Taking Bitcoin Lightning Payment, and 'earner adoption',

Welcome to the Stefan Livera podcast.

Hey guys, welcome to the show, and my guest today is Sergej Kotliar. Welcome to the show, Sergej. Thanks, Stefan. Yeah, pleasure to be here. Thanks very much for coming on. So guys, just to introduce Sergej to the listeners, Sergej is a very well known Bitcoin advocate and speaker. He is the CEO of Bitrefill, so you can find them at Bit- Bitrefill dot com, and they allow the purchase of online vouchers and mobile phone top-ups all around the world. Right? And so just so listeners know what to expect, what, what I'm hoping to cover in this episode, particularly in the first half of the episode, is around the merchant experience in taking Bitcoin and Lightning payments, and then, you know, talking about the challenges and the benefits of that. So if you're an entrepreneur thinking about taking crypto and Bitcoin payments, this is ideal for you. And in the second half of the episode We can talk a little bit more generally about Bitcoin and Lightning adoption. So, yeah, so let's, go into a little more detail on that, Sergey. So I think, I think stories are what make it real for people. So maybe tell us your story on- You know, taking Bitcoin and Lightning payments with Bitrefill.

Right. so I guess, if we look at how, how the company came about, almost four years ago now, it was, it was on an experimental basis. it was, I would say the, the, the mood was very similar than to what it is now, in the, in the broader Bitcoin community, people were trying stuff, experimenting, and, wanted to, to, you know, get in there and h-had heard about all of these, different scams and problems that, that, that happen in the, in the crypto world. So I figured, let's, Let's try something simple and, you know, let's, sell something. what can we sell? Well, something digital, right? So we don't, we don't have to bother with, with the delivery. And what, what kind of digital things are there? Well, there's, there's gift cards, there's, prepaid phone refills. I managed to get us access to, to an API for prepaid phone refills, launched the very first website which actually used BitPay as, as a payment service, and Just, it, it, it pushed the button and somehow it got a lot of attention in, all over the world. and we had users, then coming in from countries like, you know, Bangladesh and India and, and South Africa and so on and that kind of set off a process of thinking, okay, what is this? what are these prepaid phones? okay, there's billions of people that have them and so on. and gradually sort of on the, that way the company kind of, happened, a little bit, I think, on its own in that the, the market, has been pulling some stuff out of us. and from, from, from my perspective, we've always had, the same direction, you know, which is to, to move towards a world where, where Bitcoin is used as, as, a transactional currency, you know, where people are, using it to, to pay people,

I guess, medium, medium of exchange and all that. and so, so, about, about the Lightning stuff, As you may recall, in, 2017, the, we were starting to see indications of transaction fees going up, and there, this sparked this whole political debate, and people were using, merchants such as us as, some type of, bat, to, to swing in the argument, and, sometimes people were talking for us, and saying things that we weren't, weren't really agreeing with, and so, we kind of got- Pulled in to all of the, those things, and into these, discussions, for setting things straight. when it comes to lightning, it, from my perspective, we've kind of always known, or at least I've sort of always known that this is, this is where it's going to end up.

Before I started Betriffel, I was, close to joining, another startup, here in, in Sweden called StrawPay, who were, this was in twenty fourteen, were working on payment channels. So they had identified that, eventually, the Bitcoin network won't scale for each transaction to be sent to everybody, and then they identified that, payment channels would be the solution, and they started then working on, I guess the best, way of doing payment channels with the technology that we had them, which is pre-segwit, and they had, were working on a, a setup for a little, a little bit closer to the Visa model of like different classes of,

there were some elements that would require some trust, but it was largely, trustless between the end user and, and the connecting node So, so this is was kind of always,

not always, but since, since many years back, known that eventually like something like this is where it's going to be. I said, "Yeah, when, when, Tadzh, Julia and Joseph Poon presented, the Lightning presentation, I was actually in the audience and I was, taking pictures and sending them to the guys at Stripe, saying, "Hey, look, look what the Americans are up to these days." Yeah. So,

