The Wolf Of All Streets - Saving Lives With Bitcoin in Latin America with Pablo Gonzalez, Co-Founder of Bitso

Episode Date: December 10, 2020

Pablo Gonzalez, the Co-Founder of Bitso, Latin America’s most popular crypto exchange, first started using Bitcoin in 2011. Pablo was also one of Mexico’s first residents to use the internet when it was first being installed in the country. Pablo’s expertise has allowed him to gain a unique perspective on how Latin America is rapidly adopting crypto to combat hyperinflation and an unstable financial system. Scott Melker and Pablo Gonzalez further discuss currencies losing value overnight, 6/10 Mexican’s lacking access to a bank, stacking USD in safety deposit boxes, the banking cash cow, buying Bitcoin on Mt. Gox in 2011, building Bitso, cryptocurrency as superior money, using XRP for remittances, Bitcoin as magic money, the failed Petro, the complicated nature of Sats, and crypto as a world-changing movement. --- 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. --- MYBOOKIE In a year unlike any other, you need a sportsbook unlike any other. And if you gamble with Bitcoin, you need a sportsbook that doesn’t just slap the word “crypto” on their homepage and call it a day. Make the right play and sign up at MyBookie.com. Use promo code SCOTT to receive a 100% bonus on your first three deposits.  --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

This episode is sponsored by Voyager and MyBookie. Stay tuned to hear more about them later in the episode. What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast. Today's guest is the founder and chief design officer of Bitso, the most popular Latin American crypto exchange with over 1 million active users using it to buy, sell, send, and receive crypto. While the big news in the United States is that institutions, corporations, and hedge funds are jumping into the crypto space, Pablo believes that a much more significant trend is driving price and adoption, something which I can't wait to find much more about. Pablo Gonzalez, thank you so much for taking the time to come on

the show. Scott, thank you very much. And it's a pleasure, a real pleasure to be here. Well, thank you. So before we get into the questions, once again, this is the Wolf of All Streets podcast where twice a week I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, basically anyone with a good story to tell. This show is powered by Blockworks Group, a media company with over 20 podcasts in their network. You can check them out at blockworksgroup.io. And if you like this podcast, you follow me on Twitter, then please check out my website and join my newsletter. You can do both of those things at thewolfofallstreets.io. So I want to dive right into this. As I said in the intro, the big news here in the United States

is institutional adoption and investment. Companies like PayPal coming into the space, all these things we've been hearing about. But you're seeing a much more promising and important trend in Latin America. Can you talk about that? Definitely, Scott. It's pretty interesting because, I mean, we've been in crypto, my co-founder Ben and I, for a while. And we've always seen this as an amazing, world-changing moment, right? And I remember when we were starting, like before we were starting Bitso, we were both

living in Canada. And always the real, you know, like me being Mexican and living abroad for a while, I always thought, you know, like developing countries could use this a lot more. Like I'm in Canada and there's like most people are banked. There's an ATM here. There's, you know, where Bitcoin today, for example, has a very clear use case as like a million-dollar bank account. Right. Like a savings account almost. as a millionaires bank account, like a savings account almost.

And now the digital gold value proposition seems to be coming a lot more true now that all the institutions are coming and things like that. But always, when you look at a place like, let's say Mexico, for example, six out of ten Mexicans don't have bank accounts, right? That's crazy. They're completely underserved by the financial system.

And they have needs. They have financial needs, such as receiving payments from abroad, making payments with COVID. And I think the workforce is getting a lot more globalized. They also have needs to make payments to other places. We're operating in Latin America, and there's countries that have weak currencies as well. Like we're in Argentina, and there's the Argentine peso,

which loses half of its value I have per year right and we can go more about more in detail about this and and there's hundreds of thousands of families in and well millions of families across Latin America depend on things like remittances so when when you think about what something like crypto can do for us as this world-changing movement, to me, it's clear that the perfect place for this to happen is in developing countries, right? Where you have this bigger area of opportunity. It's like when people didn't have landlines and they just went from no communication

to having a smartphone and messaging. So I want to dig in deeper. So clearly there's a couple of things. In the United States, we all have the luxury of, basically everybody has some sort of bank account. They're not necessarily ideal, but so the first issue you touched on is under, under banked or unbanked completely six out of 10 in Mexico and Mexico is one of the more developed countries in Latin America. Correct. So, I mean, it got to be worse in Venezuela or somewhere that really has these problems. So we have the underbanked issue, which you can talk about more, and then also the

hyperinflation issue where currency is basically being devalued so rapidly that the only way to store any value is in crypto and to transact, correct? So can you first talk about the problem of banking the underbanked. Correct. So when you think about I mean, yeah, Mexico is a developed country, like a more developed country. It's not a developed country yet. But still, it has a pretty low level of financial inclusion. The people that are on banks or under banks, it's huge, right? And, well, like, for example, in Venezuela,

a lot of people have bank accounts, interestingly enough. We're not operating in Venezuela yet, but it's pretty interesting because, you know, from, like, they had a culture of being banked for a while. And now that Bolivia is completely destroyed, they have a pretty efficient local Bitcoins market because they're using it with these banking transactions. It's everyone's bank, right? Well, not everyone, but there's a pretty big percentage.

