SLP283 Alex Gladstein Bitcoin: Who’s For Freedom, and Who’s Not?

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Alex Gladstein CSO of HRF rejoins me on the show to talk about the recent El Salvador Bitcoin legal tender news. We break down the good, the bad and what could go wrong. 

  • Overview the news
  • Historical moment for Bitcoin and the world
  • It could have been so much worse
  • Merchant adoption and lightning
  • HRF grant

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Prior episodes:

Sponsors: 

Stephan Livera links:

Podcast Transcript:

Stephan Livera:

Alex welcome back to the show.

Alex Gladstein:

It’s a pleasure to be here. It feels like an eternity every month in Bitcoin.

Stephan Livera:

It does. So many things are going on. So for context for listeners, we are recording this basically — So for me in Sydney, it’s 8:00 AM Thursday, the 10th of June. And we are basically the day after the El Salvador Bitcoin legal tender act or bill passing. And Alex, I’m sure you’ll have lots of comments on all of this because President Bukele actually came into Twitter spaces hosted by Nic Carter and Alex, you were actually up on stage and I was listening in just as a pleb but let’s get your initial reaction to all of this.

Alex Gladstein:

Wow. Well, where do we begin? I wanted to begin actually, just by reflecting on an essay that Allen Farrington wrote called Wittgenstein’s Money. And I was listening to it the other day, courtesy of Guy Swann and his Bitcoin audible work. And you know, he’s talking about this idea of like how conventional economists and the mainstream media and policymakers, like they don’t think Bitcoin is money because it doesn’t display moneyness, right? Or it doesn’t display the full range of moneyness or it’s not money enough. And the idea is to kind of ask like, well what if it was becoming money? What would that look like? And here we go. Here’s what it would look like, right? This is literally what it would look like.

Alex Gladstein:

It would start as a small project run by individuals. It would later grow in the summer of 2020 onto the narrative of corporations acquiring it for their balance sheet. It would really strengthen around this narrative as digital gold and as a store of value after really proving itself over a decade as something that not just preserves, but dramatically appreciates purchasing power, it would be sent to stratospheric levels by fortune 500 companies like Tesla, for example, which were buying it by the billions on their balance sheet. And then that’s kind of like the end of part one of the store of value digital gold piece. And what you’ve seen happen in the last few days sparked by a small community in El Zonte, in El Salvador and the amazing work of Mike Peterson and so many others and Miles Suter, and then the incredible vision of Jack Mallers and the curiosity of a young kind of brazen government has brought us to the point where now we are all of a sudden thinking about Bitcoin as a medium of exchange in a much more serious way.

Alex Gladstein:

And not just as a store of value, but this is what it would look like. You’re going to have over time, the evolution of this money. And you’re going to have these historic events, which trigger step functions in the moneyness of the good right? — Of the asset of the network. And here we are. So now you have a really big surprise because most people, like — I think you and me probably have thought or known this, that government adoption was inevitable, but I I’ll speak for myself. I thought it would be a central bank adding it as like an asset on the balance sheet. I did not think it was going to be a legal tender first and with the focus on payments and networking and transactions, that to me is really shocking. And I think it really shocked a lot of people and last night, President Bukele mentioned that, yeah, they’re going to buy close to $150 million in Bitcoin. Sure. But it’s not going to be like for their central bank, it’s going to be to support this payment infrastructure. So this I think was really surprising. And that’s what I wanted to start with is just that, we continue to be on this journey of Bitcoin monetizing its way into existence. Right?

Stephan Livera:

Yeah, absolutely. Agreed on the point about, it’s just continually getting bigger and bigger and better and better. And it’s funny that the detractors of Bitcoin, they’re always trying to say, “Oh, see, you can’t actually spend it. Or you there’s not that many people using it”.

Alex Gladstein:

So, like, that’s the thing they use. So I’m debating all these economists all the time neoclassical or whomever. And they’re always like, “Well, Bitcoin’s not money because it’s not legal tender anywhere.” Okay. So now we have it.

Stephan Livera:

Ever shifting goalposts. Right?

Alex Gladstein:

And now they’ve come up with other excuses. Oh, it’s a small country. Oh, it’s you know, it’s all this cope, so much cope, so much salt from so many people. And you can really see out there who’s for freedom. And who’s for Bitcoin. Who’s not, I mean, the people who are for Bitcoin or freedom, this is not hype. This is a genuinely exciting mindblowing day. And you can tell who’s not because they’re like, eh, nah. Then they’re just like complaining, there’s a cope and soft and, Oh, it’s like a bad news. Somehow. Let me tell you what would have been bad news stuff. A bad news would have been the China coin. Okay. Bad news would have been a ban of Bitcoin. Bad news would have been a CBDC that’s gonna to track all your stuff. Top thing, freedom, money as your legal tender is not bad news and not for anybody. So I just don’t want to hear it, you know what I mean?

Stephan Livera:

Yeah, of course. And so just to summarize, maybe some listeners aren’t familiar with the details of the law, but some of the key points are essentially that El Salvador will now have, in some sense, dual legal tenders, right? You’ll have US Dollar and Bitcoin and taxes may be paid in Bitcoin. In terms of the accounting for businesses in El Salvador, they can still do their accounting in US Dollar, but now the government, and as you were touching on this, they are now running. Essentially this development bank in El Salvador will be operating a trust fund, which will hold some Bitcoin and essentially do the auto conversion because they understand that for some merchants in El Salvador, they may not be willing to take the Bitcoin price risk. So the end user customer may pay with Bitcoin using Lightning, maybe using Strike or any other lightning wallet.

Stephan Livera:

And that’s important. And then the government fund will essentially pay out in US Dollar and take on some of that price risk for the merchant to sort of help ease this process. Now, one point that some people have said, and I think there’s some truth to this, but I think it’s just more like, we’ve just have to recognize that on net, it is a benefit, which is that the government is now mandating that people accept Bitcoin, which is a coercion, right? So I think if we were going to be purist libertarians about it, which, you know, not everyone’s a libertarian first of all, but if I was going to be purist libertarian, I would say, there should be no legal tender laws. You should be allowed to use whatever you want instead of the government forcing people. Now, some people were latching onto this people like George Selgin, who is again, a little bit of a detractor of Bitcoin and often nitpicking here and there. But I think like you said, it could have been so much worse. Right? They could have started their own shitcoin. They could have started a surveillance coin they…

Alex Gladstein:

They could have worked with China, they could have banned Bitcoin. Right? So…

Stephan Livera:

Yeah, there could have been no favorable CGT. They could have spoken about it like crypto instead of very specifically saying this is a Bitcoin legal tender. Right?

