Jonathan Chester, Founder/CEO of Bitwage joins me to talk about his experience setting up the company and enabling more people to earn Bitcoin:
- The story of growing Bitwage
- The market size for payroll
- Exploring Lightning payouts
- Remote working as a trend
- HODLing as the use
Stephan Livera links:
Stephan Livera 00:01:34
Jonathan, welcome to the show.
Jonathan Chester 00:01:36
Hey, thanks for having me, Stephan.
Stephan Livera 00:01:39
Yeah, so I see what you guys are doing over at Bitwage, and I thought it’d be interesting to have a chat with you. Obviously, you’ve been around in the space for a while, so do you want to just give us a bit of a background on who you are and how you started Bitwage?
Jonathan Chester 00:01:53
Sure. Yeah. So, I first heard about Bitcoin back in 2013, and I came across it on a Ted talk that was just talking about different forms of money and how money can and how people can transact in different ways in the in the future one way was actually people trading laundry detergent in prisons. Another way was with, you know, money that came in the form of essentially loyalty points that you acquired by running in Nike shoes and then it kind of built up to the concept of Bitcoin, right being this digital currency that. Enabled financial sovereignty to help banking on bank and has implications on, you know, making international payments more efficient and I came out of this TikTok you know, basically obsessed about Bitcoin. You know, I was I wanted to learn everything I could, so I went down the rabbit hole. I was. Reading all reading and watching all the content I read the Bitcoin White paper and after I think it was like the 1st 2 pages, I couldn’t really understand it. Now I can but back then it was pretty hard to understand the cryptographic concept. And I remember watching Andreas Antonopoulos and All of his videos were just like him at a bar talking about Bitcoin anyways. Now this obsessed Bitcoin guy 2013 and I’m going around at my job at Oracle being like, hey guys, you gotta get Bitcoin, you gotta get Bitcoin, you know, and everyone thinks I’m this crazy guy talking about magic Internet money. And of course, the price of Bitcoin of the time is like. $250.00, $300.00 and it spikes to $1000 and you know, I felt pretty good about telling people about this, but ultimately what ended up happening is I got connected with another guy at Oracle who was happened to be a crazy Bitcoin guy. He was mining. He was actually mining. Like from a computer you know at home at the time and you know, we got together and we said, Okay, well, you know, Bitcoin is gonna be the future of money and If so, like what? Are the different areas that it’s? Touch, you know. We didn’t think so deeply. About like what are Sophisticated financial products that can be created with this. We just thought, you know, What are the basic ways that money moves in an economy? Right. Well, you know, and we looked at what was out there right there ways for you to hold your money a wallet. Ways for you to, I guess purchase. Bitcoin, which is exchanges a way for you to spend it merchant processors, but there’s never. Really a way? To for those merchant merchants to then. Take that Bitcoin and. Like use it. To pay employees with it. And so it wasn’t a fully a full financial loop, a full system within itself right so we wanted to be the first ones to enable that to close the financial, to create a system so that so that Bitcoin could exist in itself as a full financial ecosystem. And we want to be the first one to do it and that’s how the idea sprouted and 2014, my co-founder John Lindsay and I, we just did the jump, went full speed ahead, quit our cushy jobs and have been full time at Bitwage ever since.
Stephan Livera 00:05:18
Fantastic. And yeah, I think it’s interesting to see that the different narratives that have come and gone, I remember in those days, 2013 and 14, there was a whole narrative of merchant adoption and there was this, you know, there’s a lot more talk about the kind of idea of circular economy. This is pretty lightning. So, you know, it was different and I guess in your mind, you were probably thinking well, how do we get more people to get paid in Bitcoin, right, because you’re trying to help them close that loop. Right. And of course, that’s what you’re doing today still. And I’m sure you know, the company must have grown a lot. Over that time period, right.
Jonathan Chester 00:05:49
Yeah, I mean, so the first product we launched was to enable companies to pay their employees in Bitcoin and we thought this because we saw companies that we’re receiving bitcoins merchants and we called them and said, hey, would you like to do this too? And they’re like, oh, yeah, sure, why not? They didn’t actually mean it so we created the product and. It was very, very hard to get any customers. I think the first customer we had was a company called Fresh Pay, which doesn’t exist anymore, but it was one of the first Bitcoin debit cards. But we knew that even though companies were not quite ready to accept this. That there were people who wanted to receive their salary in Bitcoin, so we said, Okay, well, let’s. Figure out how we can do that. And so we created a direct deposit product which essentially we, you know, spin up a direct deposit account which you can connect to your payroll service and you could receive a portion of your salary into that and then it can be converted into Bitcoin and deposit. Into whatever wallet that you wanted right? And that was important because that basically, you know, unlocked all the people who wanted to receive part of their salary in Bitcoin. And you know, we were able to grow from that and you know, at the time a. Lot of people. Were actually like knocking Bitcoin, saying like, oh, but can you get paid in it? And so a lot of people like, Oh yeah, you can with middle age, right? That was some nice marketing back then. But yeah, so that helped us grow. And I’d say until about in 2016, we realized that there were certain people who would get like 5-10 fifteen, 20% of their salary in Bitcoin. And then there were other people who would receive their entire salaries in Bitcoin. And when we looked at those people, they were all international. So, what we realized is that there was this huge problem with international payments with regards to rates and speed to deliver money. So, people get their entire salary in Bitcoin and then they converted what they needed into local currency. As they needed it and. So then what we built out after that was? And off ramp that leveraged Bitcoin to move the money from country A to country B, but then off ramp in local Fiat currency to pay out. To the users and you know that we ended Up growing pretty, pretty, well until you know the end of the 2017 bubble. And once that kind of crashed, you know, the interesting thing about our business is that people don’t really reduce their volume during a bear market, but we don’t see a lot of new business. So, we kind of stayed.