You see Brazil where it has a high percentage of banking, but it's horrible banking in Brazil. There's a massive oligopoly where five banks control most of the market, especially one. They're the most profitable. The banks were like the jurisdiction where banks are most profitable it's in Brazil

can banks like Santander who are in the UK or in Spain pretty big economies Brazil it's pretty much a cash cow right so corrupt banks are making a ton of money in the ways that banks do.

Correct. Like if you want to get a loan or something like that, you're going to end up paying 300 or something. Predatory loans not passing on. Right, of course. Correct. Nothing like what we've seen in the U.S. or in Japan. It's a very different system.

Like it's not necessarily working for the people. And going back to the on-bank, we have over a million customers as you mentioned. A lot of our customers, their first bank account is a Bitcoin account, it's a crypto account. So they're going from like zero to super-powered money, right? And one of the things we've done, basically, we have three products, Scott. One is easy access to crypto with a big focus in payments to enable all these individuals that want to use us to transact. And then another one is our exchange, which is called Pizzo Alpha, to enable all these individuals that want to use us to transact. And then another one, it's our exchange, which is called Pizzo Alpha,

basically like an order book exchange. And then we have a cross-order product that we're working on on the enterprise side, and I can talk about that in a second. But on one of our products with an unbanked population, it's very easy to use. And we focus a lot on things that are local, like being able to go to a store and getting cash in. So you go from cash to crypto. And basically, there's these convenience stores out. So they're everywhere in Mexico.

So basically, you can walk. Within walking distance, you can walk like any within walking instance, you can, you can get access to the crypto. Right. Like seeing a Starbucks in the United States. That's how Starbucks is. 15 Starbucks on every block in New York. Yeah. Correct. And it's interesting because once we see them, uh, like digitizing their money in a better way, uh, and, And they tend to stay in a digital environment where they can transact everywhere, right?

Whether it's with Bitcoin or stable coins or even with Mexican pesos. So we've done a lot of things, like just going back to what you were saying, because of what we're trying to do, our mission is to make crypto useful for, and we believe that this will massify, right? Eventually.

So we're seeing a lot of like the unbanked early adopters and more and more, this is starting to permeate to their friends and family and things like that. So it's incredibly exciting, this case, where it's just a lot more transparent. It's like no fees, et cetera, et cetera. Right.

And here, I mean, I can't speak for other countries, but it's basically very prohibitive, the laws, especially with regards to taxes for even trying to use crypto, because every time you spend crypto on a coffee, you're selling Bitcoin and it's a taxable transaction, right? So here it's like, it's very, very different. So I see why Americans have this sort of stigma that you buy it as your savings account or a store of value, but it's not money, but you're seeing it in Latin America being used as a superior form of money, especially in a place

like Venezuela. Like you said, the boulevard is literally worth nothing. You know, there's a cap on your earnings. You can't even take it out. You may have a bank account, but you can't take any out, right? I mean, it's like a few dollars a day or a month. Exactly. Well, I don't care if you have a bank account that has useless money in it that you're not allowed to take out. Well, you have a bank account that has a number whose number is worth nothing five days from today. Yeah. Right? Right. Crazy. But yeah,

the way I see it a little bit, it's almost like when you have your ski boots on and it's clunky and you cannot really walk and it's hard to move, and suddenly you take them out and a world of possibilities properly unlocks. That's a little bit of what we're seeing for a lot of people that are getting into crypto. And going back to the on-bank, it's pretty interesting because it's not only because that banks haven't been doing a good job. I don't think they have. But they also don't want a lot of these customers. So a customer acquisition cost for a bank is quite high. Maintaining a customer in a bank because of the way that they're built, there is not necessarily profitable for certain customers.

And when you have, you know, like most Mexicans, let's say they make under $800, $900 a month, then it's not a profitable customer for them. And then they don't want that. So not only crypto, like there's a big boom on fintech because of this, because new mechanisms are allowing to create financial businesses that allow to serve these lower value customers. Right. So it's not profitable for the bank to focus on those customers. And those customers, if you have $100 in the bank, you have to pay a $20 fee a month to have a bank account.

It's like 20% of the money that you have, you have to pay each month to have it. So it's just literally a system that doesn't work for people who are not wealthy, right? And, you know, let's say you're in Brazil, you're in Argentina, you're in Mexico, and you're a super high net worth individual. Yeah, you have pretty good financial services.

