Latest / TFTC: A Bitcoin Podcast / #686: Living on a Bitcoin Standard in 2026 with Steve Lee

Transcript

#686: Living on a Bitcoin Standard in 2026 with Steve Lee · TFTC: A Bitcoin Podcast

• 0:00
  Thank you for having me in your studio, sir.
• 0:01
  Great to be here.
• 0:02
  As we were just saying, this is the first time I've been interviewed in the studio.
• 0:06
  So I'm excited for it.
• 0:08
  I am too.
• 0:09
  I mean, this is a long time coming.
• 0:10
  We've been talking behind the scenes for many years now.
• 0:12
  Yeah, I've never been on the show.
• 0:14
  I know.
• 0:14
  I'm sorry it took so long.
• 0:16
  I mean, it's been a big week for the Block organization.
• 0:20
  Yeah, the past week extended into this week.
• 0:22
  There was even more announced on, well, yesterday, the DC policy stuff.
• 0:29
  Oh, yeah.
• 0:29
  The de minimis tax.
• 0:32
  So there's been a good week and a half of really great stuff from Block and extended to the whole Bitcoin community, I think.
• 0:41
  I finally got through the whole Miles Suter episode of yours.
• 0:44
  So I'm up to speed on that.
• 0:46
  He did a great job talking about all the efforts.
• 0:50
  And then today's the investor day for Block, which only happens.
• 0:56
  There was one like three years ago.
• 0:58
  So that was COVID era.
• 1:00
  So it was like remote.
• 1:02
  And, you know, this one will be in person.
• 1:04
  And I think, well, better for two reasons.
• 1:06
  One, there's a ton of exciting stuff to share.
• 1:08
  And then just being in person, it's more intimate and better feel to it.
• 1:13
  Well, the reason I bring up the week that was for Block is because a lot of the products that were launched revolve around using Bitcoin as everyday money.
• 1:22
  Obviously payments and merchant adoption.
• 1:24
  and it aligns very well with, correct me if I'm wrong,
• 1:29
  but based off our conversations over the last few years
• 1:32
  with something that you're worried about,
• 1:35
  which is if Bitcoin doesn't become everyday money,
• 1:37
  it's not going to attain the full potential
• 1:41
  that you think it can.
• 1:43
  That's definitely true that it would not attain full potential.
• 1:47
  And then the question is, can it just be digital gold
• 1:50
  and sustain with all the properties that make it valuable
• 1:53
  as store value?
• 1:54
  I think that's a really interesting question to get into.
• 1:57
  We can certainly talk about it.
• 1:59
  But there's no doubt it doesn't reach its full potential.
• 2:02
  And I also feel strongly that even for people that are into Bitcoin,
• 2:06
  there's different reasons people are into Bitcoin, right?
• 2:09
  But for the group of people who are just in it,
• 2:12
  for number goes up, they believe in store of value and that's it.
• 2:15
  That's completely fine.
• 2:17
  But even for that group of Bitcoin users,
• 2:22
  they should care, in my opinion,
• 2:24
  they should care about daily usage.
• 2:27
  It makes Bitcoin more resilient.
• 2:29
  It gets more people involved using it.
• 2:31
  More people will care about it.
• 2:34
  So in terms of a political force and voting segment,
• 2:38
  it grows.
• 2:39
  Imagine if millions of small businesses around the world
• 2:42
  depend for their business.
• 2:44
  That's a strong voting block.
• 2:47
  It also helps distribute the price discovery of Bitcoin.
• 2:53
  Because instead of just a few global exchanges as the primary points of discovering the price of Bitcoin, you'd have millions of touch points around the world where people are exchanging value.
• 3:05
  I come to your store, you give me, I buy fish from you or whatever, bread or whatever, and I give you Bitcoin and we're establishing a price right there.
• 3:13
  And that one single instance isn't going to really move the needle, but billions of those data points on a daily or weekly basis or whatever absolutely helps establish the price.
• 3:25
  Steve, why would you spend your Bitcoin? There's only 21 million and it's going to...
• 3:28
  That's another thing I feel pretty strongly about.
• 3:30
  It's a multi-hundred trillion dollar market cap potential and it's only $2 trillion. Why would you spend your Bitcoin?
• 3:35
  You should absolutely spend your Bitcoin.
• 3:36
  But it's definitely a common thought process to, you know, I mean, people who own Bitcoin most like believe it's going to keep going up a lot.
• 3:45
  Right. Including me, probably including you.
• 3:48
  So why would you spend it?
• 3:50
  Well, multiple reasons.
• 3:52
  One, humans are already accustomed to like the concept of a spent like checking account, savings account or like spending money in your wallet or purse and then like your IRA or something.
• 4:04
  So that mental construct is very normal for folks.
• 4:09
  So sure, if you have your stack that is your Bitcoin savings, don't touch that.
• 4:15
  Don't spend from that.
• 4:16
  Don't touch it.
• 4:17
  Like cold storage, secure it, and don't mess with it.
• 4:22
  But if that's like tens of thousands of dollars or more or whatever, great.
• 4:27
  Spending wallet is like $20, $50, $100, whatever you'd have in your billfold.
• 4:33
  maybe a couple hundred bucks, but just spending amounts of money.
• 4:36
  For that, just spend and replace, spend and replace.
• 4:41
  And I mean, for super hardcore Bitcoiners who are just like,
• 4:44
  throw out Gresham's law at you or whatever.
• 4:48
  If you feel that strongly that fiat is crap money and Bitcoin is strong,
• 4:52
  then go all in on Bitcoin.
• 4:54
  Have all of your money in Bitcoin, hold no dollars or fiat.
• 4:58
  And then you have to spend Bitcoin because that's the only money
• 5:03
  you have. So I think people can still be strong hodlers and still spend Bitcoin. Then there's the
• 5:12
  reason I just mentioned, which is even if you care about your stack that you're saving, by spending
• 5:17
  it, it actually strengthens Bitcoin overall. The network, the resilience, and it protects it as a
• 5:24
  store of value. Yeah, the distribution. And when it comes to spending Bitcoin, building on what
• 5:30
  you were just saying about living on a Bitcoin center.
• 5:32
  I mean, Parker, our good friend Parker Lewis,
• 5:33
  has run the numbers.
• 5:34
  I forget the exact name of the post
• 5:38
  that he wrote earlier this year,
• 5:40
  but it was basically the logic of spending Bitcoin.
• 5:42
  And if you actually run the numbers over many years,
• 5:45
  if you use Bitcoin as your long-term savings account
• 5:49
  and actually spend it as well on top of that
• 5:53
  on a Bitcoin standard,
• 5:54
  you can run the numbers.
• 5:55
  You're still making money.
• 5:57
  You're ending up with more purchasing power.
• 6:00
  Which is actually my personal situation.
• 6:02
  Like Block pays me and folks on the Spiral team in Bitcoin.
• 6:06
  So I receive it as Bitcoin.
• 6:08
  I keep it in Bitcoin.
• 6:10
  And then I only convert it to dollars when I need, if I have to make, still sadly.
• 6:16
  But realistically, most of my payments are still a denominator in dollars.
• 6:20
  So then I would convert sort of on demand.
• 6:23
  It's the way I do it as well.
• 6:25
  It's great living on a Bitcoin center.
• 6:27
  It's hard.
• 6:27
  It has been hard historically from a UX perspective.
• 6:30
  but it's getting easier.
• 6:31
  I mean, the products that are making it very fluid
• 6:35
  to switch from Bitcoin to fiat,
• 6:36
  to bill pay features and strike Cash App.
• 6:39
  Well, certainly like with Cash App's announcements
• 6:42
  and new features from the past week,
• 6:45
  it definitely helps, right?
• 6:46
  Because now all four combinations work.
• 6:49
  You can, I can have Bitcoin pay you as a merchant.
• 6:52
  You know, I can pay you in Bitcoin,
• 6:54
  you receive it as Bitcoin or Bitcoin to dollars
• 6:56
  or dollars to dollars, dollars to Bitcoin.
• 6:57
  So each party in that two-party transaction uses whatever they're comfortable with and what they want to do today.
• 7:06
  And I think some hardcore Bitcoiners might say that's fake or not really embracing Bitcoin.
• 7:13
  It's absolutely a meaningful baby step.
• 7:17
  And everyone has their journey with Bitcoin.
• 7:19
  Not everyone starts as hardcore, fully embracing and understanding self-sovereignty and privacy and all these important properties of Bitcoin.
• 7:26
  So meeting people where they're at today,
• 7:29
  whether they be the small business or the consumer,
• 7:33
  gets them started on that journey.
• 7:35
  Yeah.
• 7:36
  Preference optionality is how I would describe it.
• 7:39
  But to get to all this,
• 7:41
  many people sort of gloss over
• 7:44
  or simply don't understand,
• 7:46
  particularly the masses,
• 7:47
  that this technology needed to be built
• 7:50
  to enable people to live on a Bitcoin standard
• 7:53
  and use it as a payments vehicle.
• 7:55
  And that's been a lot of your focus at Spiral, particularly open source infrastructure around Lightning Network and privacy as well.
• 8:06
  And so how would you describe the progression of the technology layer of this payment stack over the last five years?
• 8:14
  Yeah, so for people that don't know, Spiral has a full-time team and most of that full-time team focuses on the Lightning Development Kit project.
• 8:22
  We also have a really robust grant program and fund over a dozen open source Bitcoin projects as well.
