Everything You Need to Know: Bitcoin ETF, Lightning Network, & Altcoins | Jeff Booth & Greg Foss

In this episode on On The Margin, Mike is joined by returning guests Jeff Booth & Greg Foss. Jeff & Greg discuss breaking news as the first ever U.S Bitcoin ETF was approved and what this could mean for institutional exposure to Bitcoin. Mike, Jeff & Greg also discuss the recent developments in El Salvador as Bitcoin was made legal tender, The Lightning Network, the deflationary forces & network effects of technology, Bitcoin mining, the difference between Altcoins vs Bitcoin, the outlook for 2021 & the future of Bitcoin.

29:20
el salvador and they
29:23
have been employed by the government for
29:24
the merchant solution for the chivo
29:26
wallet so i’m privy to some information
29:29
that uh well you know what you can’t
29:31
trade on it so i’ll tell you it’s very
29:33
positive
29:34
information coming out of el salvador
29:37
and i want to point something that jeff
29:39
said and here’s how a privileged world
29:41
we live in so you guys may or may not
29:43
know i’m a partner in eight irish pubs
29:45
in montreal
and those eight irish pubs
29:48
we pay as jeff said merchant fees on
29:50
these credit cards of two and a half
29:53
percent and our margins and we’re good
29:55
restaurants we’re at about 14 ebitda
29:58
margin okay we could be at 16 and a half
30:01
percent
if and assuming that not
30:03
everybody pays with credit cards but you
30:05
know a lot of people do a lot of them um
30:07
we could we could definitely increase
30:09
our margins because you know the credit
30:11
card if we don’t have to pay those
30:12
merchant fees well our eva dot margin
30:14
goes up uh accordingly do you know what
30:17
merchant fees
30:18
for credit cards are in el
30:20
salvador eight percent guys eight
30:25
this is outrageous
so you think eight
30:27
percent you think that
30:29
running a business in canada is tough
30:31
with two and a half percent merchant
30:33
fees imagine running a restaurant in el
30:35
salvador where your ten percent ebitda
30:38
margin is doing exceptionally incredibly
30:41
well on an industry average and your
30:43
credit card fees are eight percent
30:46
guys lightning is not just going to
30:48
disintermediate western union
30:50
i’m pretty excited about someday being
30:53
pretty good size short on visa not now

