El Salvador’s Bitcoin Law went live on 7th September, what was it really like? What did the protesters have to say about it? Aaron van Wirdum, Bitcoin Journalist at Bitcoin Magazine joins me to give us an ‘on the ground’ take on things. We chat:
- Protesters and are they really protesting about Bitcoin or Bukele?
- Chivo Wallet – teething issues
- The truth about bitcoin remittances
- Positives on the experience so far
- Bitcoin Meetup
- Bitcoin Core v22
Links:
- Twitter: @AaronvanW
- Aaron’s McDonald’s Bitcoin tweet: https://twitter.com/AaronvanW/status/1435236902274220040
- Bitcoin Core article: Bitcoin Core 22.0 Released: What’s New
- Alex Gladstein’s El Salvador article: The Village And The Strongman: The Unlikely Story Of Bitcoin And El Salvador
Stephan Livera links:
- Show notes and website
- Follow me on Twitter @stephanlivera
- Subscribe to the podcast
- Patreon @stephanlivera
Podcast Transcript:
Stephan Livera:
Aaron, I’m a big fan of your work. Welcome to the show.
Aaron van Wirdum:
Thank you. Is this the first time that I’m on your show?
Stephan Livera:
Yeah, actually I was thinking about that. It is the first time you’re on my show because now just for listeners, we did a Saylor Academy livestream and I hosted and Aaron as part of that. That actually, this is the best time. I’ve got Aaron on my show, so that’s, it’s great to be with you and to listeners to a new Aaron is one of the legendary Bitcoin journalists. So definitely he’s written a lot of excellent articles and he’s also a podcast host himself so you guys make sure you go and check out Aaron’s podcast. But the reason I wanted to chat with Aaron today is he’s on the ground. So Aaron, can you tell us a little bit about where you are and what your experience has been just broadly?
Aaron van Wirdum:
Yeah, so I’m in San Salvador right now, which is the capital of El Salvador. I’ve been in El Salvador since early July, small intermezzo, I will say that I was in Nashville in the meantime at the Bitcoin magazine offices for a couple of days and in Mexico, but I’ve been there for well over two months now just to see how the whole Bitcoin law was being rolled out and how it would be accepted and just keep a pulse on everything going on over here. I’m still here. Yeah.
Stephan Livera:
Yeah. That’s great. And I’d love to chat a little bit and see what your perspective is. Obviously you’re on the ground because there were different views, right? Obviously amongst us, Bitcoiners we were mostly supportive. Although I would say in fairness, if we’re being principled, we should be against article seven of the Bitcoin law, which mandates that a person must accept Bitcoin. Right. And so I think, I mean, my view on this is it’s an imperfect step forward, right? Because the mere fact that they are taking away capital gains on Bitcoin and enabling and supporting it, that’s obviously a big positive, but from my point of view, article seven is a negative. It is a downside from my point of view. And I have seen there have been some protests, but I think it’s probably a nuanced perspective. And I’d love to hear what you think about some of that.
Aaron van Wirdum:
Yeah, there’s a lot going on with that. So if we get to the protests first, there are protests and they are sort of branded as no Bitcoin protests. So, you know, no Bitcoin anti Bitcoin protests, but I’d say that’s more of a flag of a that’s the opponents of Bukele are now sort of rallying under. It is the reason is that, okay, so first of all, Bukeele is very popular in the country, but he still has opposition of course. And he has been taking some pretty controversial measures recently as well. Like he replaced part of the high court judges, Supreme court judges, I guess recently it’s also been replacing, firing a lot of regular judges. He’s definitely consolidating power in that sense. So it, you know, there’s definitely opposition against him for these kinds of reasons.
Aaron van Wirdum:
And also just for policy reasons, people think that he’s not spending enough on this or that, or too much on this or that, or, you know just opposition issues. And it’s focusing a lot of Bitcoin. Now, if you get to the concerns about Bitcoin itself, it’s also pretty varied. So some concerns are, you know, I would consider FUD essentially that Bitcoin is only used or that it will be used for money laundering. You know, I would argue the same is true for cash and Bitcoin is actually being regulated the same as in most other countries. So the concern, if there is a concern about that at all, then it should be equal for Germany or Canada, or I’m just naming random countries, but it’s not like it’s more open in that sense here but yeah, money laundering you know, it’s good for criminals.
Aaron van Wirdum:
These kinds of issues. I’ve heard someone mention that Bitcoin was not for poor people because they can’t afford to buy a Bitcoin, apparently not realizing that you can buy a fraction of a Bitcoin. So there’s a lot of misinformation about Bitcoin at these protests, but like you mentioned, there are also some concerns that I would consider valid. One valid concern is what you already mentioned, article seven. So the mandate is part of the law, now there are outs in the law. You know, you don’t have to accept Bitcoin if you obviously cannot technically, however, when are you obviously not able to do it? That’s very, ill-defined, that’s not specified in the law. So that opens the door for what’s the term that you say abuse of the law. abuse of power. I’ve heard examples where in El Salvador, some restaurants were closed during pandemic, during the pandemic for not keeping to the COVID rules while other restaurants were kept open.
Aaron van Wirdum:
And it turned out that these restaurants that were closed also had issues with Bukele. So there’s a very nice English word that’s slipping my mind for that.
Stephan Livera:
It’s like selective enforcement, selective enforcement.
Aaron van Wirdum:
Yeah, exactly. So even if there are out in article 7, it also opens the door for selective enforcement potentially. So that’s a legitimate concern. I would say there’s also one of the concerns is that there’s very little transparency about anything the government is doing really in this regard, which I would also consider legitimate, like, how are the funds spent, or if we want to get more into like a Bitcoin topic with you know, the free and open source culture, then no one knows how this wallet actually works. The Chivo wallet that the government rolled out, it’s a custodial wallet, but who’s holding the funds. That’s not even clear or so there’s a lot of lack of transparency and the government is not really answering these questions. So I would say it’s balanced and nuanced in multiple ways. First of all, the protests, aren’t really only about Bitcoin and the parts that are about Bitcoin are also a mix of just misinformation and some legitimate concerns. So that’s what you’re seeing. But if I, you know, my impression is a generally it’s more anti-Bukele than anti-Bitcoin, the protests.
Stephan Livera:
Yeah, and I, as I understand part of that protest or one of the protests, I saw an image of a Bitcoin ATM being burned or something like that. Right. So do you know anything about that?
Aaron van Wirdum:
That’s obviously is obviously a very iconic image to, you know, that the media will take, and that’s easy to spread on social media and that’s because it’s visual and that’s something that people will immediately understand that people are angry about Bitcoin or about Chivo because the ATM’s are also branded as Chivo. So yeah, that happened I think it was two days ago, but that’s another good example that was actually the day that El Salvador celebrated 200 years of independence. And that was also a reason for the opposition to sort of rally protests. So again, I don’t think these protests were really about Bitcoin, although it may have been a part of it, but, you know, burning down with Chivo ATM makes for a very iconic image that everyone will see.
Stephan Livera:
Of course, yeah. And I saw some of the commentary from Alex Gladstein who obviously of the HRF human rights foundation and also a writer for Bitcoin magazine. He was commenting that some of that tension was potentially because of the bad experience with dollarisation about 20 years ago. So do you have any commentary on that or do you agree? Disagree?
