The Wolf Of All Streets - Paying the World in Bitcoin with Jonathan Chester, CEO of BitWage

Episode Date: February 2, 2021

Jonathan Chester became a Bitcoin adopter almost a decade ago, with the intention of changing the way that people are paid. He is the founder and CEO of BitWage, the most popular crypto payment company and is responsible for making sure that anyone and everyone around the world can be paid in Bitcoin. As Jonathan elaborates on in the podcast, it's usually when disbelief creeps in that the best things begin to unfold in crypto. Scott Melker and Jonathan Chester further discuss early adopters in crypto, magic internet money, paying the world in crypto, storing cash under a mattress, perverse incentives, Tim Draper as an investor, Wall Street’s coordinated FUD, the scarcity of Bitcoin, beneath the whitepaper, infinite wealth on a paper wallet, borrowing against Bitcoin, the disbelief of bull runs, and more. ––– MONEY ON CHAIN Money On Chain brings Bitcoin to mass adoption with solutions to meet the needs of different types of users: a fully bitcoin-collateralized stablecoin (DoC), a bitcoin on steroids (BPro), and a dizzying bitcoiner option for lovers of leveraged trading (BTCx). All this, without requiring the delivery of private keys. Money On Chain - Bringing bitcoin into the mainstream. Visit moneyonchain.com/wolf to learn more --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 9.5% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account. --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co

What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast. Today's guest is the CEO and co-founder of Bitwage, the most popular payroll and invoicing services company that provides digital asset solutions around the world. The most early adopters in the crypto space simply purchased crypto and decided to stick around because the number went up. What makes today's guest special is that he was not only early, but decided to build in the space long before the promise of mass adoption. His vision's come to life and it's helping people around the world get paid in Bitcoin with over $100 million in transactions under his belt. It's my goal in this episode to better understand the growing demand for

crypto payments and how we can reach mainstream adoption. Jonathan Chester, thank you so much for coming on the show. Yeah, yeah. Thanks for having me. Happy to be here. This episode is sponsored by Voyager and Sovereign. Stay tuned for more information on both later in the episode. So once again, you're listening to the Wolf of Wall Street's podcast, which airs twice a week. And I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, and politics. The show is powered by Blockworks Group, a media company with over 20 podcasts in their network. Check them out at blockworksgroup.io. And if you like the podcast, follow me on Twitter, check out my website, and join my newsletter. You can do both of those things at thewolfofallstreets.io.

So now to get on to what is more important. So I touched on in the intro, you were very early. And not only were you one of the people who was early and just sort of bought it on a whim, you had clearly a pretty strong belief because you started building a company. So can you tell me, I guess, briefly your Bitcoin story, how you discovered it, why you were so passionate about it? Yeah. And just to touch on being early. I mean, when I joined, I thought I was kind of late to the game. And now I'm in my, I guess when I came in was right, right before a bull cycle. Um, and now I guess I'm in my third bull cycle.

Um, but, uh, but yeah, I mean, uh, how did I get started? I was, uh, working sales at Oracle. Um, and it was, it was a bit mind numbing of a, of a job, um, a job to work for such a large corporation. And so I decided I wanted to learn more about the world. And I did all sorts of research. And I came across a TED Talk about the future of money. And Bitcoin was about half of that episode. I was intrigued, especially around things like serving the unbanked, more efficient cross-border transactions and self-sovereignty of money. And so I decided to go down the rabbit hole, spent like a month just pretty much doing nothing but reading about Bitcoin.

And I came out this obsessed Bitcoin guy, right? And at the time, you know, being an obsessed Bitcoin guy is not like a cool thing, right? It's like, who is this weird dude talking about magic internet money? Is he into drugs or something like that? Right? That's what people thought back then, because you only heard about, you know, drugs and hacking when it came to bitcoin back then it was a much worse um persona anyways there was another guy at oracle who was uh you know a technical consultant uh who was also an obsessed bitcoin guy and we got together uh because people were like you guys are both you know crazy wackos you should know each other. And so we got together and at the time,

it was 2013, there was no Ethereum, the concept of smart contracts existed, but not to the same degree as it was today. So when you're thinking about, okay, this is a revolutionary technology, how do you get into this sort of thing? It all bitcoin i mean there were altcoins but really it was all bitcoin um and and so we started to look at what uh what exists in the ecosystem right there were exchanges and wallets way for retail people to essentially buy and hold hold their cryptocurrency there were merchant processing, so you could spend your Bitcoin, but there was no way for companies to essentially take that Bitcoin and pay it directly to individuals. There was no payroll, Bitcoin payroll at all. So we're like, okay, well, there needs to be a way to close the financial loop. Without this,

Bitcoin will not be able to actually exist in its own ecosystem. So that was sort of the ethos that we first came up with, right? And we decided to go down. And what we ended up creating is two main products. One is for companies that want to offer the ability to pay their employees in Bitcoin, other cryptocurrencies, stable coins, or cross border in their own fiat currency, you know, using it as a way to move money faster, cheaper. Another is for the same exact use cases,

but for the worker whose company doesn't want to sign up, let's say you work for Google or for Facebook or whoever you can sign up. We give you a direct deposit account. You give that to your employer and then we can pay whoever, you can sign up. We give you a direct deposit account. You give that to your employer, and then we can pay you pretty much globally in the crypto or fiat currency that we offer of your choice. And that's how we got started and where we are today. So what strikes me as interesting, though,