30:56
not now i’m not gonna be michael burry
30:58
that calls it out for seven friggin
30:59
years and then he’s finally right and
31:01
he’s some sort of i’m gonna just say
31:04
watch visa
31:05
oh maybe that’s why jamie dimon’s a
31:08
little concerned because his captive
31:11
merchant fees
31:12
in third world countries might be under
31:15
pressure i’m not saying that you do your
31:18
own mathematics the other thing that i
31:20
do know
31:22
again there were only two and a half or
31:24
there’s six million people in el
31:26
salvador i think
31:27
a million and a half of them had bank
31:29
accounts
31:30
there’s currently three million people
31:32
in el salvador with a wallet
31:35
a bitcoin wallet on their phone
31:37
you tell me this stuff isn’t
31:39
life-changing for these people
31:41
changing the gdp of the country changing
31:44
the uh profitability of restaurants and
31:47
small businesses in el salvador and also
31:50
then the livelihood and the and the
31:52
productivity of the people who can store
31:55
value on their phone they didn’t even
31:57
have access to bank accounts prior to
31:59
this
32:00
like i’m telling you this is only el
32:02
salvador this is six million people now
32:04
jeff
32:05
i’m going to tell you i was very honored
32:08
to be yesterday
32:10
speaking to 45 members of parliament in
32:14
canada
32:15
on bitcoin
32:17
led by our friend pierre paul
32:20
okay 45 members of parliament
32:23
they want to know about bitcoin and i
32:25
did tell them on
32:27
the
32:28
uh on on the zoom call i and i said it
32:31
with all respect to my french canadian
32:33
wife and certainly pierre poliev who’s
32:35
franco alberton he’s not a quebecois
32:38
i said maybe we should start learning
32:40
spanish in canada because if we don’t
32:42
get our acting gear we’re going to be
32:44
reporting to the central americans
32:47
who’ve embraced this before canada
32:50
this is all about competitive a
32:53
marketplace no different than a country
32:55
or excuse me a company this is country
32:58
dynamics much like another company would
33:00
look down the road and say
33:02
boy why is jeff booth’s bar doing so
33:05
well
33:06
well because he’s encouraging people to
33:08
pay with bitcoin and can therefore cut
33:10
eight percent off the price of his beer
33:14
to get more clients to come into his
33:16
restaurant you know all of these things
33:19
are unbelievably cool opportunities that
33:22
increase the network adoption that jeff
33:24
very eloquently laid out
33:27
so greg if you just build on that piece
33:29
so the first part that incentivizes
33:33
restaurants or anybody to use it and
33:35
actually the same thing that then that
33:37
we talked about before early on a uh in
33:41
in google or amazon right you just think
33:44
about
33:44
the people that are blocked out of this
33:46
the existing financial infrastructure
33:48
today
33:49
third world countries are blocked out of
33:51
the existing financial so it’s just a
33:53
country example of the same phenomenon
33:56
happening at a person level here
33:59
why we don’t see it as much is because
34:02
of our privilege
34:04
we don’t see that there’s a cost of our
34:06
privilege elsewhere in the world
34:08
and that and that cost is the same
34:10
reason that some of these countries are
34:12
moving to it to it faster than the
34:14
country is in the g7 um and
34:17
greg’s right they better we better get
34:19
our act together because otherwise we’re
34:21
going to be falling behind because all
34:22
of the innovation and all of the
34:24
dynamics are going to move to those to
34:26
those countries because it because it
34:28
provide again
34:30
the first wave
34:32
coming companies will do it because it
34:33
increases their margin
34:35
and they’ll be more profitable and
34:37
they’ll be big and they build way better
34:38
businesses than the ones that aren’t on
34:40
it and then the ones that aren’t on it
34:42
are going to compete and they’re going
34:43
to drive into it as well and what in the
34:46
second wave
34:47
is prices come down
34:50
and and and
34:52
you know from my book i talked about
34:54
technology reduces it gives us more for
34:57
less
34:58
it is
34:59
it is a central point of this whole
35:01
thing fighting against that with
35:03
monetary policy
35:05
to be able to to concentrate control in
35:08
a very small hands
35:10
is an
35:11
is an aberration against the world
35:15
so so this bitcoin force is a forcing
35:18
function essentially by stopping the fr
35:21
by by stopping the free market from
35:23
happening but stopping creative
35:24
destruction and the free marker swapping
35:26
creative destruction in the overall
35:28
market and socializing losses creative
35:31
destruction has come for money
35:33
the world will never look the same
35:36
uh the free market has come for money
35:39
and and what you’re seeing is that
35:41
crazy network effect network effect
35:44
technology
35:46
brains moving into this field
35:49
advancing advancing something that won’t
35:51
be stopped
35:52
and it it’s it’s a really good thing
35:55
because prices will fall everywhere on
35:57
everything and it’s actually the only
35:59
way if you go to a way higher level
36:02
a requirement to move into the future
36:05
where we are in uh with human a
36:07
requirement
36:09
is tech is a
36:10
digitally native currency that allows
36:12
for deflation
36:15
because without that requirement
36:17
you’re concentrating all wealth and
36:19
power in very few hands
36:21
and that is a fact
36:24
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39:02
you know the idea of a something that
39:04
looks like an internet native currency
39:06
right this is actually something that’s
39:08
existed for a lot that the the need has
39:10
been understood right uh for this for a
39:12
really long time guys like milton
39:13
friedman identified this a long time ago
39:16
um right and it just didn’t happen
39:18
henry and henry ford buckminster fuller
39:21
and then
39:22
all of these people for the for for a
39:24
long time of time what would be the
39:26
perfect currency the code wasn’t cracked
39:29
to create the perfect currency so you’re
39:31
exactly right so so thought leaders
39:34
throughout our time
39:36
have talked about what this could look
39:38
like but we didn’t have the technology
39:40
the technology didn’t exist to to allow
39:42
it to happen and so even if you think
39:44
about the innovation of when bitcoin
39:46
came out
39:48
all of the different innovations that
39:50
came together to create that
39:53
that spot
39:54
in in time it is it’s a 20-year course
39:58
through through 20 years of evolving
40:01
through through
40:03
um
40:04
through markov chains a whole bunch of
40:05
different things to be able to find to
40:07
be able to get to that point where
40:09
bitcoin
40:12
it was invented
40:14
and that’s amazing because you know 100
40:16
years ago over 100 years ago henry ford
40:18
famously said an energy currency that
40:21
would eliminate wars right um so i find
40:25
it very interesting that uh vlad putin
40:29
is entertaining uh the potential for oil
40:32
to be paid for and he called it crypto
40:35
but vlad putin is a smart engineer and
40:37
he knows that
40:38
the first law of thermodynamics which is
40:41
conservation of energy means that oil
40:43
and natural gas naturally
40:46
should be priced in bitcoin because
40:48
bitcoin is digital energy
40:50
so that i just wanted to build on that
40:52
one for from jeff’s perspective you know
40:55
lots of people have been calling for it
40:56
it hadn’t been
40:58
developed but bitcoin is what ford saw
41:03
over 100 years ago
41:05
there’s another great henry ford quote i
41:07
thought you were gonna bring up there
41:08
which is uh it’s just as well that the
41:11
american people don’t understand the
41:12
banking system for if they do i believe
41:14
there’d be a revolution tomorrow
41:16
in the morning and i’ve lived that life
41:17
too because i told the members of
41:18
parliament yesterday when i first
41:20
started working at the royal bank of
41:21
canada canada’s largest financial
41:23
institution
41:24
it was insolvent and i know it didn’t
41:27
sink into their head until i said
41:30
bankruptcy
41:31
yeah what
41:33
and then they realize
41:34
the banking system is only what it is
41:37
because of the implied backstop of being
41:39
able to print this thing called fiat
41:42
money
41:43
have you guys noticed that uh and maybe
41:45
this is uh where we can transition to
41:47
probably part of the conversation that
41:48
we’re not going to agree on as much
41:50
because jeff i do want to talk to your
41:51
get your thesis on kind of all coins and
41:53
the stuff encrypted outside of bitcoin
41:54
uh but if you notice that uh people that
41:56
are getting into the space
41:58
there’s a remarkably similar thought
42:00
pattern that occurs across a whole bunch
42:02
of different types of people like when i
42:04
was first getting involved in um
42:06
i remember listening to pomp in one of
42:08
the early days of his shows described
42:09
this and it really
42:11
it resonated with me uh but back then
42:12
enterprise blockchain in like 2017 2018
42:14
remember that was still a thing and um a
42:17
lot of people went on this journey i was
42:18
a consultant before this so what i
42:19
understood was operations and supply
42:21
chain and uh you know you first get
42:23
exposed to something like crypto and
42:24
bitcoin you’re like well i’m not really
42:25
sure this makes a whole lot of sense but
42:27
like some sort of light bulb goes on you
42:29
try to jam it into your own world view
42:30
or how you understand things uh and i’m
42:32
like oh well like oh okay this is cool
42:34
like all assets get tracked to the
42:35
system there’d be supply chain
42:36
applications for this yada yada then you
42:38
go down that road and you’re like wait a
42:39
second none of this makes any sense
42:41
actually it was all bitcoin you know the
42:43
whole time and then you but there’s this
42:44
kind of remarkable journey that everyone
42:46
goes through and like greg what you were
42:47
saying is like everyone thinks they’re a
42:48
day trader i can’t tell you how many of
42:50
my friends i’ve talked to about bitcoin
42:53
they’re like i’m gonna wait for a dip
42:55
like
42:56
why do that why do you do that that’s