Stephan Livera 00:08:15
You can tread water though.
Jonathan Chester 00:08:16
A bit flat. Yeah, we could tread water, but we. Stayed a bit flat during that time and then? When 2020. Hit it was a, you know, entirely. Entirely different mechanism, because all of a sudden remote work just like blew onto the stage Bitcoin and you know the rest of the Crypto market kind of just exploded and all. So, all this interest began to grow and so that. You know we’ve grown 400% since then, which? Is, which has been great. And we continue to grow despite the current market conditions, which is also great. And yeah, that’s kind of where we are today.
Stephan Livera 00:08:51
Well, I mean that’s cool to see that you can grow even in a so-called, you know bear market or whatever we’re calling this right now, you know, Bitcoin about 30K, right. But I think an interesting theme you were touching on there is remote working and Bitcoin. Is there some natural synergy that you see there or some natural combination that it just? It works well together.
Jonathan Chester 00:09:13
Yeah, so I you know, when we first came first few take to offer the product, the thought process is Okay, how do we just make it easier for someone to receive Bitcoin? And in the United States, a lot of people will think, okay, well, what’s the difference between, you know? Getting cash and buying Bitcoin and versus getting paid in it and there is minutiae indifference in terms of like you know where you can get your money deposited, how fast it happens. You know how much effort is going into it where you actually want the money deposited. Since we’re a non-custodial service, we deposit to whatever wallet that you want and you can even split it, but at the end of the day. It’s where we saw. Much more of a need is on this international side of it. Because unlike in the United States, where it’s easy to just get your cash deposited and then buy Bitcoin on the cross-border. Side it’s actually much, much harder. And that’s because, first of all, when you send. The money over you actually lose a lot of value and time just during that process. You know, purchasing your Bitcoin to actually move the money saves you money additionally in. A lot of places. That have less stable currency regimes, the price of Bitcoin is more expensive and as a result of that you get access to Bitcoin with better rates. If let’s say you’re a freelancer from like Argentina or Brazil or Nigeria or South Africa, and you’re getting paid from a client in the US, not only do you save money on the transfer, but you actually get a better rate. If the Bitcoin is purchased in the US. And then sent to you, right, so there are synergies.
Stephan Livera 00:11:00
Right, because Argentina has like different rates, they’ve got like the blue dollar rate and like their government rate and so on. So, they’re getting the better rate. Therefore, they’re getting more sats.
Jonathan Chester 00:11:09
Yeah, exactly. I mean it we can, we can go into the, I mean the you know this kind of thing happens in places that. Have like very high rates of inflation, right? There’s Argentina, there’s Algeria, there’s Turkey right where there’s almost like this dual currency regime because all the debt they have is not in their own currency, it’s in a different currency. And so they, the countries have an incentive to maintain like a particular exchange rate between the two dollars and their local currency, even though on the streets it’s going out of control, right? It’s way worse than that, but they’re trying to peg it to this rate. That their debt is easier to pay off and comes out basically at the expense of the people on the ground and what ultimately happens when this happens is that Bitcoin tends to trade at the true market rate as opposed to this peg rate. And that’s how this kind of benefit occurs, but the benefit happens anywhere where there is more demand for dollars than the dollar markets in the local country are able to facilitate, right? Argentina and Turkey and Nigeria. These are like extreme use cases where. You know you’re talking about like getting double your money, right? But you know a lot of places. Around the world, it’s not quite so big. Like I think in like Brazil or Mexico you. Might be able to get a few percent. More you actually do end up getting more. It’s just not as extreme because there isn’t as extreme of. A of a demand to acquire dollars outside of the local currency so it’s almost as If it’s a proxy to that demand to the dollar, which is kind of interesting in itself, right? Because maybe what’s happening is people are just trying to exit their own currency, and maybe they’ll take that Bitcoin, they’ll try to turn it into dollars at some point or they’ll hold it, I Don’t know, and that’s what creates that premium, right?
Stephan Livera 00:13:15
Fantastic and so, you are playing at both sides here because on one side you could be the freelancer who uses bitwage to get paid, or you could be on the other side. You could be an employer who’s doing the payout with Bitcoin and so in that case the employer is sending you the Fiat and then you turn it into Bitcoin and send it out to their person like the employees or the people they’re paying.