is that hindsight's 20, though, is that, you know, hindsight's 2020, of course. And so now it seems like a completely reasonable business. Everybody knows about Bitcoin. It's starting to reach mainstream adoption. But in 2013, it's like the equivalent of saying I'm going to do payroll for what they would have said then was tulips or Pokemon cards or Beanie Babies or something, right? Because it wasn't taken seriously. And there probably weren't that many people. I mean, you're talking about an extremely niche business. So in your mind, were you trying to service the people that were already into it? Or did you have a grander vision that, you know, 2021, the world is talking about Bitcoin and it's $40,000 and corporations

and institutions are here. Yeah. I mean, my vision was that Bitcoin was the future, right? And you got to understand that when I first got into this, I mean, Bitcoin went from $200 to $1,000, which now doesn't mean anything. But back then this was like insane, like, holy shit, Bitcoin is going to the moon. I had a lot of validation in that moment. That validated my belief that Bitcoin was the future and that even if it didn't become the world reserve currency my vision was that in terms of, you know, we, you know, built our direct deposit solution and our payroll solution, both work for the unbanked. So we were actually one of the first ways for unbanked people to get into the ecosystem. Unbanked people didn't really end up using us that much. It turns out that these people were

not educated enough on crypto. So what we ended up doing is essentially catering to the people that knew about Bitcoin, but needed an easier way or more flexible way to get Bitcoin through their, their payroll or cross borders. Right. So, so while there, you know, also one of the things that I really like about Bitcoin is how fast it moved. Right. So I had this idea very early on of the concept of real-time payroll, where people could basically just get paid, like as they work. I found out that while there is a technical issue there um that that bitcoin solves there's another huge issue that bitcoin doesn't solve um which is

cash flow companies live on cash flow they just can't some some some literally can't actually pay payroll uh until the day of payroll um so so that that, that particular functionality didn't, didn't, didn't catch on. But, you know, in general, I think that what we're doing here and what we're doing now is creating the bridge between, you know, companies and their workforces. And when I say workforces, we've grown, it could be employees, it could be freelancers, contractors, even like vendors that can all receive money through our system. And we've created the easiest and most flexible system for these guys to have a crypto fiat gateway there.

What if someone wants a fraction know, a fraction of their paycheck in Bitcoin and the rest of their paycheck in dollars, sort of like they want a dollar cost average, like it's a 401k or something like that. They just want to view it as like a little bit being put away, you know, as a savings account. Yeah, sure. Oh yeah. And I should mention that we do have a beta 401k solution. It has to be offered through your employer you can't just have a 401k unfortunately um but if the company wants to offer it we we have we have the solution for that um it is in beta though um the the in terms of the percentage i mean that's how it works you know uh most people are getting 5 10 15 percent 15% of their wages in Bitcoin. I think maybe $500 a month is pretty normal for people. And there are two ways to accomplish this. One is you can go to your employer and your employer often has the ability to direct payroll to actually at least two different bank accounts. And the traditional reason for that is I want some of my checking and some of

my savings. And so instead of having sort of a normal savings, you would use our direct deposit account as like your Bitcoin savings. Right. Again, we're not custodying the money though. You tell us the wallet. We want you to have self-sovereignty. We don't want to like have any perverse incentives to to to have you sort of use a custodial wallet so so you know you put in your wallet you get your 5 10 15 20 percent some people 100 percent um but uh you can choose that percentage the other way to do it is you can have the full direct deposit come to us and you can tell in our system what's the percent that you want oh that's cool um because we'll do fiat you could you can send fiat

to someone's bank account through your system effectively and then keep the bitcoin percentage where it is how do you guys determine the going rate of bitcoin at the exact moment of payroll yeah i mean we're basically just going to the to the spot markets and we're trying to get the rates that we can. So that's pretty much it is we're going to the spot markets and getting the rates and giving those to our customers. So obviously 2020 was kind of the year of crypto, right? So I have to imagine that you saw an increase in interest. So you say, you know, $500 is a lot, but have you seen people sort of ramping up the percentage that's going into Bitcoin as we've sort of seen the insanity

of monetary policy and fiscal policy and the COVID sort of reaction in global markets? Are you seeing that now that maybe people want a little bit more of their money in Bitcoin? So it's a good question. I think that what we're seeing is more people want it. I think that the value of DCA is to not think about it, right? So when people are using us, they're actually not thinking about it. I think that when people are reacting to, to the markets, um, you know, they're going and they're buying on an exchange, like a bulk buy, but they still have their DCA. They don't even really think about it. They're just like, you know, once every year, once every few years, they just like looking like, Oh, wow. Look at how

much, how much, you know, uh, Bitcoin I accumulated. And, um, you know, it's kind of funny. We actually had a, we actually had a customer recently, uh, reach out to us and they're like, Oh my God, like, like, I don't, I don't remember where, where my wallet is. And, you know, uh, and, and I did a little bit of research for this person. Um, you know, it turned out that this person had been sending it to a custodial wallet and uh i was able to essentially help him help him figure out who that was and get them to recover their money and they were using us since like 20 2016 i think so that was money a good amount of money that that that we helped, that we helped them out with. But, um, uh, you know, and we pride ourselves with customers on customer service, you know, that's a, that's a, it's a big

thing that, that we pride ourselves on. So one of the biggest issues for anyone, obviously exposed to cryptocurrency, especially in the United States is the tax implications of every single transaction, right? I mean, now we have great software. And you know, when I started, it was like a Google spreadsheet of death. But you know, now at least we have software, but what are the tax implications of receiving their paycheck and then converting to Bitcoin? Is there anything different? Or is it effectively I mean, it's income, so it's income, and it doesn't matter. And then there's a taxable transaction whenever you decide to sell it? Yeah, so the question is whether you're doing sort of a pre-tax or a post-tax transaction, right? So all of us, we receive the money at the net level. I mean, there are certain cases that