That's fine, of course. Rich people always have good services wherever they are. You have a guy that you call that can do things for you, right? But that's not a privilege. It's pretty interesting, Scott. The Mexican Stock Exchange has about 280,000 accountants. So this is people or businesses that have stocks or anything more like anything a little bit more advanced

than a retirement fund type of savings. And we have over a million customers with crypto. That's because, you know, like if you want to like get some stocks in the stock exchange where it's in Mexico

or the US, the barrier of entry is pretty high. You need tens of thousands of pesos and then they'll like give you a shitty service, right? They'll be like,

meh. Right. Then you get the bottom of the barrel so you have basically four times as many customers as the mexican stock exchange which you think would be like in the united states that would be obviously the polar opposite um if you were if you were comparing the two that's really interesting there's four times more people with crypto right with any yeah that's that's amazing so you said that you were in Canada when you started,

uh, you guys were really, really early, right? Like 2013 or something. So, so, you know, most of the exchanges that exist, I think came about, you know, 15, 16, 17, 18, um, so I mean, what, what made you decide at that time, 2013, when this was really a nascent asset, it was just the crazy techies as they saw it who are interested in it. What made you have the vision to build a business around crypto that early? So, it's pretty interesting. I mean, I discovered Bitcoin in 2011, right? I wish I had. Well, I tried to buy at that time. And I sent money to Mt. Gox.

And it got lost in limbo, basically, in swift limbo, as we call it. It returned to my bank account two months later. I didn't know where the money was. At least you got it back. I got the money. I kind of forgot. At least I got it back. Correct.

I lost a little bit of money in Mt. Lux, but not much. And then I kind of forgot about buying. And I remember, like, it was just pretty interesting at the time to me. I went down the rabbit hole hole as many of us do. And I remember in 2012, the first time I used it, I sent money to a friend. I was in Vancouver to Montreal, Canada, and it was just mind-blowing, right?

Like, you know, I have been like learning about it, but I had never used Bitcoin. And there's a quote that I really like that's, any sufficiently advanced technology, it's indistinguishable from magic. And for me, it was magic. Like I was teletransporting value from a place to place without going through like i hate to interrupt yeah i hate to interrupt but how scary is that first transaction

the first time that you send crypto and you put all those letters and numbers in and then you hit send and it's not there right away and you're like is it gone i i will never i mean now it's very comfortable i said money all over the place, but that first time I sent Bitcoin, I was so terrified. It's horrible. It's terrifying. And it felt pretty cool to me. I mean, I'm comfortable with this, but it was pretty scary.

I agree. It was very little money as well. I mean, this is 2012, right? Like it was more like people were just experimenting. It was not about how much it's a Bitcoin, like what's the value, what's the price of Bitcoin. It was more about, hey, you can move money, you can move value,

and you can store value in your computer. I'm like, what? Right? It was just... So cool. And the UX for using crypto in 2012,

it's nothing like today. So, yeah, it's... But it was pretty cool. I barely understood that first transaction what was really happening. But I started looking into it. And it was just like I remember the very first time I was a kid that I used the internet.

I had the luxury to be one of the first people in Mexico to use the internet. Wow. We were connecting into a university, and I was there. My dad was giving classes at this university. And he took me there and I would hang out with the guy that led their computer science department. And he was connecting the internet, literally. Yeah, I see. Like the second internet in Mexico.

And I used it. And even as a kid, I had a feeling of this is weird like I can download these like programs these files and and and it was clear to me that it was going to be relevant like as a kid the only time I've had that feeling in my life was the first time I used crypto like like Bitcoin, that I sent it. So right away, like right then, I was obsessed, like this is going to change. Like the history of mankind will be different after this invention, right? And I want to be involved. So a friend of mine had also discovered Bitcoin. He was actually more into it. And we used to make short films together and things like that back in the day. And we would talk about Bitcoin all the time. And we started a cooperative in Vancouver called the Bitcoin Co-op. We made a

point of sale. It was not a business, like a BitPay, let's say. Not a business. It was just to evangelize and we had about 120 merchants in 2013 in Canada using Bitcoin. So we were just... It was awesome, Scott. We were just experimenting

and evangelizing and going to coffee shops and saying like, hey, you accept this semester card. You should accept Bitcoin. It's free. And so there, it's in there.

Right. So right then, uh, that's when I was saying like, you know, we were doing projects in Canada and I would look back at Mexico and me having experienced like sending money abroad. So I was working on there.

I went to school there. Uh, uh, It was just not efficient. So I always thought like, well, like the first time I used Bitcoin, you can tell just for money, whatever. Like it doesn't care about orders, this thing. Why can't you use it for remittances? Which is like a massive, you know, like a source of income huge market for many mexican families huge market it's the largest corridor used to mexico it's over 32 billion dollars a year i think wow and uh and it was like that's what we set out to do Ben and I who's our CTO and

we wanted to like well first we said okay let's let's figure out how remittances could work in Mexico and right away we noticed that we could not really do it if you didn't have a place where you could sell like buy sell store and

send this like a place that connected the traditional financial system with this new financial system, like this new digital economy. It's one thing to be able to send Bitcoin, but if you can't get any, it's kind of a problem. This is rich. We had to find a way to help people take these keyboards off, right?

Right. For any reason just to work. And we, so we started an exchange, like basically it was a plumbing, the infrastructure. It was clear to us that the real use cases were going to happen in a place like Latin America. It was the best market for opportunity on this, in our opinion. I mean, there's some other great markets as well. Like, I think there's going to be a pretty big explosion in India. That's my thesis.

Africa. Africa. Huge, yeah. But Latin America, like the numbers we're seeing, the growth, it's pretty interesting. And yeah, there's some speculation as well, like everywhere else. But we're seeing real use cases, like I mentioned remittances, right? We started to do like, we set out to do like, okay, we're going to do remittances.