so it's, it's been kind of known since always that something like this. And I think also if you, you think about and count backwards from the goal, you know, if the goal is that we're, we're in a world where, where, where Bitcoin or even, even broader cryptocurrency, if you so want, is used transactionally day to day, then that It requires something, and that something might as well, be Lightning, it's best candidate that we've seen this far. And, and so what it came for us? it started with, in the last summer, we had, then, an intern, named Justin Camarena, who's, now getting a little bit of, of fame in the Lightning world and is working with us since a year back, Who was, playing around with Lightning, on this, free time, and we, we were like, let's see what we can do with a, with an experimental, setup, and we just, you know, plugged it in, tested it out, and, and, a little bit on, on that way it's been. it's, like from, from what I think, about technology is that it's, like from my perspective, it's more interesting, when, when it's being used for something real, that's, even if, that means that you're not using, the latest, fanciest, bleeding edges, but whenever something, like a real financial transaction happens with it, I think that that's That's kind of like, that's what really matters to me, I would say.

Yeah, that's fantastic. And I think what you've done is you were really one of the pioneers, you and your company Bitrefill, had pioneered the use of Lightning payments online to take, payments at a dramatically lower cost than a-any other merchant was able to do because the fees with Lightning are just so much lower. do you wanna talk a little bit about any- Potential, challenges that your company faced in terms of taking lightning payments. Well,

I guess, it's always, there's this weird, enthusiasm about lightning that when you, when you, mention, I mentioned in an interview a couple weeks ago, I said that everything in cryptocurrency has different trade-offs, and lightning has some trade-offs too. and that became like a headline, which we, Phil CEO, says that, lightning has trade-offs. Yeah, which, yeah, which is funny. It, it, it is true, but, you know, and people are still seeing it, I think, like, like, a magical, thing. but some challenges, that we've been dealing with,

I think this far we're still at a phase where, Lightning users are the, the tinkering kind. So it's, it's not even, It's not even the early adopters, it's, it's the innovators, it's, yeah, the people who are, who use it with command line. Yeah, we have some, users that use, GUI wallets, like, like Eclair, and the Bitcoin Lightning wallet on Android. I would say, we're still, we're still waiting for, for, the release of all of the different neutrino-based, wallets, such as Zap, which will- be a good wallet for iOS and Lightning Labs own wallet and, a couple of other projects that, that we still haven't seen. There's still no, I would say, no good wallet for iOS At least not, not that is available main in the app store. Yeah, and, and so that means that also probably the challenges that we've seen this far, are going to be different from the challenges that we see, now, from what I understand, many of these projects are very close to releasing. So, so soon we're gonna go into a, a new phase, where, where everybody can, easily install. lightning wallet and, and start really using it. and,

yeah, it's a great point you make around how at the start it was really the tinkerers, the people who were hashtag reckless, the people who were really willing to just go out there and try it, and they were willing to risk losing a little bit of money because they wanted to be one of the first people using lightning to buy real things on Bitrefill. Now, let's maybe talk about some of the benefits. So, I, I think number one that, you know, if you're, if Number one, think about the lower fees, right? So if Lightning fees might be one satoshi, and if one USD today buys something like fifteen thousand satoshis, this is phenomenally lower than any other merchant processing available. So that's, one big benefit. Do you wanna talk about any other benefits that you saw, perhaps, lower customer support tickets or just ease of interface? So about the fees

stuff, I would say that that's not even, at this point, it's not the primary driver. fees, on Bitcoin are, currently trivially low, and I've even gone as far as to go on record saying that I don't think we're going to see another, month-long period like we had during, during the new year, of high fees. I think Lightning is, interesting, like for, for a future scenario when we see, a similar level of congestion, which I don't think is gonna happen for a while, not because there isn't demand But simply because of all the different other, scaling technologies that have been adopted, on the network, such as mainly batching. Kind of resolves, a lot of the pressure for a while. but when it comes to, benefits, yeah, so the user experience, ends up, a lot easier So, one of the, one of the big, issues, that, we've been dealing with, with regular on-chain, transactions is that if, if, the user, has to copy the address and the amount, then, there is a high risk of something going wrong. and, you know, what, what we've learned is, and this has been, I think, known for, for a long while, is, you know, if you let users make mistakes, they will make mistakes, and they will assume things that, maybe make sense to them. You know, maybe a user will, will send a little bit less bitcoins than what was written on the invoice. maybe the user's wallet calculated a US dollar amount that, that is, the same as, the, the gift card, but we calculated a different amount and that creates, discrepancy, maybe an underpayment, and we need to handle those and, if we introduce leniency into our system, as we had in the past, and that, that gets abused, that's problematic as well.

