Bitcoin Payments in 700K locations in South Africa with Carel van Wyk | SLP702

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In this conversation, Stephan Livera and Carel Van Wyk discuss the evolution of Bitcoin as a medium of exchange, focusing on the role of MoneyBadger in facilitating Bitcoin payments across South Africa. They explore the journey of integrating Bitcoin payments into major retailers, the technological innovations that have made this possible, and the implications for merchants and consumers alike. The discussion also touches on the broader context of Bitcoin’s role in the global payment landscape and the ongoing debate about its function as a store of value versus a medium of exchange. 

They explore the economic challenges faced by South Africans, the regulatory landscape, and the importance of demonstrating Bitcoin as a medium of exchange. The discussion also touches on the implications of capital gains tax, the strategies for promoting Bitcoin adoption, and the potential for Bitcoin to serve as a viable alternative to traditional payment systems. Carel emphasizes the urgency of using Bitcoin as money and the need for a shift in mindset among both consumers and regulators.

Takeaways:

🔸Bitcoin is now accepted at over 700,000 locations.

🔸MoneyBadger aims to make Bitcoin a practical currency.

🔸The Lightning Network has revolutionized retail payments.

🔸QR codes play a crucial role in Bitcoin transactions.

🔸Merchants are increasingly interested in accepting Bitcoin.

🔸Training staff on Bitcoin payments is no longer necessary.

🔸The integration of Bitcoin payments is gaining momentum in South Africa.

🔸Comparative analysis of Bitcoin payment solutions globally is essential.

🔸The debate between Bitcoin as a store of value and medium of exchange continues.

🔸Merchant acceptance of Bitcoin is growing, driven by lower fees. The NGU factor includes hodling, lending, and borrowing.

🔸Goals for Bitcoin adoption must be clearly defined.

🔸South Africa faces unique economic challenges that Bitcoin can address.

🔸Demonstrating Bitcoin as a medium of exchange is urgent.

🔸Regulatory perspectives can hinder Bitcoin’s adoption as money.

🔸FATF regulations impact how countries approach Bitcoin.

🔸Tax implications can create barriers to Bitcoin spending.

🔸Top-down and bottom-up strategies can complement each other in adoption.

🔸Familiarity with Bitcoin can lead to increased spending and saving.

🔸The long-term vision includes establishing Bitcoin as a mainstream payment method.

Timestamps:

(00:00) – Intro

(01:24) – Who is Carel van Wyk? 

(03:27) – The Journey of MoneyBadger

(07:28) – Innovations in payment processing

(11:32) – What is the role of QR codes in transactions?

(15:43) – Merchant’s perspective on Bitcoin payments

(20:20) – Comparing South African Bitcoin payments market with that of the U.S

(23:21) – Bitcoin’s use case: Store of Value vs Medium of Exchange

(29:55) – What is the impact of FATF regulations?; Bitcoin as money

(32:57) – Sponsor

(34:55) – What are the tax implications of spending Bitcoin?

(37:12) – Top-Down vs. Bottom-Up adoption strategies; The psychology of spending Bitcoin

(42:35) – The difference in volumes between Stablecoins vs. Bitcoin

(44:49) – What are the growth trends in Bitcoin spending? 

(50:12) – What is Carel’s long term vision for Bitcoin adoption?

(51:38) – Closing thoughts 

Links: 

Sponsor:

Stephan Livera links:

Transcript:

Stephan Livera (00:00)
Hi everyone and welcome back to Stephan Livera podcast. We’re going to be chatting about some really interesting news on medium of exchange and using Bitcoin as payment. I think probably the big handle I’d number you people might have seen is it’s now theoretically possible for over 700,000 merchants to accept Bitcoin and one of the men helping make this happen or ⁓ one of the men behind making this happen is Carl Van Vyck. I hope I pronounced that correctly from Money Badger. Carl, first of all, welcome to the show.

Carel Van Wyk (00:28)
Thank you, Stephan. I just want to point out it’s 700 locations, so not 700 merchants. We get that a lot. Yes, that’s a ⁓

Stephan Livera (00:35)
sorry. Okay, gotcha. Yep. Yeah, I guess we’re

yeah, just to get the right number 700,000 locations at which you can pay with Bitcoin. So I know you’ve been around Bitcoin for a little while you were a co founder of Luno. Back in the early days, and then I believe you’ve been around, you know, for a while. Do you want to just give us a quick kind of overview on yourself before you came to doing what you’re doing now with money badger?

Carel Van Wyk (00:40)
Mm-hmm.

Look, think for me, I’m an engineer and a software developer. And I grew up in the age of the rise of the internet and South African tech idols like Mark Shuffleworth and the like. And so I’ve always had this deep appreciation for open source software and this notion of sort of a global network or a global ⁓ ecosystem. And so when Bitcoin

arrived, the white paper arrived and I read this thing, I was really blown away because it already matched a lot of things I’ve been thinking about for a long time before it. And it’s one of those things that you believe is sci-fi until you realize that it actually exists. ⁓ And so that’s kind of my background. And as a part of that, I’ve always wanted to build new things, things that interface with the real world. And money is one of those things that’s like

like Bitcoin is this perfect overlap between the digital world and the real world. And so that’s something that’s always excited me and I’ve always wanted to build stuff in the space. And luckily, I’ve had a couple of opportunities. you say, ⁓ Luno was the first Bitcoin exchange in South Africa. It’s now one of the largest exchanges in Africa that’s like natively African. And Money Badger. So Money Badger takes this whole idea of Bitcoin, which is a store of value one step further.

to the medium of exchange concept. And so the idea is that MoneyBudget tries to make Bitcoin money. That’s why we’re pushing so hard to add so many new stores and new merchants and places to accept Bitcoin, because we think that’s vital for the future of Bitcoin, especially in South Africa, our relationship with money may be a little bit different from people elsewhere in the world.