Aaron van Wirdum:
I have heard that. And I’ve obviously read Glatstein’s article and he also had a Twitter thread about it earlier. And I did hear people shared that concern. I was on the radio show here actually a couple of weeks ago, talking about Bitcoin. And then that was also one of the things that people brought up. And what Alex explained in that article is that if I’m getting the numbers correct, and $1 was worth 8.75, the colon was the currency before the dollar. But when the prices for change, when people start with pricing things in dollars, they just did a divided by 10 kind of thing. And therefore it was as if a lot of things became 10 times more expensive overnight. We actually had something similar happened in the Netherlands and from the Netherlands, as you know, when we changed from the Gilder to the Euro, we also had that similar issue where just because of the exchange rates between the Gilder and the Euro, it made sense to just round things up a little bit.
Aaron van Wirdum:
But because of that, a lot of things went, you know became 10% more expensive overnight. And this Alex explained, especially affected the poorer part of the population, the people that would you know, get their stuff from mom and pop stores that would in fact, round their amounts up a little bit. And part of it is also that back when the dollar dollarisation happened, there was also a very strong narrative pushed by the government back then that it would be an optional thing that the dollar would just be an extra option. So the colon would still exist circulate, but the dollar will become an extra option. What happened in reality is that the dollar very quickly, just over took everything I think within a year, or maybe two or something like that, there were basically no colons anymore. So a lot of people that were, you know, who that were whose concerns were east back then on the promise that it would be optional, kind of felt betrayed.
Aaron van Wirdum:
And now we have this government saying that Bitcoin will be optional. So they have that sort of natural distrust for these kinds of promises. I do think that this time, it actually is different because this time the dollar is clearly still the unit of account. And I don’t see that changing anytime soon. That’s also what the government is promising. Again, you know, it depends on your trust in the government, I guess when it comes to promises from the government, but in the case of Bitcoin, because Bitcoin is volatile, I think we can both agree on that. It makes, it actually does make a lot more sense to keep things priced in dollars. So if things are priced in dollars, then that concern shouldn’t really matter. So you could maybe categorize that concern. That’s another, you know, sort of, not really a valid concern, but it is a concern that people have, and that I’ve heard. And I don’t know how big of a part of this. I haven’t heard it much, but I did hear it here and there that people have sort of bad memories from a dollarisation chapter, and it might inform some of their concerns now.
Stephan Livera:
Yeah. Understandable. And so I’d love to talk a little bit about your experience as well, going around and actually buying things with Bitcoin. Right. So I presume, you know, you’ve got a lightning wallet and you are just going out there and you had a, really a big one where you went to Macca’s McDonald’s we call it Maccas back in Australia, but McDonald’s and yeah. Tell us a little bit about, I want to hear that experience.
Aaron van Wirdum:
I mean, the experience is very, this is not going to make for a good story, but yeah, no, it was September 7th, so there was Bitcoin day I woke up. Okay. So actually, so let’s take a step back. So I’ve been here for a while now. I’ve been here since early July, more or less. And while I was here, I was going around, you know, speaking with people, including also financial institutions, just months before the law went into effect, with a couple of other Bitcoiners. We visited like banks in the country, payment processors, these kinds of financial institutions. And in our discussions with them, it became clear to us that they had no idea what was going on. They didn’t know what Bitcoin really was or how it works. They didn’t know what the lightning network was or how it related to Bitcoin.
Aaron van Wirdum:
They didn’t know if they were supposed to be mining. They didn’t know if they should be using XRP ripple. They like, they didn’t even know what to say. They had no idea. And there was also no, or at least very little information from the government coming out. Now they were talking about that Chivo wallets, but there was no Chivo wallet. And there was no information on the Chivo wallet apart from, you know, maybe some slide decks or some superficial stuff, but nothing in depth of how it works or nothing like that. There was some regulation published like one week before the law about how financial institutions should deal with Bitcoin. And that was mostly the, just sort of the standard KYC, AML type of stuff. That was, I think, quite literally copied from other countries. But overall, it was just, there was basically nothing and people didn’t know anything about Bitcoin and Bitcoin was not accepted anywhere outside of El Zonte basically some other, you know, some other restaurants maybe here and there, if you went to look for them, but nothing on any serious scale at all.
Aaron van Wirdum:
And I was discussing this with Alex Gladstein and actually literally, I think it was literally the evening before the Bitcoin Law went into effect. We were sort of discussing our experiences in the country. And I think I literally sats as an example. There’s no way McDonald’s has gone to accept Bitcoin tomorrow. And he completely agree with that. There’s no way something, you know, something like McDonald’s is gonna accept Bitcoin. So yeah, the next day I woke up and I was at breakfast, there’s actually a McDonald’s right across the street here where I’m staying and they have pretty decent breakfast actually here. It’s like the typical El Salvadoran breakfast. It’s not the stupid McMuffins or whatever. It’s actually half decent and it’s close. So I walked in and because I’m a journalist basically, because it’s my job to do so I asked, can I pay with Bitcoin just so they could say no.
Aaron van Wirdum:
And then I had learned that my assumptions were correct, but to my stupid surprise, they actually printed out this little receipt thing. It had a QR code on it. It’s a little bit of a puzzle because it wasn’t a lightning invoice or a Bitcoin thing. So I had to, but it was a URL to a website and there wasn’t a lighting invoice for is there. So to my surprise, I could actually pay with Bitcoin, which which was kind of funny. So I tweeted it out with a spelling error obviously, and that’s became my most viral tweet ever. So now I’m the McDonald’s guy retweeted by Edward Snowden and the president of the country and tens of thousands of other people. So,
Stephan Livera:
Yeah, that’s great. And so, I mean, do you know whether that was using the Chivo wallet on some kind of web interface or was that like a McDonald’s thing that they had coded up?
Aaron van Wirdum:
Yeah, they were not using Chivo. They were using OpenNode. I doubt anyone that actually coded something up about surely they got some sort of partnership and they made it happen. Yeah, it was especially still now, I guess, but it’s especially sort of these big chains, these multi-millionm multi-billion dollar chains that have started accepting Bitcoin here, I guess, you know, they have the time and money to actually do it. So, you know, you can go to McDonald’s or Pizza Hut or Starbucks or these kinds of places and they’ll accept Bitcoin. It’s not really from what I’ve seen, it’s not, a regular restaurant, just, you know, that’s operated by one guy or one family day are in general, not really accepting Bitcoin yet from what I’ve seen, but it is, there is a trickle going on. I do see there are new additions and there are new places where I can start to accept it. But so far from what I’ve seen, it’s mostly like the big chains and sort of working the way down to smaller chains are now also starting.
Stephan Livera:
Yeah, that’s really cool.
Aaron van Wirdum:
And I have met, I have been at a couple of places that do use the Chivo wallets as well now. So it starts out with McDonald’s, which did not, and also the Pizza Hut, which I mentioned the Starbucks they’re using IBEX, but now there are actually some supermarkets like National Walmart. Yeah. Supermarkets just across the country that start to use the Chivo wallet. I think maybe also subway or both, I’ve seen the Chivo wallets a couple of times as well now, which does not use lightning by the way. Or maybe the merchant that’s helping me doesn’t know how to switch or something like that. But it seems like that’s only on chain for now.
Stephan Livera:
Right? So it’s, yeah, I’ve heard different opinions and I’ve seen different points of view here because some people have said they can use, they can use lightning on it, or maybe there was some initial teething issues so maybe they disabled the lightning and they’re gonna reenable it later. I’m not quite clear there.