• 8:27
  So our scope is Bitcoin, but we do fund and support many different projects in the space.
• 8:34
  I'd say overall, we tend to fund protocol development and developer tools.
• 8:41
  Because six years ago when we got started, that's where a couple of things.
• 8:46
  One, those were very weak areas in Bitcoin.
• 8:49
  And two, they're not really naturally money-making opportunities.
• 8:53
  So it's not going to attract venture capital or angel investment or be able to generate quick cash flows for an entrepreneur to bootstrap.
• 9:01
  Yet they're really impactful, important things.
• 9:04
  So I felt like with Spiral's budget, we have these magical dollars for Bitcoin to give to developers to work on high-impact projects that don't have a business model behind them.
• 9:15
  And that's our criteria with all our grants too.
• 9:17
  If you came to me with a great idea, but also one that could make money, I'd be like, that's awesome.
• 9:23
  But we're not going to give you a grant.
• 9:24
  And it's because it's like, you can go build it yourself, generate money or get VC money.
• 9:30
  And I totally support that.
• 9:32
  So we're looking for projects that are high impact that aren't going to make money.
• 9:36
  And developer tools and protocol development are two categories that fit that.
• 9:41
  So yeah, but the full-time team has focused on Lightning Development Kit.
• 9:47
  Anyone who's followed along with Lightning at all knows it's a very complex protocol.
• 9:52
  It's a very ambitious protocol because it intends to scale Bitcoin and improve the user experience relative to on-chain in a dramatic way, but preserve as many properties of on-chain Bitcoin as possible.
• 10:06
  It does, I think, a really good job at preserving those properties.
• 10:11
  It's a little bit weaker security model,
• 10:13
  different and weaker security model to on-chain,
• 10:16
  but it doesn't,
• 10:17
  relative to all the other new protocols
• 10:18
  that have popped up,
• 10:19
  it still is the king.
• 10:21
  Lightning's the king at preserving those properties.
• 10:25
  User experience has improved dramatically,
• 10:27
  both for the developer and the user
• 10:29
  over the past six years.
• 10:31
  It still is not,
• 10:32
  it still has some rough edges,
• 10:35
  some of which are fundamental.
• 10:39
  And so we can talk about other payment protocols
• 10:41
  as well, which choose different trade-offs. Yeah. Well, important to bring up trade-offs,
• 10:45
  you mentioned not the same security assurances as on-chain, but this is what happens when you
• 10:50
  move up layers. You can get the trade-offs for UX usability, but you can always fall back to
• 10:55
  the main chain and reap the benefits of all the benefits that exist there, security,
• 11:02
  ability to self-custody, which we'll talk about with Lightning. But before we go on to
• 11:07
  the overall state of lightning and
• 11:11
  emerging second layer protocols as well. What would you say to the haters to say it's a failed
• 11:15
  experiment? It's centralized. It can't scale.
• 11:19
  And nobody uses it.
• 11:23
  Different answers to different points you made there. But I mean, overall, to call it a failure,
• 11:27
  I think is ridiculous. I mean, I can
• 11:31
  certainly steal, man, why people are saying that. If you have certain expectations or you
• 11:35
  had a certain use case in mind like if your expectation was eight billion people with a
• 11:40
  mobile wallet each with like one or more lightning channels um if that was your expectation and a
• 11:47
  great ux then um then it's failed at that and and no one ever no one ever expected it to scale to
• 11:54
  that point i mean simple math like with the because it's a function of the blockchain size
• 11:58
  so it can't scale that much but has it failed outright absolutely not because it it it definitely
• 12:08
  has won at being the glue between a bunch of different subsystems and those subsystems could
• 12:12
  be custodial like products like coinbase or cash app or all the other systems that have popped up
• 12:20
  like arc and spark and fediment and cashew and these new um layer two programs leave out liquid
• 12:27
  at the blockchain.
• 12:27
  Liquid as well.
• 12:28
  Yeah, yeah, liquid as well.
• 12:31
  You know, whether you want to call it,
• 12:32
  you know, let's call it later too,
• 12:34
  or I'll call it a subsystem.
• 12:35
  I hate the semantics.
• 12:37
  I like subsystem.
• 12:39
  I think that's a good...
• 12:39
  Yeah, subsystem.
• 12:40
  But these, you know,
• 12:41
  they all have trade-offs
• 12:42
  and I can, yeah,
• 12:44
  I'm happy to go through
• 12:44
  each and every one of them
• 12:45
  if we want to.
• 12:46
  I think they all have merit.
• 12:48
  All the ones we just mentioned
• 12:48
  have merit.
• 12:49
  I'm not a hater on any of them.
• 12:50
  In fact, Spiral supports
• 12:51
  almost all of them.
• 12:55
  But the, you know,
• 12:56
  if you live in the Ethereum world or Solana,
• 12:59
  if you're using like stable coins there,
• 13:01
  it's a total nightmare in terms of UX and interoperability.
• 13:04
  Because I might have dollars on like USDC base or something,
• 13:09
  and you have USDT on Tron and they're not compatible.
• 13:13
  So then we have to like, as the users,
• 13:14
  we have to like bridge or swap or do like crazy stuff
• 13:17
  that just to send dollars.
• 13:19
  But on Bitcoin,
• 13:20
  lightning is the protocol between all these subsystems.
• 13:23
  So I simply am sending and receiving Bitcoin.
• 13:27
  As a user, that's all you need to know.
• 13:28
  I'm sending and receiving Bitcoin.
• 13:29
  You're sending and receiving Bitcoin.
• 13:31
  You might be on a cashew wallet
• 13:33
  and I might be using custodial cash app.
• 13:37
  I don't have to know you're using a cashew wallet.
• 13:40
  You don't even have to know you're using a cashew wallet
• 13:42
  and we can send and receive Bitcoin.
• 13:43
  And what makes that tick?
• 13:46
  It the Lightning Network and also the payment protocol I mean right now Bolt 11 but in the future it be Bolt 12 So that glue is essential So it absolutely won at that It keep winning at that
• 14:01
  The only way it's displaced is if one of those subsystems ends up being subsumed.
• 14:09
  And all use cases and all payments work through one of those subsystems or some future invented
• 14:16
  one. And we'd all like to see that.
• 14:17
  Whether it's lightning,
• 14:20
  arc, zero-knowledge proof roll-ups,
• 14:21
  or something no one's ever thought of before,
• 14:24
  we'd love to have a technology
• 14:26
  that checks every box
• 14:28
  and scales to everyone and every
• 14:30
  AI and every machine and every possible use
• 14:32
  case. We'd love that. That is
• 14:34
  not on the horizon right now.
• 14:36
  Will it ever be?
• 14:38
  Yeah. So given what we know
• 14:40
  now, there's no way in the next five years that's
• 14:42
  going to happen. So in the
• 14:43
  best-case scenario, in the
• 14:46
  Coming years, something will emerge that is the silver bullet.
• 14:50
  And then maybe in 10 years, we're there.
• 14:52
  But even that's, I would assign a low probability to that, given what we know, even if that's what we all hope for.
• 14:58
  So we're going to have different subsystems.
• 15:00
  I'm quite confident in 10 years and beyond.
• 15:04
  And because they have different trade-offs.
• 15:07
  So your use case, ARK might be the right solution.
• 15:10
  In my use case, Cashew might be the right solution.
• 15:13
  And that's totally fine.
• 15:14
  But to keep that great user experience between us so that we're sending and receiving Bitcoin and keep it simple, the Lightning Network is that backbone.
• 15:23
  So to me, it's won there.
• 15:25
  It's going to keep winning there.
• 15:26
  And in 10 years, it's going to be there for that purpose.
• 15:28
  And it's actually a great technology fit for that.
• 15:32
  Now, running a mobile phone in your wallet with Lightning, that's where it's a lot more interesting discussion and debate, I think.
• 15:39
  It clearly hasn't won there.
• 15:42
  We already know it won't scale to every use case and every person.
• 15:46
  But are there still some use cases and people that will benefit
• 15:51
  and that'll be the right technology?
• 15:53
  I think absolutely, for sure.
• 15:54
  Anyone who uses a Phoenix wallet,
• 15:57
  I mean, people who criticize the Lightning UX, even for mobile,
• 16:01
  I mean, have you used Phoenix?
• 16:02
  I'm not saying it's, you know, I'm asking the audience, right?
• 16:06
  I mean, you know, have you used Phoenix?
• 16:07
  we can certainly still find things to critique about Phoenix.
• 16:12
  It's not perfect, but it's a good user experience.
• 16:15
  So you can create a good user experience with Lightning.
• 16:19
  And the LDK ecosystem,
• 16:20
  Phoenix is built on Async's own technology stack
• 16:24
  and Lightning implementation.
• 16:25
  But with the LDK ecosystem,
• 16:28
  it now has all the APIs and tools and SDKs and features
• 16:34
  for anyone to build a wallet that matches and surpasses
• 16:37
  the Phoenix user experience as well.
• 16:39
  So I don't think it's...
• 16:41
  No one should have the expectation that every wallet on a phone
• 16:44
  is going to be running lightning and have channels,
• 16:47
  but I think there will absolutely be...
• 16:49
  It has the capability and capacity to have tens of millions of users
• 16:52
  who benefit from that, and it's the right choice for them.
• 16:57
  And also merchants too.