42:58
just not a smart interest either this is
43:00
an asset worth owning or it’s not
43:02
okay if it is then it is and then what’s
43:05
the entry strategy you dollar cost
43:06
average waiting for a dip is just a poor
43:09
entry strategy for how to get ownership
43:11
of this asset but like everyone thinks
43:13
like that so
43:15
you know your guy that writes brian uh
43:17
that writes for your block works i wrote
43:19
a pretty neat article either
43:22
was it today or yesterday where he said
43:24
look i don’t try and short the market as
43:26
a as a profession because over time the
43:28
market goes higher uh but you know and
43:32
it was neat because it’s a very wise uh
43:34
equity trader type of uh thought process
43:36
the reality is uh there’s another
43:39
expression never short a bull market
43:41
right uh trend is your friend all these
43:43
other things so yeah everyone uh says
43:45
gosh they have price uh
43:47
uh
43:49
remorse uh i missed it at a thousand i
43:51
missed it at five thousand i missed it
43:53
at ten thousand let me be very clear
43:55
about this uh and i think this is
43:57
something i can talk about because i’ve
43:59
done this for 32 years uh and thirty
44:02
years i did it professionally managing
44:04
other people’s money managing other
44:06
people’s money is a horrible horrible
44:08
job
44:09
okay because they will only give you
44:12
credit
44:14
their credit to you oh the guy did great
44:16
he’s a bitcoin allocator he did great
44:19
but i’m so smart i put my money with him
44:21
and uh look at me i’m a superstar
44:24
allocator and this guy
44:26
convinced me to get into bitcoin the
44:29
flip side of that is i’m a money manager
44:31
i own bitcoin and bitcoin goes offside
44:34
and these guys are upset god he’s stupid
44:36
why did i ever listen to him like as if
44:39
i i had pulled them in in some sort of
44:41
uh you know false narrative
44:43
managing money is horrible in order
44:45
priorities it’s easiest to lose your own
44:47
money second easiest to lose a bank’s
44:49
money and absolutely horrible to lose
44:51
friends family and client money okay
44:54
anyone who thinks they want to do that
44:55
on a professional basis trust me sit in
44:58
the chair for a year and a half in a
44:59
bear market you don’t want to do this
45:02
and so i’ve seen the world melt down
45:04
four successive times in my career
45:06
i think i know how to manage risk i
45:09
survived all four of those financial
45:10
crises i came out
45:13
with war wounds and you know
45:15
stomach ulcers and i talk about you know
45:18
my
45:19
perhaps a little
45:20
grosser types of things that i came out
45:22
with but at the end of the day
45:23
bitcoin today right now
45:26
is cheaper on a risk-adjusted basis than
45:29
it was when i got in involved with
45:31
bitcoin in 2016.
45:34
okay
45:35
what happened since 2016 when i got
45:38
involved in bitcoin
45:40
not only the price has gone up 50 times
45:42
okay that’s fair but colvid cove
45:45
and governments have proved that we will
45:47
never escape this debt spiral ever
45:50
cynthia loomis said it so beautifully on
45:52
a c-span thing
45:55
the governments have been irresponsible
45:56
and mathematically it’s impossible to
45:58
escape this debt spiral very cool
46:02
head yourself accordingly don’t
46:04
overthink it bitcoin is the best
46:07
asymmetric trade i’ve ever seen and it’s
46:10
actually gotten better since i got
46:12
involved in it five years ago i know it
46:14
doesn’t resonate with people and they
46:16
want to buy a dip and they want to do
46:17
this
46:18
put five percent in your portfolio and
46:21
then concentrate on the other
46:23
95 of your portfolio that really is
46:27
risky
46:28
bitcoin’s your insurance it’s just i
46:31
just need people to take that experience
46:34
i’ve seen people literally carted off a
46:36
trading floor because they had a heart
46:38
attack right in front of me
46:42
jesus
46:43
yeah i’ve managed to risk for 32 years
46:46
please
46:47
it has nothing to do with where it’s
46:50
been it’s
46:51
has everything to do with where it is
46:54
going yeah
46:56
and
46:57
and if you’re talking price
46:59
again and a lot of people are talking
47:00
price you just asked about price and
47:02
everything else and that’s that’s the
47:04
natural thing that a lot of people are
47:05
doing and they’re measuring that price
47:07
in u.s dollars they’re measuring that
47:09
price
47:10
in a system that is that has to
47:14
print money forever that has to keep on
47:16
you so so
47:18
so
47:19
um
47:20
but
47:22
i so number one it we i i totally agree
47:25
there is no asymmetric bat
47:27
unless the majority of people
47:29
misunderstand it
47:32
so so the majority of people still
47:34
misunderstand it and and how and how how
47:37
early we are that’s how greg is a
47:39
traitor
47:41
who creates that arb that is how but but
47:44
it’s this exact same thing as any
47:46
entrepreneur wanting to change the world
47:48
with their idea
47:50
everything around us is just an idea the
47:53
system we live in as an idea first
47:55
started with an idea the iphone is an
47:58
idea that replaced another idea
48:00
and you have to have conviction you have
48:02
to have two things you have to be able
48:05
to see the future of your idea pass out
48:08
and you have so you have to any of deaf
48:10
conviction on that idea otherwise you’d
48:12
never start a business
48:14
and you have to be right
48:17
on both of those you create asymmetric
48:20
bets
48:21
right and because most people don’t see
48:23
that that’s why entrepreneurs are seem
48:25
so crazy to the rest of the world
48:27
because most people live in
48:29
a world where everything stays the same
48:31
forever and it’s constantly changing and
48:34
it’s and and entrepreneurs are creating
48:36
the future that we we are part of
48:39
if you look at bitcoin through that same
48:40
lens that’s all it is
48:42
it’s a whole bunch of people that
48:44
believe in a new system that and they’re
48:46
creating that system and the more belief
48:48
that there is in that system
48:51
we’re going to transition to that system
48:53
and that system is going to be a far and
48:55
produce far better results for society
48:58
now yes a whole bunch of people that are
49:00
going in early are going to create
49:02
untold wealth in that new system
49:05
and but this is actually critically
49:07
important to understand too because
49:08
there is
49:10
a
49:10
belief from a lot of people who don’t
49:12
understand what we’re talking about
49:14
right now
49:15
that you’ve just transferred power to a
49:17
new set of people
49:19
and the world looks the same
49:21
and that couldn’t be anything there
49:23
couldn’t be anything further from the
49:24
truth
49:25
because the world looks the same because
49:28
because the people at the top of the
49:29
economic pyramid
49:31
write the rules of the system
49:34
and they keep on changing the rules so
49:36
that they stay on the top of the
49:37
economic pyramid
49:39
that doesn’t happen in bitcoin you make
49:41
a mistake you make a bad bet you lose
49:43
your bitcoin if you want to if you want
49:46
wealth doesn’t equal power in the
49:47
bitcoin world if you have a whole bunch
49:49
of wealth in in in in bitcoin and you
49:52
want control of other people so you
49:54
bring a whole bunch of people so you pay
49:56
them more to control them
49:58
then you’re distributing your bitcoin by
50:00
trying to retain control
50:03
so
50:04
the the system incentives
50:07
make ensure
50:08
that the path to abundance for the
50:11
greater part of humanity
50:13
are aligned um and so it’s a way bigger
50:16
deal than the money you might the
50:18
generational wealth that you might gain
50:20
from
50:21
bitcoin by by getting in early it’s a
50:23
way bigger deal
50:25
because there is no fix from the
50:26
existing system short of concentrating
50:29
all power in the state
50:32
i want to get to a part of the
50:33
discussion uh because i’m pretty sure
50:34
we’re in violent agreement about almost
50:36
everything discussed so far but i want
50:38
to talk about an area where maybe we’re
50:39
not in such agreement um
50:41
so uh you know i like bitcoin for me was
50:44
uh
50:46
it’s still a large focus right uh block
50:48
workshop obviously covers a lot of stuff
50:50
outside of just the bitcoin ecosystem
50:52
i’d love to give both of your thoughts
50:53
in general on
50:55
uh assets outside other crypto assets
50:58
outside of just bitcoin so ethan even
51:00
beyond right some of these other layer
51:01
ones or gaming things like acting
51:03
infinity whatever kind of cropping out
51:05
um i know uh maybe i’ll pick on you jeff
51:07
go first because i know you have some
51:08
thoughts on this so maybe you can kick
51:10
off your your thoughts i am not in any
51:12
of those
51:14
and i’m not in and and not to say that
51:16
if it was just about wealth or
51:18
short-term trade
51:20
that that i might not be you can imagine
51:23
with with the type of influence or
51:26
dynamic and everything else i could go
51:28
create a coin right away a whole bunch
51:29
of people and create crea create a coin
51:31
and create a whole bunch of wealth that
51:32
way and essentially
51:35
game my advantage
51:37
to the loss of other people
51:39
right i could pre-mine a coin i could
51:41
bring a whole bunch of people and they
51:42
say and by the way i have been asked to
51:44
do that
51:45
by countless people
51:47
to get involved in their thing because
51:49
because that’ll bring more people on to
51:51
their
51:52
altcoin platform right right and and to
51:56
to one i will say unnamed person in this
51:59
space in the financial world that said
52:02
but we should write the rules
52:05
of what that looks like and i’m
52:07
categorically against that
52:11
and so so i i’m not categorically
52:13
against a free market deciding what coin
52:16
is better
52:17
i’m not uh
52:18
but i’m categorically against
52:21
kind of
52:22
integrity to i’m going to sell my soul
52:24
for money
52:25
so
52:26
uh so
52:28
so most of those i see as as say all of
52:33
those i see over time and this we can
52:35
disagree here and i might be wrong
52:39
but i actually can’t see if the base
52:41
layer is money okay
52:44
and now the technology starts to exist
52:47
because the base layer can’t be
52:48
corrupted and it’s secured