Aaron van Wirdum:
I mean, when it comes to, when it comes to the Chivo wallets itself. So what I just described were basically the merchant solutions, I think it’s all in the same app. When you start the app, you can pick if you’re a user or a merchant or maybe something else to be clear, I don’t have the app because I’m not Salvadoran. So I can’t use it. It’s you need to use your Salvadoran an ID thing to get it started. But I have been playing around with other people’s apps a little bit. So the merchant solution, every time that I came across one, it works. Although it also work only works on chain. The regular app for users is basically a giant mess. It’s working some of the time. So on day one, a lot of people couldn’t download it, even though a lot of people could download it.
Aaron van Wirdum:
I think it was downloaded half a million times or something, which is of course a lot. But every time I tried it, it was either incredibly slow or some weird bug didn’t let us scan a QR code or it just crashed all together or wouldn’t even start up. Or I think we lost money. I think it was because we were just playing around with it, you know, sending $20 in Bitcoin to the things, if we could get it out of the ATM, no one knows where that $20 went anymore. So there are lots of issues. They clearly wanted to ship it on September 7th, no matter what, because it’s just unfinished software. It did work a couple of times. You know, there were, and I’ve heard other people that have used it successfully. So it’s, you know, it’s hit and miss but in general, it’s just clearly unfinished software.
Stephan Livera:
Yeah, that’s unfortunate. But as I understand, the Bitcoin law does not mandate that they use the Chivo wallet. They can use any lightning wallet, but as I understand in practice, probably a lot of the businesses want to receive in US dollars. And so that’s why they are trying to provide the Chivo wallet as a government option to them to be able to receive Bitcoin. But actually the merchant receives US dollars. But in fairness, you could do the same with OpenNode too.
Aaron van Wirdum:
Yeah, I don’t know how the OpenNode infrastructure works. Exactly. I assume there’s probably a conversion fee involved somehow somewhere. That’s not the case with Chivo. So with Chivo, if you are a merchant and you accept $5 in Bitcoin, you actually literally get $5 worth of dollars. So the conversion there is essentially subsidized by the government, which is another issue by the way, which I haven’t mentioned that some people also libertarians might, you know, if they’re consistent in their ideology would have to oppose that because now the government is subsidizing that. But and that’s also something that people don’t like, there’s these funds that the government has set apart that will buy up these Bitcoin. Now they can of course sell these Bitcoin, but still the government is subsidizing the friction there. But that is to your point, that is a important reason for people to use, to use the Chivo wallet, because then they don’t have to pay any conversion fee. They just get literally in dollars what they were paid. So it’s a strong incentive to use the Chivo instead of other solutions, even though other solutions clearly work better most of the time, as far as I can tell.
Stephan Livera:
Yeah. Yeah. So I guess let’s summarize it this way then. So if that merchant or user is happy to just stay Bitcoin native, they can just use the well-known Lightning Wallets and just fully, everything would just work as it normally would on the lightning network, but where they want this specific US dollar aspect, that’s where they tend to be using Chivo or some other solution.
Aaron van Wirdum:
Yeah, not to mention that if you use an actual Lightning wallet or a Bitcoin wallet, you control your own keys, which is obviously another benefit. The one thing I didn’t mention the other incentive for Chivo, which I’m sure, you know, but I haven’t mentioned yet is the free $30 of Bitcoin. So everyone that opens up Chivo wallets gets $30 of Bitcoin, which sounds nice. And it’s nice. I guess the two concerns with that, is one, again, it’s government subsidized. You can have an opinion on that. The other thing is that they had this scheme where the first $30 in the Chivo app could only be spent to other Chivo apps. So one can only be on two other Chivo apps. Now, once you’ve done one app it’s free. Now you can spend it to any Bitcoin wallet or you can cash it out an ATM or whatever, but the first hop is only Chivo to Chivo.
Aaron van Wirdum:
So the idea there is obviously to incentivize people to actually use Bitcoin, to actually try it out rather than run to the closest ATM, get $30 out and never look at it again. And that’s the incentive, but what really happens, or at least one of the things that happens is that a lot of people would take their $40 and would go to McDonald’s or two pizza hops, or they wanted to buy something on Bitrefill. And they learned that they couldn’t and they didn’t understand why they couldn’t. And the McDonald’s didn’t understand why they couldn’t. So now everyone has a bad experience and they think Bitcoin doesn’t work because they don’t get that. The $30 can only be spent to another Chivo wallet. So a lot of people that had their first experience with Bitcoin now had a bad experience due to that restriction, which, you know, I think it’s very unfortunate that they put that. I get the incentive, I get the motivation for the restriction, but it’s very anti Bitcoin, first of all. And it’s just giving people a bad experience. And it’s unfortunate that their first Bitcoin experience is one where it doesn’t work.
Stephan Livera:
So I guess where we’re really going through the good, the bad and the ugly, right? Like that there are a lot of teething issues let’s say. And in fairness, I think it was always going to be this way, because we’re talking about six and a half million people who, many have not been exposed to Bitcoin. And of course they’re not necessarily on Bitcoin Twitter, like the rest of us who are like hardcore Bitcoin people, I can understand where there would be some of that teething issue, but hopefully as the months progress, things get better. And the experience is nicer and slick and easy and a bit better for people so that it’s not a jarring experience, not being able to spend your Sats. Right.
Aaron van Wirdum:
Yeah. Well, you mentioned we’ve been through the good and bad and the ugly, I guess I’ve mostly been through the bad and the ugly so far. Maybe, maybe that’s my journalist mindset to where I focus on the things that are negative to be clear in general. I think it’s absolutely great that a country, or at least I think a country like El Salvador could benefit a lot from Bitcoin. It’s just unfortunate that some of these bad aspects are there because now that is becoming a focal point also within the country, you know, like the protests we’ve mentioned and decks, they actually have a good point. Like if, if these bad aspects weren’t there, if the $30 was freely spendable, if it wasn’t mandated, like if these things were cut out of the law, then it would just be great. And I’d be a very happy guy here, but I am a happy guy, but now there’s so much negative to focus on, which was so easily to avoid with. And that’s unfortunate, but it’s the first, it’s the first country that tries something like this. So obviously there are going to be lessons to be learned. And obviously there are going to be kinks in the cable that are going to have to be worked out. So I actually don’t want to sound too negative. I’m sounding too negative probably in general. I think it’s a great opportunity for everyone here. Of course,
Aaron van Wirdum:
Great experience as well. So let’s mention some of the great experiences then. So one of the cool things was that someone on what was his name again? I forgot his name. Sorry if you’re listening. Am I really not going to remember his name? No. Sorry. So that guy he made a suggestion on Twitter where he said, Hey, is it possible?
Stephan Livera:
Matt Ahlborg.
Aaron van Wirdum:
No. Yeah, no, it was sorry, Matt Albert. So it wasn’t actually Matt Ahlborg. It was someone that changed his name to, I know, thank you, Matt. That’s not what got it. Yeah. So although I think it was maybe someone from cash app or Strike or someone else who actually made the original suggestion Bitrefill. I don’t remember someone made the suggestion that, Hey, could you go to an ATM there actually take a photo of the QR code, send that to us and then see if you get the money out.