Stephan Livera (02:54)
Gotcha. And so give us a bit of an overview. When did Money Badger start and sort of a bit of the journey up from when it started to now?

Carel Van Wyk (03:03)
Yeah, the journey, it’s one of those things like I can only describe it as maybe guided by the divine hand of Satoshi. If I can put it like that, it really was ⁓ the being at the right place at the right time. So like I said, I’ve been working on stuff for Luno. I actually bought some merchant payment stuff at Luno. And as part of that, we had a project with one of the largest African

retailers, grocery stores. I mean, if you’re in the US, maybe it’s like Walmart or ⁓ what would you have in the UK? Maybe like a big grocery chain. Okay, sorry, no, you’re not there. Right. What do they have in Australia? Tesco. Yeah.

Stephan Livera (03:42)
⁓ I wouldn’t know. Yeah, I mean, I’m not from the UK. I’m Australian myself, but I don’t know, maybe like a Tesco or something like that, as I’m guessing,

something like that. I don’t know, one of these big, you know, ⁓ kind of supermarket shops, I’m guessing.

Carel Van Wyk (03:59)
Exactly. this big supermarket chain called Pick and Pay approached Luna and said, we want to add Bitcoin payments. A lot of people ask us, how did you orange pull this retailer? And the fact is just simply that they wanted this. They wanted to demonstrate the capabilities of the technology stack. And one of the ways they could do this was to say, well, let’s add Bitcoin, which is this crazy new future form of money. And it didn’t work. So this was really…

2017, we didn’t have Lightning yet. And as you know, on-chain transactions can get expensive, and especially in like a rapid point of sale checkout scenario, it didn’t work. And then subsequently, I’ve left, you know, I started playing with Lightning, other LATU things, and it turned out that all the problems that we faced was solved with this, the Lightning protocol, not only the speed and the…

cost, but also sort of the control that’s sort of native to the protocol. And then it just happened that Pick and Pay gave me another ring on the phone and said, hey, has anything changed? And I said, absolutely. I think we’ve got something now that will definitely work. We bought a PIC, deployed it to one store, tested it, worked phenomenally well, deployed to a number of test stores. One of them is in a little coastal town called Mossel Bay.

If maybe some people have heard about sort of the Bitcoin Beach project or muscle, there is an equivalent Bitcoin Beach project called Bitcoin Acarcy. They are just to test this thing. They were super happy. Yeah.

Stephan Livera (05:34)
Yeah, yeah, and listeners would long time listeners

would know I’ve done an episode with Herman from Bitcoin Akasi, but you’re gone.

Carel Van Wyk (05:41)
Yeah, fantastic people there. They were so helpful to help us figure this out and make it work really well. And the rest, guess, is history. We deployed this nationally in 2023. And subsequently, we’ve added a number of other stores and retailers and payment service providers.

Stephan Livera (06:03)
Excellent. And now you tell me where I’m getting this wrong. As I recall, it was like, initially, you needed a separate app that would like decode their, like their, you know, that merchant of each location would put out like a barcode and you needed a separate app to scan it. And then that would kind of read it and get an invoice. And then, then your lightning wallet would be able to pay it. Whereas nowadays what you’ve actually built is like the lightning wallet or some of the lightning wallets like blink and others.

Carel Van Wyk (06:13)
Mm-hmm.

Stephan Livera (06:32)
they can just like natively read it. Is that what’s going on?

Carel Van Wyk (06:36)
Yeah, so I think there was a lot of confusion initially. There’s still a lot of confusion. I think people forget that it’s still kind of like there’s a lot of ⁓ development happening in Bitcoin and specifically when it comes to user interfaces and usability. Some wallets get it right and some still struggle a bit. So the situation in South Africa was that unlike other African countries like Kenya, that I think Pesa,

or India Brazil that have the UPI or PICS, where there’s kind of like a common QR standard. South Africa did not have this. So what we had was ⁓ a ⁓ number of mobile payments service providers that each had their own QR standard. essentially, we’ve got kind of like this, ⁓ let’s say, 10 different QR code providers in South Africa.

and none of them are going to display a Lightning code, basically. So we have to figure out how we’re to bridge this gap between the proprietary QR codes that’s being displayed by these payment service providers and then the Lightning network and Lightning wallets. So the first thing that we did is we implemented what we call our reference application, which is the Money Badger application. All it does is it scans one of these proprietary QR codes and it essentially translates it into a Lightning invoice.

Right, so now we’ve got the Lightning Innoce Compact and it kind of works if you’re a South African, you don’t maybe don’t mind installing sort of the SA Lightning Payments app to scan QR codes. But obviously that’s not ideal. Obviously you want everything to be one single app and one single smooth interaction. So then we had a conversation with the guys from Blink, the Bitcoin Blink wallet, and they had a very interesting idea. They said,

What if we crafted a special lightning address? So it’s using lightning URL protocol and we craft a special lightning address where the, let’s call it the user part or the user ID part of the address is the actual full QR code data. So it can be proprietary QR code data, but that’s the user ID part. And then obviously the server part of those part would be the money page of the main.

⁓ And then all that’s left to do is to match the pattern of the QR code to Money Badger. Right, so if you see a QR code and it says pick and pay somewhere in the QR code, then the Lightning Wallet knows that it’s a Money Badger Lightning address. And then it’s actually very, very simple. So now we have this means for any Lightning Wallet to implement proprietary QR codes

with no third party API ⁓ implementation. So there’s no ⁓ code from a specific country or specific provider that is filling up the code base of the Lightning Wallet. So that means any open source Lightning Wallet can very easily, by simple pattern match, they can add support for all of these South African merchants and retailers that we’re adding support to, both online and physical. I don’t know if that makes sense.