You can move money, it's super cheap. It's going to be the best use case. And we were pretty naive because there was a lot of things we failed to understand we we failed to understand that the cost is important but there was like removing friction was even more important secure things like safety like like feeling safe that your funds arrive. Super important. There's a pretty good study done to a bunch of migrants where they ask in the US, where they ask, hey, sending remittances to Mexico, it's very expensive, expensive, very cheap, cheap, very cheap.

They all go for very cheap. So for a lot of people, it's, wow, like, you're giving all this money to my family when they're charging them 7% of the transaction. When what you're really doing is debit and credit, right? Like, it's not, I mean, it's a little bit complex, but it's not rocket science. Like, it shouldn't have these costs. Right. It's the middleman.

It's always the middleman. The middleman. And they're like, how do you use remittances? And it turns out convenience and speed and convenience and safety are top, right? Right. So we've been working on enabling the remittance use case since 2014, figuring it out, right? And it's interesting because only like a year ago,

it properly started to take off, and it's been growing really fast. We're doing about 5% of the remittance volume from the U.S. to Mexico. And like moving the U. U S dollars to Mexican pesos, that's moving to crypto, right? Today, uh, through, uh, with ripple and with Bitcoin, that's, that's how we're doing it. And it's more, not primarily with stable coins. It's primarily with XRP and Bitcoin. XRP and Bitcoin today.

XRP is so fast. Yeah. So it's pretty fast. And yeah, I mean, it's a pretty good, I mean, it's a pretty good coin for fast and cheap payments today. Like for that use case, the cross border use case, it's pretty good. But at the end of the day, it's also about liquidity, right? We have to develop the liquidity.

We have to, like, okay, you have a million dollars that you need to move to Mexican businesses. Can you sell them at a good price? Right? So that's taken a while as well. So it's been like moving all sides. But it's crazy.

There's people at the rural areas of a state like Oaxaca, which is very rural, that they go to the store, they get their cash, that they're like, that they're

selling in Sacramento, California. And they don't know they're like using Bitcoin or how it works or is it, what's the economics of it? How is it, what's the cryptography? They just know they got more money, that the transaction was more transparent. It was more safe because the fees are lower.

So they were able to withdraw like smaller amount of money, like to uh like smaller amount of money like to send out smaller amount of money more frequently like a lot of these people go to the store and they carry out like massive amounts of cash right yeah huge stacks right of course so they're terrified like you know when i said five or six out of ten mexicans don't have bank accounts right so how do you have the mattress right so the question is though, like, okay, so I, you know, I'm in the United States. I send Bitcoin or XRP. It arrives at the convenience store and they transfer it to cash.

And the person who gets the cash, like you said, is not the wiser of the way that it happened. So how do we get to the point where they don't take it out in cash and they just keep the XRP or they keep the Bitcoin or they convert it to a stable coin and they just transact that way and they never carry take it out in cash and they just keep the xrp or they keep the bitcoin or they convert it to a stable coin and they just transact that way and they never carry the cash out in the store because that's what that's when we hit right that's when that's when it explodes i mean it's interesting scott because we see a little bit of that happening with uh the younger generations right so a lot of people are sending remittances.

Like, let's say they've been sending remittances for 15 years. So they go to the store and they're like, oh, you're sending money to your daughter. She's going to third grade, right? Like she needs clothes or books or whatever. Right, of course. And they like that, that right they like that way of that relationship so changing those habits it's a little difficult i think it's doable sure but what's interesting is that there's younger generations sending cash that tend to do a lot of the education and like evangelizing of like,

no, no, no, like keep it there. And then you can like spend it from your Bitcoin account. Right. And can they spend it in that convenience store? Like that convenience store will give them their cash, but will that convenience store also accept crypto back for goods? Not yet. So that's the other, like they'll keep it in cash if they could go buy their milk right there with the crypto, right? I mean, there's some convenience stores where you can spend crypto like everywhere in the world, but still very niche.

And what's interesting is we saw the payment use case, like, grow a lot in 2016, 2017. It was exploding. Suddenly, we were getting a ton of new users that were buying about $30 worth of Bitcoin and withdrawing it to the same place. We're like, what's happening? And it turns out that an influencer made a video of how you go to the convenience store and pay for your games using Bitso.

So they followed the tutorial of coin converting to Bitcoin, selling the Bitcoin to Steam, and you save to spend. And it was like every month. That was great. It was totally organic and our experience

like user experience wasn't really built for that. We just didn't know. But people find a way. People find a way. Well, they find a way because they don't really built for that. We just didn't know. But people find a way. People find a way. Well, they find a way because they don't have any other alternatives, right? Yeah. Necessity is the mother of invention, right?

Correct. I mean, these are people. They want to buy their game and they have no ways to buy their game to play with their friends or whatever it it is right but that that use case kind of collapsed with the whole scaling bitcoin problems that we had in 2016 2017 right and it was then very expensive to transact in bitcoin and we suffered it like my my my soul's got like that we're trying to make crypto useful.