Aaron van Wirdum:
So I did. And the videos on Twitter and it’s like a four minute video from start to finish where you see how I indeed withdraw cash from a Bitcoin ATM here sent by someone across the world who also shared a screenshot that clarified that he paid like $20 and maybe 30 cents. And I got $20 out, which is obviously, you know, that changes the game of remittance completely. You couldn’t do that before. If he wants to do $20 remittance you’re probably going to pay half of it in fees. That’s just completely unfeasible better. Yet. The next day I went back to my favorite restaurant McDonald’s and that’s I’m I, I took a photo of the QR code of my payment for a big Mac. I posted that on Twitter and someone across the world paid a big Mac for me with like basically no fees over lightning. And I was eating big Mac, you know, that these kinds of things were not possible two weeks ago and they’re possible now. And it’s really cool. And it could be a real solution for people here because remittances it’s really expensive. So, so these are definitely some success stories and there is a lot of potential there.
Stephan Livera:
And I mean, I have listeners who are all over the world. So there might be listeners out there who are thinking, yeah, I like, I want to come and spend some sets and I want to actually support the, the idea of trying to have a Bitcoin economy. And so there might be Bitcoiners all around the world who are listening and they just want to get a perspective from you, what’s it like on the ground and Hey, maybe I’ll come and visit. I will be coming to visit cause there’s Adopting Bitcoin conference on, in November. So I’m looking forward to coming down and using my lightning wallet and all of those things. I think that’ll be a really fun experience just to sort of live in the future. Right. And I think some of us, obviously in the Bitcoin world, we’ve been living in the future in some ways, right?
Stephan Livera:
Like there was the lightning conference in 2019, and that really felt like living in the future. Like you would walk around the conference and you’d be able to pay with lightning for ice cream or for things or at the various Bitcoin Magazine or BTC media conferences. And there’s a big, strong focus on lightning even in Bitcoin 2019, there was that there and in the recent Bitcoin 2021. So I think those are some cool experiences for Bitcoiners out there. And I know president Bukele has also mentioned this idea of a Bitcoin permanent residence. So I believe it’s three Bitcoins and you either purchase property or put that into a business and that will entitle you to residence rights in El Salvador. So that could also be a really interesting aspect. And I know also there will be no tax on the gain there. So that’s also very potentially interesting. So I guess for anyone out there who’s listening and maybe they’re thinking about going to El Salvador, some of them might have the concern around like vaccine passports and things like that. What’s been the experience there and what’s the kind of rule there in El Salvador.
Aaron van Wirdum:
El Salvador is not a libertarian Haven when it comes to COVID well, first of all, there’s still the mask mandate. Although I think it’s all the indoors. If it’s also outdoors, then I’ve been breaking the law, but not fight for it. I think it’s only indoors as far as I can tell. Bukele has actually, from what I understand, been pretty strict when it comes to lockdowns and these kinds of things. In fact, I believe, but someone feel free to fact check me on this. I believe that one office lockdown laws was considered unconstitutional and that’s why he fired the oldest judges from the Supreme court and got new judges in basically to get his way. To get into the country. I think you need either when I got in, I needed either proof of vaccination or negative test.
Aaron van Wirdum:
I think that’s probably still the case, but if you go to like El Zonte for example, so one of the mask mandate, for example, which I just mentioned, that’s mostly San Salvador because in El Zonte I have not seen a single mask by anyone. So there’s definitely a difference between different parts of the country. One other thing I wanted to mention because it’s something that comes up a lot is security, safety. A lot of people are concerned about coming to all self-aware because they’ve heard bad stories about, you know, all the gang violence and the high murder rates. I’ve been here for two and a half months now. I’ve not felt unsafe. I’ve mostly been in San Salvador. And to be fair, I’ve mostly been in the richer areas, of San Salvador or I was in one of the coastal towns, like the surf towns, the touristy places.
Aaron van Wirdum:
And here I felt completely fine everywhere. You probably don’t want to go to bad neighborhoods at night maybe, but there are Uber’s and you can just Uber anywhere. So why would you walk in bad neighborhoods at night? There’s no reason to do that. Or maybe like parts of the country that are more controlled by the gangs, but you know, again, don’t go there. If you’re concerned about that. I think if you sort of stay in San Salvador and the coastal places, then I don’t think you need to be concerned. I have not been concerned. I’ve not heard any bad stories. So I think in that sense, people that want to go to the conference, I think that’s, I personally think that’s totally fine.
Stephan Livera:
Yeah. And look, I’m hopeful that we see it might be a nice experience for people to go and that maybe that helps the overall, if you will, this experiment if we’re going to call it that or this kind of move forward that if you know, the country supports Bitcoin and more Bitcoiners around the world want to come there and either as a tourist or potentially as an investor, potentially even as a resident, there are different ways that they might want to consider.
Aaron van Wirdum:
I mean that’s even one of the arguments that Bukele gave for the Bitcoin laws that will attracts Bitcoin tourists. So if you don’t want to let him down, then definitely come down and spend your sats here. Yeah. The other thing you mentioned is that the 3 Bitcoin investments, that’s something he promised. I don’t think there are any details about that yet. That’s also sort of a common threats where, you know, there are a lot of promises or a lot of things that put out, but then the details aren’t really there. So we’ll have to wait and see how that plays out. The other example would be a volcano mining, for example, which everyone is supporting in their avatar. I don’t know if that’s actually going to happen. I don’t know, is that actually going to be feasible or cost efficient? And I have not been able to discover any details about that or any concrete plans you know, maybe it’s like the Chivo wallets where one day it’s just there and then it works half or maybe this time we’ll have to see.
Stephan Livera:
Yeah, I think it’s, maybe there’s all these ideas out there and maybe not all of them are going to work. And I think that’s the other thing as well sometimes. And you’ve probably got a similar experience as well. I’ve seen over the years, Bitcoin just as a movement and as a technology, sometimes it goes in like a two steps forward, one step back dance. And so there are times where we sort of overextend and then we kind of come back down to reality and then again, and then wait a few more years and then boom, it comes again. So I think for people who are expecting that, you know, El Salvador is going to hyperbitcoinize all of a sudden, and it’s going to, everyone’s going to know, I think it’s going to be more like a gradual slow thing that over time people slowly get accustomed to using Bitcoin and look just like all of us had to deal with Bitcoin’s volatility. Salvadorans are going to have to learn that lesson that we all learned. Right? Because you can only learn these things once you go through that big drop and who knows, right. Whatever, if there’s a big bull run later this year and a big crash, well Salvadorans and people who were holding some Bitcoin, are going to have to learn to deal with that aspect of it. So that’s part of the Bitcoiners journey, right? Yeah.
Aaron van Wirdum:
I mean, I think, I think Bitcoin or money in general is very much an emergent property. I’m very much a Hayekian in that sense. I think that’s, that’s how works in the same way that language works. You know, people speak language because they want to, not because it’s mandated. In fact, if you mandate the language and people might get angry, we’ve seen that in Catalonia, for example, region in Spain, where they wanted to mandate Spanish and people took to the streets. Language, money, these kinds of things, they’re emergent properties. And I, I think the most the governments can do is create an equal playing field for, you know, so they’re creating an equal playing field for the dollar and the Bitcoin, which is good. I think ideally they’d get rid of all legal tender laws, but that’s another story. So they can do that and they can sort of offer, you know, fair regulation or no regulation again, ideally, but let’s just say fair regulation for now.