Jonathan Chester 00:13:38
Yes, And then there’s two kind of use cases on the employer side, One is like I’m paying my employees in the US I wanna offer them the option to get partial part of their salary In Bitcoin and we see when we’re in the Bitcoin bull market, you know, the demand for that is a lot higher, right, we actually recently just launched an integration with the top 23 payroll companies, which basically allows us to automatically create the benefits in the payroll system and then read that. On payday so that the. The players don’t basically don’t have to Do anything this is like with AEP and paychecks and. TriNet and Zenefits, and Gusto I mean If you could think of a payroll provider, it probably works with it, right? And basically it then allows the employer to offer the benefit in you know, a compliant way without any additional overhead and the employees are able to you know easily get the Bitcoin direct deposit, so we can do that, but we also have another use case which is again the international use case on the international side though, it’s actually not specifically Bitcoin focused, right? It’s more like I’ve got. Remote workers everywhere in the world in like 10-15 different places and like today, like they all have their own invoicing tech. Some of them want to get paid into a paying your card. Some of them are revolute cards. Some of the you know, some of them want their bank accounts, but PayPal only does these places and Bank wires are. Ridiculously expensive, and so they have to. Cobble together all these different systems and So what we’ve built is not just this like Bitcoin direct deposit, but an entire payment system with an HR layer on top of it. And So, what the company can do is they can onboard the workers and pay them without thinking. And the workers self-choose what they want on the. Right. They can get Fiat, they can get bitcoins or they can get stable coins and they can choose what percentage they want between all of it. And you know, we’re basically just saving the company. All the headache while giving the workers, you know, the ultimate freedom.
Stephan Livera 00:15:44
Fantastic and I’m curious as well if you’ve seen much in like lightning uptake for this kind of thing as well? Like, do people get paid out in Lightning or is it still kind of all? On chain stuff here.
Jonathan Chester 00:15:55
Yeah, so we only did a proof of concept with lightning. Actually, one of the things that I’m looking. To do later this year is like a. More sophisticated Lightning implementation. Uh, we, you know, we don’t have. Have a wallet ourselves and so you know, Lightning has all these different sophistications where if I had hosted A custodial Lightning wallet and I just like filled it and then you paid for it a little bit here and there that would be like an experience that could easily be done. But you know, our ethos is like non-custodial forever and the reason why is we want to make sure that as regulations change. That we still have. You still have a compliant outlet to be able to get your Bitcoin deposited into whatever wallet you want. That’s a good core ethos that I have. You know, so. That we don’t. Lose that functionality. But to put That into perspective, when it comes to lightning. It’s actually very, very hard. To do that, because of the sizes of the transactions that people are getting right. And so as a result of the size of the transactions, we would run into like channel liquidity issues and this is at least when we did the. Concept a year ago, so I need to basically do one again. But we, you know, we run into issues where, you know, we couldn’t get liquidity to deposit like $5000 into someone’s wallet so that they can. Spend it with. The rest of the, you know, the Lightning network, you know. You know, I’ve always kind of a tangent. I feel like there should. Be a term for, you know, like the greater Communal lightning network, cause technically like the Lightning network is a technology that can have like private channels and or can be connected to like the huge, the huge public channel. And I’ve always been called.
Stephan Livera 00:17:53
Jonathan Chester 00:17:54
Yeah, so I’ve always just been calling it like the. The Lightning network Hive mind, right? But anyways, just going back to it, it’s something that the experience that I want to have is you put in, you know, whatever lightning wallet you want or maybe it has to be like, you know, LNURL enabled Lightning wallet and then we just like can pay you and like, you don’t have you can passively. Collect it. You don’t have to accept it every single time, and we’re not running into weird. You know, issues where money’s not getting to where. It needs to go.
Stephan Livera 00:18:28
Payment failures and things.
Jonathan Chester 00:18:29
Yeah, exactly. So that’s what I want. I based on my conversations with the Lightning vendors that. Are out today. Because we would do it with a partner. It seems like. We might be like. There I’m just not 100% sure if we are or not, but it’s something that. You know it’s. Acutely on my radar and something that I want to. Make sure that we implement.
Stephan Livera 00:18:50
Yeah, I mean that’s cool. And I mean, like you said, right, it’s grown and certainly the Lightning network in 2018 and 2019 it was a different beast. It wouldn’t have been easy to route those kinds of payment But you know, maybe overtime and maybe it’s not right now, but you know, let’s say over the next few years it could get to that point and you know as a quick example, you know we didn’t have LNURL back in those days we have Lightning address now and hopefully soon we’ll have Vault12 and so maybe that’s you know in the same way that when people sign up to a service online and they type in oh, what’s your name? What’s your e-mail it might be, it might literally be like, hey, what’s your name? What’s your e-mail? What’s your lighting address or and what’s your Vault12 code and we’ll pay you out on that, you know, and it’s kind of like. Then you know eventually you don’t have to think so much. You know so hard about the channels and liquidity and all this. You know, the users just kind of type in their Lightning address and you know now, Okay, sure. Some of them might be custodial and stuff like that. But then maybe you know, with Phoenix and some of these others out there who are going to do ball 12, then they can just, like, get paid like that and then. All that kind of inbound liquidity is handled, you know, by async and Phoenix or by the LSP, right? But I mean this is, you know, in the future but. I think that would be so fantastic to see and you know, maybe the real impetus of that will come when the ball when you know, when the ball comes and there’s, you know, on chain fees are spiking and all that.