Stephan Livera (09:59)
Interesting. So just

walk me through that again. I didn’t quite follow everything there. So as you’re saying, they’re like what you what’s basically like, as an example, blink have built it into their own QR scanner, that it like is looking for a certain, you know, let’s say pick and pay in this example. And then once it sees pick and pay, then it knows to call to bunny badger somehow and then get the actual invoice from you at from your side or money badger. Is that what’s happening in the background there?

Carel Van Wyk (10:00)
Ha

It looks like they can pay, yeah.

Mm-hmm.

Yeah.

So if you have a link, ⁓ and many other liking wallets have this, you’ve got the notion of a liking address. I think in BlinkFlick, they call it a pay code. And so these are essentially like special money badger pay codes or money badger liking addresses, like an email address, right? ⁓ And when you scan one of these codes, like a pick and pick QR code, and you use it in this way,

as a money badger, email address, pay code. Then everything just works seamlessly via the Lightning protocol and you get your Lightning invoice and you can pay it.

Stephan Livera (11:02)
Gotcha. And then how does it know which specific invoice as opposed to just, you know, pick and pay, how does it know like that specific invoice for milk for whatever, whatever dollars or whatever it is.

Carel Van Wyk (11:03)
So, okay, yeah.

Mm-hmm.

Well, it gets very interesting because there’s a large number of QR code types. So get the dynamic QR code that’s linked to a specific transaction, and it’ll give you basket, essentially the basket information. Then there are static QR codes. If you’re going to, I don’t know, like a restaurant, sometimes they only have a static QR code and you have to enter the amount which you then send to the merchant. Sometimes you can add a tip, sometimes you can add a note, et cetera.

So there’s still this whole sort of world of idiosyncrasies around QR codes that we’d need to solve. But ultimately, with Pick and Pay, for example, that’s a dynamic code. You scan the specific code for that transaction that you’re busy with at that point in time. So that means that you get the lightning invoice for that specific transaction.

Stephan Livera (12:07)
Okay, yeah, fascinating. so, talk us through that journey. So you started with pick and pay, how many pick and pays are there in South Africa? I presume like, there’s a lot of them, right?

Carel Van Wyk (12:19)
So we’ve got a number of you meant pick and play stores themselves or like compared it as a pick and play pick and play shops

Stephan Livera (12:25)
Yeah, meant the stores themselves, yeah, Pick and Pay themselves.

Carel Van Wyk (12:29)
There’s, okay, so I mean, it’s the kind of party to compare to South Africa’s population of about 50 to 60 million people. We’ve got seven provinces. And so there’s a pick and pay in almost every town in South Africa. The last count I saw it was about 1,600 outlets, pick and pay all across the country.

Stephan Livera (12:51)
And that

was your first merchant that you had done this with. There was a trial or the pilot and then you’ve expanded it out from there.

Carel Van Wyk (12:59)
They were the pilot.

Yeah, I guess the learning from that was that whereas in the past, like using a blockchain for retail payments, it sucked. ⁓ And this time around, using Lightning for retail payments was really cool. Like it works really, really well. In fact, you know, people were so well, tap to pay so fast, but actually, Lightning transactions are even faster by a couple of seconds.

So yes, it worked so well that we deployed to all the computers nationwide.

Stephan Livera (13:35)
Fantastic. And so the other interesting part here is that the let’s say the the checkout chick or the you the person right there like ringing you up the bill and so on. They don’t have to know or care about Bitcoin at all. Right. I think that’s probably another interesting point because in years gone by, people had to kind of know how to pull out the Bitcoin wallet and kind of code it the right way or ring up the exact amount. And it’s just it kind of adds all this extra friction. Whereas now it’s done in a way that’s a lot more smooth.

Carel Van Wyk (13:54)
Mm-hmm.

Exactly. Yes. So there’s already this notion of QR payments in the country and every single person sitting behind the till understands that. So they have the option to select QR code checkout. There’s a lot of other like non-Bitcoin and non-crypto wallets that also use this rail. So there’s a lot of other QR options. But fundamentally what this meant was that we had no, in no case do we need additional staff training. That’s a huge thing.

there’s like thousands of lanes. mean, there’s thousand six hundred stores, but each store might have 10 lanes. So that’s like tens of thousands of lanes, right? And so to train a lot of staff on like a very niche payment option, that would be quite a big ask. But at the end of the day, you can now walk up to any tool in any pick and pay in the country and say, I’m paying with the QR code, scan either with ⁓

Lightning wallet that’s already implemented the sort of pattern matching or with the Money Badger app and then you can pick any of the other Lightning wallets and then pay with Bitcoin.

Stephan Livera (15:15)
Fantastic and so then in this case that merchant is just receiving fiat on their side, right? Like they don’t have to think about it. They just get that auto converted to fiat. Yeah

Carel Van Wyk (15:23)
Yeah, we’ve got kind of two use cases.

So in the past, definitely most merchants that we engage with said, you know, we just want the exact random amount and we want you to sort of beat card rates. We don’t like paying card rates. It’s very expensive. Can you beat card rates? Yes. Can you give us an exact random amount because we see the price of the coin going up and down all the time? Yes, we can give you the exact random amount. Now what we’re starting to see is more and more merchants asking us about sort of split settlement.

So they’re saying, you know, what is the option of receiving a portion of it? Yes. So there’s this sort of cautious optimism, but we do have one merchant that’s like a pizza. They’re, I think one of the oldest pizza delivery brands in the country, they’re called Butler’s Pizza. And they have been taking Bitcoin settlements since the start. So we just sent them straight to like their Bitcoin wallet. But yeah, I think it’s something that’s changing. For now, most merchants are.

Stephan Livera (15:57)
Gotcha. They actually want to huddle some.