Aaron van Wirdum:
And then it’s really up to the people to adopt this or not. And it’s up to people to discover Bitcoin, you know, is really going to benefit them or not. And I personally suspect that it will grow same as other countries, of course, but you know, now that El Salvador is creating this environment, you know, fertile environments. And I think that that could really benefit El Salvador and spots. It’s definitely not going to be an overnight thing. It’s going to be years before it grows. And like you said, two steps forward, one step back.
Stephan Livera:
Yeah. And actually even on that same theme of being a Hayekian. I think Hayek did write and speak about this idea of, to the extent that governments exist, that they shouldn’t be thinking of themselves like a, like a top-down architect. They should see themselves more like a gardener, right. You’re sort of tilling and you’re making a good environment for the people to go. And I think that’s kind of aligned with what you were just saying there, that it should be to the extent that you think government should exist or not. I mean, obviously I’m a libertarian, but you know, to the extent that it should exist, it should be trying to minimize that trying to set up a good environment for people who can then go build the products and build the services and all of those things.
Aaron van Wirdum:
Yeah, exactly. So that’s a good thing about this law. That’s what I really like about this law that it is doing that. And then we don’t have to get into that again, but what sort of contrary to your staff is that mandatory part of it like that? Shouldn’t be part of it if you just want to provide a fertile environment, but that they are creating a fertile environment is absolutely great.
Stephan Livera:
Exactly. Yeah. And one of the big topic we’ve got to get into, and you touched on this earlier is the whole remittance thing right now, let me set the stage a little bit. There has been very conflicting and different views, right? So if you talk to say someone like Jack Mallers of Strike, or if you talk to most of us who are a Bitcoin bullish will be like, yeah, it’s free remittance now. And it’s cheap and it’s fast. But if you talk to, let’s say Steve Hanke, right? Someone who’s meant to be a free market economist, but he will be out here saying, no, they should be doing a currency board and look how cheap Western Union is. And he’ll put it like, oh, see because you’re having to convert back and forth to the US dollar each time you’re paying a conversion fee. And that’s why you shouldn’t use Bitcoin. So I guess what’s, what’s the reality. And what’s the real nuance on the ground there in terms of using Bitcoin for remittance?
Aaron van Wirdum:
Well, I mean the obvious thing first, the obvious thing is that if you don’t convert from dollars and back into dollars, then clearly Bitcoin is superior for remittance because it costs the fraction of a cent. It costs a lightning fee at this point to send money from anywhere in the world to El Salvador. Maybe that will increase over time. You know, scaling is still an issue even with lightning, but at the very least we can objectively say that at this point, if you use lightning and people just spend the Bitcoin here, then remittance, isn’t even a term that should be used anymore. Same as you know, long distance calls, it’s just, we get on Skype or whatever. It’s a thing of the past. So with remittance fees, now, if you get into his points that if you want to convert from dollars to Bitcoin and then back to dollars, I think it gets a lot more complicated and nuanced.
Aaron van Wirdum:
So one of the things he argues, what he took as an example was basically the pre Bitcoin law remittance fees. So he would assume, I don’t know, what his assumptions were for buying Bitcoin. Maybe you took the most expensive example there, Coinbase or whatever your most expensive example is and then send the money here. And then he probably assumed the highest possible transaction fee on chain or something. And then he went here and then the highest fee, if you go to an ATM, which were indeed, you know, could be pretty steep, they could charge 5% or maybe even more at some of the ATM’s, you know, a month ago. Now that has changed now with the Bitcoin law, because now you can exchange your Bitcoin here into dollars for free, which I did. So I know for a fact that that’s possible, there’s no denying that the more nuance or, you know, if you want to get more into it, then the question is okay.
Aaron van Wirdum:
And we mentioned this, what’s really happening is the government is subsidizing that it’s free because the government is subsidizing the friction. So then the question is, alright, how much is the government actually paying for that? Are they paying less than the ATM’s were before? Maybe because they got better routes or they get bulk discounts, or I don’t know how that works. Exactly. that’s a much harder question to answer, like, is the taxpayer just paying these costs now? And would it in fact, indeed still be cheaper overall if people use Western Union, I don’t have the answer to that. And yet the reason I don’t have to answer to that is in part because the government again is not giving any transparency when it comes to these kinds of things. They’re not, they didn’t put out a research report where they detail what it was costing them exactly to do this or what it was costing them before to get dollar bills in the country and how that compares and what the math is.
Aaron van Wirdum:
And you know why this is stupid. They didn’t put that out. So we don’t, I don’t know. I don’t think Steve Hanke knows, he’s making a set of assumptions and these assumptions may or may not hold up. I will say that it’s, I think that this is for example, so Jack Maller’s arguments that for especially for lower amounts, Bitcoin is actually lightning. It’s actually a much better solution because there’s this base fee for remittance. And so whatever the amount is, you have to pay $8 or whatever it is. So if you’re transmitting $10,000, then maybe these $8, you know, don’t really make much of a difference. But if you’re transmitting $30, then all of a sudden these $8 make a big difference. And with lightning you don’t have that starting fee. So, and the 5% is still the 5% on the other end. So for small remittances, it might actually be better to use Bitcoin.
Aaron van Wirdum:
Now, as you hear, I’m kind of speculating, I thinking out loud because I do think that’s all we can do at this point. We don’t have the exact numbers, so the government is subsidizing it. So as long as they’re doing that, then it’s obviously cheaper other than that, you know, even if the government wouldn’t subsidize it, which I might prefer just ideologically speaking, then it would be another option. And then it doesn’t matter what anyone writes in their paper for Johns Hopkins University or whatever. People can just have the choice and pick whatever the cheapest option is right now. I think it’s hard to say what is actually going on beyond the screws and therefore what is actually cheaper or in which cases it makes sense in which case it does not. I do think Steve Hanke gave a very one-sided example.
Stephan Livera:
And that’s probably not really accurate of, I mean, and look, I guess, setting aside the ideological objection to government subsidizing things. It is, I mean, we wouldn’t say, oh, I mean, the governments make the roads, right? We wouldn’t have, like, it is, I guess, quote unquote, free to use the roads and civilians can use roads, right? So in the same way, we would say, well, civilians of El Salvador can, you know, use Bitcoin and it, yes, it’s government subsidized, but at least it’s free to them.
Aaron van Wirdum:
That’s a very good point. No, I agree. That’s a very good point that the government subsidizes a lot of infrastructure. And if you consider this financial infrastructure to make sense for the government, maybe to subsidize it, however, then the question remains, why do they subsidize this and why don’t they subsidize Western Union remittances, for example, there’s still like a choice of what the government’s doing and maybe, and this is me very much speculating. I think that maybe the reason they’re subsidizing Bitcoin in particular is because they recognize that being a dollarized country and being dependent on the United States and the US dollar and the federal reserve policy is really harming the country. And they recognize that. And that’s why they figured, okay, we’re going to subsidize and we’re going to help bootstrap Bitcoin here, because that would actually be a way out. That’s a much bigger issue.