Alex Gladstein:

I thought that was amazing when people were asking the president about the other coins and he was just like, listen, this is a Bitcoin bill. Nothing we can do to stop new businesses from coming here, but this is a Bitcoin bill. And yeah, I mean, look with regard to article seven of the bill, it’s not good and we should try to get it repealed. I mean, no one should be forced to do anything, but there is article 12, which I feel like a lot of people just like conveniently ignored, which basically says that for anyone who’s been unable to, or somehow cannot get whether it’s, I guess, a wallet essentially on — I guess, on a smartphone or on some sort of payment technology, they don’t have to use Bitcoin.

Alex Gladstein:

So and I just get the sense and maybe I’m wrong. We will see how this plays out, but I get the sense that the goal here is a government that wants to aggressively transform its payments infrastructure and wants to be leading the world in innovative and wants to hire Jack Mallers instead of Swift to like if you think about that, that’s so crazy instead of like going with the US government, IMF, Swift kind of mafia, we’re going to go with Jack Mallers and the lightning network. I mean, to handle international payments and stuff. I mean, that is just a really amazing. Again, they’re not going to like a mega corp here to build their government wallet and to advise them all this. They’re not going with some huge multinational corporation, they’re going with Jack Mallers, who’s a hardcore Bitcoin activist.

Alex Gladstein:

Who’s completely into the values that you and I care about. So I don’t know. I think it’s really interesting and I get the sense that these articles and this thing was pushed through so quickly for a pretty good reason. The government of United States is not ready for this. Like we’re not — IMF, the US government, the state department. They’re like, not sure what’s happening. They are not taught. They don’t know really what Bitcoin is versus blockchain or crypto — they’re just like, not very well [knowledgeable], like maybe people do at like FinCEN. Okay. Maybe, and I would even say a lot of them, like, even at FinCEN, don’t really know what the lightning network is, but at the state department — no, they’re clueless. Like they don’t know like Bitcoin from Bitconnect like a lot of them and I’m being a hundred percent serious here.

Alex Gladstein:

So this is like a big wake-up call. And I think that Bukele and his clan, or whatever, knew that if they forced this thing through quickly, what are they going to do? What is the US going to do? So I think that they were worried maybe about the IMF. I mean, he said he had a meeting with the IMF tomorrow. We’ll see how that goes. But you know, people are worried about retribution like risk premium on bonds artificially imposed. Worried about like complications with paying El Salvador, the rest of the loan, things like that. So we’ll see. I mean, those are all kind of like very 1970s, 80s cold war style, heavy handed tactics. I don’t know if the US government’s going to do that stuff anymore. We’re just going to have to see, but I think they rushed it through.

Alex Gladstein:

And I think a lot more dialogue would have probably — I think we could have gotten seven out of there had we had like a sustained conversation. And I don’t think that they — I mean, first of all, I don’t think that they want to force Bitcoin at every transaction. I mean, he was really quite clear in the conversation that the dollar is really going to [be] still a unit of account. It’s still going to be obviously the main currency, so people will still use dollars. So let’s see. Maybe I’m wrong. Maybe I’m too optimistic, but I don’t really see the situation where someone gets like find, or like arrested for like refusing to use Bitcoin. That seems like not what’s happening here. And there’s even an article that’s specifically lays out that that shouldn’t happen.

Alex Gladstein:

So I do agree with you that no one should be compelled to do anything, but on the other hand, it is amazing to watch a government aggressively promote freedom money open-source, permissionless confiscation and censorship resistant money. I mean, this is something that I don’t think we saw coming this early in this cycle. You know, I think a lot of people had price predictions that have been on fulfilled, although 65K is pretty serious, but what I don’t think people were predicting was this, I mean, this is especially just so few months after Tesla that was early February. So we’re four months or so after a fortune 500 company puts it on its balance sheet. We have nation state adoption. That is an extremely short period of time. Things are happening really, really quickly.

Alex Gladstein:

And then as you saw, almost like from Mexico to Argentina, to Colombia, Panama, to Paraguay, to Ecuador, to Costa Rica, I mean, there’s Latin American politicians all across the region now saying we should do something similar. We had the chief innovation officer of Colombia on the Twitter spaces last night. He was like, yeah, we love Bitcoin. We’re going to try and like put this through something similar. We’re discussing it. I mean, it’s crazy to watch, but Latin America, you could see where this is potentially going, where like maybe they become this region, which is very Bitcoin friendly where most of the countries have Bitcoin as a legal tender, with a lot of Bitcoin businesses in Latin America. I mean, that would be interesting. So that’s one potential outcome where we’re going. And I think what’s so interesting just to conclude this piece here is that this is an alternative to the dollar hegemony, right?

Alex Gladstein:

Which I’ve been writing about lately with regard to how it got created with the petrodollar system and all that. But I mean, what used to be the like alternative to US foreign policy was like communism. So like radical redistributionist violence, right? The fact that the new alternative is Bitcoin, which is this peaceful, like free money is really staggering to think about. I mean, if you think about the geopolitical path of the world, I mean, violent guerillas and stuff. And it’s like, “Okay, now we’re just going to go with Bitcoin — really?” I mean, is that happening?

Stephan Livera:

And I’ll tell you, one thing that’s funny with that is that they are voluntarily restricting their own power. Right now, If you look at the way someone like Mises would have thought about sound money, it was actually like a check on the government. It should be thought of in the same category as like a bill of rights, or like it’s something to protect you and me and all of our rights. And so it’s interesting that they are voluntarily restricting into this. Right?

Alex Gladstein:

Absolutely. And he said this when somebody, asked him about it and he was like, “Look, we’re going to do it. We’re going to open the door. We don’t know what some other side, but we won’t control it because we can’t.” And I think they know that at some deep level, I will say, this is the world we live in. And everything will follow from here. And we don’t get a do-over, but I think a dollarized country was a good bet for this to happen because they already don’t have that power. Right? They have some of it, right? They can freeze bank accounts and stuff, so they can do that. But they can’t really debase the currency so much because they literally use dollars in dollar accounts and they don’t make — they don’t print their own money.