so that-- Sure. So let's talk a bit about what happens in those scenarios. So let's say a user had accidentally paid the wrong amount or underpaid or, you know, just underpaid the invoice, then what's involved from a manual processing point of view for you guys at BitPay? Right. So from, from our

perspective, we try to handle this stuff, automatically as far as possible. we display a view to the user saying, "Hey, you're underpaid by this much. You know, please, send another, this much, Say to this address, or we offer them, you know, or, or type in your address, your, your own Bitcoin address, and you'll get a refund, of the money that you paid. And that solves a lot of it, but still it, it creates, less than great user experience. Sometimes users, don't really understand what happened, what went wrong, what was, the problem. Sometimes it was the wallet that they used or the exchange. You know, a lot of users, yeah, this is something that people don't talk about, but like a lot of transactions are sent directly from exchanges, and their, exchanges sometimes, for example, will take a fee. out of the amount that is being sent, which in the end means that we don't receive the amount that was expected and so on. So, and add to this that, people from all over the world don't always speak English and so on, and there's a lot of user confusion that, that can happen. And with, with Lightning, it kind of, It forces, certain, certain patterns. So it forces, you know, that there is, either a QR code that you scan, or that there's this long, Lightning invoice string that you have to copy paste. but in either case, there's, Yeah, there's a much lower risk of, of something going wrong. and on top of that, there's also the questions involving transactions. so a regular Bitcoin transaction ends up in the mempool and then, is waiting for, for being included in a block. we try to process them, even, without confirmations, but we have certain rules and heuristics, that many transactions pass, but some- Don't, but a lot of different things can happen, you know, suddenly, someone, makes a couple of megabytes of transactions that outbid the user's transaction and they get stuck And, and the, the user is, often eager, you know, especially when, when, dealing with phone refills, when someone run out of data, on their, on their, their phone, they're quite eager to get it resolved quickly. and there, there is not always a great experience to wait for an undetermined amount of time until a block comes in. and, and, and the way things work with Lightning is sort of that, yeah, the transaction has already happened, right? The transaction that opens the channel, is something that the user, needs to resolve within their wallet, so that it separates, in a nicer way, all of that stuff and, and lets, yeah, lets the wallet, handle all of this so that, when the user comes to us, There is no need for, for on-chain Bitcoin transactions, they can just scan and go.

Yeah, fantastic, I like that. And I think I'd summarize that as Lightning basically forces the correct payment to the right address and to the correct payment amount. And not only that, it-- because it happens instantly, you don't have to wait for this undetermined period of time, because, with Bitcoin, the blocks could happen in five minutes, it could happen in ten minutes, or it could happen in one hour. Hour. So that is another, you know, huge benefit. Yeah. the other question I had was, just around education, because your company, obviously, the use of Bitcoin and cryptocurrency is still relatively new for many people. To what extent has your company and your staff had to spend time educating people on cryptocurrency and Bitcoin?

I guess, that has varied a little bit, over time. we still, have the thing that we, we share, within the company, all the customer service, so that, everybody gets to, to interact, with, at least some of the customers, and at least, at least when something goes wrong, we get to interact with them and, and fix it, and that's a good way to getting to know the users.

wait, I just lost my

train of thought here. yeah, so I mean, have you got any, stories that you can tell in terms of times you've had to help a customer deal with, made a,

made the, made the, made the, the like a, a line in the sand that, hey, we're not gonna be selling people on, on Bitcoin, and we're not going to be, you know, innovating new things, and, and, and but gradually, like those things we've kind of been forced, to, to do, a lot of, a lot of that as well. so when it comes to educating- I think, we do, we do a lot of stuff, and, but we also see that, others use us as a education tool. So if you, for example, search for, Bitriffel on YouTube, you're gonna see walkthroughs and tutorials in all kinds of languages, with people, you know, painting on the screen and explaining, how the payment flow happens and so on. from, from when it comes to, the Lightning stuff, yeah, we've kind of had to, in some cases, explain and we always, we always write, blog posts, that are very like, "Do this, do this, do this, do this" for each new, new feature that, that we create. but again, I think we're also going to, move into, to a, a, another phase with the Lightning stuff when, we're gonna see a, a more, more of a mainstream, adoption of those things. That's gonna be interesting.