are, we have some exceptions to that, but in general, we are receiving the money at the net paycheck level, which means that you've already had your income tax taken out of your paycheck and it comes to us. And then it's converted to crypto and sent to you. So there's no tax implication at that moment. The only tax implication that you're going to have is when you ultimately sell Bitcoin. So there's nothing to worry about. But luckily luckily one of the things you can do is you can come to our site, you can get a, you know, a history of all your transactions and you know, you'll, you'll, you'll get your cost base, download it and yeah, pulls into a CSV that you can use with any accounting software. So yeah, that's awesome. Have you had any of those moments where

like the person gets paid and by the time you can distribute the price has changed 30% or something like that with crazy volatility? Well, you know, I think that, I think that, uh, the, the, the longest amount of, of volatility time, um, in the, from, from, from purchase to send is less than, is less than an hour. Right. Um, so, you know, you can, you can do your own math. I mean, I, Bitcoin does not move 30% an hour. It just doesn't. I mean, it, it, it takes, it takes an entire, like yesterday was like a pretty big exception where it moved 20% over the course of the day, but that was not, it was not in an hour. And in general, the crashes don't do that. I mean, in general, you're,

you're looking more at like 5% swings, maybe a 10% swing over the course of a day, you know, and when you're, you know, when you, when you're looking at like, Oh my God, in a week, it lost 25%. It didn't all happen in a day. It usually, usually happens over several days. Right. So you guys made really big news lately. Sequoia, right? So they're now using you to allow their employees to receive payments in Bitcoin, correct? I mean, I'm mostly excited for them, right? I mean, they're making a bold, new, innovative step to, you know, essentially educate new people on Bitcoin, right? People now have the option to get Bitcoin. And because they're using us, they're also getting learning about best practices about, you know, being their own sovereign wallet holder, they're encustigating their own funds.

So I think that these are important steps for mass adoption in general, that you have more mainstream, non-crypto companies that are offering this. I think that this is a big deal. I'm really curious, with something like that. Do you perceive it as there's a demand from their employees? Like they just ask enough that finally the company is like, all right, man, we'll pay you in Bitcoin. Or do you think that the company is really forward thinking and they're trying to get out ahead of something

that they see being a trend in the future? My perception is that with a lot of hedge funds and Wall Street firms, they address Bitcoin when enough of their customers bother them about it. Probably not otherwise. Just to touch on the second subject, one of our investors, Tim Draper, I was talking to him recently and he was saying for the hedge funds and the guys who are getting into this, that a lot of them are actually looking at this as a hedge against the inflation of the U.S. dollar. So that narrative has changed from, you know, I can't have this in my portfolio to maybe I need to consider this or I need to have it to hedge against dollar inflation. And that's a story that that he's hearing from you know, his child. Thank you, Michael Saylor, right? Yeah, thank you.

But the first question is, you know, who's driving this? And the answer is both. The answer is both. So sometimes it's going to be the sort of the decision makers who are being visionary on the subject. And they're like, we want to offer this and we want to, you know, make sure that everyone has an opportunity to get part of their wage in Bitcoin, because maybe they believe that, you know, people need to get more upside in their salary. People dollar cost average their wealth through dollars.

They should also do it through Bitcoin with their salary. And then there's also a path where enough employees are asking for it. And so then the employees get the companies to come on board. And yeah, I mean, that's... So you talked about when you started, price went from $200 to $1,000. That gave you sort of the reinforcement that you needed,

that it was a good idea. But we all know what happens next in Bitcoin, right? It goes up five times and it goes down 90%. So it went back to what, $100 after Mt. Cox and that. So I guess the long-winded question to that is, did you ever lose that belief when the reinforcement that you got from price became somewhat prohibitive as price went down and could have reinforced it the other way. So I always felt pretty strongly about Bitcoin. But what I've really found is that bull runs tend to happen right around the time when you have a disbelief starting to, to, to take over. I think that, I think that, that disbelief is, is, is normal. You know,

everyone has even the most bullish of people, but they, they remember the fundamentals, you know, they remember that the fundamentals are sound and unless the fundamentals break, there's no reason for, for, for Bitcoin to go away. And and that's why people stay right the fundamentals of self-sovereign money the fundamentals of how the consensus algorithm works you know the the fund you know a double spend like uh you know yesterday was it yesterday yesterday um you know it did not happen yes yeah yeah it doesn't actually break fundamentals. I mean,

some people on our team actually think that this was almost like people on wall street wanting to, to blow it out of proportion so they could buy a dip. Right. I agree with that. I think we're seeing that I, you know, I write a newsletter every day and I talk about it on Twitter, but it's all the bad like FUD, you know, anyone who doesn't know fear, uncertainty and doubt. It always comes in waves, like all at the same time. Janet Yellen is saying that it's for criminals, but then she revises her statement a few days

later and the double spend, which is not even factual at all. I mean, you just hear it over and over. It's like always five, six things at a time. And now that we know that Wall Street is actually here and wants to buy, they don't want to buy higher, right? So, I mean, it's not a crazy, it's not a crazy assertion to think that there's, you know, a bit of coordinated negativity at times. Yeah. I mean, and, and, and, you know, maybe we haven't seen that from Wall Street, but we definitely have seen that from China, right? I mean, the, the coordinated, the court, the coordinated negativity has, has been coming out of China at very opportune times, you know, in the past. So, you know, we know it's happening in China. It's probably now

happening here, right? I mean, how many times has China banned crypto since you've been in it? Endless, endless. China and India always seem to be banning or embracing crypto at any given moment and you can't tell which one. Yeah, exactly, exactly. But just going back, one of the things that was happening after 2017 and a lot of people kept on thinking in 2018 that, Oh, it's going to turn around,

it's going to turn around. And part of my belief of, of it, of it not turning around is that there's just too much belief in it turning around. Like too many people who don't understand fundamentals that are saying it's going to turn around. And it was, it was only when I, I, I, there was despair in that group of people who basically didn't know anything about crypto, who started forgetting about it. And that's when the next sort of ride came up. That being said, I think that right now I'm still very bullish.