52:51
through proof of work
52:52
why the technology doesn’t evolve
52:56
to handle every other use case
52:59
that current alt coins
53:01
handle
53:02
so in it i understand totally why
53:05
ethereum would
53:07
it would live for a time
53:09
well that technology didn’t exist
53:12
because you could create a whole bunch
53:14
of you could sell art on on that and you
53:17
couldn’t on bitcoin right you could you
53:19
could do a whole bunch of uh different
53:21
things you could create a a a
53:24
and so you could actually drive a
53:25
network effect on ethereum because it
53:27
did a different job ordered a bunch of
53:28
the other coins
53:30
um because it did a different job and
53:32
now it’s a race to the bottom on fees
53:35
um and why why why
53:37
why they keep changing the rules of
53:39
these altcoins
53:41
is because
53:42
it’s the race to the bottom on fees and
53:44
somebody is attacking them
53:46
right or
53:48
you you manage for security through
53:50
proof of work so so you look at this
53:52
entire ecosystem
53:55
that is is almost i would say
53:59
trying to find
54:00
what it’s going to be long term
54:04
at the same time
54:06
bitcoin is advancing the technology
54:08
stack to remove it all
54:12
and and and so if i’m looking at a long
54:14
term if i’m looking at a long term
54:17
for forget the for forget now
54:20
making money because i think you make
54:22
way more money over the long term in
54:23
bitcoin but forget that
54:25
if i’m looking for the long term thing
54:27
that is going to to
54:31
be a network transfer from one system
54:33
that can’t work to another system
54:35
it’s only bitcoin
54:38
and so so that’s that’s my reason
54:42
so what a great uh
54:44
again
54:46
it’s great to be on a podcast with you
54:47
jeff um you bring everything you you
54:50
distill things into first principles and
54:52
simplest terms uh i i want to take a
54:54
step back and make sure everyone
54:56
understands why i got involved in
54:57
bitcoin because i had been searching for
55:01
a replacement to the fiat ponzi for 30
55:03
years okay i just never found it i
55:06
understood gold i just didn’t embrace it
55:09
like some of the other gold portfolio
55:11
managers uh because of some of the
55:12
shortcomings that being said
55:16
the thing that i loved
55:17
after having met jeff is i read his book
55:21
after i wrote my research paper on
55:24
bitcoin being valued using credit
55:26
default swaps
55:28
and it was really comfortable comforting
55:30
to read jeff’s book because he used a
55:33
lot of the same data as to the
55:34
inevitability of the debt spiral from
55:37
sources like institute of international
55:39
finance that aren’t widely published by
55:42
the investment banks in new york i guess
55:45
why because it would be exposing the
55:47
fiat excuse me the fiat ponzi so i was
55:50
really comforted by the fact that jeff’s
55:52
book used the same data by and large as
55:55
i did or vice versa i was comforted that
55:57
i used the same data that he did and we
56:00
came to the same conclusion
56:01
independently and then became pretty
56:03
good friends who i was out skiing at
56:04
whistler one time in the in the winter
56:06
just less than a year ago and i called
56:08
them up and we instantly
56:10
bonded over the ability to
56:13
distill the the information that’s
56:15
available but not widely disseminated
56:17
because you know the investment banks
56:19
don’t disseminate that
56:20
so i met jeff
56:22
and we had never talked about this we
56:25
don’t talk about altcoins we talk about
56:27
our desire to improve the world’s most
56:30
pressing problem
56:32
which is fiat currency and none of these
56:34
other altcoins can do that in my opinion
56:37
now will there be more than one winner
56:39
in the short term on a number go up
56:42
because there’s defy on erc20 and
56:45
there’s different blockchains that have
56:48
various levels of decentralization but
56:50
at the end of the day they
56:52
sort of smell like a lot of centralized
56:54
control
56:55
over time there’s a lot of people that
56:58
believe
56:59
that
57:00
other blockchains and apps on those
57:02
blockchains are essentially a test net
57:06
for layer 3 bitcoin
57:08
and as a trader all my life i am not
57:11
short any of those
57:14
okay
57:14
there will be a time when it’s very
57:16
clear that the dodgy coins of the world
57:19
that are true zero-sum scams promoted by
57:22
a pretty famous guy
57:24
uh but look
57:26
you got to call it out as it is there
57:28
are times when it will pay to be short
57:31
those but right now
57:32
bitcoin is
57:35
the leader by market cap but it also is
57:38
what most big money is gonna understand
57:41
they need it as a hedge
57:43
to the absolute certainty of fiat
57:46
debasing and this brings me back to my
57:48
career as a bond trader
57:50
if you
57:51
advance
57:52
a 10-year loan to the u.s treasury
57:55
highly highly likely but not 100 certain
57:57
you’ll get your money back in 10 years
57:59
the biggest problem is you get a d based
58:01
currency 100 cents on the dollar back in
58:04
10 years you might have 65 purchasing
58:06
power if you’re lucky what kind of
58:08
contract is that like what i’m a bond
58:10
manager this is i need to start thinking
58:13
outside the box and that bond market is
58:16
400 trillion dollars that’s all fixed
58:19
income by the way it’s not just
58:20
government bond market point being
58:23
why are we battling with the gold bugs
58:25
that’s 10 trillion that’s okay gone see
58:27
ya we don’t care like we want gold to go
58:30
up because gold will go up because
58:32
bitcoin goes up because fiat 100 certain
58:35
d bases
58:36
and a lot of these other coins that are
58:38
out there
58:39
yes they will go up why they solve a
58:42
short term problem but in the long term
58:45
is there a better decentralized
58:47
blockchain for those apps to exist on
58:51
how about this
58:52
right now i’m not going to worry about
58:55
that my biggest problem
58:57
is i don’t want this fiat system to
59:00
collapse before we have this other
59:02
network in place where there can be an
59:04
orderly transfer
59:06
and i want to sum it up with
59:08
a a saying that i love saying i want
59:11
bitcoin to be north america’s store of
59:13
value that the chinese graciously have
59:16
given us like have you seen these mining
59:18
stats now usa biggest center of mining
59:21
for bitcoin mining
59:23
china almost down to zero
59:25
my goodness i think is a capitalist with
59:28
a heart okay i have a heart i want to
59:30
help the people at the lower end of the
59:32
privilege spectrum but i’m a capitalist
59:34
not a communist
59:35
these the communists have given this as
59:38
a as a present to the west
59:40
embrace it bitcoin is your store value
59:42
savings account
59:44
fiat currency in this in the short to
59:46
medium term will be your checking
59:48
account
59:49
don’t save your money in your checking
59:51
account
59:52
use that for
59:54
not having to do barter
59:55
what are where do altcoins then fit in
59:58
between here okay think of your savings
60:01
account checking account
60:02
i think a neat way of seeing whether an
60:05
altcoin has any value how close is it to
60:07
a checking account
60:09
versus a true savings account
60:11
and play your cards accordingly
60:13
michael i i maybe i ask you and the
60:16
reason i
60:17
so so when i’m investing or building a
60:20
company or
60:21
or spending time on it i wonder i want
60:23
to understand the thesis right from the
60:26
bottom up and i want to understand
60:29
what could possibly go wrong i want to
60:31
understand
60:32
one of the first things i look at is
60:34
what are all the things that could go
60:36
wrong
60:36
with i have this view what are all the
60:38
things that could go wrong
60:40
with with this view and and if i do that
60:43
on
60:45
bitcoin and the altcoins
60:48
i can’t see a path for any of the
60:49
altcoins
60:51
i may be wrong right i may be but but i
60:54
don’t see what they and and the problem
60:57
is
60:58
measuring in a point in time and that’s
61:00
actually maybe maybe the opposite side
61:02
of the argument opposite side of the
61:04
argument is i totally understand how
61:05
some people can make a lot of money in
61:07
the short term uh short term on some of
61:09
the altcoins i totally understand it
61:11
whether they’re whether they’re gamed
61:12
whether if you get in you’re trading on
61:14
a a
61:16
on on hype and everything else and
61:17
you’re trying to trade a momentum play i
61:19
get it i’m talking the thesis for them
61:23
against the thesis for
61:25
uh
61:26
for
61:26
what is going to happen
61:29
with
61:30
projecting what’s going to happen with
61:31
bitcoin forward
61:33
and then specifically i’m talking later
61:36
because it’s i don’t think i don’t think
61:38
we would disagree that bitcoin is
61:40
already
61:41
one layer one store of value
61:44
sure
61:45
absolutely
61:46
and so so so what what in time
61:50
is the technology develops on that on
61:52
layer two and three
61:54
do those alt coins provide that it gives
61:56
it gives a defensible moat to the
61:59
altcoin
62:00
and that would be my question i think if
62:03
you approach everything happening in
62:04
crypto from the standpoint of this is
62:07
solving a monetary problem
62:09
then bitcoin is the clear winner
62:11
solution bar none i don’t even think any
62:13
of these other coins like even ether or
62:16
any of these other layer ones are even
62:17
trying to be a money or a store i mean i
62:19
guess there is the ethos sound money
62:21
whatever i think they it wins the store
62:23
value i think why they just changed to
62:26
that
62:27
is because they realize exactly what we
62:29
just talked about
62:30
they realize that unless it’s
62:32
unless it becomes a store of value which
62:34
is highly unlikely that everything else
62:37
is lost over time i believe that that’s
62:39
why
62:40
but it becomes a centralized store of
62:42
value in that case
62:44
so i would go
62:46
like
62:46
starting way back right the advantage
62:48
that humans have well for everything
62:50
else on this planet is coordination
62:51
right that’s how we hunted back on the
62:53
plains of the savannah that’s how we
62:54
were able to build cities from an
62:55
evolutionary standpoint our one big
62:57
advantage is that we’re intelligent