Alex Gladstein:

So a dollarized country was probably likely to be one of the first anyway, and this gives them like a hedge against US monetary policy. And that’s what Jack Mallers said in his amazing speech in Miami, at the Bitcoin conference was essentially that these people face the negative externalities of extreme debt monetization and expansion in the United States, which benefit the coastal elites and asset holders. But not the lower classes and certainly not El Salvador, which is like this client state. So this young president and his family and we can get into to how, you know, democratic or not they are later. But the point is they’re looking at this as like a hedge kind of like an alternative, like, okay, well, we can do the Bitcoin standard and see where that goes and they’re looking at this from a perspective of foreign investment excitement think about it this way.

Alex Gladstein:

This is a country that’s had decades of civil war unrest, super high murder rates. I mean, all of a sudden, now people are like really excited about El Salvador. I mean, this is like light at the end of a very dark tunnel. And if you think about it for the president himself, it’s kinda like this thing, it’s like, we’re really, I was talking about this, a lot of people at the Bitcoin conference, like people like Gigi and others, but Bitcoin’s kind of got this chemical impact on your brain. Like when you start talking about it publicly, you get a lot of engagement. Oh, like, well, maybe I should talk a little more about it. And then, Oh, wow. Like maybe I should learn more. Oh, now I’m going to put it in my profile. And I’m going to be like the Bitcoin.

Alex Gladstein:

It really like latches in there and fulfills something and it gives you something. And then you want to talk more about it. And that’s what he realized. And he noticed Bitcoin Beach. And I know this cause Mike Peterson was on the space and he was like, Mike, you guys really, you were the ones who started this and he notice the circular economy, noticed it’s spreading noticed Jack Mallers, noticed Strike becoming the biggest app in the country. Notice the fact that Salvadorans have this huge reliance on remittance, 22% of the economy is based on money coming back from the US. Noticed the fact that the infrastructure sucked and 70% of people don’t have bank accounts and they all have to take these long bus rides that are really dangerous to go get the cash that their family sends them. Risk getting robbed and noticed that internet access is on the rise.

Alex Gladstein:

And it’s now about 50% in the country and it’s heading higher every day. And he probably looked at that maybe analyze that a little bit, but at the end of the day, the bigger thing I’m guessing based on what I’ve observed [from] this guy is that he’s a narcissist. and he knew he would get really famous and like, he’s really famous, man. Like, so I’m all about it. We want to have a generous interpretation and I just laid out like the optimistic case for why he did this, as he thinks he can transform his country and really bring a lot of foreign investment interest and infrastructure — fine. But we can also just take the more cynical view that he knew at some level that he was watching what was happening. And he was like, if I do this, I’m going to be famous for the rest of my life.

Alex Gladstein:

And lo and behold, no one had heard of this guy outside of like Latin American politics before. Now he’s going to be very famous and he’s going to be like a keynote at Davos and all that stuff. He’s going to be like a star. Right. So Bitcoin did that for him. Nothing else. Bitcoin did that for him. We’ll see, we may never know what is what was actually the reasoning here, but he seems very open, really crazy was on the Twitter spaces. Cause like someone, messaged me, cause like I was one of the handful of people on stage. So I was getting all this inbound from like people being like, can you ask him this? Can you ask him that? So I asked him a question about the wallets from our friend was Bitcoin QNA or something like that.

Alex Gladstein:

And he was like, can you please ask him to clarify like this, isn’t going to be like some government wallet only and you get arrested if you have some other wallet. So I wanted to clarify that for our freedom, loving friends and look, he could be lying, but he said his answer was like, definitely not, like we’re going to work with Strike to make an official wallet, but like you can use any wallet you want. And that probably logistically makes sense. The other one I got to ask was, “Are you going to do mining?” Because there hasn’t really been a lot of state mining or really — any. Like we know that States are involved in some ways, but not like openly, right? Not like Canada’s doing Bitcoin mining for the government. There’s no government operations quite yet. Like we know Iran is kind of like taxing miners and some countries are incentivizing them and the Chinese government allows a lot of it, et cetera.

Alex Gladstein:

But like, it doesn’t appear that there’s a lot of like, if any actual government operations. So I was like, are you guys going to mine? And he literally was like, I haven’t thought about that yet. And then he kind of stopped a second and was like, you know what, like, actually we have all this stranded geothermal energy because of our volcanoes. And he started going into detail about it and he’s like, we’re going to do that. And I’m like, wow, okay. Today he’s been tweeting. He tasked like the minister of energy with like setting up this volcano mine. And then he posted a video like two hours ago of them with a new well that they had dug this morning. Whereas engineers, yeah. With 95 megawatts is no fricking joke, man. So now you’re watching a country that has apparently about 650 megawatts of geothermal.

Alex Gladstein:

I mean, they’re going to do very well there. And that’s just that can go straight to the state people as welfare. It can power a grid. I mean, it can connect — you can use that income to connect other parts of an electric grid to that space and create communities. There’s a lot of things that can be done with that money.

Stephan Livera:

That’s pretty cool!

Alex Gladstein:

Man, that’s really exciting that in this age, as Bitcoin Twitter people, we can just kind of meme things into reality. It was really crazy, man. I mean really wild. So at the end of the day, this guy he saw this opportunity, he took it, he ran with it and he started a, he’s changed the world and look, he’s an autocrat in many ways.

Alex Gladstein:

I mean, it is a democracy. Okay. It’s, it’s what we probably call flawed democracy or like a partial democracy just because he has this like very uncomfortable, super majority, he’s done stuff like he brought the military into the Congress last year to like force them to sign a bill. He sacked a couple of judges. Now his defenders who are legion and the majority of the country, probably from what I understand, they’ll say stuff like, well it’s the old corrupt guard that he’s like trying to get rid of. And that’s just such a nuanced conversation. And that’s partially very true. I mean, who are the other political options besides his party Marxists on the left and then the ultra right? So he’s like this young millennial kind of a character and the older conservative guard doesn’t like him. So maybe it’s true that the judges are whatever, but as human rights activists, we don’t like to see infringements on the democratic process like that.