Right. that the main trigger right now has been dollar inflation. That while purchasing goods and services may not have gone up that much. I mean, maybe it's like eggs and milk have gone up. But where you're really losing your purchasing power is in assets, all the assets. I mean, are all these stocks really adding so much value that the stock market has been going up like crazy? I don't think so. I think that this is actually a way for people to store their money, to store their value. And that's why all the assets are going up. And that's why Bitcoin is going up, because people are storing their value as a hedge against the dollar, which is sort of a new phenomenon, I think. Right. And if you said that in 2000 or 2013 or

14, you were the crazy guy in the corner who was talking to himself and singing Whitney Houston songs, right? And okay, now we're normal right now. But do you think, and we've all seen it right there. I mean, the endless money printing, I don't care who you are, you notice that and have to think, this doesn't make much sense, right? But do you think, and you would know, do you think that your average person is finally getting that message? Or do you think that it's still a select few that are really interested in hedging against dollar inflation? I think more and more people are looking at it that way. There are some people, I mean, there's like a new, like economic theory that printing money doesn't matter as long as people are willing to buy, buy the dollar.

Right. So, so you do have people that are like that. And they're not seeing, they're not seeing this, right. They're just like the government's job is to print the money, right? But in general, I think that most people, maybe they don't totally see, oh, inflation, but they see, oh, stock prices are rising, right? Oh, real estate is rising. Yeah, and I don't have a job, but stock prices are going up. And I don't have a job. How can this be right um and i think that's that's sort of where it clicks because you know maybe maybe stock and and and real estate feel out of out of reach but you know getting you know

some dollar amounts of bitcoin is actually it it's it's not only um easy to do now with systems like bitwage where you can get your paycheck in it but the entire community you know is is is trying to be as welcoming as possible I mean you know you everyone's just trying to educate and and help which is which is an amazing thing you know and it feels like an out of control train at this point like there's no stopping the printing right so I mean this this can only go in one direction, in my opinion. I mean, do you agree? Yeah, I mean, maybe they'll slow down at some point.

I think that the, you know, some major tipping point could happen where people, I think that the major crisis, financial crisis, if money keeps on getting printed and debt keeps on going up, is going to be the government defaulting on treasury bills. That's going to be the huge thing that's going to shake the world, is this thing that's supposed to be the lowest risk asset. And people don't even understand what treasury bills are. They're just this like low risk asset that, that the government gives you, but it's the debt, right? That is the debt.

The treasury bills are the debt. So, and if the debt is increasing, the, the, the, the interest that that's owed is increasing. So at some point, you know, what if the interest is higher than the money that you're, you're getting on in taxes? I mean, that's, that's like a, the huge reckoning close. Yeah. I mean, that's a huge reckoning bomb. Is that going to happen during this pandemic? Maybe if it does,

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are making the switch to Voyager. Visit investvoyager.com or search for Voyager on the Apple App Store or Google Play Store and get $25 in free Bitcoin when you use the promo code scott25. That's S-C-O-T-T-2-5. So I'm curious, obviously, your initial interest in Bitcoin and most was, you know, borderless payments and frictionless payments we sort of talked about. And the store of value narrative was also there. But now, as you said, the store of value is the narrative, digital gold, gold 2.0, whatever you want to say. The white paper said peer-to-peer cash, right? Do you still view Bitcoin as cash, or are you really erring towards the store of value side?

Because we have stable coins now and there are other ways that you can send money quickly with cryptocurrencies. Sure. I mean, the white paper is brilliant, right? And what did the white paper accomplish? It accomplished the ability to have digital scarcity and censorship resistance. These are the two main things. These are like the two big combined things that was the major innovation of the Bitcoin white paper. The actual rhetoric inside of it,

it's hard to know whether or not that rhetoric aligned with those two major innovations. You know, Satoshi was brilliant in creating those innovations, but maybe not everything in the rhetoric was correct. You know, I think that Bitcoin needs to have ways to scale. I don't believe that it's going to be on chain. I think that what you're going to have are secondary layers and you're going to have centralized and decentralized layers. Right. And semi decentralized. Right. You got you got like decentralized layer like lightning.

You got like a semi decentralized layer like liquid. And I think that actually what's going to prevail mostly is centralized layers. I think that that's going to be the thing. You're going to have your savings account of Bitcoin, your keys, your savings account that you're not using to buy coffee, right? But then when you're doing everyday transactions, you're going to probably fill from your savings account into sort of an account to do transactions. Some people will use decentralized. Most people will probably use centralized. And what does that mean? That means you're going to connect to a credit card. It means you're going to connect to the banks. And I've sort of been saying that I believe that what's going to happen is something similar to what happened to gold and cash, which is people create digitized tokens pegged by these things, right? So your money in the Visa network and in the banks, these are essentially tokens of your cash.

