe i think it was if i if i'm big enough to to be on podcasts and big enough you are big enough you are big thanks as is evidence of this two-hour rip um i hate to do this but i gotta go to the airport uh i could sit here for another two hours i had a feeling so you're looking over at the side i got my wife my wife's calling me she's

like and parker lewis is driving us to the airport and he's like looking down i'm like oh we're coming we're coming don't worry uh it's been a it's been a fun conversation well it's never been i think it's been an important one too um because i think the work that you're doing the context that you're adding so the conversation is very important than the data like you want in from you want individuals trying to educate and about bitcoin and build for bitcoiners to actually understand the world in which you're operating in both externally with the income and payments world and then internally with what's actually going on with bitcoin how people are using it what tools you can build and how to teach them how to use them

so thank you very much for doing that yeah thanks for having me on it's been a lot of fun we'll have to do it again you have to get stateside next time you're in Austin yeah I haven't been there before which is going to shock you but

we'll fix that sometime if you get to New York this summer let me know we'll still be up that way alright well thanks for having me have a good flight and you enjoy what is it it's Wednesday I'm losing my

my sense of time here you enjoy your Wednesday night in the Netherlands okay will do thank you sir alright we're going to link to all this stuff in the show notes freaks that's all we got today peace and love take care