• 16:58
  I think it actually might be a better sweet spot for merchants
• 17:02
  versus individual users.
• 17:04
  Where right now with the Square launch, that's awesome.
• 17:06
  We're going to onboard more merchants and kickstart that.
• 17:10
  Fast forward into the future when there's tens of millions of small businesses around the world accepting Bitcoin.
• 17:16
  Custodial is how most of them will start.
• 17:19
  But tens of millions.
• 17:21
  And then if 10% go through their journey and realize the value of self-custody to them and their business,
• 17:28
  or just the situation they're in, the environment they're in, the country or the banking situation,
• 17:33
  or what their commerce is.
• 17:38
  If 10% self-custody,
• 17:39
  that'd be millions of small businesses
• 17:41
  who are looking for a lightning-based solution
• 17:45
  for accepting money.
• 17:49
  Just one more steel man of the lightning network
• 17:53
  or a refutation of a FUD that's often thrown at.
• 17:56
  It's like, there's no activity.
• 17:57
  Look at the amount of Bitcoin
• 17:58
  locked in the lightning network
• 18:01
  compared to the TVL of these DeFi protocols.
• 18:05
  It's a pittance.
• 18:06
  And I think there's two things here.
• 18:09
  Number one, it's a mischaracterization of...
• 18:13
  It's a bad comparison because the way Lightning channels work,
• 18:16
  it's actually bullish if you have less
• 18:18
  because it means you're doing more with less.
• 18:19
  And then on top of that, Lightning is so distributed.
• 18:23
  I think Lisa put it best when she was last on the show.
• 18:27
  It's literally, if you look at any quote-unquote L2
• 18:30
  across any blockchain that's out there.
• 18:33
  Lightning is objectively the most distributed.
• 18:36
  And that means that it's very hard to track
• 18:38
  what's actually happening.
• 18:39
  There's a lot of unannounced channels
• 18:41
  that aren't, you know,
• 18:44
  so like the number of channels reported
• 18:45
  is a bad metric.
• 18:46
  Basically, all the popular metrics
• 18:47
  that are reported are misleading
• 18:50
  or relatively poor metrics.
• 18:53
  So it doesn't really tell the story,
• 18:54
  which is, it's also,
• 18:56
  Lightning is relatively private too,
• 18:58
  which is a good thing,
• 18:59
  but then it's hard to do data analysis and know is it healthy or not.
• 19:03
  But in terms of is it growing,
• 19:07
  I forget exactly what...
• 19:09
  Miles Suter from Block at the Vegas conference
• 19:12
  gave a really great presentation on Cash App and Block
• 19:15
  and reported a bunch of juicy numbers.
• 19:18
  I forget exactly what he revealed.
• 19:20
  But definitely, I can say that a couple of years ago,
• 19:24
  River came out with a report
• 19:25
  where they collected a lot of private data from companies
• 19:28
  and assembled it into a report.
• 19:30
  And I think it was like 1,212% growth
• 19:32
  of payment volume on Lightning Network
• 19:35
  over the past 18 months.
• 19:37
  And that was two years ago.
• 19:39
  What I can say is looking at Cash App
• 19:41
  and Lightning Node data from Block since then,
• 19:45
  the ensuing two years,
• 19:46
  that growth rate of on the order of 15% monthly
• 19:50
  has sustained.
• 19:51
  So the data that we're seeing at Block
• 19:54
  is very, very strong for payment growth.
• 19:57
  So it's, and you'll note that if you look at the capacity, the number of Bitcoin locked into Lightning does not reflect that. It's sort of been constant, roughly, what, 4,000 or 5,000 Bitcoin or something in that entire three or four year period.
• 20:13
  So I think that indicates how misleading that metric is.
• 20:19
  And it's what you said.
• 20:20
  I think the answer you might,
• 20:21
  and then someone might ask,
• 20:22
  well, if it's growing so much, why isn't that growing?
• 20:25
  I think it's what you said.
• 20:26
  Lightning operators are learning how to be more efficient
• 20:28
  and operate with more efficiency.
• 20:30
  So like River kept closing channels and closing channels.
• 20:33
  And then people are like,
• 20:34
  oh, are they getting out of this business or whatever?
• 20:36
  It's like, they're just making their operations more efficient.
• 20:38
  Now, of course, once you reach sort of optimal efficiency,
• 20:42
  then if you still keep continuing to grow payment volume,
• 20:47
  you're going to see that number go up.
• 20:48
  And I think it did recently go up.
• 20:50
  And I think we are going to see it.
• 20:53
  It'll be a grind, I think, with square payments
• 20:56
  and people paying in Bitcoin.
• 20:57
  It's not going to like 10x from now to Christmas or something.
• 21:01
  But we're going to see a steady growth month to month to month
• 21:05
  with that as well.
• 21:06
  And we will see that capacity grow.
• 21:08
  Well, it's not happening right now.
• 21:10
  But another thing to take into consideration is
• 21:12
  when the price of Bitcoin goes up.
• 21:14
  Prices, denominating stats goes down.
• 21:16
  So you need less Bitcoin to move through these channels
• 21:19
  to actually purchase goods and services.
• 21:21
  That's another good point.
• 21:23
  Yeah.
• 21:23
  Yeah.
• 21:24
  So, yes, I think the easy, simple metrics that are reported
• 21:30
  don't really tell the story.
• 21:33
  Or you certainly have to...
• 21:34
  I mean, I would agree that like 10 years from now,
• 21:37
  the capacity of Bitcoin and Lightning channels
• 21:38
  should go up a lot compared to...
• 21:40
  So that metric, I think, is important to look at.
• 21:43
  If you zoom out in a four-year window, is it going up?
• 21:47
  And I think that is important.
• 21:48
  But if you zoom in more right now, you have to have access to these private data sources and stuff.
• 21:55
  But I think another thing, something that I thought of recently, a lot of my friends who aren't into Bitcoin, but they're techies.
• 22:05
  They're Silicon Valley people, not into Bitcoin.
• 22:06
  And they think Bitcoin, at least as everyday currency, it's failed, but also that it's over.
• 22:14
  It had its moment and it should have caught on.
• 22:18
  Their mentality is like back in 2013 or 2014, the first wave of excitement of Bitcoin payments, at least in Silicon Valley, that it didn't take off then.
• 22:27
  And if it was as great of technology or promising of money as everyone was talking about then, that it would have taken off then.
• 22:37
  And so they just write it off.
• 22:39
  Well, there's a little more to it, right?
• 22:41
  And so I think with the Square launch, and now there's going to be stickers and windows that show the Bitcoin symbol next to Visa, MasterCard, and Apple Pay.
• 22:52
  And even if no one's actually making Bitcoin payments, normal people will see that sticker in the window and they will think, oh, it has arrived.
• 23:02
  People are paying in Bitcoin.
• 23:04
  It is everyday money.
• 23:05
  So I think it'll be this huge psychological shift with the narrative, which we haven't really talked about the narrative.
• 23:11
  But the narrative that dominates Bitcoin is like ETFs and number go up and store of value.
• 23:16
  That narrative is hurting today.
• 23:17
  Yeah.
• 23:18
  Well, right.
• 23:19
  But I mean, again, for my own experience in Bitcoin the last eight years, the store of value, that was to me sort of obvious from the beginning and just inevitable.
• 23:35
  Preordained.
• 23:36
  Didn't really need much work.
• 23:37
  I mean it still needed to work but in terms of like software development and design and
• 23:44
  the kind of things where I'd want to contribute to it's like yeah it's already it's already done
• 23:50
  but but everyday currency a lot of work needs to be done including you know improving the tools and
• 23:55
  creating better products and new use cases blah blah blah so I think I think it's a great use
• 24:01
  case, but it's really crowded out the everyday money narrative. And so last week to me was awesome,
• 24:11
  not just for Block the company, but for everyone who's into Bitcoin as everyday money. I think
• 24:18
  that's why it was easy for Bitcoiners to cheer Block on because of the alignment around that.
• 24:22
  And hopefully it's not just a one week wonder in terms of narrative, but it's the start of
• 24:28
  recreating this narrative
• 24:30
  and joining alongside
• 24:32
  the digital gold narrative.
• 24:34
  I don't think it needs to replace that.
• 24:36
  The digital gold narrative shouldn't go away.
• 24:38
  We should be talking about everyday money
• 24:40
  way more.
• 24:41
  Since we're in San Francisco,
• 24:44
  I'll say it because this is
• 24:45
  the nomenclature. Let's double click
• 24:48
  on your Silicon Valley friend
• 24:50
  saying that it failed
• 24:51
  as payments technology.
• 24:53
  That blows my mind.
• 24:55
  To me, it highlights some
• 24:57
  sort of time preference uh mistakes that are being made in this part of the country and other
• 25:05
  parts as well because how could you honestly expect something to be launched in 2009 and to
• 25:11
  take over the world and be an everyday payment um in five years if this was happening in 2014 or
• 25:16
  they expected that would happen like how do they not recognize that rome wasn't built in the day
• 25:21
  and there's a process to this i think it's uh i mean i think there is a good explanation i mean it's
• 25:26
  it's wrong thinking but it's a there's a good explanation if you think about the success stories
• 25:32
  through in silicon valley over the past many decades and the patterns that people build up
• 25:39
  in their head here we're working on it being part of it or seeing these success stories things do
• 25:44
  happen fast um whether it be google or facebook or instagram or youtube like you go from like
• 25:52
  zero to high growth in users very quickly,
• 25:57
  revenue quickly,
• 25:59
  and acquisitions quickly or IPOs.