Jonathan Chester 00:20:09
Sure, Tell me about Vault12. I actually don’t know that much about it. I’d love to learn a little bit more about it.
Stephan Livera 00:20:14
Okay. Yeah, Sure. So, Vault12, the basic. So, Rusty Russell had this idea. It was originally called offers. And so the idea is, could you have a reusable string like a you know, instead of, you know, Vault 11 invoice where it’s a one time. invoice. It’s actually it could be reusable and so now a lot of the implementation. So obviously core Lightning, because that’s where Rusty’s working on. They’re kind of hard at first, but other implementations are working on this, so even the async and Phoenix, while the guys they’ve mentioned, Vault12, is coming to their wallet. I know LND is going to have. Like a little side extra bit. I think someone’s working on some, I don’t know the detail, I’m probably getting it wrong. Someone correct me, but someone’s like working on like another little module that you plug into that LCD could kind of speak Vault12. And I know even the LDK guys are working towards this kind of idea and what it would enable is exactly this idea that right now, one of the downsides with Lightning address is that you have to have a web server and because for most people that’s a lot of work and most of these, you know, contractors, they’re not like Hardcore Bitcoin technical people, they just want to get paid, right. Fair enough. And so, Ellen URL and this lightning address style, it relies on that web server. So typically, a lot of people are using custodial wallet for that. Unless you’re able to run your own thing with BTC pay server or stuff like this, right? But with Vault12, it doesn’t require a web server, so you could just easily have one reusable QR code that people can, you know, scan and just pay you, you know, so.
Jonathan Chester 00:21:44
Yeah, that’s awesome.
Stephan Livera 00:21:45
Yeah, and so this is the kind of stuff that’s coming over time, right? So, it’s interesting to see kind of over time, you know, people have been, you know, they’ve been the people who kind of bearish on Lightning and think it’s not going to work. And then you’ve got people in the middle and the people who are super bullish on it and think, you know, everything should be done on Lightning. But I think in terms of the experience, right, like once you’ve earned on lightning and then you can spend on lightning and it just kind of. It’s very slick, right? Once you’ve earned on lighting and then you can spend the Lightning easily. So that’s just kind of, yeah, but still you know.
Jonathan Chester 00:22:14
I mean I imagine that, you know, people would choose to like split, you know, between their savings account and their checking account, right. Lightning’s their checking account and they’re, you know, on chain. On-chain Bitcoin is there is their savings account, right? And I mean you know, of course it has to be like that if you live in a hyper Bitcoinized
Stephan Livera 00:22:37
Bitcoin as well, yeah.
Jonathan Chester 00:22:45
because you know on chain fees are going to be unsustainable for average everyday Transaction It’s just what it right, I mean.
Stephan Livera 00:22:48
Yeah, that’s just how it’s gonna work. Yeah, for sure. But I mean, that’s where it’s interesting as well. We’re seeing technology like splicing. So, I did a recent episode with Dusty and splicing enables. People to have a unified balance right, you could have a wallet with one balance, and it can just pay on chain. Or it can pay lightning and we’re seeing this now with Phoenix. I think they were the first out of the gate and they’ve got it now on the better. So, if you apply for the Beta channel on Android, and I think on it’s coming on iPhone soon, you can literally have just one balance and so you can either get paid on chain or you can get paid. Lightning and it will splice it and kind of combine it all into one channel so, instead of four historically, where if you were a Phoenix user. And you had. Like 11 channels. If you’re on the beta and you’re on the splicing, you just have one channel. And whenever you pay it just, you know, and when you need to do an on-chain payment, it’s kind of splicing some out of the channel that you already have. So even if you don’t know. As an example, let’s say you received $2000 and you need. You need to make an on-chain payment for $200.00. You just make that and now the channel capacity on your side is 1800. Right. So that’s kind of enabling.
Jonathan Chester 00:23:55
I feel like I’m missing something so it’s like you got on chain Bitcoin and then you spent that on chained Bitcoin on lightning. At least that’s the user experience. Is that the?
Stephan Livera 00:24:05
Okay, so it depends how you receive it. So, in the example where you receive it on chain then Phoenix has to do a like a swap operation. And so, think of it like you’ve got your channel and you’ve received some on chain. Then Pheonix has to do another Unchained transaction to kind of splice it into the channel and now it’s in your lightning like a unified balance thing.
Jonathan Chester 00:24:25
Oh wow, that’s pretty cool.
Stephan Livera 00:24:26
So, you just have one balance, and you don’t have to. And like all the channel management in the background, you don’t have to think about it now to be clear, you will pay a fee for that. So, Phoenix is lightning. You’ll be paying mining fees for that, right? For each on change transaction, of course. And when you make a lightning payment using Phoenix, I think it’s up to 0.4%. of the transaction value. So, let’s say you make $1000 payment on lightning, you’re paying $4.00. So, I mean, people today don’t realize it, but with their credit card, they’re already paying 3 to 5%, so they’re already paying mo re than that. And you know how much would people pay? Yeah.