Aaron van Wirdum:
And interestingly, while that’s definitely something that people will discuss on your podcast and that people, will discuss that your listeners will know about that piece of the arguments, that part of the argument has not been vocalized here at all. Basically it’s not part of the pro it’s like, no one, well, I don’t want to offer, I don’t want to say no one, but it’s as big of a argument and as big of a topic that is on Bitcoin Twitter, here no one speaks about it, including the government. There was even this part of the initial drafts of the government that Jack Mallers onstage Bitcoin 2021, where it specified that federal reserve policy was harming El Salvador or something like that, that was removed from law. So it’s that because they don’t want to ruffle feathers. Maybe I don’t know, is that because they changed their mind on that also possible? I don’t know, but it is definitely notable that that argument has been almost completely absent here, even though to me, it sounds like that is actually the biggest argument in favor of not offering an alternative to the dollar.
Stephan Livera:
Yeah. Interesting stuff. And I guess we could also argue that by supporting a Bitcoin network, maybe arguably they’re sort of less choosing winners, right. Whereas if they would have subsidized Western union, they’re kind of picking a winner and just giving money to this company. Whereas if they sort of say, Hey, here’s the Bitcoin lightning network you’re allowed to use whatever wallet you want, but here’s the government one, if you, for whatever reason can’t cannot use a private market solution, maybe there’s a little bit of an argument on that aspect. But I think the broader point as well, that I think the Steve Hankes of the world and others like that ignore is a convenience factor as well, because as people would point out, even people down in Bitcoin beach and Arizona, they would find out that let’s say grandma or mom back home has to go and ride the bus for a few hours to go get the that money out. Whereas if they use a Bitcoin wallet, they’ve just got it right there on their phone straight away. And although we don’t really like the coercion aspect of article seven, they can now directly spend the Bitcoin. And that’s an important part, right? Because without that ability to directly spend the Bitcoin you can’t close the loop.
Aaron van Wirdum:
Yes, I agree. But that’s come back to sort of the original argument that if people actually use Bitcoin, then remittance isn’t even an issue anymore, where it doesn’t even make sense anymore. If people do want to get dollars, which was sort of the base assumption for Steve Hanke’s paper, then they, in that case still need to go to a ATM and get the dollars out. So that might still require a bus. Right. And that might still be a place where the gangs sort of hang out to see who’s getting a lot of money. So in that sense, I would say it’s probably equal. You can, of course keep the dollars in your app as well. You can keep a dollar amount, the dollar balance in your app. So maybe you could counter the argument in that way that people don’t actually have to get the cash anymore. They can just pay each other in dollars for the Chivo app if the Chivo app works. So maybe if you want to make that argument that then it holds up. Yeah. But if you want to cash them, the problem is still similar, I would say.
Stephan Livera:
Right. And actually, I’m also curious your thoughts on this and also, and just your experience on the ground. What’s been your experience with talking to Salvadorans and people on the ground in terms of how they manage, how much USD they hold that’s how much Bitcoin that’s they held, is it sort of like people keep their tips in Bitcoin and they just hold a little bit of Bitcoin. And then for most of their day-to-day stuff, they’re holding USD or what’s kind of the sense that you have just from discussions?
Aaron van Wirdum:
I mean, I don’t think there’s one strategy. Some people are happy to hold Bitcoin. I’ve met people that would accept Bitcoin on one day, but not on another because they thought Bitcoin was going down and the next day. They don’t want to accept Bitcoin. But if you were there a week before you did, so that will be a case. I mean, I’ve met Salvadorans that are basically trading that are just trying to time the markets. So you know, they’ll keep it in Bitcoin when they think it goes up and they transfer $2 when they think it’s going to go down. It’s not clear to me whether they fully recognize that they are just currency trading that are trading Bitcoin, but that is what they’re doing. And definitely also, just especially now with this new, since the Law’s going into effect in these big chain, McDonald’s and Starbucks and all those, I’m pretty sure that they just convert it into dollars immediately.
Aaron van Wirdum:
Although, I mean, maybe they’ve maybe McDonald’s would surprise me again, but I’m assuming they’re, taking it in into dollars, but in general, to answer your question more generally, I do think inaudible is clearly the number one problem. It’s also one of the things is that one of the arguments another argument that I haven’t mentioned is that there’s this perception that Bitcoin is for the rich here. When you go to these protests, that’s sort of, one of the things you’ll hear the bitcoin for the rich. One thing they might say is because not everyone has internet or because not everyone has cell phones. I’m not sure I find that argument very convincing. But another argument they will give is that if you’re rich, you can stomach the volatility while if you’re really living paycheck to paycheck and you need your food to eat, then you’re not going to be able to take any volatility risk.
Aaron van Wirdum:
And therefore Bitcoin is better suited for the rich. Now that is an argument that I think is that actually holds up that, yeah, it’s true. If you have a lot of money, you can stomach the volatility better. So I do think volatility is definitely the number one challenge. If I have to mention one number, one challenge for a country like El Salvador, it’s the volatility of Bitcoin. You know where you price it in day-to-day goods, which most people have to price their living expenses in, one Bitcoin is one bitcoin it’s true in sounds nice for social media, but it doesn’t help them very much if they want to buy pupusas and the price drops by ten percent.
Stephan Livera:
Yeah. Right. And as their expenses are denominated in us dollars, whether that’s rent or employees, wages, or food products that you know, your wholesale cost of what you’re buying. And I can understand that aspect. And it might just be a matter of time there as well for people to get accustomed to the volatility. And then at some level, whether they consciously think about it or just kind of do it without really thinking have a small portion of Bitcoin that they hold in sats, then maybe they keep their US dollar for their kind of day to day staff. But over time.
Aaron van Wirdum:
Yeah. That’s the positive side of things. Of course, which I of course forgot to mention as, as I tend to do apparently, but yeah, no, it is true. That’s, you know, Bitcoin as savings technology. It’s also technology for people here and up till now they have no savings technology. They have noother option to save at all. So it does now offer this to people. So if they can set anything apart, then now they actually can set something apart because now they have something to save him. And that is affecting, you know, that’s something that the people from inaudible mentioned a bitcoin be that I’ll mention a lot. And also the people, some of the people I’ve spoken to that they actually do do that. So they’re now starting to get more into a savings mindset. And that’s very interesting. Yeah. That’s the positive side of things of volatility.
Stephan Livera:
Yeah. That’s a really good way to put it and I’ll tell you what it’s like, here’s the good counter-argument then to the protesters in that example, because they would say, oh, it’s only for the rich, but think about it this way right now, if you can’t access buying property or stocks again, which is again, accessible to the rich you can’t save. And so in this way, you can, you can stack sats, you can stack a fraction of Bitcoin in small amount and it’s actually accessible in that way. Of course, it will take time to be able to learn that and to understand that, and to, as we say, have a longterm view but I think the whole savings technology narrative as our friend Pierre Rochard has famously popularized is an important one. I think actually, and also an important idea as well for people out there who want to support El Salvadorans as my friend Hass McCook says, if everyone’s out here setting up their DCA stacking Sats plan, because if the price of Bitcoin, if you become part of the quote unquote DCA army, and you help the price stabilize or steadily be rising over time, then that will provide a better experience for anyone who’s saving into Bitcoin.
Stephan Livera:
And so you’re sort of helping deal with that volatility problem if you’re joining the DCA army.