Alex Gladstein:

You know, we’re not going to be celebrating him personally, but we’re going to be celebrating the action and the policy for sure. And I think that’s a nuance that’s actually important. I mean, we didn’t celebrate King John, we celebrated the Magna Carta, right? So there’s going to be in history, all kinds of bad leaders that like give either give in to people power or give in to incentives and change their nation. And that action should be celebrated. We should be incentivizing leaders to launch the Bitcoin standard. This is very good for freedom, for empowerment for the people. So anyway, long-winded take to say that we now have the Bitcoin standard in a nation state and here we are, man. I mean, it’s, it’s kinda hard and crazy that crazy to say it, you know?

Stephan Livera:

Yeah, of course. And this also ties into a comment and I know this is part of something you’ve been talking about is what we might term Trojan horse theory. So tell us a little bit about this idea of Bitcoin as a Trojan Horse.

Alex Gladstein:

Yeah. Well, essentially just to briefly recap in the classic tale in classic mythology, there’s like this long protracted war between the Greeks and the Trojans and creeks cannot penetrate the city of Troy. So inspired by Minerva or Athena, depending on whether you’re following Latin or Greek, Homer’s Odysseús character. He gets this inspiration from Athena to create essentially this big horse and trick, the Trojans. So, and this is actually described in the Iliad rather, but by Virgil in you read this and essentially they create this big beautiful kind of really enticing looking prize. And then they like pretend to leave the Greeks and they’re really hiding nearby. And then they leave one soldier behind and then the Trojans are like looking at it, debating Cassandra and Laocoon.

Alex Gladstein:

Like, no, no, it’s a trick. Let’s not do it. But then they get dispatched and the Trojans are like, let’s bring it in. And then they bring the horse in. Cause they think it’s going to give them power. And at night of course the Greeks come out of the horse. They let the rest of the army in and you know, the Greeks win. So the Trojan horse has been a term for a long time in computer science. So like something that looks benign, but actually it’s quite harmful. So yeah, I mean the idea of Bitcoin’s Trojan horse theory is that people adopt it for their own self-interest because it’s shiny and pretty and because it has NGU technology. And that’s largely what we saw right before, at least the previous few days here was we were in that kind of era of Bitcoin as like digital gold.

Alex Gladstein:

Right. And it was being adopted by institutions, by individuals as like something to hold on to — as like this asset. And those people were always very careful to not really go into the cypherpunk qualities of Bitcoin or talk about it’s censorship resistance or programmability, or they would never mention anything like taproot or they wouldn’t really talk too much about the lightning network, all these incredible things that makes Bitcoin a strong freedom tool — they didn’t really talk about. But the thing is like the NGU and the freedom go up, the FGU are like tied together. So you’re kind of getting this you’re sitting there and you’re looking at this really like enticing asset to invest in or buy and you’re acquiring it, but in doing so you’re like strengthening what’s inside of it.

Alex Gladstein:

And you’re allowing that financial freedom, really. So this is exactly how I described it in an essay. I wrote a about a couple of months ago in Bitcoin magazine where not just corporations, but one day nation States would go after Bitcoin. What it brings them now, maybe that’s fame, maybe that’s fortune, but they can’t separate it from the impact it’s going to have on the rest of the community, the rest of the network. Right? So again, I don’t know whether it’s fame or fortune that this guy’s after. He certainly I don’t think you could call him a Democrat. You know what I mean? I don’t think that’s what he’s after here. I think we just need to be realistic, but guess what? It doesn’t matter. And he’s going to be co-opted into promoting freedom anyway. Even if he doesn’t realize it, like he’s now going to be aggressively pursuing a program to get Bitcoin to the hands of all the citizens, which over time reduces his power over them. Right. It’s like that’s Trojan horse theory and we’re literally watching it play out,

Stephan Livera:

Yeah. And so I am thinking here of some members in the Bitcoin Twitter space and Bitcoin community world who maybe are a little more bearish on that aspect right now, of course I’m bullish. I’m like you, I think number go up also ties in with freedom go up long-term. And so I think we can, even if there were some concern about the coercion aspect, I think, well, it’s a net win. We should be positive. We should be celebrating this idea, but there are some people out there who might say, well, look, Bitcoin’s been out there and actually it’s resulting in a capital gains tax to the state and therefore the state’s getting bigger or you guys talk about this thing of it’s making the state smaller or giving people back their freedom, but we’re living in a world with continual surveillance.

Stephan Livera:

Right? And I guess I’m thinking a little bit about that even though really, I kind of disagree with that point of view, but there are people out there who maybe are a little bit more paranoid or a little bit more and Hey, look, some paranoia is good. People need to think about what are the risks and maybe that ties into the next question, what could go wrong here, right? Could it be that the IMF bring pressure and say, if you do not kowtow to our way, we won’t give you loans and then you’re going to struggle. Or maybe if the US government — could there be pressure brought there? Do you have any ideas there?

Alex Gladstein:

So I think like the main argument, like the reason why people are upset about like the NGU bros or whatever, I don’t think that comes from a place of realizing that Bitcoin is the best money. And it’s just going to be very valuable for humans because it’s really effective at what it does. I think it comes from a place of realizing that the NGU people will actively cooperate with the state and its surveillance and control mechanisms to try and capture as much Bitcoin as possible and to make lives miserable for Bitcoin users which is a real risk. Right? So the interesting part is laws and regulations restricting the use of Bitcoin. And co-opting it, we’re kind of — it’s funny because that’s what we were worried about a few months ago, so much so that I wrote this long essay for Quillette called Can Governments Ban Bitcoin?

Alex Gladstein:

And it’s ironic because at the end, I kind of, again, I hinted at the Trojan Horse thing and I’m like, well, the incentives say that ultimately they won’t ban it. They’ll actually adopt it. And it’s just to get kind of crazy to see it happen in front of our eyes. But sure. I mean, I think that what could go wrong with Bitcoin has always been, at least in advanced democracies, like the United States, like too much regulatory capture. And I’ve never been one to agree that wall street can like co-opt and like kill Bitcoin. I just don’t agree fundamentally. I don’t think that’s how it works and it’s not how it works technically. And I don’t think that’s how it works from an incentive point of view, but a lot of people say that here in El Salvador, what could go wrong? Well, there’s a lot of things.