Jonathan Chester 00:24:58
Yeah, I mean. You know, it’s interesting, right? Cause in different parts of the US, they treat like credit card spend differently. Cause like when I was in San Francisco, you know, it didn’t matter. Whether you pay with cash or with credit card, but like when I’m. Over here in Miami, like I see a lot of people. Who are you know, tacking on the additional? Fees like if I go to my doctor, and I pay with credit card they’re charging. Me an additional, you know, two and a half percent right. So, and actually if I pay with Zell which like I didn’t know like had had had a cost for them they’re charging. I think like 1% or. Something like that. So, it’s pretty you know, even here in the United States. For certain purchases, people can the actual consumer can feel the difference, right? With spending the credit card versus not. And I think that, yeah, I mean point .4% is it’s pretty good, especially if you know you are If the merchant can get back the money right? I mean, right now the credit card companies give back the money, right? The credit card companies, they’re like, take the money from the merchant, you know, take their profit and then give the user back the money, right? But really, could cut that out and have the merchant give. The money back to the to the user. For spending it right.
Stephan Livera 00:26:18
Yeah, well I mean, a lot of this stuff kind of hinges on people being willing to spend. Of course, now, I think. In practice, what we’re probably gonna now personally, I do earn and spend Bitcoin, but I recognize that most people are not going to do that yet for various reasons. It could be because of capital gains tax and record keeping and accounting and stuff like that. Or it could also just be because they’re holder’s and they do not want to spend. They’d rather just kind of spend the Fiat if they have fear. So, I appreciate that. But at the same time, I also think getting more people who could earn with Bitcoin is a really powerful thing, right? If we’re growing that base because we’re trying to win hearts and minds here, right, like at least that’s how I see it. We want to win hearts and minds. We want to get more people to be Bitcoiners so that we can. Sort of push forward. You know the vision of, you know, being in a hyper V colonized world which you know I would like to see but I understand you know it’s gonna I also appreciate that it’s gonna take time to get there. I mean nobody really knows right so.
Jonathan Chester 00:27:18
Yeah, I mean if you just think about you know how much payroll is being done just. In the United States alone, you know we’re talking about. I think it was like it’s close to like $20 trillion, right? Huge, huge amounts. And if people are choosing to get, you know, if the average person’s getting 5% of their salary in Bitcoin, right, we’re talking about like a trillion dollars of positive, you know, price.
Stephan Livera 00:27:45
Like by volume? Yeah.
Jonathan Chester 00:27:46
By volume right of buy volume consistently, right. So that obviously is gonna help the network get to what I would say is its end game right in my opinion you know Bitcoin is early when there’s volatility. Right. And in fact, you know what, where we know when we know it’s matures when 5%. You know, people are getting, or people are getting 5% of. Their salary in. Bitcoin and that has basically no impact to the price that. Just acts as a stabilizing factor to it. And that’s, you know, I mean in my opinion that’s. When people would spend because who you know most people don’t want to spend Bitcoin when they feel like it’s still early right and why would you?
Stephan Livera 00:28:36
And to be honest, for a lot of them it is going to be early for some time to come, right. I mean as I you know, I’m curious if you’ve seen different number. This bit you know, you see these numbers thrown around, okay, there’s 100 million Bitcoin users, or 200 million, if you count across some of. These big exchanges. But don’t forget a lot of that is custodial use and some of that may be common, like they may be users who are both a kind of coin base user and a Kraken, or a Binance or something else user. And so then if you look at. The actual unique. On chain Bitcoin users who are self-custody, we’re probably under 10 million. We might even be under 5 million globely. In terms of self-custody, that is. So, I mean the global population is 8 billion, right? So, you know, we’re still tiny. Of course, I think it’s gonna grow and I think it’s gonna have these big cycles and just like it has had historically, there’ll be these big cycles and people it, you know, we hit like a 10X in the volume and the number of people, but it’ll be and maybe. That’s what drives more Lightning and more, maybe more arc or other L2 conversations. And you know, of course, some of those users will go custodial, but of course we want to encourage, as you said, we want to encourage as many of them to be self-custodial as possible, right. But I guess Speaking of hyper Bitcoinization, I’m sure you’ve probably got some thoughts on how things went with El Salvador turning on the Bitcoin law, but at the same time a lot of people weren’t really educated about Bitcoin there and do you have any thoughts on how that went and did you see anything in terms of your numbers or your users there?