• 26:01
  It does move fast.
• 26:03
  So if things don't click in a few years
• 26:06
  or at least within the first four years,
• 26:09
  usually you shut the thing down
• 26:12
  and you move on to the next idea.
• 26:14
  That is the common pattern.
• 26:16
  And so that's the pattern matching
• 26:17
  all the smart, successful people here have.
• 26:20
  So when you have something like Bitcoin,
• 26:21
  Sure, it was introduced in 2008, 2009.
• 26:23
  And so by 2014, oh, great, this emerging technology, let's VC fund all these startups, make a lot of money.
• 26:31
  And then no one was making payments then.
• 26:33
  It wasn't used.
• 26:34
  None of these companies, I mean, except for like Coinbase, which had to go way beyond Bitcoin.
• 26:39
  They had to create a gambling casino to make a lot of money.
• 26:43
  There was just failure after failure from a venture capital and startup perspective.
• 26:48
  So I think that's why they wrote it off.
• 26:50
  Now we know, like the Bitcoin community knows that that's an absurd expectation.
• 26:56
  I think another dynamic was people thought that like, they compared it to like PayPal or Visa as a justice payments technology.
• 27:05
  And they didn't have a deep appreciation for like, oh no, this is way bigger idea.
• 27:10
  This is not disrupting Visa.
• 27:11
  This is disrupting the US dollar.
• 27:14
  And if you look at history, there's not that many things that have been money.
• 27:19
  We have a piece of artwork here at Presidia Bitcoin from Crypto Graffiti with a history of money.
• 27:27
  And there's eight different symbols of representation going back to seashells and rocks and stuff like that.
• 27:34
  And obviously gold.
• 27:37
  Depending on how you define things, like a credit card or something.
• 27:40
  But even that actually is a bit of a mistake to think of that as money right As dollars the money behind it But there not that many things in history that have been money And now Bitcoiners are saying this is the new money This is going to be the new money And then to your point that doesn develop overnight especially if it not fiat if it not declared if it not forced upon all of us from up high It has to be a grassroots effort
• 28:05
  it also happens to be like super complex and counterintuitive from many different angles.
• 28:12
  So it's very common, whether you're a Silicon Valley person or Wall Street or just
• 28:16
  whatever your lot in life is, it takes a leap of faith and then it requires a journey of learning
• 28:27
  to really see like, how does this work? So I think Silicon Valley myths that this is not just
• 28:33
  displacing and competing with the payment layer, but actually the money layer.
• 28:37
  And once you appreciate that, then you realize, oh, this is obviously not going to happen in
• 28:41
  five years.
• 28:41
  This is like a 20 year or more process.
• 28:45
  And then all the other disruption happens on top of that sort of in parallel.
• 28:50
  You think people are coming around to recognize, oh, we mischaracterized this a decade ago.
• 28:57
  Sadly, I don't think so.
• 28:58
  hopefully we'll talk a little bit about Presidio Bitcoin too
• 29:01
  on this episode
• 29:03
  but one of the missions for Presidio Bitcoin
• 29:05
  is to help bridge that gap
• 29:07
  we're going to take advantage of the fact
• 29:08
  that we're here in Silicon Valley
• 29:10
  physically
• 29:11
  and we've got a bunch of people here
• 29:14
  who have ties to Silicon Valley
• 29:16
  and so be it through
• 29:19
  events we host here
• 29:21
  myself and Max Webster and David King
• 29:25
  do the Presidio Bitcoin Jam podcast
• 29:28
  Great show.
• 29:28
  Yeah, thank you.
• 29:29
  We're podcasters now.
• 29:31
  Watch out.
• 29:32
  Everybody becomes a podcaster.
• 29:34
  Yeah, big proponent.
• 29:35
  But our intended audience for that show is Silicon Valley people.
• 29:42
  It's people who would not identify as a Bitcoiner.
• 29:45
  Now, of course, people who are into Bitcoin watch the show and I think like it.
• 29:49
  And that's great.
• 29:49
  But what we have in mind, we want to bridge that gap to Silicon Valley.
• 29:52
  So we, well, I mean, we're just ourselves in that show, but like, I think we...
• 30:00
  You guys can talk the talk.
• 30:01
  Well, we come from, I mean, I worked at Google for a decade as a product director.
• 30:06
  So I come from Silicon Valley.
• 30:07
  David King does as well.
• 30:09
  We know that culture.
• 30:10
  We know that we come from that world.
• 30:12
  We're part of that world.
• 30:12
  We also happen to be hardcore Bitcoiners.
• 30:14
  So it's kind of rare to be in both camps.
• 30:17
  So we can speak both languages.
• 30:19
  So hopefully we can bridge that.
• 30:21
  Thank you for Google Maps, by the way.
• 30:22
  You're welcome.
• 30:24
  I'm glad you said that instead of Google Glass.
• 30:26
  I worked on both.
• 30:28
  Google Glass is an unquestionable success.
• 30:33
  But yeah, Glass.
• 30:35
  Hey, Kyle Simani liked it.
• 30:37
  Yeah, I know.
• 30:39
  Let's not go there.
• 30:41
  Everything's bad in that direction.
• 30:42
  Well, I mean, we were just focusing on Silicon Valley,
• 30:45
  broader Silicon Valley's perspective on Bitcoin
• 30:48
  and how it may be the perception
• 30:51
  may be sort of misguided
• 30:53
  because they don't understand
• 30:54
  what's actually happening.
• 30:56
  The shift to the Bitcoiner figure.
• 30:57
  That's a Bitcoiner
• 30:59
  really dedicated to building out
• 31:01
  Bitcoin as everyday money.
• 31:03
  How would you grade Bitcoin's success
• 31:06
  up to this point?
• 31:07
  Is it...
• 31:08
  As everyday money?
• 31:09
  Or just like where it is on the trajectory.
• 31:11
  Understanding that Rome wasn't building a day.
• 31:13
  This is going to be a multi-decade process.
• 31:16
  How would you...
• 31:17
  I don't want to say grade.
• 31:18
  It's like...
• 31:19
  Yeah.
• 31:19
  How would you describe Bitcoin's progression up to this point?
• 31:23
  Is it over-exceeding where it should be underperforming?
• 31:29
  Given the way you framed it, appreciating how long it takes to establish it as money and stuff,
• 31:33
  I'd say I'd give it a good grade overall.
• 31:35
  Like high level, very good, because we can easily nitpick and say like the everyday currency narrative has been sort of squeezed out.
• 31:46
  And obviously it's not like heavily used for that yet.
• 31:49
  So we can say like, oh, it's kind of, it's so far failed at that.
• 31:52
  But again, appreciating how long realistically it's going to take to do that, I'd give it a good grade.
• 32:00
  A good grade to this point, but like a lot of work ahead of us.
• 32:04
  But I remain super optimistic about that future.
• 32:07
  But it's to attain like a sustainable good grade, like we've won, we've succeeded, that's going to take another 10 plus years.
• 32:16
  but that doesn't mean
• 32:17
  that doesn't mean meaningful progress
• 32:21
  is not going to happen every year right
• 32:22
  I mean so there should be a sense of urgency
• 32:24
  among all of us
• 32:25
  there needs to be intentionality
• 32:27
  and not just assume
• 32:31
  like oh you're going to do it
• 32:33
  like no like each person
• 32:35
  who's into Bitcoin
• 32:36
  find your own way to contribute
• 32:39
  and help will this into action
• 32:40
  I'm a strong believer in like
• 32:42
  the individual can make a real big difference
• 32:45
  and you don't have to be like Elon Musk or something.
• 32:47
  Like any individual can contribute value.
• 32:52
  I mean, like with the launch last week,
• 32:54
  in Spiral's small part in it,
• 32:56
  we created like a Bitcoin or marketing kit
• 32:58
  to help people go to their favorite merchant
• 33:00
  and help them persuade them to turn on Bitcoin payments.
• 33:05
  And it's a laser sharp focused, like save on fees, right?
• 33:08
  Get rid of the 3% fees.
• 33:10
  And so we have like a one-pager leave behind
• 33:12
  and plushies we've distributed to like six different.
• 33:15
  physical Bitcoin, physical hubs around the country. And so that's our, that's our small part.
• 33:21
  But then like as an individual Bitcoiner, you don't have to be a Bitcoin core developer or like
• 33:26
  an engineer to just go to your local merchant and talk to them about Bitcoin and talk to them about
• 33:32
  saving. I mean, my recommendation start with like, do you want to save fees? Like, don't the fees
• 33:38
  suck? Don't, you know, aren't they like a significant part of your profit margin? Wouldn't
• 33:42
  you like to get rid of them? And then they're going to say yes. And that's the hook. And then
• 33:47
  you can say, well, here's how you can do it. And that's a way for anyone to contribute.