No one actually uses cash anymore. Cash itself has a semi-decentralized nature to it, not in the printing, but in the holding of it, right? And the spending of it. So that got taken away with these centralized tokens in banks and on credit cards that were pegged to that cash. Similar things are going to happen with Bitcoin, but Bitcoin just happens to be a lot easier to hold, right? You're trying to save your dollars. You're putting $100 bills rolled up under your mattress or something. I mean,

people don't do that anymore, really. I mean, some people do, but in the U S not that many people are doing that, but if you're doing it with Bitcoin, I mean, you just need, you know, uh, your phone or your hardware wallet, or, or, or, or, you know, even just, uh, you know a paper wallet, right? And it stores unlimited wealth for your future. And then you just move some money to some system so it can work with the convenience of credit cards or other banking systems. Right. I mean, there's a number of debit cards in crypto, obviously. Already, we're seeing Visa talk about the space. I know BlockFi is coming out with a rewards credit card and others. So I do think that it's definitely moving in that direction. You just said something that's really interesting. You can have infinite wealth on a paper wallet. That's terrifying to most people. Right? Right. So there's the people who see that and they think, I'm my own bank. Amazing. Nobody can steal my money. And then there's the 98 other percent of people who are like, I'm going to lose that piece of paper.

I'm done, right? So you touched on earlier that you guys help people with best practices, right? To understand how to secure a wallet, how to secure your assets, all those things. Can you talk a bit about the practically what those best practices are? Yeah. I mean, basically it's all about, it's all about backups, lots of backups. Um, I, so, so, so I'm a big fan of, you know, hardware wallets and, you know, quote unquote paper wallets, um, and having backups of these things and actually even having like geographic dispersion of of the backups right um so so you have your hardware wallet which makes it easy for you to do transactions right that's like you know to five minutes or to to do to turn on your computer and do a transaction and no one's able to take the money from you but you might lose that what do

you do when you lose that you need a backup so how do you do that there are um now these you know metal metal sheets of paper or like you know metal metal boxes or whatever that or you can store your your your your private keys and then you probably want at least two of those you probably want them in different geographical locations or i mean a lot of people they split them in half and one half is in one place one half in another yeah exactly exactly so of course that's a lot for someone if you don't have a life-changing amount of money maybe you don't need to do all of that but if you're storing all of your wealth you know and and on bitcoin you want to do the thing that's best and you know maybe you're thinking why do you want two different geographical

locations well uh you know what if a natural disaster happens right sure on fire yeah fire flood i mean you know this is global warming is, you know, and climate change is somehow affecting things. Right. So so, you know, you want that extra security to know if my house blew away today, I can recover my funds. Yeah. I mean, and also I think, you know, especially as it's every time there's a bull run, you start to hear more about the hacks and the criminals and the crazy attention to it and stuff. And I think that forget even being like an influencer or known person in the space, eventually you're going to talk about it and people are going to find out that like, you're a fan of this stuff and it makes you a target to some degree. Right. So I think an aspect of it is you also want to make it so you have difficulty sending it if you become compromised to some degree.

Like I use Casa, you know, three, five multisig. My my stuff's everywhere, man. Like it would be you're going to need a week of kidnapping me to get my funds because we're going to be going on a long trip. It's sad. But, you know, and I don't maybe a lot of people don't want to take that big of a step to do it. You know, I get that. So it's it's a it's a bit scary. Yeah. Yeah. I mean, it's it's one of those things where, you know, I think I think most people are probably not going to put their entire savings in Bitcoin. I mean, no matter what the asset is, you probably don't want to do that, right? I mean, you should actually spread it between different assets.

What you shouldn't do is hold it all in dollars, right? That's what you shouldn't do because you are not... You get dollars, you got to buy something. You're actually losing money if you store it all in dollars, right? That's what you shouldn't do because you are not. You are actually losing money if you store it all in dollars, right? Yeah. I always joke that dollars are for spending and Bitcoin is for saving, but you can almost say that dollars are for spending and everything else is for saving. Yeah. I mean, most assets, most assets, right? And I, you know, of course, you can, you can, you can try and go full Bitcoin. And, you know, I, one of the things that I was just thinking about recently is, is the concept of capitalism. And one of the one of the most important parts of capitalism is that it rewards for taking risks and choosing the risks correctly, right?

So when you're putting everything in Bitcoin, you're taking a risk. You know, I believe that it's the future. A lot of us believe it's the future, but it is still a risk. And, you know, if you're taking that risk and you're right on that risk, you're going to be rewarded. And from my perspective,

the risk is very low. Now, and I think that that risk has decreased. And now, as we've discussed, there's actual risks to holding dollars as well. It's not viewed blindly as the only place to just kind of park it and whatever. Listen, when I was a kid, I don't know how old you are, but we had savings accounts and you could earn nine, eight, nine, 10% on your money. So at least you were like fighting inflation by getting interest. That's not a thing anymore. Your dollars get earned you nothing. So that, that leads me to the next question. I mean, obviously the sort of catch catchphrase of, of, of crypto right now is DeFi, right? And there's very many levels. Are you finding, obviously, you guys are sending to self-custodied wallets, but do you think

that a lot of people now who are taking payments or their paychecks in Bitcoin are then moving it onto yield-bearing platforms? Yeah. So I think that one of the big things that people like from these platforms is they want to continue to have exposure to their Bitcoin, but they need something today to spend on things that, you know, don't allow you to spend Bitcoin on. And this is a very popular use case, right? I don't want a tax event on selling my Bitcoin. I don't want to sell my Bitcoin.