62:58
enough to coordinate in novel ways right
63:01
we had like nomads roaming around that
63:02
we had cities um
63:05
consummate to that
63:06
uh trend right which is like a millennia
63:09
old trend in humanity uh you have
63:11
everything moving more digital in
63:13
general right life uh is is moving to a
63:16
more digital plane um and in my my
63:18
personal thesis behind everyone who
63:20
doesn’t understand bitcoin the chief
63:22
objection if you scratch hard enough is
63:23
that you can’t pick it up with your hand
63:25
that’s my personal thought process on it
63:27
and i really believe that uh like if you
63:29
really dig hard enough what you come
63:31
down to is the problem that i can’t hold
63:33
it in my hand um so i i personally kind
63:36
of see economies transitioning to
63:38
something that looks a lot more digital
63:40
so if you go back to the original
63:41
innovation of what did satoshi create i
63:44
think what he
63:45
created was
63:47
the creation of scarcity in the digital
63:49
realm and the first most important use
63:51
case of that is the monetary use case
63:54
and i think bitcoin handily solved that
63:57
monetary use case
63:59
now i see what’s happening in
64:01
ethereum and you know dows and nfts is
64:04
like okay now we’ve got the money layer
64:07
of this new digital world solved what
64:09
are the other things that we’re going to
64:11
build in this new digital realm
64:14
and when i look at the existing world
64:16
and everything’s completely out of whack
64:18
today so let’s like use another period
64:20
of time in history but i look at what is
64:22
the
64:24
sound value pristine collateral type
64:26
thing that everyone wants to own in
64:28
relation to riskier assets and more
64:31
productive assets companies things that
64:33
are building on top of that
64:35
pristine collateral and it’s like you
64:37
know so i guess the way i look at it is
64:39
the the eventual value of things that
64:41
are going to be built in this new
64:42
digital ecosystem looks roughly like the
64:44
ratio of gold to equities today that’s
64:47
my like you guys can totally disagree
64:48
and tell me why i’m an idiot but that’s
64:50
the way that i think about it ics
64:53
transitioning to a primarily digital
64:54
native economy i think gold by the way
64:56
like i’m younger i see the value in gold
64:58
honestly if i’d been bored 70 years ago
65:00
i would own a lot of gold today i only
65:02
own bitcoin because i believe that
65:04
economic value is transitioning to a
65:06
largely digital plane i think the
65:08
preferred store value is going to be
65:10
bitcoin and i i actually think when the
65:13
rest of the world starts to consider
65:14
bitcoin as a store value instead of a
65:16
risk asset is when the majority of the
65:18
economy happens on this digital plane
65:20
but that’s my overall framework jeff so
65:22
so yeah so let’s play that for forward
65:25
and and because i agree with a lot so
65:27
you said solve the coordination problem
65:28
i totally totally agree right the the
65:31
byzantines general problem and
65:32
everything else and bitcoin solves that
65:34
coordination program a
65:36
coordination problem at a different
65:38
level
65:39
where you don’t need to have slack in
65:42
the system
65:43
somebody else choosing how much money in
65:46
an intermediary choosing how much money
65:48
is going to be held as slack in the
65:50
system because it can’t it can’t uh it
65:53
it can’t
65:54
uh
65:55
settle every 10 minutes
65:57
right so so so
65:59
that coordination problem becomes solved
66:01
with bitcoin
66:03
and
66:04
now the next step of that is the
66:06
question is is two
66:08
does it require a whole bunch of other
66:10
altcoins to be built building
66:13
layer two on top of the internet
66:16
right because if if you just say what
66:18
you just said
66:19
is then you have to see bitcoin as a
66:22
primary protocol like tcpip it is the
66:25
internet
66:26
it’s the internet of money if that’s
66:27
true sure
66:29
right now
66:30
what i believe happens on top of that
66:32
internet of money
66:34
through layer two and three layer three
66:36
solutions is all of the innovation takes
66:38
place on top of it rather than
66:40
in a different different silos
66:44
because because it solves that
66:46
coordination problem and it’s already
66:47
solved that that anyways that that is
66:51
if you’re looking out kind of looking
66:54
out and projecting if if you said today
66:56
or if you said let’s not use today
66:58
because we we can see the evidence of
67:00
lightning network
67:02
reinforcing what i’m saying
67:04
and i think you’ll see the evidence of
67:07
of the same thing with taproot and and a
67:09
whole bunch of other things reinforcing
67:11
an entire
67:13
ecosystem build on top of it
67:15
but let’s look back in time two years
67:18
instead and and bitcoin only was the
67:21
store of value
67:22
it was greg’s savings account
67:24
right it was only the store value or it
67:26
was it was just it was competing against
67:29
gold
67:30
and you didn’t have lightning network
67:33
and there was an opportunity and there
67:34
was a whole digital economy thriving
67:37
and there was an opportunity to create a
67:39
digitally native token that could help
67:42
that along
67:43
that was that bitcoin couldn’t do
67:46
that’s why i totally understand ethereum
67:49
where it was
67:51
i understand the value creation that
67:53
came on the ethereum of trying to do
67:55
something else and a whole bunch of
67:56
value delivered from that
67:59
my question is
68:01
i don’t see the use case going forward
68:03
with all of the innovation and
68:05
everything else that’s happening that’s
68:06
reinforcing the primary network i don’t
68:09
and and i may be wrong
68:11
but i don’t see it hey guys i don’t
68:14
think i’m going to get back in the show
68:15
but i have to run anyway
68:17
yeah i’m sorry about that
68:19
it’s all good jeff i’m so glad i had the
68:21
last uh the opportunity to listen to it
68:23
i don’t think i’m i’m being recorded but
68:25
i wanted to say thank you to you both
68:27
and please relay that to the uh to the
68:29
crowd i love being on a show with jeff
68:33
because i learn
68:35
way way way more in 45 minutes or an
68:38
hour and a half than i’ve learned in you
68:40
know the week and a half prior so right
68:43
right back at you greg great back at you
68:45
well let’s keep this going because the
68:47
kids need it michael there’ll be more
68:49
than one winner
68:51
and there needs to be more than one
68:52
winner in the short term
68:54
but in the long term and that’s the
68:56
difference between a trader and an
68:58
investor
68:59
in the long term
69:01
uh you know you play your thesis
69:03
i really really really hope that
69:08
what you guys keep doing is educating
69:11
that’s all that’s important jeff says
69:13
frequently he may be wrong and i know
69:15
for sure i’m
69:17
often wrong
69:18
but there’s a trading expression
69:20
frequently wrong but never in doubt okay
69:23
i’m frequently wrong but i’m never in
69:25
doubt okay so keep up the good work and
69:28
uh and i i really appreciate you guys
69:30
inviting me have fun on your trip jeff
69:31
we’ll talk soon okay bud thanks thank
69:34
you guys thank you good day good day
69:38
all right i’ll give a bit of a
69:39
disclaimer for for greg uh since we i
69:41
think lost him uh for whatever reason it
69:43
might have been uh networking space or
69:45
whatever what we got to wrap this up i
69:47
guess but jeff this has been awesome i
69:49
guess look end of day um i just really
69:51
appreciate you coming on the show
69:52
sharing your opinion here i have no idea
69:54
which one is going to be right i think
69:56
at the end of the day you need to do the
69:58
thing that uh i’ve started to give
69:59
people this advice when they’re like how
70:00
much bitcoin should i buy or say just
70:02
buy the amount
70:03
buy the amount that if it dipped 50 you
70:06
wouldn’t sell it and at the end of the
70:08
day i think people should only really do
70:09
things that they have conviction in i
70:11
have a lot of conviction in bitcoin i
70:13
also have a lot of conviction in eth i
70:14
don’t have a colossal amount of
70:17
conviction in other things outside of
70:19
those two assets at this point so i own
70:21
some of them but i don’t own a whole lot
70:23
and that might change um try to keep
70:25
everyone on the show updated
70:27
but you know at the end of the day what
70:29
i do have deep conviction around is this
70:31
space in general because i can see guys
70:33
like you uh jeff and greg you guys
70:35
moving in that just the pure
70:36
intellectual capital uh and the amount
70:38
of stuff going on just blows my mind all
70:40
the time and i just feel super lucky to
70:42
be a part of it to be completely honest
70:43
yeah and and by the way michael me too
70:45
that conversation we just had on that
70:48
those are the types of conversations
70:49
open curious on and everything else and
70:52
different viewpoints that actually bring
70:54
a whole bunch more and again i might be
70:56
wrong i could be too it’s it’s exactly
70:59
but but that type of conversation brings
71:02
a whole bunch more people to to
71:03
understand and it’s important it’s a
71:06
really important asset class to
71:07
understand yeah i do i want to put you
71:10
on the spot here to plug your book
71:11
because it’s great uh tell people about
71:13
the price of tomorrow where they can
71:15
find it also if they want to find out
71:16
more about you just like what’s the best
71:17
way to do that uh myself just on twitter
71:20
at jeff booth is probably the best place
71:22
to find me
71:23
amazon’s probably the best place to find
71:25
the book the price of tomorrow why
71:26
deflation is key to an abundant future
71:28
jeff’s book was foundational for me for
71:31
understanding a lot of the deflationary
71:32
argument and the impact of money
71:34
definitely i’ll i’ll say it for you jeff
71:36
you should definitely go read this book
71:38
and uh and that’s about all the time
71:40
that we have uh jeff this has been a ton
71:42
of fun uh we’re pouring one out uh for
71:44
greg we lost just at the tail end of the
71:46
show uh but it was a ton of fun thanks
71:48
so much for coming on
71:50
thank you it’s awesome
71:51
thank you
71:53
[Music]