Alex Gladstein:

I mean, yeah. As you mentioned, at the foreign level, you could have US or IMF influence to force him to like backtrack. I guess what I’m saying is that the incentive structure is such that today, I don’t know how much they’re going to twist his arm. I don’t know how much we can look if it was the 1970s dude might die in a friggin mysterious plane crash tomorrow. Like that’s what we used to do to people who like, did stuff like this to us, right? Ditto, the Soviets or the Brits or any, any like empire. Right. So I just don’t know if we’re doing that anymore, man. Like Russia is threatening our monetary dominance and we’re even going to go after the Nord Stream head for sanctions. We’re not. So, I mean, I think we’ve reached the apex of our power about 15 years ago sort of right after the Iraq war.

Alex Gladstein:

I mean, which I thought in many ways was waged in order to help sort of protect American hegemony, especially the petrodollar system. I just don’t think we can do that stuff anymore. So we’ll see. I just think also Bitcoin is catching people by surprise and it makes it harder to go after if you don’t really know what it is. Right. So we’ll see, I think IMF, US power. That could be one thing that throws it for a loop, but let’s say that happens. I mean, the people, this is a genie that is open source code. That’s out of the bottle, man. Like you can’t, it’s like out of the lamp, like all of a sudden, I mean, for the last four days, everything — anyone everyone’s been talking about in El Salvador is like, what is our president doing? What is Bitcoin?

Alex Gladstein:

Like, I want to learn more, like it’s in all the newspapers, like it’s in all the coffee shops. It’s in all the taxis it’s in all the work sites. It’s at the water cooler, it’s everywhere. So what are people just going to forget? No, they’re not. And like, so I don’t know how reversible it is at a social level. That is a threat. I mean, I think in El Salvador a risk is that it becomes too centralized in terms of the network. And it basically becomes like too much of a bank. Now that’s where Bitcoin’s attributes are really helpful because as look, as long as Strike is the one contracted to do it, I think we can be assured that you can pay out of Strike to any other Bitcoin or Lightning address. I think that people need to know that generally speaking Strike is like for an Salvadoran when they’re holding it.

Alex Gladstein:

It’s a dollar nominated USDT account, right. That has KYC. Right? So I mean, what we really want is the ability of Strike to be able to receive payments instantly from anywhere in the world. And then obviously this is in a custodial way being run by Strike and it’s in there, they’re doing it by Lightning, like instantly, but as long as you’re able to withdraw or pay out to another invoice, I think we’re good there because it allows people to have this dual setup where they have like a custodial checking account. And then they have their like non-KYC, sovereign savings account that they control. And I think that’s probably the best compromise we could ask for like a nationally built system, at least for now. So some Bitcoiners may be upset with that because it’s not like pure Bitcoin, but I mean, let’s just be realistic.

Alex Gladstein:

That’s probably the best we can hope for here. And as long as there’s no rule against having your own wallet, I mean, I think it will grow a lot. I mean, if you talk to Mike from Bitcoin beach, obviously they made their own wallet there and people use Lightning in a way that’s not reliant on any sort of app or whatever. Meaning you don’t have to rely on a custodial service or whatever. So those are risks, right? Both from foreign and internally, I think he’s so popular right now rather has so many seats, whether it’s legitimate or not, like, I mean, there’s not going to be like, they’re not going to reverse it.

Alex Gladstein:

You have to understand that incentive here this has given like some hope to this nation. Like, I don’t think they’re going to go backwards on this. So if anything, the challenges are going to be foreign or like technical. Right? But look, this is the full bitcoin standard package, right? It’s like legal tender, mining it with local resources and attracting foreign capital building Bitcoin communities, building a Bitcoin payments infrastructure, and then eventually getting it into the central bank. That’s the full Bitcoin standard stack right there. So they look very much on that track. And again, I think that there’s more upsides than downsides. Certainly. I mean, I guess one other downside I’d mentioned of course is that we lionize this guy too much, but look, Bitcoiners got to know you can’t have heroes. We just went through this. Right? Like do not like lionize this guy. Like he could be really bad. I like what I see in terms of like what he said about Bitcoin and I like what his advisors are saying, and I think this could be good for the world. Just remember that he’s power hungry he could turn on a dime, so just be very wary and put up your guard, but let’s try to make the most of this opportunity. You know what I mean?

Stephan Livera:

Right. And so one concern could also be to what you were saying is that maybe a lot of the Bitcoin ends up in the government wallet and isn’t actually held by the people. Right. Or something like that. Maybe it is a concern like that. Like withdrawal.

Alex Gladstein:

Yes. So if the government wallet does not allow you know, payments to outside the system or withdrawals yes. Then we have a huge problem. But I think that Jack Mallers would resign before he gets that far, but maybe too much trust in him. I don’t know. We all just need to be vigilant and watch this thing, but I’m very encouraged that they’re hiring him and his team and rockstar dev. I mean, come on, rockstar dev, is he really gonna freaking dagger us? I mean maybe, but probably not man. So I think that if anything, if they’re going to be the ones building out that infrastructure, they’re going to build it the right way. And I think people need to know there is going to be that compromise where there’s this like partially custody, kind of volatility, protected checking account type service for the people.

Alex Gladstein:

Because that’s just where we are in the world right now. I mean, but it’ll have the ability to like, just use native Bitcoin also again, getting back to Allen Farrington’s essay, if it was money, what would it look like? Well, it would look like this. It would be going through this process where it’s not just like, it doesn’t just go from store of value to unit with account in a day, it goes through the medium of exchange process over time to becoming that unit of account. And we’re not there yet. And clearly the unit of account there outside of Bitcoin beach is still dollars, but hey, it’s bullish that in some communities in this country, the unit of account is already satoshis. So that’s really crazy. So again, we’re on this journey of monetization and this is just such a massive step in that direction, man.

Stephan Livera:

I’m very excited to see it. And I also was reflecting back to some of my early years in the Bitcoin space and now I often speak about this in 2013 and 14, there was this whole idea of merchant adoption. Right? So, and then what happened in practice is people would pressure businesses to say, Hey, you should take Bitcoin for payment. And they did. Right. And then very few people actually paid. Right? And so, and then it’s sort of like, well, this time around seven or eight years onwards, now we’ve got lightning. Now we’ve got more education. We have so much more adoption. You know, maybe this time it’s really going to be a lot more different. And I guess this time it might be that it’s not instant. Everyone’s just going to instantly convert and use Bitcoin straight away. But maybe there’ll be some people who just stay within the US dollar system, but it just slowly growing, right? It’s the number one app. So I wonder what, if they set up all this infrastructure and very few people actually use it.