Yeah, it's interesting you say that, because it's like there's almost this externality that is being born, or, you know, the companies that take crypto earlier have to kind of wear that cost of dealing With customers who aren't as familiar with Bitcoin and cryptocurrency, you know, and in, in a sense, you kind of indirectly spend time educating customers, whether that's customer support tickets, or, you know, more time spent doing blog posts teaching people, okay, this is the correct way to do it. Do you anticipate that over time that will become easier with better wallets and better interfaces that help automatically deal with these things for the customers?

Everything is, is improving, quickly. Like we discussed already, like the, the UX, benefits of Lightning are huge, now we just need to get to the point where, where there's wallets in everybody's hand, and then we're probably gonna see quick iterations on, on the wallets, finding out, which parts of the UX assumptions that have been made, work, which parts don't work, or what causes user confusion, I think, when it comes to Lightning, a lot of, I think the wallet, wallets, carry a lot of the educational burden. Which, I don't, I don't know how fair that is either, because wallets usually aren't even, making that much money, but I think in, in, with the Lightning stuff, it happens a little bit, naturally, that, it's the, it's the wallet that gets the questions.

but, yeah, good point. Yeah, of course it's, it's hard, that we need to educate people. but that's, that's cost of doing business. I mean, if, If we didn't, I think every company needs to educate its users to some extent, and help its users figure out how to use, whichever thing it is that it is. So I don't know if it's, if it's that, sort of,

Yeah, sure. And I think you, you mentioned a good point earlier as well that some, to some extent, these explanations and education is crowdsourced when there are other people out there saying, "Oh, look, here's how you do a Bitrefill transaction online, and here's a YouTube video..."

Enthusiasts,

so

a lot of the stuff, I mean, you, we're all on Twitter these days and, seeing the huge amounts of Thinking and, both, both philosophy, but also tutorials, and like there is a lot of people, who are, are trying to help this, this become a thing. and, yeah, those, some, some, some of those people code, and they code, and some of those people don't code, and they, they usually, promote and explain it. And I think that's, working pretty, yeah, pretty nicely in the, in the ecosystem that we have.

Sure. How about getting staff who are crypto-savvy? Has this kind of talent been hard to come by?

Yeah. Yeah, it has, I would say that it's actually easier with the Lightning stuff, yeah, and that's something that, is very, curious, at least to me, that it seems like, Young people that can code are, drawn to, to Lightning, in a sort of intrigued, I guess, and, start tinkering with it. So, we get a lot of, a lot of, really good inbound, at least on the en-engineering side, on the backend side, seeing a lot of, really good people, reach out and wanna work with us. I'd say the difficulty, and that's also, I guess, an interesting topic to discuss is that different personality types are dr-drawn to, to different things. And, in Bitcoin, we have a large amount of, how would you say, like, the backend or algorithmically minded,

type of people that are, drawn to it. but on the other hand, I would say that we, we have a, a large- Lack of, the visually minded, the aesthetic, design, UX, that kind of people, that is, still, in, in short supply And so that's something that we maybe should, should, think about how we can, attract more of that kind of people.

Yeah, fascinating. I hadn't thought about it like that, but it actually does make a lot of sense. Okay, that's, yeah, I mean, they're the key, points I was interested to cover with in terms of, you know, Bitrefill and your experience, with taking Lightning. let's now change to discussing a little bit more just broadly about Bitcoin and Lightning adoption. So Those of us who are kind of more monetary maximalists and believe that Bitcoin will someday be worth millions per Bitcoin, you know, that kind of person, probably myself included, likely doesn't want to spend a large portion of the Bitcoin stash for various reasons that could be maintaining privacy, not wanting to pay capital gains tax, or at least not yet, or not wanting to pay unnecessary exchange fees in trying to spend and replace, let's say. but I know you've also got some thoughts in terms of what Bitcoiners can focus on in terms of- Of, the medium of exchange component. Yeah.