Bitcoin Must Be Accepted By World Bank, According To Charter

The World Bank has poured cold water on El Salvador’s adoption of bitcoin as legal tender, saying it cannot support the move due to “environmental and transparency” concerns.

But the developmental body may soon be forced to accept bitcoin payments from countries that have embraced the cryptocurrency.

Its founding document, the 1944 Articles of Agreement, outlines the procedures and principles by which the World Bank pledges to engage with sovereign governments. A central theme in the document is its commitment to accept payments from member states in local currencies.

Section 12 of Article V defines acceptable “forms of holdings of currency” as follows:

 

  • The Bank shall accept from any member, in place of any part of the member’s currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest-bearing and payable at their par value on demand by credit to the account of the Bank in the designated depository.

 

So, as well as allowing payments in “the member’s currency”, the charter allows central banks to pay with “notes or similar obligations” backed by their reserves.

These are effectively IOUs from governments. They can be backed by dollars. They can be backed by precious metals (the US Federal Reserve guaranteed its notes with gold until 1934, and with silver until the 1960s). Or they can be backed by bitcoin; perhaps, in El Salvador’s case, the $150m bitcoin fund being established by Banco de Desarrollo de El Salvador, the national development bank.

Things gets more awkward. Section 9 of Article II states that holdings paid into the bank by members should be continually re-valued (presumably against a “real” benchmark like USD). If the local currency has appreciated, it says, the World Bank should do the decent thing and hands the gains back:

  • Whenever the par value of a member’s currency is increased, the Bank shall return to such member within a reasonable time an amount of that member’s currency equal to the increase in the value of the amount of such currency

 

Conversely, if the local currency has depreciated, the member gets margin called and has to “pay to the Bank within a reasonable time an additional amount of its own currency sufficient to maintain the value”. Or, put another way: when bitcoin starts tanking, the World Bank starts stacking. Nice.

All of this depends, of course, on whether or not the body will respect El Salvador’s sovereign right to choose its own currency.

That’s not a foregone conclusion. Reuters asked them about that yesterday and got a decidedly arsey response. “We are committed to helping El Salvador in numerous ways, including for currency transparency and regulatory processes,” a spokesperson waffled. “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

The World Bank, by the way, has invested more than $12bn in fossil fuel projects over the past six years, representing at least 6% of its total investment portfolio. It also accepts gold payments from members, despite gold mines emitting on average 0.8 tonnes of CO2 for every ounce of gold produced.

Still, they’re worried about bitcoin’s carbon footprint. So they’ll be happy to know that, by some estimates, 76% of bitcoin miners are already using renewable energy.

Oh yes, and every transaction ever made on the bitcoin network is recorded on an immutable digital ledger that is fully visible to all market participants. That makes it, by far, the most transparent monetary network that has ever existed. No funny business allowed.

Follow me on Twitter.

(Mike Peterson/Bitcoin Beach) LISTEN ON Apple Podcasts Spotify Pocket Casts Google Podcasts Castbox Stitcher RadioPublic iHeart Radio RSS Feed An Interview With Bitcoin Beach, the Community That Inspired El Salvador to Adopt the Bitcoin Standard

bitFeaturing Bitcoin Beach’s Mike Peterson.

This episode is sponsored by Nexo.io.

Download this episode

On today’s episode, NLW is joined by Mike Peterson, director of Bitcoin Beach. Bitcoin Beach is a community project in El Salvador that has spent the last two years helping individuals and companies integrate bitcoin into their daily lives and long-term habits. President Nayib Bukele cited Bitcoin Beach in inspiring El Salvador’s bitcoin legal tender law.

In this interview, NLW and Mike discuss:

  • How he came to reside in El Salvador
  • How the bitcoin community project started
  • What drove community adoption at the beginning
  • How remittances and COVID-19 solidified the value of BTC to the community
  • How bitcoin has changed how people think about investing
  • How international bitcoiners such as Miles Suter and Jack Mallers got to know the project
  • Where the project stands today (complete with 22 different community initiatives)
  • How bitcoiners can get involved

Find our guest online:
Twitter: @Bitcoinbeach
Web: www.bitcoinbeach.com

See also: Strike Launches Bitcoin Lightning Payment App in El Salvador; Full EU Support Is Next

Image credit: Mike Peterson/Bitcoin Beach

Transcription

What’s going on guys? It is Friday, June 11. And today, I am so excited to bring you a conversation with Bitcoin Beach’s Michael Peterson. If you were on Nick Carter’s Twitter space on Tuesday night, where El Salvador’s President Nayib Bukele popped in to answer questions for about an hour, you heard Mike Peterson talk. You see, Bitcoin Beach is a project in El Salvador that has been running for a couple of years now. And they set out to show that for one, bitcoin could be used day-to-day as well as it could be used as a long term investing and saving technology; and two, that bitcoin wasn’t just for rich people: in fact, the poorest of the poor could often find even more empowerment in it than the rich that we normally associated with.

Their website states: “we believe that if a local economy is created with the support of bitcoin, new opportunities will open up for the community members. The project Bitcoin Beach is creating a sustainable bitcoin economic ecosystem on the coast of El Salvador, where the majority of people do not have access to bank accounts, and the local businesses could never qualify for merchant accounts needed to accept credit cards.”

From the early days, bitcoin promised to allow us to bank the unbanked and return power from governments and financial institutions to the individual. However, until recently, this promise has remained elusive. Bitcoin Beach is a movement to make sure that the true potential of bitcoin is realized, and that those who have been excluded from the banking system are the primary beneficiaries.

On that call on Nick Carter’s Twitter spaces, President Bukele went out of his way to say that it was the inspiration of Bitcoin Beach, showing that bitcoin wasn’t just for rich people, that it could improve the outcomes of individuals and a community as a whole that inspired them to start looking into bitcoin in the first place. So with that, I’m incredibly excited to bring you this interview about how Bitcoin Beach came to be, what it’s doing, where it’s headed, and how you can get involved.

NLW 

I’m so excited for this conversation. Obviously, it comes at a really awesome time. But you and I’ve been talking about doing this for a while. So perfect, that it’s all coming together right now.

Michael Peterson 

Well, I’m glad the president of El Salvador could finally get me on your show.

NLW 

He did it as a favor. Nah man, I mean, obviously, anyone who’s listening to The Breakdown frequently has context around, you know, a little bit of context around what’s been going on. But I think that one of the things that’s so important is that this didn’t come out of nowhere. And a lot of the place that it came out of is the work that you guys have been doing down in El Zonte and in El Salvador just more broadly, for the last couple years.

But let’s go back even before that, like, how did you end up getting involved in this? How did you end up spending time down there in the first place? I mean, what is your story that got you there?

Michael Peterson 

Originally, I wound up in El Salvador on a surf trip. I mean, they have wonderful waves and warm water. And so, about 17 years ago, I went down and just really fell in love with the country. I’ve traveled all my life, I’ve probably been to like 45 different countries. And it was the first time that I wanted to buy a house. And so I called my wife and said, “Hey, we’re buying a house in El Salvador.” And three weeks later, we flew back down, and we bought a house in El Salvador. So that’s kind of how it started. And initially, we just spent a few months of the year there. But about seven years ago, we made the decision to basically split our time between there and the US and kind of be more full time there.

Michael Peterson 

And that was kind of where it was all born. Once we were there, we saw you know, the needs, we got to know a lot of our neighbors and kind of better understand their experience. And so we became involved in some different educational campaigns, economic development initiatives. And you know, that was kind of parallel to me going down the deep rabbit hole with bitcoin. And then two years ago, in conjunction with a donation to the project we were doing that was done in bitcoin that wanted to see it be used in real ways. We basically bitcoin-ized everything we were doing. And it’s just kind of blown up from there.

NLW 

I think a lot of things that are interesting about this is one, having a long duration and relationship and experience with the place that you’re interacting with before you decide to do a bunch of programs. That’s something that I think is a little bit too rare in terms of a lot of the kind of global development, global philanthropy work that happens. So it’s really interesting that you came there because of the thing that you loved, which was surfing, fell in love with the place, got to know the community, and then it kind of grew organically from there.

And it feels like a lot of the the bitcoin side of the whole project was also similarly organic, where it sort of started to present itself, you were exploring it, and it just kind of made sense to keep going deeper and deeper. I mean, what were the early pieces of that like? Let’s talk about the point where you guys have a bitcoin donation that comes in, probably trying to figure out how to actually use that, what was that kind of actual turning point, I guess, and what were some of the first steps to bring bitcoin into the work that you were doing?

Michael Peterson 

I definitely don’t think we would have been able to do any of it had we not had that kind of long term relationship already with the community and hadn’t built that trust. Even the guys that I worked with on a daily basis, when I told them, “hey, we’re gonna start using this magic internet money, and we’re gonna give stores to accept it, we’re gonna get people to start taking their salaries in it,” they just kind of looked at me like, “okay, Mike.” So that was kind of the initial response.

But we do a lot of work with the youth, especially in gang prevention. And a lot of these youth didn’t have other job opportunities. So they were actually kind of forced to take bitcoin because they didn’t have any other job options. And so we were paying them in bitcoin, to clean trash out of the rivers, or clean the beach. And once they started using it, I mean, it only took a couple days for it to really click for them that, wow, this is so much better than using dollars. I can send it to my friend across town, I don’t have to worry about putting it in the bank, it’s always with me, because I always have my phone.

And so it really started with the youth. And then from there, you know, once the youth had it, and were looking to spend it, we got our first store on board, we kind of cajoled them into accepting it. And they did it kind of reluctantly. But you know, at this point, more than half their sales are in bitcoin. So it’s kind of in that same pathway with everybody. And initially, they’re a little bit hesitant, they’re a little bit skeptical, which is healthy, people should be skeptical, because we don’t want them falling for, you know, scams or other scam coins. And so it was good for them to be skeptical.