Alex Gladstein:

I think it’s time. Like this is Bitcoin’s time because this couldn’t have worked even a year and a half ago or two years ago. We are at a time now where the infrastructure can support it. And pre-lightning, obviously in a high fee environment, you can’t do daily payments with Bitcoin. I mean, the fees are going to get 10, 20, 30, $40. They’re going to keep rising in Fiat terms as we go forward to the future because both — they’ll get higher, but also Fiat will become debased. So it’s like on both fronts, right? So now we have Lightning and it’s robust enough and it works. And like, as someone who’s been trying to follow lightning apps and use it like really, I mean really, really making some big leaps here. Like I was able to really easily send lightning payment within seconds on stage with Jack Dorsey, which was a nervous experience for me to try and do that.

Alex Gladstein:

I’m like, I’m either going to be the enemy of everybody involved in Lightning. If this doesn’t fricking work or it’ll be really sweet and people will notice for a small moment and then whatever. So the risk reward was not great, but I really just wanted to do it to show the world that it was doable. And I’m just like, all right, I’m just going to take my non-custodial Muun wallet and I’m just going to make a quick payment and I’m just going to teleport a bare asset around the world on stage with Jack Dorsey. I just think that’s cool. So we’re there with that. and I know that you’ve got these devs and engineers today, reflecting on Twitter. I mean, this is a moment for them to like take a bow and step back and be like, wow, all this hard work.

Alex Gladstein:

Like we’re not where we need to be. But like, we are on our way, man. Like both at the dev level and the app level. I mean, we are on our way and we were not a couple of years ago. So I think like as for why it could work this time around, there’s two main things. One is just like the technology and development infrastructure is just where it needs to be is so much better than it was poor and in the right way not the big block way, like the sort of like actual way to scale Bitcoin, number two is a socioeconomic thing, right? So it’s like, we thought people like me, especially, I thought this was going to be just like decade of like Gresham’s law, where it was like, unless you really needed to spend your Bitcoin, you were going to save it and spend your depreciating Fiat.

Alex Gladstein:

I really believed that whole like bad money drives out the good thing. What I didn’t see coming was this. Was the government like, and I just knew it was a possibility, but I just didn’t see coming this quickly in the second year of the decade that like you’d have legal tender, like, okay. So now all of a sudden what happens if merchants prefer Bitcoin? Cause that was always the idea in my head is like, I thought it would switch to like Their’s law or whatever, which is like that the good money drives out the bad. I thought that would happen in one or two cycles from now when people in America would want to be selling their homes and they would not want your fiat, they would want Bitcoin. That is now like set to an accelerated pace.

Alex Gladstein:

The idea of that happening, especially obviously in El Salvador, but you’re going to have merchants who really either they want Bitcoin they like the experience of lightning, whatever it is. They like the ideology of it. They like the ease of it, whatever they like, they don’t like the state, whatever it is, whatever it ends up being. And they may prefer Bitcoin and they may provide a discount if they’re willing to accept less Bitcoin, than dollars for a payment, you know? And that’s where you start to see this Thier’s law thing happening. And that’s where, that’s where the payments could actually really come alive. And it helps that it organically has grown out of, or a Bitcoin beach in an organic way. I think the main issue, I guess, with the earlier stuff, when you were getting involved early was it was non-organic.

Alex Gladstein:

It was like people trying to force it to like make it work. And now it’s just like flowing. It’s just doing it on its own. Right. yeah, like it’s growing out of this little community in El Salvador and it’s going to spread throughout the nation. And that way it’s like, there are going to be people at every step who are using it — our users. There’s tens of thousands of users spread across El Salvador. So now it’s going to be like, Oh, like, I don’t know, who’d use this Bitcoin thing now. Oh, well my cousin or my nephew or my son, he knows how to use it. I’ll have him come tell me. So I wouldn’t under, under count, like the network effects here. So I’m much more bullish about it actually like unfolding and for us to start to see pockets of the world where Bitcoin is preferred for payments. I mean, I think that’s something that I will admit. I did not see coming this this early.

Stephan Livera:

That’s really cool. And to add to what you were saying there around network effects. I remember one of the things people used to say was, Oh, it’s one thing to take payment in Bitcoin. But then if you, as a merchant, can’t pay your suppliers with Bitcoin. You can’t close that loop. And there was this idea of, “Someday, we’re going to close that loop. We’re going to have the circular economy.” This is actually going to be a really interesting experiment because now the Salvadoran merchants can pay most of their, at least their local suppliers with Bitcoin. Right? Because everything’s Bitcoin, right? So that’s at least one step towards. It’s going to be interesting.

Alex Gladstein:

Rght. And apps like Strike, allow you to seamlessly connect anywhere in the world via Bitcoin, but through dollars as well. So that’s why Strike is like this great bridge technology like it is a technology of the moment. Like it won’t last forever, in my opinion, I mean, or if the company may, but like the particular product, as of now acts as this, like neobank is what Mallers calls it. It’s kind of like a technological chronological bridge between where we are and where we want to go. And to get there, we do — as evidenced by what you’re watching, like if there had been no Strike, there’d be no bill. There’d be no [bitcoin as] legal tender in Salvador. We’d have a different outlook on Bitcoin. We’d have different ideas.

Alex Gladstein:

Like we’ve really been jump-started by this product, which is a way to really connect the old and the new systems. And again, what would it look like if it happened? Obviously it would look like this, right? We would have these bridge companies that are trying to bridge the old and the new. So that’s what you’re seeing there. And it’s remarkable to watch them folds live. And we’re all just watching we don’t know what’s going to happen or how long it’s gonna take. And none of this is priced in it’s crazy to me. I was thinking like, okay, we’ve got nation state adoption, we’ve got taproot activation. We’ve got a growing global user base, increasing mobile adoption, incredible mobile improvements in user design. We’ve got all the smart macro investors now are in, right. Dalio all the rest.

Alex Gladstein:

There’s tons more and you haven’t heard about it. They’re all buying a small spot here, there, tons of people coming in through NYDIG that you don’t know about. And that’s the signal and the noise is literally everything you read in the newspaper or watch on TV or listen to on the radio. So like those of us in the know, I mean, I am just so much more excited about Bitcoin now than I was a few months ago when the price was twice as high. Like this is the signal the freaking nation state adoption of Bitcoin is really what we’re after. And of course it’ll be great. Like in the future when the price is higher, that’ll lead to more interest. And it’s all this feedback loop. But from like a political point of view, political philosophy point of view and economic point of view, this is what we’re going for.