Carel Van Wyk (16:25)
taking fiat but we’re also making it very easy for them to accept bitcoin.

Stephan Livera (16:33)
Fantastic and I mean that’s really cool because in I think I will get to kind of the criticisms part of this later I guess one other thing I wanted to touch on before we get to that is ⁓ Just the sheer numbers like that’s kind of incredible when you really think about it like 700,000 locations is just an incredible like number of ⁓ Locations that you could go and pay I mean for so long

Carel Van Wyk (16:40)
Yes.

Stephan Livera (16:57)
Let’s say people look at btcmap.org, you know, for so long, it would have been a very low number that you would see. You look in the whole country and it would be like, you’re scanning around to try and find somewhere that you can even pay with Bitcoin. And now it’s just like, for South Africa, must be just like totally blowing it out. so can you talk us through, as I understand, I was having a quick look on your website. I think it’s through Zappa and then through Scan2Pay, you got like, you basically got a lot of these numbers up from that. Do you want to just talk us through this journey there?

Carel Van Wyk (17:25)
Yeah, sure. I think, look, when you go on BTC map and you ⁓ look for these locations, there’s still that little bit of education that’s needed. So there’s still kind of like a bit of uncertainty about which wallet supports which code. So obviously, if you install the Money Badger application, all wallets are supported and all codes are supported. That’s the very easiest way to do it. But I understand that people just want to use their own wallet and something like Blink.

has become very popular in South Africa. So let’s just use Blink as an example. So when we add a new PSP or a new mobile QR provider, all that we need to do is we need to essentially give the wallet a list of these new patterns that they need to match. So for us, we did a lot of heavy lifting, obviously. We integrated with Zapper, which is a mobile QR payment provider, and then

Scan2Pay, which is another one, and they’ve got massive reach. By the way, they’re across most of the large brands in South Africa. So that means filling stations, a lot of other grocery retailers, but also online. There’s a lot of online shopping that they cover. So suddenly that ballooned the number of shops and locations where you can spend via system. And now it’s simply a matter of somebody needing to make a

code changer or like a pull request or a merge request on all these code bases and adding these new patterns and then it just magically works. But it takes some time. yes, if you go and look at on bt-map, I think there’s usually some, if you click on like a location, there’ll be some indication of what is the application that you’ll need to scan and pay. ⁓ And then hopefully, you know, in the near future, you can just use Blink. I think at the moment, Blink supports everything. Yeah.

That’s pretty much the strategy. So what we said is that we can either onboard individual merchants, and that’s going to take a lot of time, but what we want to do is just ⁓ aim for the moon and add all merchants in one go, essentially. So the point is working with the PSP, they’ve got existing distribution, and adding us just as another provider on their network gives us immediate reach to vast numbers of locations.

Stephan Livera (19:52)
Yeah, that’s I mean, that’s incredible when you think about it. Seven hundred thousand. It’s just massive. And obviously, the other big news that’s just come out recently, which I’m sure you’re following in the US is ⁓ Dorsey and the guys at Square have turned on for up to four million merchants, ⁓ which is incredible when you really think about the scale of that. Now, to be clear, I think those merchants have to opt in to turn on Bitcoin payments. So there’s a bit of a campaign going around that. But I’m curious, just any reactions on your side like

Carel Van Wyk (20:02)
Mm-hmm.

Stephan Livera (20:21)
comparing the South African market and Bitcoin payments and let’s say the US market.

Carel Van Wyk (20:28)
Look, think ⁓ it’s fantastic that ⁓ essentially like a PSP, they’re essentially a payment provider, added native support for Bitcoin Lightning payments. like, amazingly, it looks to me like they’re saying that there’s a zero fee. Is that right?

Stephan Livera (20:46)
I believe so. Yeah, I think it’s zero fees until 2027. So I think it’s maybe an intro offer to get more people in but hey, it’s you know, because I think part of the attraction there is normally they’re paying whatever like two, 3 % for credit cards. So if they’re paying zero, that’s kind of a good incentive there.

Carel Van Wyk (20:48)
Yeah. Okay. Fantastic. Right.

Yeah, I mean, that’s not only a good incentive. I think that’s sort of like a make or break kind of thing. Like that’s the deal maker. ⁓ And that’s, think, the angle that we need to take ultimately is to say, well, look, ⁓ these card companies are charging you an arm and a leg. And if you consider Bitcoin, the technology allows the system to be much more efficient in terms of pricing.

So can get it much cheaper. And so that’s kind of the deal, right? Hey, we’re going to give you an option that’s much cheaper than card, ⁓ but then you also need to help us to promote it. And maybe you need to opt in, but it’s a no brainer because there’s no risk to you. ⁓ There is no chargeback risk. I think, like, I don’t know what their terms and conditions are. Can’t speak for them, but ⁓ that mechanism doesn’t exist. The fraud. ⁓

profile is very different. It’s not like you can just steal somebody’s plastic card, right? And so I think like the value proposition for the merchant with this idea of a very low fee, it becomes so strong that eventually they’ll catch on and they’ll opt in and switch it on. And then they’ll start looking for the customers, the Bitcoiners that want to spend, they’ll start finding them and advertising to them and reach as new audience. So I think that’s really fantastic.

And I hope that we also have similar terminal ⁓ providers in ASA that we’re already talking to, already trying to do proof of concept with. We’re hoping that this announcement from Block and Square allows us to get these things over the line in ASA as well.