Aaron van Wirdum:
I’m not sure if it’s exactly to that point, but you just mentioned, so let’s get back to the protestors again. I guess one of the arguments I’ve also heard as you know, El Salvador is already an impoverished country. What are you doing, bringing Bitcoin here? So that suggests that they are really looking at Bitcoin as sort of a products while I think you, and probably a lot of your listeners will think, you know, part of the reason that the country is so impoverished or at least it doesn’t help that the country is dollarized and the dollar is being devalued by different country. And now in a pretty perverse way, El Salvador is sort of paying the bill for that. That’s not helping making the country richer either. So, you know if you see yeah, you and me we’ll see Bitcoin as a potential to actually get out of that cycle. But yeah, like I mentioned, that’s one of the arguments that just hasn’t been I’ve not heard it or seen it basically anywhere, including from the government it’s not one of the arguments for Bitcoin that’s being espoused here very much. And, and that’s how you get into a situation where it’s a bit of a luxury product and it mismatch for a poor country because why would you introduce a luxury product into a poor country? Yeah.
Stephan Livera:
Yeah, but I mean, the flip side of it is the opportunities that if there are businesses who can sell products and, you know, wealthy Bitcoiners who want to come to El Salvador and spend their sats that’s opportunities, that’s jobs for Salvadorans. So that’s, I guess that’s the flip side to that particular piece there. I also know you were a part of the Bitcoin meetup in San Salvador. So can you tell us a little bit about that? How did that go down? What was the sentiment?
Aaron van Wirdum:
That’s kind of a funny story, actually. So it was probably about eight weeks ago, six weeks ago, somewhere around that time that me and a couple of Bitcoiners, there are bitcoiners just visiting the country every week now, because at least for the past couple of months, that was the case. And in one weekend, me and a couple of other Bitcoins, we went to El Tucco which is one of the beach towns. It’s close to El Zonte but it’s more geared towards their parties there at night. And then you can have a beer. El Zonte is pretty quiet at night. So we went there and at one point we were having breakfast with it was Moritz from Specter, Nicholas from Galoy and Fode from Senegal. He just got the grant from the human rights foundation to set up a course there to help Senegalese anyways, Moritz sort of jokingly suggested to me is that I don’t, you know, what you should do. You should organize a meetup that way. You don’t have to find all the Bitcoiners in Sal Salvador, they’ll come to you.
Aaron van Wirdum:
They’ll make it they’ll will make your job easier. So we laughed for you know, we laughed, there was sort of a joke, I guess, but then we, you know, we sort talked about it, then we realized that was actually a very good idea. And we started putting together this meetup. So we put up a meetup page and picked a location a bit for a magazine. I figured a bitcoin magazine would actually want to sponsor it. So, you know, because we want to help the community and give back to the community in these kinds of ways and support a project like this in El Salvador. So Bitcoin magazine kind of, came into sponsor. And then the first time I think we went to steak restaurant course that that’s obviously the first place you go to for meetup. And I think about 18 people showed up something like that, and it was a nice fun and a bunch of a Salvadoran people showed up and a bunch of fellow travelers.
Aaron van Wirdum:
And so we decided to do it again. And then the second time Galoy sponsored. And that time we just went for beers and 50 people showed up. So it was like a big growth, the second meetup. And then the third one we did on Bitcoin day and Bitrefill sponsored. And there were probably more than a hundred people. We sort of reserved one part of a bar, but the whole meet up spilled over to the whole bar. And it was it was amazing. It was really cool to see all these international Bitcoiners show up for this, but also a lot of locals that showed up. And yeah, it was a very, very nice end of the Bitcoin day with a party with Bitcoiners in the middle of the jungle, not in the middle of the jungle, in the middle of the volcano, I guess I should say
Stephan Livera:
I’m a big fan of Bitcoin inaudible and I always try to hop into them or I’ve, you know, but back when I was in Sydney, I was an organizer for them. I think they’re a great way to grow the scene and grow the knowledge and give education as well. So that’s awesome.
Aaron van Wirdum:
Oh, they’re so easy to start as well, which is nice. Like, it doesn’t take that much organization, just pick a spot, pick a date time and people will show up and you have good conversations and a nice beer or something else. Steak.
Stephan Livera:
Yeah, yeah. So definitely listen, as I encourage you get involved either start a meetup or get involved in a local one and help out whatever way you can. And also I’m curious on Bitcoin companies coming to El Salvador, I presume you’ve seen a lot of this. What’s been your, what have you seen there?
Aaron van Wirdum:
For a couple of companies that are, or a bunch of companies that are opening like a second or third office here or, you know, hire a country manager Bitrefill has a country manager, strike also an office both of them Paxful as got some feet on the ground here, IBEX, which is from Guatemala. So it was already close for their at least partly settling in El Salvador as well. Also just, I’ve met a lot of people from companies that aren’t necessarily moving the company here, but a lot of interests from everywhere, obviously at Athena which are doing the ATM’s. Although I think that’s, I don’t think, I don’t think that has been officially announced or anything, but it’s obvious that it’s a team that are that are that got the ATM deal. Speaking of which it’s still not clear who builds the Chivo wallets.
Aaron van Wirdum:
There are probably multiple companies involved there, but it gets back to the lack of transparency from the governments. There’s very little transparency about these kinds of things, but getting back to your point about companies, well, I’m almost certainly forgetting at least one, maybe several but I mean, it’s small. It’s not like, you know, it’s not like I’ve not met a company, that’s moving its HQ over here, but like a second office and getting some people here to help with a rollout or so, so it’s creating jobs here as well, at least some jobs. So that’s good for the local economy as well.
Stephan Livera:
Yeah, that’s cool. So I guess, and that’s the other thing as well, because this is a global thing. There are developers all over the world who are working on some Bitcoin Wallet or Lightning Wallet somewhere that’s helping in that way as well.
Aaron van Wirdum:
I mean that’s the benefits of plugging into an open system. Like Bitcoin right? That it’s open source and anyone who’s helping Bitcoin is now helping El Salvador. Yeah. That’s pretty, pretty amazing.
Stephan Livera:
Yeah, exactly. Like as an example, you know, Roy and the team at Breez making that breez software in Israel, but anyone in El Salvador can just spin up a wallet and it’s got an in-built merchant POS terminal. So you can just open breez, start the merchant terminal and boom you’re receiving sats, all over the lightning network.
Aaron van Wirdum:
And it will probably work a lot better than the Chivo Wallets as well. So there you go maybe dunking a bit too much on the Chivo Wallets, but it is a piece of.
Stephan Livera:
Well I’m sure. I’m sure.
Aaron van Wirdum:
I’m sure they’re improving. It’s you know, maybe, maybe we shouldn’t expect too much from them after one week go team Bukele let’s make Chivo wallet to work.
Stephan Livera:
Yeah. Yeah. Also wanted to ask you actually about a Bitcoin core version 22. So you’ve read an article about this also. What’s your what’s the high level, I guess a comment you’d have about Bitcoin called version 22,
Aaron van Wirdum:
The high-level comments. I mean, as you know, Bitcoin core has a new release every six months. I think this one took a little bit longer actually, but it’s scheduled to have a new release every six months. So that means that after, you know, six months there’s a cutoff point and then whatever is ready is in there and whatever, it’s not as a work in progress. So it’s not like Bitcoincore software is released, you know, like some commercial software where they have in your future ready, or it’s not like that. It’s just whatever’s ready is ready. Now they did have some interesting things ready for this one. I think one of the most notable ones is offer wallet support in the GUI and the user interface is now basically complete. You still need to HWI hardware, wallets integration, add on sort of software, but then you can just use it from the Bitcoin core wallets.