Jonathan Chester 00:32:01
I would say I’ll start with my numbers and my users. I would say that it wasn’t really a huge effect and but the reason why it wasn’t a huge effect was not because it’s more related to like the markets of remote work than it is related to the Level of Bitcoin adoption country. So, there’s just not a lot of remote workers in El Salvador compared to, you know, a lot of other countries, right, you know, getting paid from. The US, whatever, but. You know, we have seen an uptick, I mean it. Was it went From like nothing to something but. In terms of. Following, I mean, you know, I think I can’t remember when it when they did it and. When they purchased the Bitcoin, obviously. I think that they’re pretty down right now, if I’m not mistaken, and that obviously has an impact on you know how the whole world is treating their ability to pay their debt and all this stuff, I’m actually good friends with some of the people who are behind that, who are behind the technology. The cheaper wallet. Which is the alpha point guys. Not the first iteration, which apparently was like a terrible rollout, but the second iteration of It and they say the sets they gave was like. 90% of. The population have, like, has interacted with the wallet really huge number, right? And that’s surprising and really cool. I love that you can go there and just like. Spend it at like a Starbucks or McDonald’s, right? That’s really cool. But you know I can’t say that I’m really up to date as to what is the usage today in El Salvador.
Stephan Livera 00:33:42
Right. Yeah, of course.
Jonathan Chester 00:33:43
But again, I view Bitcoin today as a savings mechanism and I almost feel like it. That is what it’s supposed to be, right? I look. At it as digital gold. And digital gold is essentially just a, you know, a way for you to store your money without governments being able to print more of it with, you know.
Stephan Livera 00:34:05
Yeah, the use is huddling, you know?
Jonathan Chester 00:34:08
Yeah, they used this whole hunting that is the main use case. It’s just that once it’s right now, it’s like we think that it could go to 100K 250K a million, right? But at some point, you. Know it’s going to be closer. To gold, you know, maybe it’ll be. You know 2%. Or, you know like, like grow at average global growth or grow at average? Global inflation, right? Which is, you know, not nearly the same degree or magnitude of growth. And once we are, once we’re at that point, you know, people are saving their money in it, they’ll feel like, OK, well, I’m not, you know, saving for it to grow substantially. I’m just saving. To buy a house, to buy a car, to buy something big, and then I’ll spend it there. Or maybe, you know, you put all your money there because you’re like, okay, well, I know this money’s not gonna be inflated away. And I know I can spend it with the Lightning, right? And you know that’s really the point that I think there would be much more of a spending. Adoption right when it’s there.
Stephan Livera 00:35:13
Yeah, for sure. No, I think that is the likely pathway. Now, of course there will. Be there will. Be a small but growing segment right of day-to-day spenders, right? People who use as an example bit refill and things like this, right? Who are, like, regularly spend.
Jonathan Chester 00:35:26
Hey, this goes great.
Stephan Livera 00:35:28
And so that’s going to grow. But I think maybe on the pathway there, you’ve got different segments or groups, right? The Bitcoin saving right, the hodlers right? That’s probably the important one. But maybe for you, the remote working is actually a really important sort of demographic or segment that if remote working were to grow. To continue to grow then you’re then you continue to grow as well, right?
Jonathan Chester 00:35:53
Yeah, exactly. I mean, obviously, spending is great and what we’ve seen with the growth of work right is that there is kind of a constant percentage usage of Bitcoin, right? I think we’re at about 17% of like the remote workers getting that amount of volume in Bitcoin, and this is like they have the choice to get their local currency to get stable coin or to get Bitcoin. So, it is a pretty high percentage relative to you know what you might think cause we’re not. We’re not just like servicing Bitcoin companies or crypto companies. Actually, most of our companies are like Main Street companies, whether it be like a tech company or like a professional services company. You know, that might traditionally these are kind of the companies that traditionally have. Workers and they’re using us and the employees. Are, are. Electing to get a portion of their. Salary in Bitcoin? I think that’s going to continue to be the case as we grow right, especially as the use cases for Bitcoin continue to grow.
Stephan Livera 00:37:06
Yeah, and I think it’s some of this stuff aligns a little bit with like the sovereign individual and ideas like that where. You know, people can just jurisdiction shop, right? They can go to some other jurisdiction, whether it’s low taxes or better quality of life or, you know, less COVID hysteria, less climate hysteria. Who knows? And they can go there and just get paid with Bitcoin and sort of float a little bit above the regime there. And you know or just kind of not. Be as impacted by what’s going on because they can just deal with Bitcoin, right? So that’s kind of interesting to see. I’m also curious if you have any thoughts on Bitcoin as contrasted with stable coins and sort of the growth that you’ve seen in those right, because even a few years back. Many of us thought, hey, these stable coins are gonna get shut down by the government, you know, and maybe some of them are. You know, we can’t. You can’t. Totally minimize that risk like it is possible also, but I’m curious if you have any comments on what you’ve seen sort of Bitcoin compared to stable coins.