Stephan Livera (22:49)
Excellent. And so let’s talk a little bit about, ⁓ I guess, what this means, let’s say, as Bitcoin advocates, Bitcoin maxis, whatever you want to call us. ⁓ Now, for a long time in the community, there been kind of these ongoing, let’s say, debates. ⁓ Now, some people would say it’s not really a debate. Maybe it’s just kind of arguments, whatever. But some people who kind of frame it in terms of, no, it’s mainly a store of value, and others who are kind of more in the MOE side of that. ⁓ And I mean, my

perspective is more like, think the hodling aspect is probably the most kind of economically important, but I think maybe there’s a social factor that is kind of interesting around the medium of exchange part. ⁓ I’m sure you’ve seen some of the back and forth ⁓ there around, ⁓ let’s say someone like a Dan Held, who I was kind of going back and forth with, where he was sort of arguing, well, that’s not really that important. Think about all those other years in the past that merchants have done this and it didn’t really make a big difference.

Really what matters is more like the NGU factor, the hodling and maybe like the lending and borrowing and collateral and some of those factors. I’m curious your position on this. Obviously, I’m sure you have some kind of disagreement. ⁓ How would you see this question around trying to get merchant adoption for Bitcoin payments?

Carel Van Wyk (24:06)
⁓ Yes, mean, that doll discussion is like, there’s so many voices and there’s so many different perspectives. So I think that to really give a ⁓ input, we need to be very clear about the goal that we’re trying to achieve. Right? ⁓ Is it simply sort of mass Bitcoin adoption and mass adoption of Bitcoin as money as well? ⁓

or are we trying to solve a problem for a specific group of people? Maybe just we’re trying to solve the problem ⁓ for Bitcoiners that are already living their lives on a Bitcoin standard and they just need more places where they can spend it to support the daily needs. But I think something that is maybe not considered in the rest of the world and that weighs very heavily in South Africa specifically is

the need for us to have access to a form of money that doesn’t have the same restrictions as our fiat currency have. And that’s something that the US won’t understand. So maybe to give a concrete example. So in South Africa, if you’re in South Africa, you are limited in the number or the amount of money that you’re allowed to abroad out of the country. And

that number has not been adjusted for inflation in at least 14 years. That’s a very long time for inflation to erode a threshold. And there’s no indication that these thresholds will be adjusted. So to give you some idea of this threshold, when it was first, the current threshold was implemented was in 2011. And at the time, you could probably purchase a house for that amount.

Today, you could probably purchase a luxury car for that same amount. And so the question is, what does it look like in 10 years time? Will that threshold be updated or is it to be like a straight jacket that just keeps pulling you tighter and tighter until you can’t move? And we’re kind of like more more stuck in this economic black hole. It’s difficult for us to financing if you’re like a bright startup founder.

and you’re looking for investors, they’ll say, well, we’re not going to invest in as an African company because you’re like in this black hole essentially, financial black hole. So yeah.

Stephan Livera (26:43)
Right, because it’s like a, what’s the word,

the Roach Motel aspect. Like you can put money in, but you can’t take it out.

Carel Van Wyk (26:50)
You might be able to take your money out, but not your returns. And that principle will erode over time with inflation. So, okay. So we look at money a little bit differently. We kind of feel that the restrictions of money and fiat more directly. okay, a long story short, what it boils down to in this debate for us is that if we don’t use Bitcoin as money,

then the whole system that we’re in, just I know we’ve had this terminology, ossification, you can also say like crystallization or calcification, whatever, but the whole system essentially configures itself around the notion that Bitcoin is only something that people hold onto and they never actually use, they never actually move it around. And that’s a big problem. So for example, just before we launched the pick and pay thing, our Reserve Bank Deputy Governor said,

We don’t consider Bitcoin to be a form of money because you can’t walk into a shop and spend it. Right. So that’s the view from the Reserve Bank. That’s the view from our financial services regulators. ⁓ That’s the view from the banks. That’s the view from the payment industry. Right. And then there’s nothing that can happen. There’s no innovation that can happen. No movement. Nobody can go and build cool stuff. If all the rules are

formed around Bitcoin as something that, you you buy it, you keep it with a bank or some exchange somewhere forever, and then maybe at some point you’ll sell it back to fiat and then do something with it. The whole system crystallized around that notion. And then one day, you know, maybe the Bitcoiners start going, well, we want to start using this as money, and then it’s too late. So in South Africa, we think it’s like urgent. It’s a matter of urgency for us to demonstrate the use case of Bitcoin as money.

as currency, as something that you use to support your day-to-day needs, right? Not only luxury goods and services and like holidays and fancy cars and lambos and stuff, but the daily bread that you want to eat because that changes the mindset. And I believe that we’ve started to succeed in this. So I think like the dialogue in the country has started to shift. There’s a lot more talk about, unfortunately, crypto payments. I mean, you know how people are.

like the media, they don’t differentiate. So it’s a lot of talk about crypto payments. We’re getting a lot more interest from payment service providers that want to differentiate. And they say, we see that you can do crypto payments now. Can MoneyBadger please enable crypto payments for us? And we’re also now starting to have different conversations with regulators and the like. One example is that

We have this whole licensing thing. have the old gray listing, FATF gray listing of the country. don’t know, some people might know what that is, but ultimately it makes it more difficult. Yeah.

Stephan Livera (29:52)
Yeah, I guess quick overview for listeners. FAF

is Financial Action Task Force. And they are kind of one of these big international organizations that basically push a lot of this kind of the kind of KYC AML news that we’re all under in today’s world, KYC AML sanctions in America, it’s called BSA Bank Secrecy Act. Basically, these restrictions are kind of constantly constricting. And if you get put on what’s called the gray list or the black list by FADF as a country, then your country can get shut down and maybe

your banks will struggle to have correspondent banking partnerships. People may not want to send money into your country. So it can be a pretty big kind of quote-unquote death sentence or a very not death sentence, but like a very constricting thing, at least in the fiat payment world. And so that’s why some of these countries, they sort of feel a pressure to sort of go along with what FADF says to say, ⁓ if FADF told us we need to do more AML and compliance and sanctions and what all this stuff, okay, we’ll force that onto our banks and our companies and our financial institutions. Hey, you need to do more AML and compliance.