Alex Gladstein:

And out of nowhere, it happens. You know, I think a lot of people had seen Bitcoin beach a lot, some had even gone. And Peter McCormack he’s just been ranting about how amazing it is, the last like six months. and apparently it was so amazing that the president of El Salvador was like, I’m sold, let’s make it legal tender. Like, I mean, that’s how compelling what they were doing down there is. And I think a lot of people, including myself, maybe didn’t fully understand the vision and didn’t really get that it was more than just like a small circular economy, that it was like a template for how you would change a country and a nation. So I’m excited. We’re going to have Mike Peterson come to my event, the Oslo freedom forum at which we’re going to have in Miami in October. And we’re going to have him try and do some stuff around how to build this kind of community, because now there’s so many other people, activists from other countries who want to rebuild what they built in El Salvador, they want to do to Guatemala. They want to do the Lebanon and we want to facilitate his ability to like share his examples. And hopefully we can spark some more change. You know,

Stephan Livera:

I’d love to get down to Bitcoin beach myself and when I can get out of here, which is going to be soon, I’m going to get out. So I’m going to…

Alex Gladstein:

Oh yeah, dude, it’ll be soon.

Stephan Livera:

I’m going to get over there and I’ll try to get over to Miami for that as well. And let’s chat a bit about HRF. I know you did some grants recently, so tell us a little bit about some of the grants you just did.

Alex Gladstein:

Yeah, well essentially at HRF at the Human Rights Foundation, we have this Bitcoin program or we’ve kind of got three spokes, we’ve got a development, you’ve got education and awareness which is in large part, a lot of the stuff I’m doing around interviews, talks, public events. And then, and then we have you know, activist trainings, which we do kind of privately, but we’ve been doing those consistently teaching activists, human rights activists about how to use Bitcoin. That’s been going really well. We’ve been, we were able to work with some of the folks on the teams at Blue wallet, Muun wallet, others to understand how to earn, receive, store, send Bitcoin. And then we were working with Paxful as well. When these people need to sell it so that they understand how it works into Fiat as effectively as they can. But yeah, on the dev front we started the Bitcoin development fund about a year ago, we’ve given out around at today’s prices somewhere around 800,000, a little more than $800,000 of Bitcoin in dollar grants, mostly Bitcoin grants you know, want to support privacy and decentralization and resilience and accessibility. But it’s funny cause like obviously like every dev you’re going to fund — you’re gonna support is related to freedom, right? It’s like, it’s all connected, but we ended up being able to do a really large round because two guys from Korea, just an investor and then a teacher and educator, they gave us $150,000 of Bitcoin to give out. And we got some other money from a VC and from this whole pizza day thing that we did with a Pomp.

Alex Gladstein:

And we were able to parlay that into a big round where we did 50k dev grants in USD, but in Bitcoin, but like 50k of the Bitcoin to a Calvin Kim and we worked on that with BitMEX. So they gave him a hundred, we gave him 50 for the next year to work on what he’s doing relating to utreexo and making it easier to run node, which is really exciting obviously. Then we gave 50k to Dhruv Mehta and he’s also being supported by Gemini and by Square Crypto. And he’s working on helping nodes fight sybil attacks, which is really neat. And then we also gave we’re in the process of giving $50k Bitcoin to Abu Bakar.

Alex Gladstein:

Who’s in Northern Nigeria actually, and he went through chain code and now he’s trying to work on like some software that is like a good wallet software for the Nigerian context. And then he’ll kind of use our funding as bridge funding to then go apply to something more formal later this year or something like that, but really happy to support all three of them. We also gave some gifts to the Breez and Sphinx teams to do some privacy stuff that we wanted to collaborate on. So I think in Breez, they’re going to put that to bounties, to help with Tor adoption as well as integrating with matrix, which is neat. And then on the Sphinx side, they’re building out like a directory where you can just like look up and just like give people money.

Alex Gladstein:

So that’s kind of the idea of we really would like to make it easier for people to tip activists. And I’ll mention another idea related to that in a second, and then the final gift was to support Arabic HODL has been doing this incredible work, translating stuff from everybody from Saife to Breedlove, to Nic Carter, all these different people writing about Bitcoin. He’s translating it all into Arabic and he’s incredibly productive. So we wanted to give him some money to keep doing that. So it’s an exciting round. I mean, we want to continue to focus on the wider world around us. And it’s exciting to support devs who are not [in the US] — I love devs in the US too, but like, it’s kind of, our mandate makes us well-placed to support people in emerging markets and stuff.

Alex Gladstein:

Or at least outside of the common areas. So of that round, five of the six gifts are out there abroad. And then the last thing I just say on this note is for people listening, we’re really interested in this idea of like a passive alpha numeric Lightning identity that you could put into, for example, your Twitter bio, right? So this is the dream, right? So for two reasons, because if it worked and enough people started doing it, then Twitter would be sort of like it would force them to add a feature. Do you know what I mean? Like if we could kind of front run them a little bit, kind of like, what clubhouse did. Like Clubhouse, OK Twitter spaces. Well, if all the activists in the world could easily just add, like an alphanumeric to their Twitter bio.

Alex Gladstein:

And then that could be like a lightning tip place. I mean, okay, now we’re talking the other thing is just generally speaking, it’d be so powerful for activists. So I know that there’s like some discussions around how to do this and people are divided and that’s fine. And it’s exciting to see different approaches. Like some people think you can do it with like LN URL. But there’s like IP address issue there. If I’m not mistaken with regard to privacy, that people are debating about how to solve other ways to do it. But basically I talked to a lot of Lightning folks when I was in Miami. And I think there’s a consensus that it’s doable and it’s like maybe in the next year, but I’ll just say that if anyone listening who wants to work on that, like we’d love to support you. So please reach out to us. We think it’s just like, after doing a couple of years of research and talking to the activists, this is what they need. It may not be necessarily what devs want to work on, but I can tell you that this is what the activist world needs this sort of a functionality. So that’s where we’re probably heading next. And we’ll announce another round kind of September or something like that.