So I'm going to essentially use it as collateral to borrow dollars, but still maintain my exposure to Bitcoin so that when I finally pay that back, it happens. I think that's a pretty popular use case. We're hearing people who have interest in sort of these deposit DeFi things. And, you know, I think DeFi is cool. I think that there's a lot of risk in DeFi that worries me, especially the decentralized loan world. So you have centralized crypto loan platforms. C5. People like to call it C5 i mean voyager block five celsius yeah yeah yeah and then you have the decentralized ones and one of the decentralized ones are are fun and in

concept i'm i'm always worried about because because you you have to trust the coders actually it's not totally trustless you you you you've you've actually just traded your risk of, so you used to have credit risk when you gave a loan, right? The DeFi solved the credit risk, but what you now have is code risk, right? Rug pull risk. I mean, you also have a bad actor. Like, I mean, they can literally, you know, depending on the platform,

we've seen it hundreds of times in the last year with these smaller platforms and yield farming and all that. They can literally just empty the wallet. Yeah, you could have a bad actor who coded it. You could have someone who is just not good at coding. Right, incompetent. It could have a great heart, but, you know, some other person took advantage of it you know and then sometimes you don't even need a bad actor to totally screw you in defy i mean the parody

wall it totally showed that there was just a developer who who played with some code and locked millions of dollars away he wasn't even trying to steal money right so um so so so you know i think that when you talk when you're thinking about defy especially the you know like the true decentralized defy you gotta understand that while you are taking away uh credit risk you are taking on code risk and you gotta be yeah yeah yeah i think that's fair i think that it's sort of in its infancy, but that the promise of safe and secure DeFi is game changing for the future, in my opinion, because people just want, I mean, people want yield, right? I mean, they want yield in a safe way.

Yeah. I mean, it's, so Bitcoin decentralizes money and, you know, the DeFi, the two main decentralization is exchange and loans. Right. And what we've found is that decentralization in financial services are valuable, not as valuable as money. I think that's the most valuable., but, you know, banks are taking a lot of money in their structure. You give them your deposit. You, you actually loan money to the bank. They give you no interest on it, on the loan that you give to the bank. And then they, and they're loaning that and they're taking all the interest, right? So what these platforms are basically doing is they're allowing you to get the interest that the bank would be getting. And right now, I think that there's so much easy access to capital that you can get really high interest rates.

I think that over time, the interest rates will go down and it'll be probably closer to what the interest rates are when you borrow from a bank. But still. Well, that lends the, lends the question. Well, we've seen the OCC say that banks can custody crypto. We've seen Kraken become bank in Wyoming. We've seen stable coins now will be approved to be a competitor to, to Swift. What happens when the banks just get in on the game and say,

we want to do this, forget you guys. We're going to take the Bitcoin, we're going to use it as collateral for loans and we're not going to give you your yield. Same system, right? Sure, but while they'll be able to do that, and I think that's going to be real competition to like the CeFi systems.

Sure. But I think that the DeFi systems won't. Why? Because they're actually removing that intermediary. So the banks will have to compete. Of course, you know, DeFi systems have the cost of the blockchain, which is not nothing, as you can see now. I actually think that server costs and data storage costs are more expensive on a blockchain than without a blockchain. So they would have that going for them, but it'll be a competing system, right? They'll both exist

simultaneously. I think that one of the things that people are excited about which is like the stable coins being able to be used by banks uh i don't think it's that um exciting really um i mean i think it's great for circle you know i think that they're they're gonna do great for us right sure but i'm not sure if the industry is going to... The only way I see the industry benefiting from it is if they are actually allowing people to get the stable coins to their own wallets. Self-custody, right. If it's just another payment between two banks.

Yeah. If they do that, then it's huge. And the reason why it's huge is because volatility is not the only barrier to entry for Bitcoin. This whole private public key understanding is a huge barrier. Huge. do it with stable coins, people are going to learn it. And that would be huge. And then the next step is, okay, I need a hedge against dollars. Let's go to Bitcoin, right? Yeah, you're like, these are still dollars. Yeah, they're still dollars at the end of the day. Exactly. So I think that if they do that, which I don't believe they're going to do, but if they do that, then it would be huge. I mean, I've made the same argument about central bank digital currencies.

I mean, we all know one way or another that money's going digital. China's already doing it every week in other countries exploring a central bank digital currency. I just think that's going to lead people to Bitcoin, right? You're teaching people how to use a wallet. You're teaching them how to accept transactions. And then they're going to go wait this. Yeah, I mean, it's like if they people to to learn about private public key cryptography

sounds like an interesting innovation are they going to do that i don't believe it i think that you're like paypal just go buy it yeah they're just doing it for like marketing sake or they just don't understand like what's what is the efficiency that's being gained here i mean the fact that a central bank is is is is powering a stable coin but then it can only be used between the banking various banking infrastructures it's like what's the point at that point um help a lot easier to print money and control and control the money supply if you know exactly where every single dollar is at every given moment. I mean, a central bank digital currency is a central bank wet dream, right?