Jonathan Chester 00:38:08
I would say that stable coins are pretty important. so I actually look at stable coins as a Trojan horse to Bitcoin. So, what do I mean by that? Well, you know there’s sort of two main barriers to entry to Bitcoin. The 1st is volatility, and the 2nd is public. Private key cryptography, right? And you know, on the trading side and then the US side, what we see is that a? Lot of people. They want the volatility, but they don’t want the private public key management and so they offload that to a custodian so they can get access to. The volatility stock. Well, what we’ve seen with remote work and stable coins It’s often these people around the world are not ready for the volatility of Bitcoin, but they want access to a currency that’s not their local. And so, they’ll get paid in a stable coin, and then they’ll. Actually, learn about public private. Key cryptography and they’ll leverage it and do non-custodial stuff and so what that why I see that as trojan horse? Is because you know, in my mind it’s. An eventuality that the US Dollar will not be the dominant currency anymore and when that happens? You know what currency is gonna come up from the ashes? You know you and I both. Both believe that’s going to be Bitcoin, and so when that happens. If you are in a world where you already know public private key cryptography with stable coins, it’s just a click of a button to get to Bitcoin and now you are in full control of your right? but where we are today, a lot of these remote workers, they’re just not ready to get like their entire salaries in Bitcoin. They want something more stable than that, you know, because people don’t are not thinking on like 4-year 10-year strategies. They’re thinking how am I going to pay for rent this month? You know what are my expenses in a week, in a month, in six months and you know when you are barely saving or. Living paycheck to paycheck in my opinion, this is not a great Bitcoin. Use case, right? Because the volatility on the one month and the two week you know and the and sort of the three- and six-month use case is so high that if you’re barely able to spend, you don’t have a long enough time horizon. To get you. To where Bitcoin’s going to be? And so, people will then choose, okay, well, I want some of the speed advantage That Bitcoin has and some of the arbitrage you know that’s going on using stable coins or getting out of their own local currency. And that’s sort of where they sit, where they land. But again, the surprising thing is that still we’re seeing about 16% of. The volume going to these Workers. Being in Bitcoin, which I think is high stable coin though is also actually it’s higher than Bitcoin because of this particular phenomenon.
Stephan Livera 00:41:06
So, yeah, again, I’m not hating or whatever. I I recognize that for some of these users out there, they are just simply not in an economic position where they are able to save right a lot or a big percentage of their salary or their income. But I think in I think of them as maybe they’re not ready for Bitcoin yet, but obviously we want. As many people to be ready for Bitcoin and we want to promote and so personally, I I never promote stable coins, I promote Bitcoin obviously, but I am trying to at least trying to understand what’s happening out there so that we’re not blind to what’s going on out there and I guess in some cases it may be that they will need to sell to local cash in their market, whatever market they’re in around the world. They, you know, may not be able to pay their rent with Bitcoin or with stable coin, and they have to sell it for physical cash. And that means they need to go find a guy. You know, they need an OTC trader. A Cambio they need someone. They can go and sell that for physical cash and then pay their rent, buy their food, etc. pay their bills. But the long game is for them to come to Bitcoin. Although I will say some of the downsides are of some of the stable coins existing in a way is that, you know, rewind the clock to 2017. Bitcoin was the reserve asset of the kind of you know, I don’t like the term crypto. You know it’s Bitcoin and Shitcoins as far. As I’m concerned. But it was seemed like the reserve, you know, it was what people countered their profits in. But then I think stable coin sort of took some of that volume and some of that because it sort of gave people almost like a false promise. In a way, because really we all know they’re not decentralized, right? They don’t have the same qualities of Bitcoin, but maybe many of these users around the world, they understand that risk and look if they understand the risk and they are comfortable with that risk then Okay, the stable coin could rub them or something could go wrong or the government could go after stable coins then you know, so be it. Right. Like they know the risk, they’re taking it. And maybe for them they would rather that risk than trying to trust their local fear. Out banks or it’s literally impossible to get paid, you know, through their normal Fiat banking rails. So, you know, I’ve tried to have awareness of that, right.
Jonathan Chester 00:43:14
Yeah, I mean, you know, sometimes cause with the a lot of like the stable coins that we offer mostly are centralized peg, right. And so, you know, part of the trust that you have is just like, well, I trust, like the US regulatory body over the regulatory body in my own local country, right on the banking. Which you know, obviously with Bitcoin it’s like you don’t have to trust any regulatory body, but you know, people may are just not necessarily ready for 100% of their salary on such a radical concept. Instead, they’re just thinking like, how do I pay? How do I feed my kids. You know and. Like what’s the? Closest thing that’s easy for me to comprehend. And make it easy for me to pay. My kids. Right. And that’s really. What they’re thinking about and you know the as you said like when it comes to like shift clearly. We don’t really do any Shitcoins. We’re not. It’s not like we’re trying to go. To like the People who are trying to figure. Out the kids and say hey. Go purchase this Shitcoin and you’re gonna. Become a millionaire. And that’s how you’re going to do it. It’s like, no, you’re just gonna get your money faster and cheaper and. And it’ll either be in in Bitcoin, your local currency or in. And the dollar pegged, you know, token on this ominous technology called the blockchain.
Stephan Livera 00:44:40
I mean yeah, I get that. I think, yeah. So it is kind of the but as remote working grows and as the awareness and desire to Hoddle, Bitcoin grows, that’s really where I’m seeing the growth pathway come here. So I guess in some ways to you and like your business in Bitwage, it’s sort of like you’re trying to get connected up to HR and payroll because really you don’t care whether they are a Bitcoiner who came to you for it like you just want more people to be able to do it and then inside their own internal HR system payroll system. Oh, I want to get paid. Bitcoin, then you’re getting new people. That’s kind of the.