• 33:54
  And I don't, another thing I like about marketing kit, and I don't know if you guys actually made
• 33:58
  this or a Square merchant just put it on their door with a Bitcoin preferred sticker. I think
• 34:03
  that the preference signal from the merchant is very strong too. Yep. Yeah. Yeah. I'm glad you
• 34:09
  notice that i think that's great copy and the you know it's a multi-phased approach to get people to
• 34:17
  spend bitcoin i think um at least at like a retail outlet in america um i i used even two months ago
• 34:24
  i was actually bearish on this becoming popular compared to other wow other types of payment use
• 34:31
  cases because like an american buying coffee like it like i i just i use apple pay and i get two
• 34:38
  percent cash back it's like that and it's a super good user experience um so like why spend bitcoin
• 34:44
  right that but i've turned from uh bearish to bullish just in the past two months and um largely
• 34:53
  thinking through it through the lens of the merchant like the small business those fee card
• 34:58
  fees are very material to their business and most small businesses are low margin and uh it's like a
• 35:06
  it's a passion pursuit for them and they just want to stay in business um and so being able to
• 35:14
  eliminate or significantly reduce that fee is an enormous value prop so but that's just step one
• 35:22
  like and and of course with the square product introduction that makes it so much easier for
• 35:26
  them because if they're using a payment solution whether it's toast or clover or square or whatever
• 35:31
  and then someone comes in with a like a bitcoin wallet as the pos and there's several of them
• 35:36
  out there and they're good they're good user experiences on the surface but it doesn't
• 35:40
  integrate with their with the small businesses like accounting system and back-end system and
• 35:45
  you have to be a pretty hardcore bitcoiner i think it's a merchant to adopt that but now with square
• 35:51
  it it's integrated into the system you're already using for your whole business
• 35:56
  so that that's a much smaller lift but that's just step one getting them to turn it on because then
• 36:02
  they'll learn um early on they'll attract some rabid bitcoiners to come in and spend some bitcoin
• 36:09
  and attract new customers that's a marketing win they'll like that but it's not sustainable and it
• 36:14
  doesn't grow to a larger part of their consumer audience or you know customer base so then it's
• 36:20
  like well i love the pitch of saving fees but no one's coming in and spending bitcoin anymore
• 36:25
  or only like you know my three percent of my customer base who are crazy bitcoiners do
• 36:30
  and it's saturated.
• 36:32
  So how do you get everyone else spending Bitcoin?
• 36:35
  And that's where like Pink Owl Coffee
• 36:37
  helped change my mind
• 36:38
  because they're like,
• 36:39
  we're going to give 21% discount.
• 36:41
  And I'm like, wow,
• 36:42
  that's something that's going to wake up
• 36:43
  a normal person, right?
• 36:45
  21% discount at your favorite merchant,
• 36:49
  then that's going to get a lot of people
• 36:51
  over the hump to install a Bitcoin wallet,
• 36:53
  a spending wallet on the phone
• 36:54
  and get some and load it up with some Bitcoin.
• 36:56
  $5 coffee becomes a $4 coffee.
• 36:58
  Yeah.
• 36:58
  Less than $4.
• 36:59
  Well, that adds up when you do that every day.
• 37:02
  And I do think early adopter merchants who are hardcore Bitcoiners or see the value in changing consumer behavior to eliminate or to spend Bitcoin in order to eliminate the fees.
• 37:17
  Early adopter merchants will come out with crazy promotions like that.
• 37:21
  And it's kind of a one-time thing because if you convert a consumer to install a Bitcoin spending wallet, get some Bitcoin on it, then that cost to the consumer, they don't have to do it over again.
• 37:31
  It's only a one-time thing to get the wallet set up and just sort of change your behavior.
• 37:37
  So all other merchants in your local community will benefit from that one-time onboarding.
• 37:43
  So it's not like every merchant has to offer 21% and has to do it indefinitely in order for Bitcoin payments to work.
• 37:49
  It's like a bootstrapping thing.
• 37:51
  So I think that'll be effective.
• 37:55
  And then I think...
• 37:56
  So another part of the Spiral Initiative is not just a Bitcoin marketing kit, but we're
• 38:01
  going to come out with a merchant marketing kit as well.
• 38:04
  And we also established a Facebook community.
• 38:08
  I haven't used Facebook for over 10 years.
• 38:10
  I've been off since 2016.
• 38:11
  I literally have a minor complaint to my team that I have to log into Facebook again.
• 38:16
  But it's a smart move.
• 38:17
  some people
• 38:20
  some people
• 38:21
  are like
• 38:21
  DarthCoin
• 38:22
  on Stacker News
• 38:22
  is critical
• 38:23
  of the choice
• 38:23
  of Facebook news
• 38:24
  because who uses Facebook
• 38:25
  but guess who uses Facebook
• 38:27
  merchants
• 38:28
  small businesses
• 38:28
  around the globe
• 38:30
  are not on Twitter
• 38:30
  they're on Instagram
• 38:32
  and Facebook
• 38:32
  so
• 38:33
  my mom runs a coffee shop
• 38:35
  in her hometown
• 38:36
  I can
• 38:36
  I can
• 38:37
  confirm
• 38:38
  so we've created
• 38:39
  a Facebook community
• 38:40
  that is for merchants
• 38:41
  for merchants
• 38:42
  by merchants
• 38:43
  for merchants
• 38:43
  so we've seeded it
• 38:44
  with some merchants
• 38:45
  who have been accepting
• 38:46
  Bitcoin
• 38:46
  and no Bitcoin and it can answer one-on-one questions.
• 38:50
  And then other merchants who are new to it
• 38:51
  can ask questions or look stuff up there.
• 38:53
  So we did that.
• 38:54
  And then the merchant marketing kit
• 38:56
  will include ideas like offering financial incentives
• 39:01
  or putting a Bitcoin plushie by your cash register.
• 39:05
  I actually am pretty bullish on that.
• 39:07
  The plushie is sitting in front of you right now.
• 39:10
  I get one of these from my boys.
• 39:11
  You can grab one.
• 39:13
  Yeah, you can grab one after the show for sure.
• 39:15
  You can grab two.
• 39:16
  And then you can also give your favorite merchant one of those.
• 39:19
  And we've seen evidence of merchants actually not just taking it home and giving it to their kid, but actually putting it by the cash register.
• 39:26
  Because it's a great way to communicate, hey, we accept Bitcoin.
• 39:30
  You should pay in Bitcoin.
• 39:31
  And it does so in a silly, goofy way.
• 39:34
  It's non-confrontational, right?
• 39:36
  It's not like a...
• 39:37
  He's grimacing.
• 39:39
  Well, imagine...
• 39:41
  Hey, give me Bitcoin.
• 39:42
  Well, look at most of the, well, our one page leave behind tells the story of why he's grumpy because he doesn't like 3% fees.
• 39:55
  So he's remissing at the people paying our credit cards.
• 39:58
  Yes.
• 39:59
  But I think it's a really nice conversation starter at a local business where you have that human to human connection to just start talking about Bitcoin.
• 40:09
  So I do think there's a plausible story to convert people to consumers to have Bitcoin on their mobile wallet and start spending.
• 40:19
  Also, another thing that greases the wheel is like Cash App's now dollars and lightning.
• 40:25
  So you can have the 58 million, I know Miles talked to you about this on another episode,
• 40:30
  but 58 million active users in Cash App have dollar balances and all of them can now pay via Bitcoin.
• 40:38
  Via the Lightning and Bitcoin rails, they cut out the card fees.
• 40:44
  But the Cash App customer doesn't have to have ever owned Bitcoin or be into Bitcoin at all.
• 40:51
  And is that the full experience we're hoping for long term?
• 40:54
  No, but it's a baby step.
• 40:55
  It allows the merchant to save fees.
• 40:58
  It allows the merchant to save in Bitcoin if they want to.
• 41:01
  And then eventually, some of those Cash App customers will keep
• 41:08
  converting over to using bitcoin yeah yeah i'm very bullish as somebody who's been spending
• 41:13
  bitcoin using the lightning network for years now and certainly and as i talked to this with miles
• 41:18
  and talked with many other people like merchant adopted i think there's an apprehension to really
• 41:23
  lean into bitcoin payments and merchant adoption specifically due to the sort of failed attempts
• 41:31
  at it previously most famously back in like 2014 to 2016 era and then i read that i think that was was a big push but like Roger Burr and that early Bitcoiner crew haven really seen it since until now a decade later And I think it makes sense And I thought
• 41:46
  Miles' point was really good, which is like, hey, today's the best day. Tomorrow will be the best
• 41:50
  day. Let's just get it out there and it's time. Yep. Well, like I mentioned, I think it'll be,
• 41:54
  it'll be a grind. It'll be a lot of work, but I do think we'll see steady growth. And that's just
• 42:00
  like square in america but then like the world's big place so i think square will also light a fire
• 42:08
  under like other payment providers too i mean i would hope that toast and clover in the u.s and
• 42:14
  other um established payment providers around the world will be seeking out a bitcoin solution too
• 42:20
  um but that's just one type of bitcoin payment solution i think or like use case or category
• 42:28
  And one I mentioned, I sort of went from bearish to bullish in the last few months, but others that I'm very excited about. One is just like new applications and new ways to integrate Bitcoin and like Nostra's apps is the canonical example or Stacker News apps, but like micropayments within these social media experiences or community forums.
• 42:47
  People showering us with sats.
• 42:49
  They listen to this podcast.
• 42:51
  Podcasting 2.0.
• 42:52
  Yeah, that as well.
• 42:53
  So we have these real world examples that we see.
• 42:57
  They're not scaled yet, but we do see retention and usage.
• 43:01
  And anyone who's done it, I think,
• 43:03
  I love zapping people's posts.
• 43:06
  It makes me feel good.
• 43:07
  I mean, getting back to also another reason
• 43:08
  about spending my Bitcoin or whatever.