Carel Van Wyk (30:51)
Yep, 100%. It’s the naughty list for countries ⁓ in the global financial system. And so we got on this gray list and our regulators worked really, really hard to get us off. And a part of this was to license what they call crypto asset service providers or VASPs in other places of the world. But they failed to consider the payments use case. So now they’ve basically classified all

service providers as ⁓ financial service providers. other words, investment speculation, brokerage, all of that stuff. And they are now in a position where all of the people trying to do Bitcoin payments in South Africa, ⁓ their licenses are kind of like peddling this very long discussion that’s been dragging out for over a year now between the financial services regulator and the reserve bank.

Because they didn’t consider the use case. They thought people don’t use it as money and now suddenly they’re caught with their pants down. Then if you look at like Kenya, they have a very simple solution. They said, okay, well the investment services providers, they go under the investment regulator and the payment services provider, the Bitcoin payment service provider go under the payments regulator. But we fail to do so here because that mindset wasn’t here and that view wasn’t here. And so that’s why I think like it’s so

important and crucial for us to demonstrate the medium of exchange, the MOE use case. That’s kind of, I think, a very important reason to do it that’s not even considered by the broader debate.

Stephan Livera (32:36)
I see. Yeah. And so I mean, as I’m understanding it, we can think of it like maybe there’s a social or a political benefit ⁓ to people who are Bitcoin advocates that if you can, if there’s more places, you know, that are ⁓ like to your point around demonstrating the MOE use case or demonstrating the payments use case, then ⁓ it will be considered more from that perspective. And we can maybe even argue in different countries, maybe there’ll be a bit more

push to take away capital gains tax as well. Now in many countries there’s a capital gains tax on Bitcoin and so maybe if it is being used as money then there’s a better argument around, okay well maybe they have to just take away the capital gains part or maybe they give you like some kind of de minimis exemption under a certain threshold, no capital gains and then I can also think of it like this, like to your point as well, that if you’re already a Bitcoin owner and you’re already holding Bitcoin, it gives you more

potential off ramps, right, that you can just natively spend it instead of having to go to an exchange, sell it there, get fiat, then use that fiat to pay ⁓ for your groceries or whatever.

Carel Van Wyk (33:43)
Exactly. The tax ⁓ angle is interesting. Definitely that is a barrier to adoption. It adds friction. Even though I tell people, you know, if you’re paying capital gains tax, it means you’re beating the system. So like you shouldn’t feel too bad about that. do you know what is the country in the world with the most, let’s call it the most that have capital gains? Because let me put it like that. The country in the world that have capital gains, that has the most rational approach.

to Bitcoin’s spending specifically to the MOE use case in terms of its tax guidance. I can give you a, it’s Australia.

Stephan Livera (34:22)
Well, Australia has a certain rule, yeah. Yeah, they have a rule about if

you purchase those coins with the intent of spending them, I think it’s up to $10,000. I don’t know, someone correct me if I’m wrong there, but I believe that’s, yeah, that’s what I’ve heard.

Carel Van Wyk (34:36)
Exactly. So you already have this concept embedded in your tax code already ⁓ that you can spend without incurring. It’s not a being disposal. You don’t have to do a calculation every time that you pay. You just separate your payments wallet from your savings wallet and then you’re pretty much set. So there are ways to do it.

Stephan Livera (34:58)
Yeah, so hopefully

that could be brought into other countries. don’t know, Senator Lummis in the US was talking about having like a de minimis, I think $600 or something. Anyway, the point is there are people talking about this ⁓ and there’s actually different countries. Like I know Czech Republic recently brought in a rule. I think it’s like if you’ve been huddling for two or maybe for three years, no CGT on spend. ⁓ so there are some countries that are trying to make moves on this.

Carel Van Wyk (35:20)
Yeah, that’s insane. ⁓

Stephan Livera (35:25)
There are other countries that just don’t have a capital gains tax, you know, some of those countries they have. So I believe Netherlands doesn’t have a capital gains tax, but they have a wealth tax. ⁓ And I think similar with Switzerland. I believe Singapore doesn’t have a capital gains tax as well. So that’s interesting. ⁓ But you know, some of these countries are small and you know, obviously most countries have a capital gains tax and most of them do not have this kind of de minimis exemption or some kind of, you know, allowance that you can just use it for day to day.

payments. that could be something there. ⁓ Now, I guess, do you see any other benefits? I think maybe it’s difficult to quantify the benefit of having more locations that you can off ramp. Is there any other element that you could point to and say, well, that’s a benefit of actually having more MOE adoption or payments adoption for Bitcoin?

Carel Van Wyk (36:20)
Yeah, I guess the way we see it is that there’s a top-down and a bottom-up approach to promoting Bitcoin adoption. And the top-down approach is what Money Badger is taking. So we’re saying, let’s add as many merchants as quickly as possible to the network. Then there’s obviously the bottom-up community approach, the Bitcoin beaches of the world, people starting in their own town, forming Bitcoin communities and groups, and onboarding merchants one by one. So one of the…

biggest benefits, I think of the top-down approach is that it very much supports the community approach. It makes the lives of the people trying to orange-pull the peer-to-peer ⁓ style merchant, it makes the lives a lot easier because I can say, look, one of the biggest retailers in the country is accepting Bitcoin. So why shouldn’t your store also consider it and then walk the shop owner through it? So that’s definitely something that we’ve heard very often.

is that it helps with the grassroots campaigns. And then I think something also that it helps that’s kind of counterintuitive is that we found that people who start spending the Bitcoin, they end up saving more. So it’s counter to this idea that if you ⁓ spend this very scarce asset that’s going up in value forever, that you’ll regret it down the line. I think it depends on how you do it.