But once they start interacting with bitcoin, and once they start doing their own research and realizing there’s this global market, there are people all around the world that want bitcoin that are willing to exchange it for value. There’s doctors and lawyers from the capital city of San Salvador that started driving down to El Zonte to buy bitcoin from people from the youth that they realize, “Wow, we really have something here.”

NLW 

So I guess let’s talk about like, what the financial profile of folks in these communities, was or is going into this, what percentage of them are actually incorporated in the traditional financial system have bank accounts, how much of it is just totally cash based before that, and then maybe just as another dimension of this, what is mobile or internet penetration, kind of to correspond with that?

Michael Peterson 

I’d say those who do pretty much everything in cash is probably 90%, maybe an additional 10% have bank accounts, but they don’t really use them, but probably 80%, there’s no bank accounts at all. But the internet and mobile penetration is, you know, probably the reverse of that, there’s probably only 20% of the population that doesn’t have at least somebody in their family that has a smartphone that’s capable of having a mobile wallet on it.

NLW 

And so when you guys were kind of introduced to it, how much was the initial value proposition that was exciting to people, about the comparative convenience of the digital money ecosystem versus kind of a cash ecosystem, versus an interest in the bitcoin assets? Specifically, I think, you know, part of the motivation for the question, too, is, I think people are now really trying to understand how this community that you guys have down there can model other places. Obviously, we’re about to see a much wider experiment across El Salvador, but I’m interested in what clicked for people that got them excited.

Michael Peterson 

Initially, it was just the convenience. I mean, most of them weren’t that interested in bitcoin, if they would have had the option to have the same convenience in dollars, they probably would have chosen that initially. But over time, they started to realize that their bitcoin assets were appreciating and that they would much rather have their money being held in bitcoin rather than holding in dollars. I think that’s important for people to realize, they don’t have to understand everything about bitcoin, they don’t have to sell them on all the aspects of it, what you really need to do is get them using it, once they start using it, they have that “aha” moment.

And then once they start holding it for longer periods, and seeing how much they put in versus what they can buy with it a year later, like, that’s how they flip switches. And that’s how they actually start wanting to put the effort into learning how to hold their own keys, how to custody it safely, the different options for non-custodial versus custodial wallets, and all those things. First, you get them using it, then they’ll do the work.

NLW 

It sounds to me almost like there’s sort of a twin value proposition that clicked for people. The first part of it being, “this is just easier and more convenient to use, it’s time saving,” all the things that come with any form of digital money in some ways. But then there’s the second piece around actually empowering people to feel like investors and like they have some agency and an ability to design their future a little bit more. I mean, is that a fair characterization?

Michael Peterson 

Oh, 100%. Because these are people who have never had access to financial markets, they’ve never even thought about having access to financial markets. So when they got money, they would just spend it right away. Because why not, it was just going to go down in value over time. So even saving seemed kind of pointless.

And we’ve seen that I mean, it literally changes people’s outlook on life. And always not just about money, like once they start thinking, hey, if I don’t spend this today, it’s gonna buy me more next year, there’s corollaries with education with everything else. Now, they’re starting to think, “Well, yeah, I have to forego, you know, earning a wage this year to go on to university, but longer term that’s going to be in my best interest.”

And so we’re seeing a whole generation that’s just looking at life very differently. And I mean, honestly, you see hope on their face. I mean, I know it sounds kind of corny, but for a lot of these people, this is the first time they felt like hope that they can build a future in El Salvador that they’re not going to have to follow the path of their parents to sneak into the US illegally and work in some dead end job. They can build a business based on bitcoin, they can work for an American company being paid in bitcoin, but still be able to live in the country they were born in. And so it really opens up the world to them.

NLW 

I think that one of the things that I’ve long felt is that our sense of the possible is shaped by what we see around us. And one of the things that we do extremely poorly, even in the US, is actually treat people of all kinds of economic classes like they should or care, they have the capacity to think about investing in their future in a meaningful way.

And some of that’s the language that we use, some of that’s financial media, which I think is kind of designed to be exclusionary and in-group, but I think one of the things that makes bitcoin pretty unique in that is just the divisibility of it, that you can see your stats going up, even if it’s a tiny amount. It feels different than, you know, owning a single stock and a single stock might be out of reach in most contexts, you know?

Michael Peterson 

Yeah, they’ve literally never had that opportunity. I mean, before investing used to mean like, they would buy a bunch of cement blocks, because they knew cement blocks went up over time. So if they had money and needed to build something in the future, they might as well buy those blocks now, so they at least don’t lose value. But for them to be able to buy something that’s going to go up in value over time? Like that really just shifts everything in their mind.

And it’s, I mean, these are just super intelligent, hardworking people that haven’t had these opportunities before. That’s the thing I always want to make sure people realize when they hear about the Bitcoin Beach project, or they hear about what’s going on in El Salvador. It’s not that, you know, I, myself, or anybody else brought Bitcoin down to El Salvador. The Salvadorans proved the use case for Bitcoin. They’re the ones that proved that Bitcoin can be used in the ways that we always talk about that we’ve never seen before, they figured out a way to make it work. And they’re literally upending the world’s financial system. So I just want to make sure that people realize, these are these young people that a lot of people, you know, look at as having no future, but they are literally changing the future.

NLW 

Yeah, I’d love to hear more about who actually works on this down there, like who’s kind of driving it and what are the different aspects of the project? And then I guess simultaneously, maybe more or first just to kind of a follow up question from from the last question is, have you guys gone through a sustained period of Bitcoin going down? And, you know, have you seen that change people’s perceptions or, you know, how did you help people kind of think through how to think about that experience?

Michael Peterson 

Yes, we have a team of probably about 15 people. Most of them are, you know, ages kind of, 16 to 30, is the majority of them. Jorge Valenzuela is the community leader that heads it all up. He’s one of those guys that, I don’t think he ever needs to sleep. He just runs circles around me. And he has this huge heart and he’s always looking for ways to improve the community.

And so, right now we have 22 different programs that are going on: everything from the lifeguard program, where for the whole region, he launched this professional lifeguard program where we have 62 lifeguards being paid in Bitcoin. We have English classes where people are learning English, but the teachers are being paid in Bitcoin. We have a trash collection service for the whole community where the people collecting the trash are being paid in Bitcoin. So it’s not people being given Bitcoin, like they are earning Bitcoin and they prefer to earn Bitcoin and they’re spending Bitcoin at the local stores and it’s Bitcoin that’s kind of sustaining the local economy.

NLW 

So it’s, I mean, it sounds like more than anything, it’s a kind of pretty end-to-end community-driven, bottoms-up economic development initiative that happens to have this new asset that serves to kind of facilitate the ease with which the the kind of resources flow through the system and also creates kind of a different mentality and incentive around it.

Michael Peterson 

No, 100% it is, this is very bottom-up and it’s funny because when bitcoiners, you know, when when expat bitcoiners come down, and they see people wearing bitcoin t-shirts or bitcoin hats, they kind of freak out because they’re so used to being you know, ultra secretive, and you don’t want anybody to know you’re in Bitcoin, because they’re gonna rob you because they’re gonna think you’re rich.

I tell them no, in El Zonte if you have Bitcoin stuff, they think you’re poor, because it’s mostly the poor that are using Bitcoin and it’s the wealthy who are kind of the last to adopt it. And so it really is the money of the people. And I think that’s what makes our project different than anything I’ve seen anywhere else in the world is it really is, you know, the people that only have a second grade education, the people that are living in shacks with dirt floors that are interacting and doing most of their life in bitcoin.

NLW 

You started in 2019. What was the sequence, I guess where did different things come online? What was first, what was next? And where did you guys start to connect with some of these international bitcoiners obviously, Jack Mallers came down Miles Suter from Square came down, how did that connection happen?

Michael Peterson 

Initially, when we started we started with the youth. We have a real focus on the youth because in El Salvador, there’s a huge gang issue. So a lot of the youth from age 10 to 14 are recruited into the local gangs. And so we wanted to provide a more positive pathway forward. And so that was our initial focus, we were paying these young men and women to pick up trash to do other kinds of community benefit jobs, and they’re being paid in bitcoin. And so initially, it was this really kind of small thing.

And we wanted to go down to the LABITCONF, the Latin American Bitcoin conference, which in 2019 was in Uruguay. And so I took Jorge Valenzuela, who I mentioned earlier, and I took another gentleman, who was from another town that we have a project in, a gentleman named Juan. We took them to this conference.