• 43:11
  It's like, okay, well, I've got my savings account,
• 43:13
  my spending account.
• 43:15
  And the spending account, I mean, I'm zapping sats,
• 43:16
  but what is it?
• 43:17
  a few dollars a month or I don't know what it is, but it's not that much money.
• 43:21
  But it makes me feel good to do it. And then obviously on the receiving end,
• 43:26
  my zaps alone don't move the needle, but
• 43:29
  hundreds of people doing it, then it's kind of a nice amount.
• 43:33
  I mean, it's at least like
• 43:34
  having a dinner paid for you because of your work or whatever. It's like a nice gesture.
• 43:41
  Well, I was talking about this last night with somebody because they were
• 43:45
  asking about podcasting 2.0
• 43:47
  like ah is it actually working? I mean we
• 43:49
  I think TFTC was literally
• 43:51
  like one of the
• 43:53
  first five podcasts in the world
• 43:55
  to ever put a lightning address in our RSS feed
• 43:57
  to begin receiving
• 43:59
  sats over the lightning network
• 44:00
  that was 2018
• 44:03
  2019? 2019 because
• 44:05
  lightning launched
• 44:05
  it was definitely before I left New York so it was like 2019
• 44:09
  so it's been six
• 44:11
  years and
• 44:13
  I think a lot of people think it's a dead model
• 44:15
  But you can, Fountain makes it very easy to look at the data.
• 44:19
  Like the numbers have been going up.
• 44:20
  I mean, it's not enough to run the business,
• 44:24
  but it's consistently up and to the right in terms of revenue
• 44:27
  from people streaming and boosting and commenting on the show
• 44:30
  via Podcasting 2.0 and Noster.
• 44:34
  And then we'll live stream Rabbit Hole Recap every Thursday or Friday to Noster.
• 44:39
  And we've sort of gamified the zapping there.
• 44:42
  if you zap us more than 21,000 sats, we'll read your comment and have a brief discussion around it.
• 44:48
  And that, to your point of spending Bitcoin, I have my fountain app, my fountain wallet, my Primal wallet.
• 44:57
  And those are my main spending wallets.
• 45:01
  And it's all Bitcoin that's been sent to me from the content I've been using.
• 45:05
  That's great.
• 45:06
  That's great.
• 45:07
  Yeah.
• 45:07
  So all the Bitcoin payments around micro-maintenance is still niche, but I'm optimistic about that.
• 45:17
  Anytime you can see usage and repeated behavior, even if it's on a small scale, if you see that repeated behavior in retention, I think that's a very good sign.
• 45:27
  And it's just a matter of scaling it now.
• 45:28
  I think another really positive trend is vibe coding and just the development tools that opens up access to new product development to literally 100 times more people.
• 45:39
  Or like in order to magnitude more people.
• 45:42
  You no longer have to be a coder to take an idea in your head and manifest that into an application or a mobile app and allow people to use it.
• 45:52
  And vibe coding is incredible for that, where English is a language to program.
• 45:58
  Anyone can create an application now, one that is good enough to realize your vision,
• 46:06
  or at least mostly, and get it out to like 100 people or 1000 people to use.
• 46:13
  And that's really all you need to like, for most things to prove out,
• 46:19
  is this actually useful to people?
• 46:21
  is it something people come back and do a second time a third time make it a recurring habit
• 46:27
  and if they do it's hard to do that by the way so it's like law of large numbers so if we have
• 46:34
  but if all of a sudden we have a thousand times more attempts at creating the right recipe
• 46:40
  we're going to see way more at the end of that funnel we're going to see a lot more compelling
• 46:46
  applications ones that do have a thousand users who are using it constantly and love it and then
• 46:51
  maybe vibe coding isn't
• 46:54
  then you actually need real human
• 46:55
  engineers still to create something that's secure
• 46:57
  scales and checks all the boxes
• 46:59
  from an engineering stability standpoint
• 47:01
  but you don't have to do that until
• 47:03
  that point in time and you've already
• 47:05
  and so 999 out of
• 47:07
  a thousand ideas fail by that point
• 47:09
  so don't invest the
• 47:11
  hardcore expensive engineering resources
• 47:13
  until you reach that point I think
• 47:15
  we're going to see that you know that
• 47:17
  that's happening right now and that's going
• 47:19
  to lead to thousands
• 47:21
  of applications being developed
• 47:23
  that people wouldn't call Bitcoin
• 47:25
  applications, but they just integrate Bitcoin.
• 47:28
  Because the second trend is that the
• 47:29
  tools around Bitcoin are much easier. You can now take
• 47:31
  Lexi or Spark or
• 47:33
  Liquid or all these, and
• 47:35
  literally one-shot VibeCode
• 47:37
  and application has Bitcoin payments
• 47:39
  integrated into it. That's amazing.
• 47:41
  Integrate this API or something like that, or
• 47:43
  use this development kit too. Yep.
• 47:45
  Matt Belez did a one-shot
• 47:47
  into Replit and was able to create
• 47:49
  a Bitcoin tipping app,
• 47:51
  you know, circa 2014 or whatever.
• 47:52
  But in 2014,
• 47:53
  the people creating
• 47:54
  a Bitcoin tipping app
• 47:55
  was like two developers for a year.
• 47:57
  They spent that much time
• 47:58
  and like, you know,
• 48:00
  highly skilled engineers
• 48:01
  to build a Bitcoin tipping app.
• 48:03
  Now you have literally
• 48:03
  a one sentence
• 48:05
  or paragraph prompt
• 48:07
  that you can speak to the computer
• 48:09
  and then nine minutes later
• 48:11
  have the same Bitcoin tipping application
• 48:13
  that existed 10 years ago
• 48:14
  from two person years
• 48:16
  of engineering effort.
• 48:17
  That's amazing, right?
• 48:18
  So I think we're going to see thousands of quality applications created over the coming years that integrate Bitcoin in ways that we couldn't have thought of or imagined, or I'm certainly not thinking of them right now.
• 48:35
  And that is going to yield some home runs and then payment growth.
• 48:40
  So I think I'm very, very bullish on that.
• 48:43
  and then AI
• 48:47
  I'm still not super articulate on exactly
• 48:51
  what this looks like but obviously AI is explosive right now
• 48:54
  AI agents you can imagine a world with
• 48:58
  payments between agents and you can imagine
• 49:02
  AI agents don't have an identity they're not going to be able to KYC or
• 49:06
  onboard so like permissionless systems just to me make intuitive sense
• 49:10
  for this world. But I still don't know exactly what it looks like. And it's important to compare
• 49:17
  like, okay, where do stable coins fail and where can Bitcoin succeed in that use case?
• 49:24
  So that's still like a learning process for me. And I think for most of us trying to figure that
• 49:28
  out, but I'm generally bullish in that area as well. And one thing I'd sum up for that category,
• 49:34
  for the micropayments and sort of new application categories,
• 49:39
  what's really important for those is no KYC.
• 49:43
  And so let's talk about that a little bit.
• 49:45
  Because I think most Bitcoiners, when they think of no KYC,
• 49:50
  the reason they think it's important is like,
• 49:53
  government shouldn't have my data or privacy focused.
• 49:56
  And that's completely legitimate and a very, very good point.
• 50:00
  But I think that's sort of, it's my impression, a lot of Bitcoiners,
• 50:03
  that's the start and end of that argument.
• 50:06
  And I think there's other arguments too.
• 50:08
  It improves the user experience.
• 50:10
  Like if I have to fill out a bunch of forms,
• 50:12
  if I have to upload selfies holding my passport
• 50:15
  and like all that.
• 50:16
  It's so ridiculous.
• 50:17
  It's a horror.
• 50:18
  I just stop.
• 50:18
  Like something has to be really important to me,
• 50:22
  like buying Bitcoin or whatever.
• 50:26
  I mean, you know, it's a really high bar
• 50:29
  to go through that effort,
• 50:30
  totally independent of the privacy.
• 50:33
  Even if you don't even care about it or you're ignorant about it, you don't even think about the ramifications of that.
• 50:37
  Just the friction of onboarding is horrible with KYC.
• 50:42
  So getting back to the zapping stuff, let's say Nostra takes off in a big way and actually starts scaling to other people.
• 50:50
  That's going to be the first introduction point to most people for Bitcoin, at least Bitcoin payments.
• 50:56
  They'll have never done a Bitcoin payment before.
• 50:59
  They probably don't even have any Bitcoin.
• 51:02
  So that's going to be the first introduction to Bitcoin. And let's say I'm that person. I'm new to this, but I love Primal or Domus or whatever new application gets built in us. I love that and I'm really interacting with that. And then all of a sudden, people start zapping my posts and I get this Bitcoin.
• 51:20
  if I have to like upload my passport and go through all this onboarding friction I'm unlikely
• 51:28
  to do that because I'm not I don't have a strong enough reason yet in my head to do that so I'll
• 51:33
  just opt out but if it's like frictionless and it just accumulates because there's like no
• 51:38
  onboarding cost really then sure and then once it then once that that stash grows big enough then
• 51:45
  it's all of a sudden it's like oh and you mean I can spend it here or I can use it here or I can
• 51:49
  zap people back. So I think
• 51:52
  no KYC is
• 51:53
  very important for that application.