I mean, sure. Yeah, but I guess that is an interesting point. But again, you have sort of, in my opinion, an inefficiency of server and storage processing, and you're just going to end up getting centralized silos on top of it anyways, and then you're going to lose that, you know, and then there's going to be fractional reserve, and then they're just going to lose that knowledge. I mean, yeah, I mean, it could be, it'll probably give them some more transparency, but it's not going to be majorly revolutionary. So do you think we're approaching a world where everybody wants a piece of their paycheck in Bitcoin or every merchant wants to accept Bitcoin? Or do you think that that's still sort of a pipe dream for now? I think that we're still early. I think that eventually we will go there. I think that maybe not everybody, I mean, not everyone wants part of their paycheck in gold, right? So, but, you know, I think people do get part of their paycheck in 401k. And there's sort of this general understanding of, oh, I'm saving money here for retirement. I don't understand entirely

what it does, you know? And that's like, you you know a lot of mainstream on that um and i think that i think that that this could be a way that people approach bitcoin in the long term um dollars are not going away i mean it's just not gonna happen um so you know i i think that if it did go away it's like some sort of massively terrible thing is happening in the world yeah we're like hooray we live in a dystopian hollywood blockbuster and i've got bitcoin to go get uh water 100 miles down the road with mad max not ideal so but at this point then what do you see as the still existing barriers to that level of Tim Draper, but because of what we've seen being in the space as a live company in 2014 and me, you know, just learning in 2013 is this story of currency, government, economic instability, causing the positive price changes in Bitcoin. So if we look at the end, I think it was 2016, India demonetized its two largest bills.

And that was like 80% of all the cash in circulation in India, which was a cash-based economy. So hugely destabilizing. The price of Bitcoin locally grew 40% compared to global. You know, same thing happened in Brazil. I think that was in 2018 when the president was, you know, kicked out of office for corruption. You know, another, you know, 30, 40, 50% increase in the price locally. In the beginning of the 2017 bubble, which really started in 2016, we were seeing price rising. And one of the huge things that was happening at the time was China was having a huge stock market issue. Maybe stocks were crashing, growth was slowing down. And at the same time, Bitcoin started its price rise. And there are

more cases of this that I won't go into, but I think that this is happening in the US. It's a slow thing. It's not happening overnight. People have just lost some trust in the dollar. Right. And I think that as people over time realize that fiat currencies are not 100 percent trustworthy, that these are the things that will contribute to to the growth of Bitcoin ultimately. Yeah. And I want to I want to know because you sort of mentioned that, you know, at some point, the story was cross-border payments and now it's self-sovereignty.

We actually do cross-border as well. It's an important part of our business, which is a lot of people globally who are exporting to like the US or Europe or UK or whatever. And they're using our system to get essentially better rates directly deposited into their accounts, which we use crypto to help move the money,

or stable coins or Bitcoin, right? And it's still an important use case. It's not just self-sovereignty. It's still an important use case. Right, I guess what I was getting at is just with the other existing coins in the space or technology of Bitcoin is still the best one of the group. You know what I mean? I mean, even XRP is lightning fast to send across borders. I don't want to use it, but. Yeah, but it's not about that much speed. People are actually willing to wait. Also, if you're willing to wait for a wire

transfer from Nigeria to the United States for two weeks and hope your money comes in a bank, then the 30 minutes instead of one minute is not really amazing. And also, one confirmation doesn't mean shit. It means something, but it doesn't mean transaction finality, right? So when you're getting the money in Bitcoin, you know, zero confirmation, you can see that it's coming. And then, you know, you probably want to wait, you know, up to six confirmations to wait for it to confirm. And that transaction finality in time pretty much is the same everywhere because if you actually understand

how the base how it works it's it's it's it's time it's mainly time-based that that that does the security because it's you know in proof of work it's electricity base which is bit which is limited through time right um so uh so even if you have confirmations at 10 seconds you actually have to just wait for more confirmations to have transaction finality um and so people but people are willing to wait i mean you know you're talking about you know the tens of minutes right um there were times in 2017 when it was like tens of hours yes i remember those days it was like it's been two days man is this thing right but like you said you knew it was coming you could check and and i think that i think that um that uh most most blockchains are not necessarily designed to be that much better in terms of transaction throughput along with security.

I was going to say you sacrifice security for speed. I mean, that's why it always comes back to Bitcoin. And the whole idea of cost, I mean, that's really just an issue of the capacity that nodes are able to process. So either you require, you know, more powerful nodes, which is less decentralization, or, you know, you have the same level of decentralization, but you, you're, you're limited in your transaction throughput. That's,

that's also a trade-off, right? Decentralization is security and self-sovereignty, right? So, so these are not really the things that things that I think matter the most. What matters the most is liquidity, actually, when you're talking about the cross-border stuff. I mean, if you can't sell, you know, a million dollars of, you know, shitcoin XYZ in some country, then it's useless, right?

You have to be able to get out of it. And with Bitcoin, you can do that. I mean, you know, maybe with Ethereum, you can do that too, right? You have to be able to get out of it. And with Bitcoin, you can do that. I mean, you know, maybe with Ethereum, you can do that too, right? But, you know, someone who creates, you know, oh, we're going to create like a cross-border, a currency specifically for cross-border, but then has no liquidity, it doesn't, it's useless.

So true. Does any of the tether FUD concern you at all? It doesn't concern me in so far as it's going to crash the price of Bitcoin. It does concern me in terms of whether or not we want to offer it to our clients. So we don't offer Tether to our clients. And that's because, well, I believe that Tether actually has a use case because it has liquidity for trading. I'm a little afraid're educating people right they might come to us for bitcoin but they maybe they turns out the needs that they want stable coins over their local currency and then it like, if we only offer Tether

and they don't know that there is sort of this risk of Tether that no one entirely knows if they're fully backed or not dollar for dollar, I'd rather them not have to be exposed to that while it's still uncertain in the market, right? So that's why we offer USDC. And we're looking at some decentralized stable coins as well, because maybe some people want sort of the decentralized peg.