So there's, a lot of stuff in what you just, brought up. I think, I mean, generally, of course, someone who, acquired, bitcoins, online, for the purposes of investment, isn't going to go out, and the first thing they do is to go on, on- Buy some-something with them, right? That's nobody buys something online in order to buy something online. That's, that's not the right way to, to, to look at it, yeah? But I think that For example, already people who, you know, have, have, have been, in, invested in Bitcoin for a long time and have had their coins, go up in value, those people are very eager to, to, to spend some of it. And, we also see, already today, a, a pretty big demand from people, that are, eager to earn, coins. And I think that that's something that, we as a community should, yeah, should pay more attention to, 'cause we have, you know, according to different, surveys, There's, some tens of millions of people that, that, own coins in some capacity. Yeah, but there's probably ten times or even a hundred times more people that are aware, yeah, of Bitcoin, that don't maybe super know how it works or what it is or care about all of the, You know, sound money and, all the other stuff that we can discuss. You know, people who just, see it as, you know, it's money. It's, it's foreign money and it's better money than, in most cases, it's better money than the regular money that they use every day. And so we, we, and we see some of that on, on Bitcoin, that people shout them, or, or asking like, how can we, how can I earn coins here? You know, and I would say, ecosystem, of, of people that are, that are, earning money, in, in Bitcoin, everything from, Proper, you know, salaries and, and consultancy fees and things like that, but also really minor stuff like rewards for, for small stuff or, or faucets. or, little microtasks. And, I mean, faucets, the, if you look at, a site, that not many Western Bitcoiners know, which is FreeBitcoin dot i am, which I, I always bring up as one of my, favorite, Bitcoin companies. Yeah, they have a couple of, million, users. I, I'm looking at their page now to see, if they, they brag with that or not. Yeah, but, but they have a couple of million users, and it's basically a faucet. So you go in there, you, you solve a captcha, you get some bitcoins, for free. you-- there are some gambling features and some, some other little, stuff. but it's, it's basically-- there you go. They have sixteen million Users, and, and the, not many of, the Western Bitcoiners that are all about, the holding, mentality, know about, like that there is an ecosystem of that stuff as well, which, which I think is super interesting and super exciting that there are people that, that value Bitcoin as money, and maybe, for different reasons, don't wanna buy it or can't buy it or maybe don't even care about About Bitcoin, right? I think again, if we count backwards from, from, from the, the success case, we're, we're, I think nobody thinks that we're gonna live in a world where all seven billion people are, are Bitcoin enthusiasts and, and maximalists and go to conferences, right? most of the people are going to be, okay, this is money, I can, I can earn it with work and I can, pay people and pay services with it. And, and I think that we already see like slight indications of, that kind of stuff. and I think it's, it's still very early, but probably if, if, if I was starting something entirely new, I would probably like look in that area, for, for opportunities, because I think that there's, there's a huge, demand for, for earning coins. and, it's something that i-is going to be desperately needed for, for, for us to have a circulating economy, plus that it's needed for, in, in countries where maybe there's no exchanges or even if there's legal issues and things like that.

yeah, I guess maybe I'll, yeah, I'll, I'll stop there

for, for now. Yeah, sure. No, I think it's an interesting way to put it. I think what we can talk about is how many people frame it as merchant adoption, but actually what you're discussing here is more like earner adoption. People trying to earn Bitcoin from, you know, online payments. And I think that's the other really cool thing with Bitcoin and with Lightning is this kind of unstoppable payment Narrative, it can enable people to work, right? And get paid online for services. Yeah, it's,

you know, we, we created this, this meme, of merchant adoption, which is, quite, you know, it's a clunky expression, you know, no, no child, thinks about merchant adoption, it's something that we learned,

and, and, we've, been doing that in, in, in, in the Bitcoin world since, I guess 12 or something, and I guess we've gotten to a certain point, but I also know because I, you know, I, I run one of the bigger merchant services, out there, so I kind of know like what, what the demand is and so on and, and I think that we should, as a community, similar, efforts that have been spent, on, on merchant adoption on all levels, you know, on both on, on, on low, like A person going to bug their local café, takes a Bitcoin payments to the, the CEOs of, of, Bitcoin companies, pitching it into Expedia. I think in a similar way, as a community, we should start thinking about, about earner adoption or payer adoption. Like, you know, maybe bug the same café for, for paying out tip money in Bitcoin to their staff, or, or bug, online,

gig economy sites to start paying out in, in Bitcoin, things like that. I think there's a lot of stuff to be done there.