• 51:56
  And then for the AI agents, it's super
• 51:58
  important. Again, because if they don't
• 52:00
  have identity, it's just
• 52:01
  fundamentally, they need
• 52:04
  no KYC. So to me,
• 52:06
  there are many important reasons for
• 52:08
  no KYC
• 52:09
  and not just
• 52:12
  sort of down-of-the-state privacy reasons.
• 52:16
  And that's why it really
• 52:17
  just scales to
• 52:19
  everyone. People don't walk around thinking, oh, I need no KYC in my life. But it impacts everyone.
• 52:25
  It's important. And then that leads to why are trust-minimized systems very important?
• 52:32
  Which just gets all the way back to why do we work on Lightning and LDK at Spiral?
• 52:38
  Because it's a very trust-minimized system. If you're running a Lightning node, I'm running a
• 52:45
  Lightning node, I don't have to trust you. You can't steal my money. I mean, there's a few areas,
• 52:53
  like if I'm offline and then maybe then you could try to steal, but overall, it's a very trust
• 52:58
  minimized system. And so that's why I think it's worth continuing to invest in Lightning or any
• 53:05
  technology that minimizes trust. Some of the other newer payment protocols, I really like them as a
• 53:13
  recipe. They make smart trade-offs and I think they're valuable for the ecosystem, but they are
• 53:18
  more trusted. And some of them are going with the no KYC approach now. And I think that's great.
• 53:26
  I'm glad they're doing that. How long will it last? I don't know. When will the state crack
• 53:32
  down on some of these out there ecosystems? And I think it's a matter of time. I mean,
• 53:36
  I think it's like three to five years away. It won't really be an issue until they become really
• 53:41
  popular or there's a lot of
• 53:43
  illegal activity through it,
• 53:45
  that's when it gets the attention of regulators. But
• 53:47
  ultimately, I think it will
• 53:49
  fail at that. It will
• 53:51
  then require KYC. And then all of a
• 53:53
  sudden, all these cool, interesting,
• 53:55
  valuable application categories we
• 53:57
  just mentioned won't be possible with them anymore.
• 53:59
  So it's very important from a developer
• 54:01
  and protocol perspective to
• 54:03
  keep investing
• 54:05
  in trust-minimized systems, even if
• 54:07
  people are saying things are
• 54:09
  dead, failed, or whatever.
• 54:11
  We got to keep working at it.
• 54:13
  Yeah.
• 54:14
  And I mean, I had the conversation recorded with Kyle Olney in here yesterday.
• 54:18
  It was really on the tip of the spear in terms of Save Our Wallets campaign, ensuring that
• 54:23
  we get the ability to, developers like yourself and everybody working at Spiral and other open
• 54:30
  source projects across space have the ability to write open source code and not be held
• 54:34
  liable for what their end users do.
• 54:37
  And I completely agree, based off the trade-off, some of these other secondary solutions are making, or sub-network solutions are making.
• 54:47
  Subsystem.
• 54:48
  Subsystem, excuse me.
• 54:50
  Are making the state will eventually be like, hey, you got a KYC.
• 54:55
  And we've seen it with FinCEN Treasury coming out with guidelines like, hey, they want to sort of connect PII with Bitcoin addresses and try to make it so wallets.
• 55:07
  are doing the job of the state collecting this information.
• 55:10
  And it's just like, it's so demoralizing, number one.
• 55:14
  But two, it's infuriating because it's like, are we free?
• 55:18
  Are we free?
• 55:19
  Do we live and live in a free country?
• 55:20
  But broader point being once if and when manifesting positivity here,
• 55:29
  we get the blockchain regulatory
• 55:32
  Clarity Act in the market structure
• 55:34
  bill and it's the way we need it to be
• 55:36
  which protects individual
• 55:38
  developers and individual users and their
• 55:40
  ability to self-custody.
• 55:42
  Next battle has to be repeal the Bank Secrecy
• 55:44
  Act. It is insane that we have to have
• 55:46
  this conversation and go through these mental
• 55:48
  cycles, go through all the costs, go through
• 55:50
  the UX hurdles just because
• 55:52
  they want to force this ineffective
• 55:54
  sort of
• 55:56
  data aggregation system on us.
• 55:59
  Since you brought that up, I'll
• 56:00
  I've tweeted this before, but like Spiral will offer a grant to someone who wants like,
• 56:07
  and this would probably be like a, like a lawyer or policy type person. So it's, it's not,
• 56:13
  we have not given a grant to a lawyer or policy person before, but we would totally would with
• 56:19
  the project being something like, imagine the world without the BSA. So imagine a world where
• 56:24
  it is repealed, but also imagine like the real world where there are like legitimate
• 56:30
  policy issues that need to be addressed somehow, like, you know, anti-terrorism and AML type
• 56:37
  stuff.
• 56:37
  So let's say we have to address those, but we get a start from scratch.
• 56:42
  And let's learn, what have we learned in the past 50 years with the BSA?
• 56:46
  What have we learned with new technologies and like incorporate the fact that Bitcoin
• 56:51
  exists and that there'll be an AI exists in these technologies and just start from scratch and
• 56:57
  develop a new policy that's credible. I think that would be a really awesome project because
• 57:07
  it also gives Bitcoiners more credibility if you are in DC talking to regulators or politicians,
• 57:14
  whatever. Because if you just go in there and rant, then they're not going to listen to you.
• 57:18
  even if that's your view and that's what you want,
• 57:21
  you're not going to win that argument.
• 57:23
  But if, I think it does two things.
• 57:26
  One, in the somewhat remote possibility
• 57:29
  that the BSA would be revealed,
• 57:30
  well then, okay, here's a credible alternative
• 57:33
  that we've thought about and would be pro-society,
• 57:38
  pro-American, and ultimately like everyone in the world
• 57:42
  and pro-technology, et cetera.
• 57:43
  But secondly, even for the nitty gritty, like we're debating the Clarity Act or whatever, like incremental changes we're either wanting to see happen in legislation or things we don't want to see happen.
• 57:58
  If we have this body of work to fall back on, it can influence, I think, these other more smaller year to year decisions.
• 58:07
  So this is many cases.
• 58:09
  Spiral would give a grant for anyone who wants to work in something in that vein.
• 58:12
  I know there's many esteemed lawyers in the audience.
• 58:15
  Okay, please do your duty to Bitcoin in your nation.
• 58:19
  It is insane.
• 58:22
  Number one, how much friction it adds to any interaction you have with financial applications.
• 58:29
  And then number two, how completely ineffective it is.
• 58:31
  It's not stopping.
• 58:33
  Well, like we briefly mentioned at the beginning of the show, the de minimis tax and like Blox doing a marketing campaign in DC right now around that.
• 58:41
  And we talking about spending Bitcoin Well I mean right now in the US and I think many other countries but certainly the U S it treated as a capital gains Um when you when you when
• 58:55
  you buy a coffee and it's kind of ridiculous, right? So the proposal is like a $600 de minima.
• 59:03
  So if your payment is under $600, you don't have to pay taxes. It's too low. Sorry. It's too low.
• 59:08
  to a little bit of inside let's think big uh yeah i i agree but so a little bit of um context
• 59:20
  uh senator lammas uh original bill i think was 300 um there uh are other cryptocurrency
• 59:30
  stakeholders that I've heard are pushing for $50.
• 59:37
  Scumbag.
• 59:38
  Which is completely ridiculous.
• 59:40
  To the degree that's true, I've got to think that is like companies that have a vested
• 59:47
  interest in stable coins.
• 59:49
  And so that's really just, that's throwing Bitcoin into the bus to do a $50 de minimis.
• 59:54
  so in that context
• 59:57
  600 is a lot better than 300 or 50
• 1:00:00
  but I agree that it should be
• 1:00:04
  ideally a lot higher
• 1:00:06
  we're taking the wins that we can get
• 1:00:08
  it's arguably a big win over
• 1:00:12
  or it is a big win over what we have now
• 1:00:14
  arguably is maybe the best that can be achieved
• 1:00:18
  and we haven't achieved it yet either so we'll see
• 1:00:20
  but a problem with the BSA and everything
• 1:00:23
  since then is that
• 1:00:25
  the way they're written into either
• 1:00:28
  law or regulations is
• 1:00:29
  a fixed amount of dollars.
• 1:00:31
  As certainly all Bitcoiners know,
• 1:00:34
  inflation, right?
• 1:00:35
  What a $3,000
• 1:00:38
  limit in the 70s was
• 1:00:39
  is way different than today.
• 1:00:42
  $3,000 in the 70s was a substantial
• 1:00:44
  amount of money, so it might have seemed like
• 1:00:45
  a reasonable limit or whatever the limit is.
• 1:00:47
  $3,000 when you have to report certain
• 1:00:50
  transactions or whatever. And now all of a sudden
• 1:00:52
  And it's like, well, that's like a...
• 1:00:53
  It's pretty common.
• 1:00:54
  That's like a nice bicycle or something.
• 1:00:56
  I mean, it's not like buying a house.
• 1:01:00
  So that de minimis tax will be...
• 1:01:04
  Yeah.
• 1:01:04
  So some Bitcoiners want it denominated in Bitcoin as well,
• 1:01:07
  which, again, I philosophically agree with.
• 1:01:10
  I mean, I agree with that.
• 1:01:11
  It's just like, is that practical?
• 1:01:15
  I know we got to get going here soon.
• 1:01:17
  But, I mean, on this note, too, BSA privacy, like on-chain privacy, too, I think everybody's like, oh, that's a big narrative.