Stephan Livera:

Yeah. That’s cool. And on the donations point, it’s like, there’s a BIP 47 stealth addresses or PayNyms if you’re using Samourai wallet, but then that’s all on chain.

Alex Gladstein:

Yeah. So we have that really cool lightning, but first of all, it’s all on chain, which is just sort of a non-starter because we really want to focus on Lightning here, but it’s also like, it’s a little, I mean, I love what they’re doing, the Samourai wallet. Incredible. And I recommend it all the time, but it is a little limiting just because it’s the only — and I know that there’s reasons for that and we don’t need to get into the politics of it. But the reality is that like all the other wallets don’t incorporate it with it. Right? So it is just miles away from the convenience of a lightning tip.

Stephan Livera:

Yeah. And then, so then the activist is left either trusting someone, right? They might have to use say OpenNode, right. Which again, may not, may not depending on the political or the KYC aspects of it, you might not be able to do that. And then the other way is, well, spin up a BTCPay Server, but again, that’s not right. That’s not feasible for everyone and even then, you still need lightning capacity and you still have to like give them somewhere to go, you know?

Alex Gladstein:

We run our own and we run our own BTC Pay and it’s an incredible project and we love them and they’re going to be coming to the Oslo freedom forum too, to help folks. I mean, we want to get as many activist groups as possible set up with BTC on their websites for incoming donations. And of course we accept lightning and we’ve gotten tons of that. And we have had a lot of amazing help from the community to help us with inbound liquidity, et cetera. But that’s a lot, I mean, it requires a staff member on your team to spend a lot of time learning about Bitcoin and how to set it up. We’re talking about something a little more simple here that works with like an open source phone wallet, right. Where you’d be accepting donations. And then as they come in, you would be sending to cold storage. Like, you’d be sweeping it in like over time. Right. But just the ability to have this passive identifier that gets dumped into your wallet in a way that’s privacy protecting is certainly the dream. So we’ll see where we go with that.

Stephan Livera:

And I think that’s also the reality for many new people coming in is that while we would love everyone to come in and be fully self sovereign from the get-go, the reality is a lot of people will come in and starting on a custodial wallet. Right. And even with Bitcoin beach, right? They have what we might call community custodial. And I think that’s going to be the same story with El Salvador. A lot of the new people coming in, will use a custodial service. They may be using the Strike or the government wallet. They may be using blue wallet, wallet of Satoshi or some of the other ones out there. And then the hope is that over time, people graduate up into more levels of sovereignty. And perhaps then that’s a similar thing in terms of what this means for human rights is that it will accelerate.

Alex Gladstein:

This is what I’m saying. I mean, you could go ahead and put, like, I mean, you could make a Strike URL right now, but like you’ve got to do KYC and it’s like, we’re looking for something that’s a non-custodial and again where the public keys being rotated between donations type thing. I read of course, Anthony Ronning’s great piece on Lightning privacy and the cool part is all of these issues can be probably mitigated at the wallet level. Right? So it’s like a lot of the issues with Lightning are being improved now and we know what they are, and they’re definitely getting improved. So this, I see hopefully as a piece to that, where you’re receiving inbound and you have no way of knowing where it’s coming from. that’s really the key, I think. And then, Hey, if you tip somebody and you want them to know, you just tell them, Hey, I sent you this amount and that’s kinda how it works with us, but anyway, yeah.

Alex Gladstein:

Really exciting times at HRF obviously as well. And just that final comment on a lot of people are, Oh, this guy in El Salvador’s is not democratic, but I think, again, you’re missing the bigger point here that again, he could have, he could have banned Bitcoin or had some China coin or surveillance coin, but he went with the freedom money option and he can’t stop it. and I think there was always going to be a first country to adopt. I thought it was going to be like a rogue regime. I thought it was gonna be like a North Korea or like a Venezuela and Iran or something like that. El Salvador is a US ally, it’s dollarized, it’s got a democratic process that that’s not certainly not perfect, but it’s like, there are elections.

Alex Gladstein:

Like it’s not like Cuba. Do you know what I mean? So it was kind of crazy to see it happen in a country like that. So I mean it’s at the end of the day, people are going to complain about everything. Oh, I wish it could have been a different country. Well, which one? Like, it’s not going to be an advanced democracy because we’re too comfortable and we would never be that radical. And we’re too trying to preserve what we have. And we’re much more likely to be rolling out the CBDCs, to be honest out in our countries like Australia and the United States. We’re not going to go on the Bitcoin standard first. That was never going to be on the cards. So it was always going to be like one of these like fringe countries and you know what? It’s pretty ideal. Like compared to what it could have been like really it could be taught. We could be arguing about Iran right now, or about Venezuela or about North Korea or something. And that would have made it really difficult, even though I still think it would have been something to be cheered. This is just really like an interesting fit for a lot of different reasons. So what a remarkable moment in time.

Stephan Livera:

It’s crazy hey. Alex, thanks very much for joining us listeners. Make sure you follow Alex on Twitter @Gladstein. Find him at HRF.org. Is there anywhere else you’d like people to find you Alex?

Alex Gladstein:

No, you can just follow me on Twitter. Check us out at HRF.org, the dev fund. If you want to learn more back, that is HRF.org/devfund. And then if you want to come to the Oslo freedom forum, we’re going to have a Bitcoin tracks. It’s gonna be really cool. It’s going to be October 4th and 5th in Miami. We will have a full day of Bitcoin programming. That will be a little more intimate. It won’t be like a giant hall. It’s going to be kind of seminar style where we’re going to have human rights activists and other interested people in for a full day. We’ll start with like the political history of Bitcoin, which I think is important. And the cypherpunks, which I think is important for activists to know about. And then we’ll go into like more like how to use wallets, how to use multisig, how to use lightning.

Alex Gladstein:

We’re going to have Mike from Bitcoin beach talking about how to build a community. We’re going to have a lot of hands on help from the BTCPay team too, because we want any activist who’s at that event, whether they be American or Australian or Cuban or whoever they come from Chinese, we want them to be able to set up a BTC pay instance on their site so that they can accept Bitcoin in like an opensource decentralized way. So we’re pretty excited about that. So if you go to Oslofreedomforum.com. You can apply to attend and just put in that your Bitcoin and we’ll get you the reg link, but yeah, excited about that and everything else that’s to come and thanks again for having me, Stephan.

Stephan Livera:

Thanks Alex.

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