So I think that would be one way is looking at some of these two way market companies, so something like an eBay or an Airbnb, these kinds of companies allowing payout in Bitcoin.

Right. And I think that, that, a lot, a lot of people would actually be quite happy to, to get their, payouts that way. Again, sort of if you think about it from a, from a perspective that, and most people in the world live in countries where the local currency isn't all that good. Yeah. Most people in the world live in a world where, the lo- you kind of know that the local currency, has a constant inflation and, a constant risk for- Hyperinflation at any given time. Yeah, and in such a world, I think a lot of people would be very happy to get their Airbnb earnings in Bitcoin. For example.

Okay. And then, what, what, what are some other things that you think, you know, people in the Bitcoin community, as it were, what, what could they do to help earn our adoption?

Well I guess, that's, a big question, right now, that we need to, to, to experiment with, and, and try stuff.

Yeah, sure.

Both, both pitching it to, to existing companies, starting new companies. I know of several projects that have now or before tried to create, something like, Fiverr or something, but for, for Bitcoin. Haven't really seen any of them take off in a big way yet, but I think that there's, there's a lot of, interesting, task, task-based, concepts that can be tried, and just, you know, paying people. no, no, no. Paying people in, in, in, in Bitcoin. Yeah. here in Sweden we used to have, at the, at the local, meetups Yeah, we would, I don't know if that still happens, but we always tried to, to, you know, we would pay in regular money, but we would try to tip the waitress in, in Bitcoin. Yeah, so by the way, should check in on that, yeah, 'cause probably, p-probably some of those waitresses are, are getting quite rich. If they still have the wallet, which, which is another of the, the issues that we have, yeah, sure.

Yeah, but yeah, yeah. Okay. and then, I guess, do you have any, comments or stories that you could tell, you, you know, Western listeners about uses of Bitrefill that might not be obvious to the Western world?

Right. So I guess one such thing is that when, when someone finds out, about Bitcoin in the first place, either from a friend or at some type of, meetup, everybody's first reaction is, you know, oh, it's a scam, right? And, and what happens then is like, the other person says, like, "Oh, it's not a scam," Here, let me show you, I can buy stuff with it. and we've seen quite a bit of, activity like that, where, where, where Bitcoin is used as, sort of to prove, to prove, the point that Bitcoin is money, and that it can be converted into things that are valuable, online. And, I think that's quite cool. It also has a downside because, it also means that scammers will, will also use Bitcoin to, to convince people that their, their particular scam is, is, is, is real money, because scammers try to conflate, whatever scam that they're doing with, with Bitcoin itself in different ways. Yeah. And that's something that we, we kind of need to, struggle with in, in different ways, but it's, Yeah, it's a little bit, a little bit tricky. some of the other stuff, I mean,

generally when you're selling, like we are selling digital goods that are, that are valuable, that's a category of products that is, you know, like the highest rated risk for fraud

well, simply because if you have, if you're a hacker and you bought a hundred thousand, stolen credit cards somewhere, then you're gonna try to cash them out, by buying different types of digital goods and then maybe even, even, in different ways, reselling them for cash at a discount and so, some, some sites like this, there's a local gift card site here that, has opening hours. it's open, you know, it's open nine to six. I, I was thinking a lot, like it took a while until I realized, like, why is it, why does it have opening hours? Well, it has opening hours because there is a human that is sitting there and going through the orders to make sure that there's nothing, on the wall. Huh, right. Yeah, that there Right? And so with, by working with, yeah, with, Bitcoin, we, we kind of don't need to deal with that type of problem, at all. Yeah, the money that we get, we know that we got it. There's other problems, that we need to deal with, of course, but, but That particular one, is something that, that, is, is not an issue, and it also means that we can offer our services in, in a lot of countries where, where the online payment infrastructures are, are lacking, you know, or, or not trusted or things like that, yeah. Whereas we can be like, "Hey, it just works," and we can be almost anywhere you want.