Because what we’re seeing is that people actually just acquire more of it. And in fact, they incentivize to earn Bitcoin now or to convert their full salary into Bitcoin because in the past, they knew they needed to have some fiat reserve for expenditure. Whereas now that level of reserve for people that’s like crazy Bitcoin maxis that are like 100 % Bitcoin, that fiat reserve is dropping that amount. And what ends up happening is that they end up saving more Bitcoin.

So it’s not that they end up in a situation where they’re spending this valuable thing that they should be hoarding forever. In fact, they end up with more in a better position down the line.

Stephan Livera (38:25)
Could it be that there is a familiarity effect, right? Like for a lot of people, maybe they, if they haven’t really had it explained to them or haven’t seen it with their own eyes, they loosely think of like Bitcoin and crypto is like either it’s kind of DJ and gambling stuff or kind of internet money. But once they’ve actually spent it with their own, like out of their own phone wallet, let’s say, maybe they become more familiar with it now. And now they’re kind of a bit more savvy with it. And then after they’ve maybe

earned and spent a little bit. Now they start thinking, actually, I should be huddling this, I should be actually trying to accumulate and, you know, yes, I’m spending some, but I want to try to earn more than I spend, right? Like personal finance 101, right? Earn more than you spend, and just do that with Bitcoin, right? So I just think that’s a simple approach that works for most people is just, okay, it’s okay if you spend SATs, but just try to earn more than you spend, and do like the basic personal finance thing. ⁓ Now, of course, it’s different situations. Like if you’re

Carel Van Wyk (39:05)
and have a

Stephan Livera (39:18)
old or you’re retired and you have to spend down, okay, that’s a different story, kind of for younger people, that seems like a very simple ⁓ approach. So maybe it’s a familiarity effect.

Carel Van Wyk (39:30)
Yeah, that’s a very powerful mechanism to change somebody’s mind. When you let them do it. So what I’ve often done is I’ve met, when I meet sort of people that’s not from the Bitcoin space, like people that I need advice from or that we want to partner with, what I’ll do is I’ll meet them in a location that I know accepts Bitcoin. And then after that, I’ll say, you are paying the bill today.

⁓ We’re going to install a Bitcoin wallet on your phone right now. I’m going to send you the Sats and you’re going to spend it and you’re to see how easy that is. And I’ve never seen anybody that is not surprised by that experience or not sort of having an aha moment. There’s always a little hmm.

Stephan Livera (40:23)
Yeah, yeah, so they sort of just yeah, I think for a lot of people look people are busy They’ve got jobs and families and kids and different things and maybe they’re just obviously they’re not as into it like you and I and maybe many listeners many listeners of this podcast are So it’s just a know a factor of having seen it Having and I guess making it real for them like that factor of I can go down to the shop To let’s say pick and pay I can buy my bread my milk or whatever and it feels a lot more real ⁓ once you actually

do that, whereas when it’s all online on an exchange website somewhere, you’re buying BTC on the exchange, maybe it doesn’t feel as real for them.

Carel Van Wyk (40:59)
And there’s still so many people that say, oh, it’s crypto. And Bitcoin and crypto is the same thing. It’s like most people still say that. differentiating the two, there’s so many lessons that you have to learn. But the question is, what is that first switch in your mind that flips when you actually start paying more attention and then start digging into it and then going down the rabbit hole?

Stephan Livera (41:22)
Yeah. And while we’re here, I mean, have you had a lot of interest on people talking about things like stable coins or has mostly the interest actually just been like, no, just keep it on Bitcoin.

Carel Van Wyk (41:31)
Yeah, so in terms of sort of the numbers ⁓ Definitely when I speak to people about this the expectation is that it will largely be stable coin expenditure, right? So if you look at kind of the reports that people like Chain Alice has put out They’ll typically say, know stable coins, especially US stable coins is massive in Africa and especially Nigeria and yes, it is big so then the expectation is

obviously that people will be spending USDT, USDC via this network. But in reality, what we’re seeing is that it’s actually a lot of it being driven by Bitcoiners and two thirds of the transactions that we process is in Bitcoin. That always surprises a lot of people. So they’re like, okay, what does that mean? Does it mean that there’s actual true Bitcoin adoption? Because it’s not just this rail that you can spend your altcoin or whatever on or a stable on.

And you can see this also in the stats of the wallet. So I know we’ve got some, we’ve got a good relationship with Blink and they show us that the adoption statistics for the wallet in South Africa indicates that people download and install it, not only to like store their Bitcoin, but also to spend it. And as the number of shops in South Africa increase that accepts it, the number of Blink installs

proportionally increase as well. So the rate of blinking stores go up as the of stores go up. So we can certainly see in the numbers that we have that there’s kind of like a groundswell of Bitcoiners in South Africa that’s adopting it for the daily living. Yeah, to me, that’s phenomenal. The numbers are definitely very, I think, positive in that regard that there are people using it as an MOE. They aren’t small.

But the rate of growth is rapid.

Stephan Livera (43:32)
The other question I’ve got to ask you on this around the numbers and the growth. ⁓ Now it may be too early to say just based on when you turn things on, but historically, and you’ve been around a while, you’ve been around for many cycles in Bitcoin, so I’m sure you’ve seen this, but the historical pattern has been, bull market, lots of people spend. Bear market, maybe not so much, right? That’s been the historical pattern. But what I am noticing and what I’m hearing from people is actually lightning is starting to see just like secular adoption, right? So it’s not just like price goes up, more people spend.

We’re just seeing like just steady growth in lightning payment volume. Is that what you’re seeing on your node and in your volume?