It was just dying a little bit when I saw. Right, because cheap transactions or free transactions was kind of your pitch, especially for people who want to keep as much of the money as possible. So is that where, I mean, is that where, is that where Ripple and stable coins and such came in? I mean, or was it just that Bitcoin crashed and became cheap again to send? No, I mean, no, no, no. I think SegWit helped a lot. It's kind of forget, but it... Yeah, improved the network.

Yeah, improved the network. And there's been more improvements. We believe in lightning network that it will get a lot more easier and more adaptable. But I do believe there's going to be a resurgence of that merchant use case. Yeah, I think so too. Hopefully. So one of the things we did is we have a pre-payment system

where you can transact Bitcoin and other cryptos and stablecoins very easily with a phone number or an email. So it's almost like a Venmo where you can move your pesos, your dollars, your crypto very easily with QR codes for merchants or for peer-to-peer. And we've seen a lot of adoption in that just for the cheap payments, even though we haven't fully focused on that. It's just very interesting to see that

grow and grow and grow. But it's not necessarily a blockchain transaction, right? Which is the one that carries the fee. And that's the goal that we're trying to reach. Sick of paying ridiculous fees to trade crypto? It's time you try Voyager. It's hands down my favorite place to buy and trade crypto and it's 100% commission free. Voyager gives you easy access to more than 40 top crypto assets and you can instantly transfer cash from your bank accounts. You never miss a trading opportunity. Even better, you can now automatically earn interest on your crypto holdings. Currently, they are offering 6.5% interest on Bitcoin and 9.5%

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And when you do, use promo code Scott to receive a 100% bonus on your first three deposits. Bet with the best, bet with my bookie. So you've worked on remittances for six, seven years before it really exploded and became a core part of your successful business. So what else is Bitso now? And then I know you touched on that you're building some cross-border payment solutions that I know you're excited about. So what are your core businesses at this moment? You have the payments, obviously. You have the exchange. And then what are you building?

So we basically have our Bitso app. And that's basically like a global bank account. I mean, I know that's about a proposition of a lot of crypto. Short the banks. No, no, no, no. I'm just kidding. I'm kidding. I'm kidding.

The big proposal is local access to a global value proposition, right? Right. When I say that you're someone from Brazil and you go to a bank like Itaú or one of the big banks, and they're like, you're not trustworthy enough. I'm going to give you your credit at 200% a year because you have a good income, right? And that's a fair type of transaction. That's insane. That's ridiculous, right? And the problem is that money,

like when you look at the financial systems, they're siloed. They're jurisdiction, they're locally based. And that's incorrect when we live in a global economy, right? Why am I on a disadvantage to be successful in life if I was born in Sao Paulo than if I was born in Stockholm right I was born in Stockholm like I mean life is easier for me and one of the reasons it's it's it's this it's it's bringing the access to people, to these global financial services, where they can get the same level of opportunities as if you were born in Scandinavia, right? Right.

And so that's what we're trying to do. It's basically like a global challenger bank, CryptoPower. We have, we give access to stable coins and crypto to people and all of the use cases. We're seeing pretty interesting things in Argentina, for example. So in Argentina, 75, I mean, the people are used to protecting against the Argentinian people. This is from years ago. I mean, there's people our age, maybe, or I don't know how old are you,

but my age is... I'm 44. I'm 44. Okay. That's in 3D valuations. Like, the money goes to zero during the next day. Like, that's crazy, right? So I was used to, like, whenever I go to Argentina, I love talking to people because they tell you, like,

how they use their money. It's fascinating, right? And they always use the same word, that it's survival, right? And, like, oh, I do this to survive. And it's fun. And I'm like, that's weird, right? That you have to, but they've gotten into this weird world already.

So basically 75% of the bank accounts in the country, empty the day they receive the payroll. So Argentines get their payroll. They make any payments they need to do like right then they empty they whatever they have on their bank accounts then they go to a cueva which is like exchange yeah the exchange is in the streets yeah of course or they have like have like a US dollar dealer. Everyone has one. Yeah, a guy. A guy.

They have a guy. It's his name. And they call them up. And they're like, oh, I need to buy dollars. So they convert their Argentine pesos to dollars. Which you can't do directly. You have to have a guy or do it sort of under the table. Because there's

extreme limits and the exchange rate is far worse if you do it directly through a bank or something well you you can do it directly up to 200 a month 200 200 bucks with the worst exchange rate yeah correct whether you're a individual or a business yeah it's ridiculous right yeah they just don't want you coming out of the currency. Right. So there's, there's many dollar, like, well, no, they actually exchange rate is good because it's a people that can be official. So the official exchange rate. And that's a. All right. They changed that a few years ago though. Right. Cause I know that there was a time a couple of years ago, I have American friends who are living in Argentina and they would

like go find their guy in the exchange rate. It like you know one thing at the bank officially but if they went in the street it would be like two or three times better you know uh yeah that's right I forgot that they actually regulated that now right we could do an entire podcast Scott on Argentine USD exchange rates yeah There's a Bitcoin exchange rate now that people know what it is. There's something called Contado Con Licky. There's the thing called the Dollar Blue. There's the official one, which is not real. There's a cheese exchange rate because like cheese exporters, something. So Argentines know these things. So they're like very financially sophisticated, right? Like that's a very big, like a big difference for users, let's say in Mexico.