Aaron van Wirdum:
It was already available in the client. Sorry, I am saying that’s right in the command line interface. Sorry. but that was obviously as accessible to regular users. So now it’s available in the wallet. So, you know, you can link your Trezor or ledger or opendime or whatever it is and use the full security of Bitcoin core. So that’s cool. It’s it’s Taproots ready? Taproots. The protocol upgrades will go live in November and Bitcoin core 21.1 was already Taproot ready? Of course the miner release, but this is the first major release that’s taproot ready. There’s also some miner, there’s some miner taproot support in it, but you know, that baby steps, like I mentioned.
Stephan Livera:
Taproot addresses.
Aaron van Wirdum:
Yeah, exactly. But you can’t use like full taproot functionality, like with all the smart contract stuff or anything like that, it’s you can’t use taproots for regular transactions essentially.
Aaron van Wirdum:
And you can label your taproot addresses as such under the who’s these kinds of things. It’s of course now compatible with I2P, which is the, if like a Tor like I2P it’s a little bit like Tor I don’t know the details. I don’t know what the difference is exactly. From what I understand Tor is more centralized when it comes to network mapping and I2P has a more decentralized solution for that, while it’s also a little bit better for hidden services, a bit more geared towards hidden services. So if you never need to leave the privacy network, then it’s a bit better for it as well. Or it’s more also suitable if you want to connect with a regular internet. Let’s see what else? Yeah. There was,
Stephan Livera:
I think the last thing is a test mempool accept.
Aaron van Wirdum:
Oh yeah. That’s yeah, well again, that’s another baby step. It’s like a small step. So the bigger idea there, the bigger plan is that right now sometimes if your transaction gets stuck, so you’re receiving intersection, but it has a very low fee and therefore it’s stuck in a mempool. You can actually speed it up by spending the coins from that transaction and user section with a higher transaction transaction fee. Sorry. And then what a miner will do is it won’t just look at transactions individually to see which paid the highest fees, but it will actually look at combinations of transaction. So miner will be able to figure out, you know, what, if I confirm this low feature section, then I can also confirm this high fee transaction and therefore that’s more profitable than picking two other transactions. So that’s a way for users to get their transactions on stock.
Aaron van Wirdum:
This is sometimes very important in context of something like the lightning network, where if you, you know, sometimes you need to get a transaction confirmed within a certain timeframe because otherwise your counter party can claim the funds because yeah, so sometimes very important that you can use this functionality. Now, the problem is that what I just discussed is about which transactions are included in blocks, but before a transaction is included in a block. It must first be included in a mempool. So in the mempool of nodes for it to even make its way to miners for them to include it in a block and for mempool that logic that I just explained, inaudible for parents doesn’t work. So now sometimes the transaction you’re receiving might have such a low fee that it doesn’t even make it in mempools, but then you also can spend it up, speed it up because the logic that the combination is considered, it doesn’t apply yet.
Aaron van Wirdum:
The long-term plan is that that this will work for mempool as well, so that the child pays for parent logic will come to work for mempool. And so you can use it to get, you know, for the safety of the lighting network, for example, this is a multi-step progress to get there. And one of the steps that’s been included in this Bitcoin quarterlies is that you can sort of test this on your own node, so you can create multiple intersections, tested on your own nodes, see if your mempool would accept it. And you know, that sort of just running a test, essentially, but over the longer term, this should also be rolled out on the peer to peer network, for example, and then you can actually start sending packages of transactions. So these are the packages. So you’re sending two packages as two taxes one package, and then it will be considered as such. So one baby step on that direction. Now there are of course, many more subtle changes and bug fixes and inaudible just improves in all sorts of ways. But in my article, what you’re referring to, I think I, unless I’m forgetting one, but I think I, in these picks these four, I sort of the most notable ones for more, you can just read the release notes. Of course,
Stephan Livera:
Of course. Yeah. Yeah. But I think that’s a good one for listeners who maybe you’re not as technical and you just want to get a high level, get a few ideas. What were the big changes that came in this recent major release of Bitcoin core, which is the wrestler reference implementation of Bitcoin. And yeah, it’s just, there’s all these little progress being made along the way. And it’s interesting to see, yeah. With tests with mental acceptance, things is on stand one of the consents, like high up hypothetically, it could be that, you know, you don’t want to open it up that someone can like DOS with the network or shut down, someone’s know, by sending like malicious, you know, packages together. So it’s kind of like, how do you intelligently do this and things like that. So that’s all really interesting stuff to say.
Aaron van Wirdum:
Yeah. And of course the one that the one that’s maybe most interesting or most important is actually taproots. So anyone that hasn’t upgraded to Bitcoincore 21.1 yet, you know, now is really the time for upgrades because the protocol upgrades will go live and you’re not using full node security if you’re not enforcing taproots, starting somewhere mid-November so, you know, if you haven’t upgraded yet, now it’s a very good time just upgrade to Bitcoin 22 and you’re good to go.
Stephan Livera:
Yeah. That’s a good call out there. And so, yeah, listen to is make sure you check out your, if you’ve got a node package see if they’ve, most of them would have put up the update or they will soon. And so you can update your package there, or you can, if you’re running it manually, obviously, you know how to do that to go and get that updated and get up to speed. Cause there’s lots of things happening in the Bitcoin land, whether that’s in El Salvador, whether it’s Bitcoin core or it’s lightning, and it’s so incredible to see all these things happening. So yeah, I guess it’s probably a good spot to finish up here.
Aaron van Wirdum:
Yeah. Or it’s a Bitcoin 2022. Can I shill that for a second?
Stephan Livera:
Yeah for sure.
Aaron van Wirdum:
April coming up. Biggest, Bitcoin conference in the world,
Stephan Livera:
Bitcoin 22 come up April, right?
Aaron van Wirdum:
Yeah.
Stephan Livera:
I’m looking forward to it and it’s going to be up in Miami.
Aaron van Wirdum:
Right.
Stephan Livera:
I’m looking for, I was so upset that I missed 2021. But you know,
Aaron van Wirdum:
Bitcoin 2021 was amazing!
Stephan Livera:
Yeah, for sure. For sure. And I think it’s just a good chance to meet. Lots of fellow, like-minded Bitcoiners. Right. So, and just to get a sense and you can sort of meet a lot of the Bitcoin Twitter people that you’ve been following online, or you might’ve been interacting with them and it’s a good chance to get in touch and meet people that way. So I’m definitely, I’m looking forward to that also.
Aaron van Wirdum:
Like Twitter comes to life.
Stephan Livera:
Yeah. That’s it. Yeah. And I guess
Aaron van Wirdum:
Someone else described it like that.
Stephan Livera:
Yeah. so that’s a good chance to meet people and yeah, of course go and check out Bitcoinmagazine.com and Aaron, where can people find you? And of course, where can people find your podcasts as well?
Aaron van Wirdum:
Yeah. So people can find me on Twitter. Obviously. @AaronvanW . The podcast is called Bitcoin explained nowadays it used to be called the inaudible, we rebranded it’s now it’s Bitcoin explained just a bitcoin magazine we’re bringing out a new print publication. In a couple of weeks, there will be a print publication, which will also include my story on El Salvador. So check that out.
Stephan Livera:
Fantastic. Well, Aaron, it’s been a pleasure.
Aaron van Wirdum:
Thank you for having me, Stephan.
Stephan Livera:
Yeah.It’s been great chatting with you. Thanks Aaron.