Carel Van Wyk (44:10)
So there’s, I think there’s baseline growth, but then we see sort of booms in spending when there’s a boom in the price, definitely. And we do see dips in spending when there’s a dip in the price. So that’s still, there’s still a very clear correlation there. And I think it’s simply a matter of people feel rich when the price goes up and they feel poor when the price goes down, and then they’re more stingy.

Stephan Livera (44:35)
Yeah, I think it’s maybe a psychological factor, right? Like if you felt like, oh, we’re at all time high, 125,000, oh, your people might feel a bit more like, hey, let’s live a little. And then now once it’s down at whatever, 103k as we speak, maybe they feel a bit more like, oh, and the sentiment is down right now online. So maybe people feel a bit more like, no, I’m just going to hodl. So maybe that’s a factor. But it’s interesting you point out that there is just a general baseline growth going on. And I presume part of that for you is also just because you turned on so many more merchants and locations, right?

Carel Van Wyk (44:38)
for sure.

Yeah.

I’m gonna wait.

Yes, think so. So we can see massive spikes when we turn on. So when we turn on shops, it’s typically like thousands at a time. And then the problem is communicating where those shops are. So then it’s a matter of sort of, you know, BTC map, adding stuff there. We’ve got our own map, adding stuff there, putting out messaging on social media, putting out messaging on the website. It’s like it’s a big task. But what we see definitely is that ⁓

there’s like big ramps up in spending on the network. But like I said, even when we are not doing that, month on month, it’s always growing. So there’s this baseline steady growth in user numbers, in the number of wallets that’s using it. ⁓ And that to me is encouraging.

Stephan Livera (45:57)
Excellent. So yeah, I mean, let’s see more people get onto it and start earning and spending. And this might be a way that even some of those merchants start to spend, start to, let’s say, hodl and they actually want to accumulate Bitcoin too. Now at the start, obviously, I’m not expecting that to be a big factor. Maybe at the start, they just kind of auto convert everything to fiat. And obviously they have bills and wages and electricity bills and everything to pay and rent and whatever else they’re paying, stock and goods, cluster goods. But over time,

you would expect that some of them will start to actually increase what’s colloquially known, I guess, as the hodl ratio, right? Like some of the payments will come in and they’ll start to actually hodl more and then start to actually ⁓ take the orange pill themselves.

Carel Van Wyk (46:39)
Yeah, so I think we need to be patient. you coming back to the debate of Bitcoin as a medium of exchange, if you expect things to just change overnight, you will always be disappointed. ⁓ Change takes time and changing people’s mindsets take time. And there’s different motivations behind every decision. like where we’re starting, we’re starting at merchants accept fiat and they take the fiat, right? Now we’re starting to see

there’s these special use cases are starting to pop up. So we’re seeing, ⁓ here’s a merchant that they need to pay suppliers, foreign international suppliers, and they’re having trouble with the Swift system. It’s unreliable, wants to slow, or whatever. ⁓ They’re saying, well, hey, can we receive a part of our settlement in a stable token, USDT? And then we say, yes, of course, you can do so. And we enable that for them. But now they’re on a

platform where they can very easily add Bitcoin, should they choose to. And we know that there’s now, I mean, this past year has been big for sort of, you know, Bitcoin treasury companies, right? Been a lot of talk around keeping Bitcoin on your balance sheet as a company. We’ve seen the first South African company now ⁓ rebrand to, I think it’s Africa Bitcoin Corporation.

⁓ and they’re sort of positioning themselves as a Bitcoin treasury company. And a lot more companies are going to start thinking about keeping the most liquid and best performing asset of the century, of the millennium, on their balance sheets. Right? And now we can tell them, guess what? If you’re with one of these PSPs, it’s like a one-click solution. You don’t have to do a lot of heavy lifting. You immediately get access to a ⁓ managed treasury account where you can set your

allocations. And then suddenly it’s like very, very interesting. So there’s a very long plan that we’re working with. It’s a bigger strategy than just adding Bitcoin acceptance for merchants. It’s sort of, like I said, it’s changing the narrative. And that ultimately, the change in the narrative is what’s going to drive the full loop of accepting Bitcoin, holding Bitcoin, and then spending Bitcoin.

Stephan Livera (49:02)
So what’s next for MoneyBudget? What can people look out and look forward to seeing?

Carel Van Wyk (49:07)
So we certainly keep working on adding more shops and more merchants and bigger brands and like the most popular household retailers in South Africa. We’ve got a couple of new partnerships that we’re working on. Obviously I can’t divulge too much. But certainly I think what we’re going to be doing in the following year is to put a lot more emphasis on the, let’s say merchant treasury solution and trying to find those merchants where

giving them the option of being settled in allows, gives them a real advantages and benefits. And that’s the use case, I think, that we’ll be focusing on and developing in the next year or so. But ⁓ in the payment space, the goal is to essentially establish, I don’t know people tell me I’m crazy when I say this, but we want to establish the alternative to Visa and MasterCard. We’re not trying to, you

compete for Bitcoin payments versus USDT versus Solana or whatever, ⁓ we’re positioning ourselves to build an alternative rail to card and we’re promoting as hard as possible for that rail to be a Bitcoin Lightning based rail.

Stephan Livera (50:25)
Excellent. Well, that’s probably a good spot to finish up there. So listeners go and check it out. The website is moneybadger.co.za. And, ⁓ thanks for joining us. Any final comment and thanks for joining us.

Carel Van Wyk (50:38)
Thanks, Stephan. My final comment is just like, why, if you think that Gresham’s law applies to Bitcoin and that bad money drives aren’t good, why the hell do you still have bad money? Just only have good money and then you have to spend it.

Stephan Livera (50:58)
Fantastic. Well, ⁓ it’s great to see what’s happening out there and yeah, keep up the good work. Thank you, Carl.

Carel Van Wyk (51:05)
Thanks, David.

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