And so what they do is they empty the accounts. They pay everything in pesos they can. They convert everything to dollars. And the craziest part is that they have their US dollar cash and they go to the bank to deposit in a safety deposit box. So they go back to the same bank that they withdrew their money from to find a safe place to put stacks of cash.

Correct. So there's a crisis of running out of safety the busses in the country they're super popular wow i lived in miami for like uh four years probably from like 2012 to 2016 and the amount of argentinian money that was flowing in to buy real estate and just get their money out of the country and into dollars or into some you know asset in the united states was i mean it was absolutely incredible. Right. From South America in general, but particularly from Argentina. Correct.

So one of the interesting bits is that now they have, like most of the growth we're seeing right now in Argentina, like the big growth. I mean, we're seeing growth in other markets, but the one that's really surprising us, it's in Argentina, because now they download a Bitswap, they get their money,

they move it to their Bitswap account very easily, and then they just convert it to dollars, to DAI, for example. Our DAI market in Argentina, it's super popular. And then when they need to spend it, for example. Our DAI market in Argentina is super popular. And then when they need to spend it, they just convert it back whenever they want.

So we have plans, for example, to launch a card in Argentina where they just spend and the money converts to Argentine pesos. Right. So you're holding it in crypto, you swipe your card, you don't know, nobody knows it's a normal credit card transaction

or debit card transaction. And, you know, so you don't have to actually cash out of your crypto to transact. Exactly. So, yeah, you're saving US dollars, which, interestingly enough, like, it's not great to save US dollars this year. Some places it is. It's all relative, right? It's all relative, correct. You'd rather great to save in US dollars this year. Some places it is. It's all relative,

right? I mean, you'd rather be in Bitcoin than US dollars, but you'd certainly rather be in US dollars than Argentinian pesos. So, you know, US dollar is still a store of value to most of the world. Well,

you're even probably better off like to be in US dollars than Mexican pesos or Brazilian reais, which are stronger currencies for Latin America. But they devaluate historically. I remember my sister had a pretty strange sickness when she was a kid. And they couldn't find like a cure for her right like it was like what is it so my parents have to take her to the Boston Children's Hospital there was a specialist in this and they took her in and and it was a time where the Mexican vessels just devaluated like crazy. So as I went to the US to treat my sister,

they placed a bunch of locks in the financial system. And the money that my parents had, they couldn't pay the hospital, basically. So my sister was in the hospital almost dying because they could not pay the hospital because the Mexican peso had devaluated. And you could only spend something like $20 or ridiculous amounts, right? So, I mean, fortunately, the doctor ended up paying the bill. It's crazy. And then my parents figured out a way to pay

the doctor, right? But I didn't know that story and then my mother told that to me recently. So I was very young. It's just crazy, right? Like it's we forget like okay oh the Mexican Pesos only devaluated at 10% this year. So, okay. No, it's your money. It's your, like, you know, like your inflation and your devaluation. It's, it's, it's, it's hitting you on a, like it goes back to the luck of where you were born, right? Of course. Why, why was I unlucky to be born in a country that I have

not an ideal currency for me to store my money? So in Argentina, the store of value use case, it's pretty big. So the people obviously see the store of value use case. In the United States, we have now companies like MicroStrategy, right? Michael Saylor saying, hey, we're going to put our treasury into Bitcoin because it's not going to devalue as quickly as the dollar, you know, which is an obvious move, but the dollar is still pretty strong relative to these other ones. So that said, the people see it, American companies are seeing it even relative to the dollar. Do you think that Latin American governments and companies will, well, maybe they already do, or will invest in Bitcoin

as a store of value to sort of fight that inevitable inflation? I think, I mean, I think all central banks will eventually have some Bitcoin. Right.

That's just my two cents. I mean, they used to have gold, right? And this is a better version they still have some gold you know that they use sometimes to sell a bunch of gold to like protect the currency right but we're seeing

companies we're seeing a lot of treasuries coming in and using us to so you are seeing that? You're directly seeing that? We're seeing that in Latin America, yes. In a few different places. And these are treasuries for companies that are not

like, for example, we've been seeing like family offices or funds that come in and buy some. But this is now like treasuries from companies that are not, have nothing to do with financial services or crypto or they're just protecting. They just want to protect their cash. I mean, you know, it's, I mean, it seems so inevitable that they're all going to have to, like, not that they're going to choose to eventually,

they're just going to have to, cause that they're going to choose to eventually they're just going to have to because there's nowhere else to put your money no and it's got to my knowledge i don't know if any governments are maybe they are but i have i don't think so i don't know to my knowledge they're not yet we don't count the petro right we do not count the petrol no no no no, no. Wow, what a failed experiment that was. I actually had Gabriel Jimenez early, early on when I started the podcast. He was the guy, the crypto guy kind of behind the Petro. I had him on the podcast.