Jonathan Chester 00:45:21
Exactly, and you know, we’re actually not trying to. Convince people I mean yes, I provide education on why Bitcoin. but that’s like a personal thing. When I think about Bitwage, it’s not that. We’re trying to. Necessarily be the first educational step to Bitcoin.
Stephan Livera 00:45:39
Jonathan Chester 00:45:39
I think of it as the second educational step. Once you’ve bought into Bitcoin, you know, how do you how do you sort of turn it into a thing that’s regular and doesn’t, you know, create a lot of short term risk? For yourself, right, and getting part of your salary in Bitcoin is kind of is kind of that thing I mean. But you know we don’t what? We don’t want is. The grandma who decides to go. 100%. All in because the price went up so much. Right. Don’t really want that. What we want is like oh I heard about this thing, it seems cool. Oh, I see that my salary at like I can get part of my salary. Now why don’t I turn on 5% or 10% of my salary? To be in Bitcoin. Right. And that’s like that’s my hope and dream is that when we we’re there so when you get onboarded to your employer and they say hey, you can do this, you’re like oh you know, why not let me test this. Out with like 5%. Or something like that, right?
Stephan Livera 00:46:44
And I think the other angle is for people who can’t easily buy it in their own country, right? Because if they can. Isn’t it? That’s like another easy way, because maybe they’re in a country where maybe there’s not really good Bitcoin exchanges or they’re giving you really bad rates, or this is not easy because here’s the other angle. There’s a big, you know, deep banking angle, right? Which I’m sure you’re seeing, you know, Nigel Farage obviously is a famous case, although that was maybe a bit more political, but. Oh yeah. Nevertheless, if you are struggling to access the Fiat banking system. Just simply being in some other country and just being able to accept Bitcoin is it’s a big win, right? So, I’m curious if you’re seeing that as maybe that’s like another growth area for you is like the more the Fiat de banking happens, the more people come to you?
Jonathan Chester 00:47:29
I mean, yes, but it’s not. Such a huge it’s not like. A huge, you know, cataclysmic event that’s happening.
Stephan Livera 00:47:35
Like factor for you, yeah.
Jonathan Chester 00:47:38
Right, it so. You know it happens and people. Come to us. For other people sometimes come to us. Because they are volunteer, voluntarily debunking themselves, right? Like getting your salary in Bitcoin is. Actually, like the only. It’s like one of the only ways for you to reliably acquire. Bitcoin without a bank account, right? So, if you wanted to like. To, Get the unbanked on the Bitcoin standard. Bitcoin payroll is the answer, right? I mean the alternative is cash to Bitcoin ATM’s and you’re just gonna, you know, get robbed that way. I mean, that’s just like payday loan industry basically. The Bitcoin ATMs, it’s like robbing you, but with this mechanism, you know. You’re able to. Acquire your Bitcoin without having a bank account. Never had a bank account and do It in a reasonable way.
Stephan Livera 00:48:34
Gotcha, okay yeah, that’s interesting to see and yeah, hopefully we’ll see more people start stacking. I mean, for me, you know, I want more people to just self-custody Bitcoin, right? However, they get it. Yeah. When they mine it, when they buy it with us, it’s one whether they, you know, whether they buy it, peer-to-peer, whether they earn it. Like it all helps because what we want is more and more people who are sort of. At least starting their rabbit hole journey and going down that rabbit hole journey and you know then I see it like that is what enables this kind of broader vision of just being able to you know transact peer-to-peer and you know I think that would be a really cool thing to say so.
Jonathan Chester 00:49:17
Stephan Livera 00:49:19
Well yeah, I guess that’s pretty much a pretty good spot to wrap up there. So if you got any closing thoughts in terms of what you’re seeing, you know with Bitcoin and you know, why should people consider getting paid in Bitcoin?
Jonathan Chester 00:49:34
Yeah, I mean I’m excited for what’s around the corner, right? Every day we see a lot of. I mean, I’m not excited. About this generally, but for Bitcoin you know we see a lot of risk happening to the US dollar with like you know. All the brick, the attack from bricks. Right. That that’s happening. And then thinking about creating their own? Currencies right to challenge the dollar, I think that. You know, with the having that’s coming soon, there is going to be an interesting opportunity and be I’m excited to see you know will the cycles continue right that we’ve seen over and over and over again and you know why start getting paid in Bitcoin today. Well, I guess because it’s super easy, it benefits you, it benefits everyone and it’s a very low risk way for you to get 510-1520 or 100% of your salary in Bitcoin. So yeah, thanks for having me. You can check out bitwage at Bitwage.com
Stephan Livera 00:50:36
Fantastic, Thanks, Jonathan.
Jonathan Chester 00:50:38
Stephan Livera 00:50:39
So, I hope you found that episode informative and of course, I’m keen to see more people who are aware that they can actually earn Bitcoin even if their employer doesn’t necessarily do Bitcoin payouts. So go and check out the show notes at stephanlivera.com If you enjoyed the show, make sure to share it out there and of course, I will see you in the Citadels.