But yeah. So what are you most excited about for 2021 and beyond? But it's still January. So for 2021 in the space in general. Stimulus? I don't feel stimulated. I mean, I think that stimulus is going to be a huge boost for Bitcoin, right?

So I'm excited about that. And people are actually getting their stimulus checks through Bitwage. It's pretty cool. Is that right? How's that work? um well it's it just works the same way as the direct deposit function you sign up you get a direct deposit and you use that as as the the way to to receive your money from the irs so um yeah people people are doing that uh it's pretty cool uh i that's that's really what i'm mostly bullish for uh what what

and that's why i'm still bullish for price rising this year right um yeah even when the price was was crashing on on this fud it's like okay it's going to rebound because the fund fud double spend fund has no basis and from a perspective, there's going to be $2 trillion of new money going to be printed soon. And that's just going to increase the price of Bitcoin. People are going to hedge against dollars. So that's what I'm most excited about. Once that happens, maybe we'll see us. Probably that'll happen. We'll get some sort of really crazy spike. US is going to spike you know us is going to buy then asia's going to buy and everyone's going to go crazy about it and then there'll be a big crash

but then we'll probably be stable and maybe we'll be stable in the 30ks the 40ks the 50ks who really knows right but um but uh you know this is what i kind of think is going to happen. What are you worried about in 2021? What am I worried about? What am I worried about? Let's see. I am worried about, so, you know, a lot of people are talking about this is new FinCEN ruling, which, you know,

is not that great. But I think it's going to happen i you know stable quote you mean the uh self-custody the self-custody one i think it's gonna happen the stable coin one regulation is kind of weird i don't think it's gonna happen but the self-custody one is is gonna happen i mean i i i think that that ultimately what that's gonna do is if you send over ten thousand,000 out of any centralized service, they're going to need your social security number and then they're going to report that to the government. And I think that's just what's going to happen. And I think that that's

going to totally crater the price of bitcoin or do anything to stop the price of bitcoin or anything like that um yeah you know i guess the only thing that would make me scared is like if um you know some create some crazy regulation comes out that's really going to hurt people, right? I mean, like if, you know, you just can't send to non-custodial wallets or you can't send to smart contracts or I don't know, some sort of- Or you can't receive to your fiat off-ramp

from another wallet. You've been sitting on this Bitcoin forever and there's literally no way for you to get it to dollars or something like that. But the thing is that that would definitely hurt the price of Bitcoin because the US and Asia are basically the leaders in the global pricing. But I don't think that it'll stop people from it. I mean, I think that, that people will, will figure out how to use it. It's only going to affect people in the United States. And a lot of the, the, the, the real like payment use cases are happening outside of the U S.

But, you know, I think that, that my hope is that they do the regulation, correct. Right. They, they do it where people can still be self-sovereign that that that you know there isn't a huge burden on on the exchanges um and right and that's that so who would want to start an exchange if they uh pass pass those laws i think actually currently because of the uh presidential transition, the Biden administration has for now frozen all of those proposals. He's frozen it. It's going to be. It's absolutely going to happen.

Just no doubt in my mind that at a bare minimum, what's going to happen is if you are sending money off in an exchange uh over ten thousand dollars they're going to require your social security number or tax identification number and they will then report that to the government um for most people that i mean it sucks but for most people like you're reporting your money so yeah yeah, whatever. Yeah. Yeah, exactly. For, for, for a lot of people, it's whatever, it's a loss of privacy. Hopefully it's not overly onerous for companies to do that reporting. I think that, you know, that, that, that would suck if you needed like a team of five people to dedicate just to that, then it's like, you know, some, some, some, some companies just can't do that. Can't afford that. Right. I mean, to some degree, I really see the flip side is a bigger

risk. Like I said, as if you sent $10,000 to your exchange to get out and they said, you can't do this. You know what I mean? Or, or that they need it, but it's going to be what it's going to be. So at the end of the day, you're most excited about stimulus and your biggest, I guess, concern is regulation. Yeah. Yeah, exactly. And I'm not saying that there shouldn't be any regulation, right? I mean, at least if there is some regulation, we're willing to work with you and not ban you. Right. So that's, that's sort of the good side of it. It's just a matter of it being regulation that makes sense. That is an overburden. So that's, that's just a matter of it being regulation that makes sense. That is an overburden.

So that's, that's the important part. So after this, where can everybody, uh, keep up with you guys? If they're interested in using the service, if they want to follow you, where, where do we find you guys? Yeah. So our service is just, uh, www.bitwage.com. Uh, I, my Twitter is at John chest. I'm also on clubhouse. Really loving that app

at Jonathan Chester there. So yeah, sign up, get your wage in Bitcoin, get better international payrolls, all that good stuff. So I'll ask you before we're done. So what for you, specifically your business and you, what do you see happening over the next couple of years that would be a huge change? So I think that in the US, this Bitcoin payroll subject is very hot, right? Yeah. And I'm expecting and I'm hoping for essentially this to become a big fad that we, you know, get to jump in on. You know. We've been servicing since 2014 and we're the most flexible and easiest to use platform. We're the only platform

that really pushes self-custody. So I'm excited for that to happen. I'm excited for the US to really push forward on Bitcoin payroll. Me too. And I hope all these NFL guys and NBA dudes that are talking about it, I hope they all just start buying Bitcoin and taking their paychecks. It'd be awesome.

So thank you, man. I really appreciate it. Give me a lot of hope for mainstream adoption for the future. Very excited to see what you guys come up with. And I think that quite incredible that you were so early on it, have stuck with it. And now it's really likely going to pay off in a big way. So congratulations. Yeah. Thanks. Thanks. Thank you again.