• 1:01:26
  There's a bunch of people in Silicon Valley trying to pump Zcash right now.
• 1:01:29
  Looking at you, Naval Balaji.
• 1:01:31
  We see it.
• 1:01:32
  They're like, Bitcoin's not private enough.
• 1:01:34
  It certainly has its pitfalls on-chain when it comes to privacy, but it's not impossible.
• 1:01:42
  And one thing I want to make sure I ask you about is PayJoin development kit.
• 1:01:47
  like making the case for PayJoin at a large level, particularly at exchanges,
• 1:01:55
  because it improve on privacy by messing with the chain surveillance heuristics that exist But just as importantly maybe more importantly for these exchanges creates efficiencies in terms of being able to batch
• 1:02:10
  And so it can be positioned that way too.
• 1:02:12
  Yes.
• 1:02:12
  Depending, I think, how you position that technology and project,
• 1:02:16
  you want to know your audience.
• 1:02:17
  But I've always liked PageJoin and big credit to Dan Gold,
• 1:02:24
  who's carried that torch for many years now.
• 1:02:27
  Thankless torch carrying.
• 1:02:28
  Thankless torch carrying.
• 1:02:29
  And no one else is really working on it.
• 1:02:33
  I like when it was first.
• 1:02:35
  I forget when it was even originally thought of.
• 1:02:39
  But I like the trade-offs from the get-go.
• 1:02:42
  But then, yeah, no one was working on it.
• 1:02:43
  But he started working on it.
• 1:02:45
  And now there's a really healthy set of developers working on it.
• 1:02:48
  Spiral funds it in a big way.
• 1:02:50
  We're big believers in it.
• 1:02:53
  Starting with, well, why is it attractive?
• 1:02:55
  I think it's like, there's a couple different versions of PayJoin now too.
• 1:03:00
  So I'll start with like the one that is implemented today and integrated into some wallets.
• 1:03:05
  I feel like it's a very practical and pragmatic solution.
• 1:03:10
  It's not overly complex.
• 1:03:11
  It also, it doesn't require like the whole ecosystem to adopt it for everyone to benefit.
• 1:03:17
  Because you only need, I don't know what the threshold is, but as long as there's just like a nominal amount of usage of it,
• 1:03:25
  it benefits everyone because it destroys the common input heuristic,
• 1:03:30
  which chain analysis heavily depends upon and is very successful at right now
• 1:03:35
  because pretty much it's a good heuristic right now to identify,
• 1:03:41
  like help identify everyone's coins into,
• 1:03:45
  oh, these are all these coins which are disparate or actually all from your wallet.
• 1:03:49
  If you can break that common input heuristic,
• 1:03:52
  it really destroys that level of analysis.
• 1:03:54
  and PayJoin does that.
• 1:03:56
  And as you mentioned,
• 1:03:57
  PayJoin also has a benefit of batching.
• 1:04:02
  And if I'm the receiver,
• 1:04:03
  if I'm a merchant and you're paying me,
• 1:04:05
  I'm incentivized to do it
• 1:04:06
  because I actually get to consolidate my UTXOs
• 1:04:09
  as part of that transaction.
• 1:04:12
  So I think it has a number of attractive properties.
• 1:04:15
  It improves.
• 1:04:17
  It's not a silver bullet for privacy,
• 1:04:19
  but it definitely improves privacy.
• 1:04:21
  You don't need the whole ecosystem to adopt it.
• 1:04:22
  so I think it's very
• 1:04:24
  very promising
• 1:04:25
  then there's
• 1:04:27
  PayJoin v3
• 1:04:29
  which is like
• 1:04:30
  a much more advanced
• 1:04:32
  version of it
• 1:04:33
  Yuval Kogman
• 1:04:34
  he goes by nothing much
• 1:04:35
  on most of his
• 1:04:37
  online handles
• 1:04:37
  he's on the
• 1:04:39
  he's a full-time member
• 1:04:40
  of the Spiral team
• 1:04:41
  and super
• 1:04:41
  super sharp guy
• 1:04:43
  really passionate
• 1:04:44
  about privacy
• 1:04:45
  and he
• 1:04:47
  he
• 1:04:48
  used to contribute
• 1:04:50
  to Wasabi
• 1:04:51
  he's sort of the
• 1:04:51
  architect behind that so yeah he has a lot of um experience from that and he learned a lot of
• 1:04:56
  things from that too and things he didn't really like about what was created at the time and and
• 1:05:01
  and he so he has a lot of ideas on how to improve it that ultimately so he's working on a project
• 1:05:05
  called fungi which was that like um and it's really multi-party um uh coin joins and but
• 1:05:14
  he worked with dan gold and other p join contributors in that project to fold it into the PayJoin project So now payjoin v3 is that vision because payjoin is just two Like you paying me and we both put UTXOs as inputs into the transaction
• 1:05:30
  But with payjoin v3, it can be more than two.
• 1:05:34
  Is this similar to what Dusty Damon was?
• 1:05:37
  I talked to him at Bitcoin++ earlier this year and he was saying like a payjoin protocol
• 1:05:42
  where you could sort of have a gossip network.
• 1:05:45
  looking at lightning channels and what they're rebalancing?
• 1:05:49
  Probably.
• 1:05:50
  I don't know exactly what he's referring to.
• 1:05:52
  I think it was an idea.
• 1:05:53
  I don't think he implemented anything,
• 1:05:55
  but in the context of splicing,
• 1:05:56
  it was like, yeah, page one can be implemented.
• 1:05:58
  It's similar to that.
• 1:05:59
  It sounds similar.
• 1:06:00
  So that's still R&D mode,
• 1:06:03
  but that'll be coming.
• 1:06:05
  And then that takes the privacy to another level.
• 1:06:08
  It's a lot more challenging for that to be successful,
• 1:06:11
  but if it is successful,
• 1:06:12
  there has to be a very high volume,
• 1:06:14
  not a payment's willing to do that so that you don't have too much
• 1:06:17
  latency with your payments. Like channel rebalancing is like a perfect thing to
• 1:06:23
  put into that, right? Right. Yep. So in any case, but back to what you're saying, like getting
• 1:06:28
  people to adopt it, I think getting mobile wallets to adopt it is
• 1:06:32
  relatively easy. I mean, it's always a prioritization game.
• 1:06:37
  Yep. Cake wallet as well. Getting
• 1:06:41
  exchanges too. I think
• 1:06:43
  most likely
• 1:06:44
  to succeed, you have to go in
• 1:06:47
  with the save
• 1:06:48
  efficiency, save transaction fees
• 1:06:51
  angle. We're looking out for shareholders
• 1:06:53
  here. We're looking out for shareholders.
• 1:06:55
  Yeah. And
• 1:06:56
  it's definitely
• 1:06:59
  worth the effort to make
• 1:07:01
  that sales pitch and get it to happen.
• 1:07:03
  So that sales pitch
• 1:07:05
  will happen within Block, but
• 1:07:07
  within other companies too.
• 1:07:08
  We'll see.
• 1:07:09
  I mean, these companies have compliance departments,
• 1:07:12
  so unclear how they'll respond to it.
• 1:07:16
  Just using the Bitcoin protocol in a more efficient way.
• 1:07:18
  Why don't you want to do that?
• 1:07:19
  Yeah, there is power.
• 1:07:20
  My observation for speaking with lots of compliance teams,
• 1:07:24
  not just Block, but many others,
• 1:07:26
  is that the more something is part of the protocol,
• 1:07:29
  it's part of the open protocol.
• 1:07:31
  Everyone's doing it as part of the open protocol.
• 1:07:33
  That does help.
• 1:07:35
  That does help.
• 1:07:36
  I've been on this pay join journey for years.
• 1:07:38
  Dan, thank you for your work.
• 1:07:41
  Exchanges, seriously consider it.
• 1:07:43
  I think this is one of the lowest hanging fruits,
• 1:07:47
  highest leverage tech implementations
• 1:07:53
  at the protocol level that everybody can make in the space.
• 1:07:56
  Steve, we got to get going.
• 1:07:58
  Any final thoughts, parting notes for the audience out there?
• 1:08:01
  No, thanks for having me on.
• 1:08:03
  I'd say that people should remain optimistic on Bitcoin
• 1:08:08
  even the price is going down
• 1:08:09
  even if
• 1:08:10
  they're not happy
• 1:08:11
  whether lightning is
• 1:08:12
  out of mobile phones
• 1:08:13
  there's just a lot of
• 1:08:14
  promising stuff ahead
• 1:08:15
  so
• 1:08:15
  everyone keep their spirits up
• 1:08:17
  we're gonna win
• 1:08:18
  we're gonna win
• 1:08:19
  peace and love
• 1:08:20
  yeah
• 1:08:20
  that's your email signature
• 1:08:21
  I just noticed
• 1:08:23
  some people
• 1:08:23
  some people don't
• 1:08:24
  some people don't think
• 1:08:25
  it's a signature
• 1:08:26
  after the first email
• 1:08:27
  and they think
• 1:08:27
  I'm just writing it
• 1:08:28
  and get a thread
• 1:08:29
  that's your signature
• 1:08:30
  that's great
• 1:08:31
  we're gonna win
• 1:08:32
  you gotta have that
• 1:08:32
  irrational optimism
• 1:08:33
  we're gonna win
• 1:08:34
  peace and love freaks
• 1:08:35
  the game