That was a really incredible story. Did not go the way that he foresaw, obviously. So I was invited to the announcement of the Petro. Oh, wow. Quick story. They put him on stage. They took him out of jail and put him on stage to pretend that he was supporting it

to sign the documents. Apparently, that's the story. It's pretty crazy. No, I got a letter. It was around Christmas time. You were invited by the government of Venezuela, by La Republica, the government of Venezuela, Republic, blah, blah, blah,

for an initiative around blockchain and stuff, right? We're inviting the leading companies. And it was like December 22nd, right? Yeah. And I remember like reading that and showing that to the team and being like, no, there's just no way, right? When you get in there, you know, they sit you with Maduro and they're like, you need to support this.

You better throw that for Christmas. Yeah, this is scary. So, I mean, so how much, speaking of governments, obviously the very core of the idea of fiat currency is that it's backed by trust, right? I mean, we used to have money that was backed by gold, and now we have money that's backed by trusting your government. So how much of this adoption that you're seeing do you think is a result of distrust of governments in Latin America? Yeah, so something, it's very simple to place Latin America under the same bucket. They're all very different countries, right?

So you have Brazil where there's, you know, five banks that basically dictate fees and things like that. So people are pretty sensitive about this because they say, okay, we're going to charge this for access to capital and there's nothing that people can do, right? Right. And then, you know, that happens with oligopolies. Then you have a place like Argentina, for example, where they had this thing called the Corralito. And that's pretty interesting because basically they couldn't access the money

in their bank account for a very long time, in 2001. And it created this psychological, like, it's ingrained, like it's in their brains, but on a very deep level, where they don't want to, like, have money, like, in their bank accounts, right? Probably that's why they use these safety deposit boxes that I was telling you,

like, they prefer to keep the cash cash because they can't withdraw that. And they don't want to have a corralito where they don't have access to their money, basically. So, yeah, I think there's a distrust more in the banks. I don't know about the governments. For example, the Central Bank of Mexico, it's actually, actually like a pretty efficient institution for Mexico. So they've done things pretty well, you know, like protecting us against the 2008 crisis and things like that. But at the end of the day,

yeah, I do believe there's a general mistrust on the banking system and some of the governments. I mean, this is a trend we're seeing worldwide, I guess, right? This apathy towards governments. Yeah, and politics in general, yeah. But it's a little bit more present in some of the countries where we're operating, just because in a way they've been worse to people, right?

Of course. Yeah. What's interesting though is now like some of those things that you've seen in countries and the less developed countries around the world, the monetary policy, central bank policy, the printing and the hyperinflation. I wonder what it's like for people there now to see it happening everywhere. Not that the United States hasn't been printing money for a while, but we've taken it parabolic here, right? So to see it in places like this, when it seemed like something that was just for smaller countries or other governments, now it's the dollar, right? Yeah, people think their currency is untouchable, but they're not. They're pretty fragile.

Right. And that goes back to your trust of your government to maintain your currency. And to me, isn't that such a clear case for Bitcoin? It's a very clear case for Bitcoin. It is. I mean, it's interesting because there's still a lot of friction with Bitcoin. I don't think we're there as an industry to reduce some of that friction, right? And when you think about who's using Bitcoin today, like while we've seen crazy adoption in the past couple of years, still very, still scary, right? It will start being scary. Like one of the things we strongly believe in

is that cryptocurrency mass adoption is not necessarily a technological challenge. I think the technology works really well. I mean, it's improving and improving constantly. But it's more of a design challenge of making the capabilities of what this technology can do closer to the needs of people and making it easier for them to use. It's like when you send out a WhatsApp today or something like that,

you don't care. You don't care about the technology. Some people do care how Facebook encrypts things, obviously. What they really care is, did my message go out? Did they receive it?

Are they with it? Are they replying back? They want to communicate. And I think that's something that we need to do as an industry. People need to send a payment. They need to do as an industry. Like people need to send the payment, like they need to move money, they need to store money, they need to feel safe.

Like these are the things we need to convey to people in a very simple way. So does that happen with Bitcoin or, you know, are there altcoins that, you know, are better for some of these, these purposes, or is it really all about Bitcoin? I mean, it does happen with Bitcoin because of just the way,

the way it's set up and it really bothers me. It's pretty silly, but humans can only really understand two decimal places. Sure. Like property, like you can only quantify like a cent relative. So when someone's transacting with 0.00164. Yeah, sats are very complicated. Yes. It's very difficult and sats are complicated and like i think that's like we see a lot of users uh coming in and i'm accessing something else just because it's cheaper right yeah that was like in 2017 like

they they put like litecoin on on coinbase people like i can't afford a whole bitcoin they didn't understand so they just bought the cheapest thing they could find on Coinbase. Correct. So there's a lot of education that needs to happen about these type of things. And even better for me would be to just I mean, it's a little bit difficult now, but

to agree as an industry on that, like changing to SADS, for example. Right? But agree as an industry on that. Like, changing, like, to SADS, for example, right? Yeah. But it's pretty tough

to come into agreement. It becomes harder as it gets more expensive, too, because, yeah. So there's these little problems like that

and that we still need to address as an industry. There's things that are much better and easier. Like we talked about the first transaction towards and how it just becomes second nature.