Yeah, fantastic. Okay. and what about the well- Wealth effect. Have you seen a bit of a wealth effect in terms of, you know, if Bitcoin has just gone through a big bull market, did you see a lot of people, more people spending on Bitrefill compared to if, you know, the price is lower or there was a bear market?

Sure, absolutely. i-is absolutely like that, and I think, I don't know if the wealth effect is necessarily, the right, framework to look at it, but, because you could also just, see it as, that the person does, mental accounting, you know, some type of, subconscious portfolio management. And if it, if, if Bitcoin is up, and they are like feeling that they maybe, have more Bitcoin than they would like to, Be exposed to compared to their other assets, then those people are more likely to, to spend. Oh, fantastic. Yeah, that's like a rebalancing if they get right. Yeah, in a way, in a way. And if, obviously if, somebody, has, both, both, a Bitcoin option and a non-Bitcoin option, and, the person, you know, is trying to get more Bitcoins, then it doesn't make sense for them, to be spending it. But it is absolutely the case that we see, a lot more, a lot more purchases when, when, when, Bitcoin is, is going up. There's even, like, there's even nuances in that, which we've tried to catch in different ways, and because, like, when there's, for example, if there's, panic, and people are just trying to, to, dump the coins really fast. then, then too we, we see a spike in, in, in our volumes, whereas when, if Bitcoin is, is going up, rapidly, then at the time that, that it is, is going up, people are kind of holding onto the coins a little bit longer, but when it's, when it's up, they'll, they'll be, be spending it again.

Right. So it's almost the difference in the, in the speed of the price rise that drives different behaviors in terms of purchasing.

Well, Yeah, but, but I mean, the wealth effect, framework is more right than it is wrong, so it, it is a good, good way of, looking at it, and, and that's also the thing is that we, we know right now that there's, some like on the order of tens of millions, of people that, that have coins. if, if there's another bull run, bull run, then many of those are going to go into, into the spending category, and, that's gonna be an interesting time, and that's kind of what we're building for and bracing for. Yeah.

Talk to us a little bit about the cyclical nature of some, you know, Bitcoin and crypto- Businesses, they have had to sort of weather the, the down, the downtrends and then kind of make hay while the sun shines when the bull run is happening. Do you wanna talk a little bit about that?

It's a good question. Yeah, I mean, it's, it's definitely to some extent like that. You can also sort of say that, when, when there is a hype, a lot of, effort goes into just keeping up with it, whereas when the hype is lower, you, you have, time and energy to, to, to build new stuff and improve, to make sure that, you can, you, you can deal with the next hype, yeah, when that comes. yeah.

that might also

help, yeah. There is, there, but there is definitely the cyclical effect and there's even, things, like, how, how capital is, is invested, you know, when at the peak, of, of the, the hype cycle, obviously a lot of, people, in crypto are feeling rich, and there you have a wealth effect because the, then they're very eager to invest, their coins into, into projects. And the projects in turn start using that capital, and, hire people, which means that they gradually liquidate, some of their coins, either all at once or, or, you know, stepwise. But, and that's kind of like that is, that is, the, the selling pressure, the burn rate of, of the ecosystem, which is also, I think, not entirely, been discussed. Like the, we discussed, the burn rate of, of miners and how they're, liquidating coins, but it's also the case that, that, startups start, like after a bull, bull market, startups, receive capital and start, start spending that capital and that spending creates selling pressure, and I think that if you view Bitcoin from, from the perspective of, of it being, like a country, like a country with its own currency, then, this, does resemble in some ways, a business cycle that in an upcycle capital gets invested, which in turn, gradually creates, downward pressure. Downward pressure creates more efficiency, which, which creates a new, upcycle and so on.

Yeah, fascinating, about the way the cycles apply in Bitcoin and Bitcoin businesses. okay, so Sergej, do you have any other thoughts around, you know, what you see as potential opportunities? For companies who do Bitcoin and Lightning well, what kind of opportunities are there in this space?