Once you move, once you use it, never go back. Never go back, second nature, etc. So it's how can we get people over the hump because the first one's scary, but the second one, you realize it's actually a lot easier, right?

It's than sending an ACH in the U.S. The worst. Right? That's the worst. So that's what we're working on. But I think there's still a lot of long ways to go. It's getting better, but it's not there yet. Right. So it's clear Bitcoin is going to be the best store of value.

I just wonder if another project that we haven't thought of will emerge and just kind of blow it out of the water with some of the peer-to-peer aspects or the actual, you know, sending. So maybe it doesn't have to be everything. Maybe it doesn't have to be everything. No, and, you know, we're talking about XRP. Like, it's very useful for the cross-border use case. Yeah. world use case. I'm pursuing a Bitcoin guy, but it's actually very, very useful to move between exchanges, it works. And a lot of the development roadmap has been geared towards that.

Yeah, that's what it is. Bitcoin has been more around security, around it always works. It's awesome, right? But it just has a different product program, I guess. It's going to be interesting to see what it is and what the narrative is in 5 years and 10 years and 15 years and 20 years. What do you think

your business looks like in 10 years? We don't exist the way we operate today. So what I always tell the team is that, I mean, right now we're a centralized exchange. Of course. We interact with traditional financial systems. I mean, we're regulated in Europe, we're regulated in Mexico,

getting a PSP license in Argentina. There's a clear regulatory strategy in Brazil. So we interact with both worlds, right? So we're custodians. We keep funds of people very safely. And but at the end of the day, I don't think that's going to be the case for most of these exchanges, right? We're going to move into more of a interface layer, I think, for the users.

So, I mean, hopefully once we're into crypto, you know, there's no need to connect the traditional system because we've all upgraded. So your employees aren't going to have jobs. No, they will.

It would just be different, they will it would just be different right it would just be like like what I say is if we're successful we're gonna become necessary the way we exist today we just need to evolve like you know we need to solve the needs like work on solving the needs of people

and making crypto useful and if they find a use for it, then we'll have, like, if we provide value to people, then you know, they'll be able to, like, they'll use us. If we, you know, like right now, the biggest value we provide is to give them access to the system. But once everybody has access, then we'll provide a different value, right? Like we're providing other values, like making

a lot of these things easier to use. Like, for example, like getting interest on your crypto, like we're working on making that very, very easy to use, like whether it's on US dollars or Bitcoin. The payments use case, we've been focusing a lot on making it easy for people like in Latin America that do use us to make payments. And interestingly enough, Scott, we worked on sending bank transactions really well in Mexico back in the day.

We started in Mexico. And suddenly, we have the best UX to send bank transfers. So a lot of people used us to pay rent. Interesting. Bank transfer and things like that, right? And we believe on you having choice over which currencies you need to, where you want to store or where you want to spend or what you want to receive. So we're still working on that user experience and that's the type of value we want to provide to customers. It's so interesting. So like now you're, you know,

working on adoption and you're working on connecting people basically to the systems that exist because they still need those systems. So the real goal in 10 years is those systems completely disappear. And we just operate inside this ecosystem and therefore the business completely changes. Correct. So cool. Let's hope.

The other part that's interesting, we speak a lot about the retail use case, but like another thought we have is that the entire effects market will move into crypto. Yeah, sure. Like, you know, and, you know, there's currencies like... Which is the biggest traded market. Like that's the highest volume market there is.

People don't realize that. But I mean, trading Forex is, yeah, volume is incredible. Yeah. And you have a currency like the Mexican peso, which is a highly, highly traded currency, right? So it's pretty interesting, like, how the technology that these crypto exchanges are building is now better than some of the Forex markets.

Sure. And you can move the funds real-time. So that's pretty interesting as well, what's happening with it. And I do believe that Forex will eventually be consumed by crypto. I agree. So where can everybody find you after this? Follow you, sign up for Bitso, you know, follow your progress. So yeah, you can download our app in the iOS store or Google Play.

Unfortunately, we cannot service you as citizens. Nobody can. Especially if you're in New York. unfortunately we cannot service you as citizens nobody can especially if you're in New York if you're a regulated financial institution but nobody can service

us in crypto I love it but but if you're not from the US you can probably serve you and

and bitso.com we also produce a lot of official content that we have a platform called Bitso Edu. And even if you're from the US, you can access that. But you can follow us on Twitter at Bitso, or me personally at Pablo underscore Gonzales. So my name is well, but

Pablo underscore Gonzales or at Bitcoin. Amazing. Well, thank you so much for taking the time to do this. I know you're a busy man working on

taking over the world with Bitcoin and crypto. And I think it's so important that people understand that this is more than just you know a speculative asset or a savings account or even just a store of value that it's being used every single day and it's

really changing people's lives no I appreciate appreciate the invite and I will watch that episode from the petrol sounds like I fascinating. Yeah, that one actually was before we even did video, so you're going to have to actually listen to it. But yeah, it's very, very interesting. Crazy story. Gabriel Jimenez. Lovely. Thank you, Scott. Thank you so much.