That's a, a really good, good question. I would say that, the opportunities, that I'm seeing, is, are the ones that, don't necessarily involve, direct conversion, to or from, fiat currency. Yeah. So things like, like earning, things, you know, what are different ways that, that people can, can acquire coins? And what are different ways that people can, can, pay, other Bitcoiners, in other countries to do things? I think, in, in those areas, there's, a lot of stuff to be done. And a lot of really cool and successful businesses, that, also don't depend on, on the, the goodwill of, of, regulation, and, and that can, can, you know Can be more sure, to,

to survive, but like to, to go strong through a period, if, the regulation in the country in question turns, turns to the negative.

Yeah. Okay. Alright. and I suppose just if you've got any closing thoughts, Sergey, or perhaps, maybe for a closing question we can ask you, what do you think the Bitcoin ecosystem needs most over the next year or two? Well,

if- I think, over the, yeah, I'm gonna be talking about earning again, because I, I, I think that that's, that is what, what we need. I think that there's opportunities, if, if nothing else, in Bitcoiners earning money by onboarding other people to become Bitcoiners. So something similar to what, what Local Bitcoins is doing, for example, where, where people can earn a buck, by becoming, a, a sort of- distributed, on-ramp, off-ramp. Yeah, but other than that, I think that we, we also, I guess, what I would like to see is, is more, more experimenting with, with real stuff. both when it comes to, you know, like use, use minutes, for things. Maybe it's okay. maybe there's, there are people that are, that are reckless enough to, to try stuff, and, maybe it's, okay if, some things, fail, as long as we communicate very clearly and use, use, a wise approach. Just to, to, to mitigate, yeah, potential downsides, but,

I would say that that's one of those, like, let's try to, especially with, with Lightning now, where we're seeing a lot of really interesting, sort of, hackathons and, small projects, I'm curious to see what, what are, what are some, some, things where real world, value is being exchanged. what are things that can be built in, in, in that regard? Because that's what's go- going to, that's going to speed up the learning cycle, because when you're, when you're only dealing with, with, thinkers or you're only dealing with, with proof of concepts and so on, you're not really learning. You're, you're, you're learning somewhat, but you're not getting the full- feedback from, from the market and what the market wants, and, I think that we should all be,

be more more aggressive with, with, yeah, with, testing stuff, at least on, like each on themselves. Yeah, yeah. Not, not, not to, not to encourage other people to, to necessarily, be reckless and especially to, to understate the risks, but, but to sort of, you know, not, not, I think, not be afraid to try some, some real stuff, I think, where Yeah, we're getting to that point where, where we should be doing, real things. And this is also, I guess, one of the reasons why If you look at, the altcoin ecosystem where there's a lot of different proof of concepts and partnerships and, that kind of stuff, but like where is the, the real world, usage? you know, and a lot of the real world usage is, in, in the Bitcoin world, which, which is cool, and I think that we should, continue to, to do the real world stuff, even if it's sometimes maybe a little bit, a little bit boring.

Yeah, sure. O-okay, I think that's, a great way to summarize it then. So I think it's basically our conversation's been a lot about earner adoption and really making Bitcoin work in the real world for real applications, and Just as it mainstreams. So listeners, if you wanna find Sergey, you can find him online. His Twitter handle is at zigamon, and bitrefill dot com. Have you got anywhere else that you want the listeners to, we, we want them to find you?

No, that's all good. And there's the bitrefill Twitter account as well, at bitrefill.

Excellent. Okay, well, thanks very much for coming on, Sergey. Thanks so much for having me. So that was my conversation with Sergey Kotliar. I hope you guys enjoyed it.

Over Lightning Network and the benefits that that represents for customers. I also thought it was really cool how he mentioned the increased ability to attract young technical talent who are drawn to the Lightning Network and want to work on this. Lastly, it was a really interesting reframe in, in terms of earner adoption instead of pushing merchant adoption. So that's another thing to think about as well. Remember to subscribe to my podcast, search Stephan Livera podcast on iTunes or your podcast app. If you enjoy it, please give me a five star rating and share it with your friends. That's it from me. Thanks, guys, and I'll speak to you soon.