It was the first time they’ve been out of El Salvador, first time they’ve been on a plane, and definitely the first time they’ve been around a bunch of crazy bitcoiners because we were in this big convention hall, and I think Max Kaiser was the first person that came on. And, you know, he did his whole shtick and was totally obscene. And they’re looking at me, like, “What in the world have you brought us to?” Fortunately, it got a little more in depth after that.

And, you know, they came out of there dyed in the wool, you know, bitcoiners. I was able to bring them back with that experience, with that view that this is an international thing. And then they started kind of spreading that in the community.

And also, during that time, I ran into Peter McCormick. And I told him, “Hey, we have this little project, we’d love to have you come check it out.” And you know, I was thinking, like, in a year, maybe he’d come by. And so he looked at me and said, “Okay, well, I’m going to Bolivia tomorrow, so I can be there on Thursday.” I was like, oh, okay, yeah, let’s do this.

So, Peter McCormick actually was the first one that kind of put us on the map. We did a podcast with him and he put some videos out, I think he quadrupled my Twitter account with one video that he sent out from my, you know, 30 Twitter followers at that time to 120. He put us on the map there.

And then, you know, it was growing, we were instigating some new programs and kind of methodical way. And then COVID hit. And when COVID hit it was a combination of there was a huge needs. But also it gave us an opportunity to use Bitcoin in a way that otherwise would have been irresponsible.

I’m really a big believer that when you do any type of development work, or any type of aid work, you have to be very careful to not cause more damage than good. You have to be very careful not to distort the local economy, you have to be careful not to dentists, dissent, disincentivize work. And so generally, for us to just give bitcoin out is something that we, you know, we try to avoid. But during the COVID lockdown, nobody was allowed to leave their house, they weren’t allowed to work. And nobody had any money for food. And so we kind of switched at that time.

We started doing basically like a universal basic income, to all of the town, there were like 500 families, and we were sending out about $40 worth of Bitcoin every three weeks. And that kept the stores in business because there was money flowing through, they could buy their basic food goods, it gave them enough to buy at least the basics of food. And they got all of them using Bitcoin and seeing how easy it was to use, not just in person, but they could also you know, send the payment to the store, and then have the store come deliver food to them, which was a huge issue during the COVID lockdown. So that supercharged it.

And then coming out of that we had Miles Suter was kind of the second person that came down. And he was originally only planning to come down for a couple weeks and he stayed for six months. And obviously huge help somebody with his experience, his network. And then Jack Mallers kind of followed, and to bring Strike with him, and just, I mean, what a huge asset to have that system for people to be able to send remittances, because remittances is kind of the Holy Grail. It’s the thing where bitcoin really shines.

And so, you know, that’s kind of all these things have been happening. And at the same time, our local programs have just been turbocharged also. So now we have 22 different community programs where we’re doing all this. And we also have probably a few 100 people that are actually getting their salaries in bitcoin now. Some of them that work with us, but a lot of them that work for other companies, both local and international.

NLW 

How much has this been able to be funded from that kind of initial donation? Or have you guys had more donations? I mean, it sounds like, obviously a ton of work that’s gone into this.

Michael Peterson 

Yeah, a lot of that was from that initial donation, but then there’s been a lot of subsequent donations from a lot of different bitcoiners you know, something as small as you know, a couple of 100, a couple 1000 SATs to you know, people sending large chunks of a bitcoin. And so it’s enabled us to sustain it.

But what our goal is, is to really make it so that we’re not having to raise funds. We want individuals earning bitcoin, we want people that have jobs with bitcoin companies. So the fact that now we have a number of people that are employed by Strike, Strike’s actually paying rent on the office building of ours that they’re using. And so that’s, you know, helping fund the project.

And then we have a number of other companies that have started hiring people from El Zonte to help them with everything from ongoing or onboarding new customers, to doing marketing. We even have another bitcoin related company that’s having an architect student down here helping them put together construction bids.

NLW 

Super interesting. I mean, this obviously gets into I think some of the stuff that’s happening now. So maybe just to kind of transition into that, let’s actually talk about your perception of Salvadoran politics and how that’s changed. You’ve obviously been going down there for a seriously long amount of time. You saw the transition to the New Ideas party. Holding aside everything that we know now in bitcoin, like, how would you describe the shift in political sentiment over the last, I don’t know, 5, 10, years?

Michael Peterson 

Well, the shift really happened a few years ago with the New Ideas Party and the rise of Nayib Bukele. Before that, everybody was very cynical about politics, you know, kind of go back and forth between the right and the left there, you know, reminds me a lot of the US system. So I was really surprised when Nayib Bukele rose to power because, you know, we’ve seen third party candidates in the US, but we’ve never seen them be able to get that type of traction.

And he really shook things up. I mean, he didn’t, he didn’t do any of the traditional debates. He didn’t use the traditional media, he used Facebook, he used TikTok, and I was shocked to see how much support he was able to rally through that. So you know, in El Salvador, I’m very apolitical. I’m not a Salvadoran, and I stay out of the politics. But I just as an observer, I have never seen people more excited. And I’ve never seen people more hopeful of the future.

And so I in general, I’ve liked most of the stuff that he’s been doing. You know, there’s always a concern when somebody has that much popular appeal that it could go sideways. But so far, I’ve been very pleased. And even over the last six months, we’ve met with his Minister of the Economy, Minister of Tourism, the Minister of Education, and I’ve never met with bureaucrats before that were so forward looking, and who really wanted to help the people, and weren’t just kind of stuck in the past.

So I know he’s getting a lot of flack from certain quarters. But so far, from what I’ve seen, it’s been all positive. And especially in light of the history in El Salvador, where the three previous presidents blatantly robbed the country. One died under house arrest, one’s in jail now and one, you know, fled the Nicaragua for asylum. So that tells you, you know, the bar wasn’t very high. But he definitely has the people behind him.

NLW 

So do you have a sense of when the things that you guys were doing, when they get on his radar or his administration’s radar? Was there someone who was kind of paying attention? Who was sort of beneath him? Or what was that process?

Michael Peterson 

Actually, on that Twitter space call last night, I got some new information. I think a lot of it was when there was a Forbes article that was done last summer. And I think that caught the government’s attention. They’re not used to getting positive articles, you know, from publications like Forbes. So I think that got them starting to take a look at what we were doing. And there’s been a lot of subsequent good press.

They’ve also been very open to allow us to meet with them. I mean, we’ve had several meetings where not just with the ministers, they would bring in all their aides, they were really looking and considering what we were talking about. Miles Suter from Square went to the meeting with us when we met with the economic minister. And, you know, he was telling from their perspective of what El Salvador would need to do to attract companies, for companies wanting to headquarter here. And they took it seriously. So I’ve never really run into that before with the government.

NLW 

I think that obviously, there’s a huge element of this that’s attracting bitcoin businesses. And that’s something that, you know, has been a constant refrain and question, I mean, really, ever since COVID hit, especially this kind of global competition for talent for tax revenue in the form of companies. But do you know when the legal tender idea got on their radar?

Michael Peterson 

I’m not sure. I mean, I’d like to think that we had some part of that, you know, anytime we had a chance with, to do an interview or meet with any of the government ministers, we kept pushing that, that they could be that, that party, the politicians that go down in history for putting the world on a bitcoin standard. They’re already on the US dollar, so they don’t have to worry about it competing with their currency. So they really had nothing to lose, but so much to gain. I don’t know when they started taking that seriously or what kind of got them to go in that direction. But of course, we’re thrilled they did.

NLW 

Well, one of the things that I think is remarkable in that is a lot of people are noticing is, I think that if you had polled the average, super engaged, enfranchised bitcoiner on Twitter, you know, at the beginning of 2021, about whether a country would adopt bitcoin as a legal tender as a currency first or bitcoin as kind of a reserve, right, I think almost everyone would have said reserve. And instead, it’s very clear that the example that you guys set of a fully functioning, you know, economy, that includes using it for some people as a long term investment for others as a medium of exchange that really kind of obliterates the lines between these things, was influential. I mean, you know, President Bukele made that clear, even on last night’s call.

Michael Peterson 

Well, I think the bitcoin community has become a little too just locked into the “digital gold” narrative. I’m not against that narrative, obviously, I think that’s where everybody should be doing their savings. But bitcoin’s also money.

And especially with the second layer protocols, like Lightning, like it works, it’s easy, it’s easier for me to buy something online, and scan a Lightning QR code than the point my, you know, physical credit card, and give them my name and address and my credit card number and who knows where that’s going to go. So it works for transactions, it works in El Salvador, we’ve seen that and these are people in kind of the hardest of environments, you know, they’re living in places, some of them have electricity, but they can still get online, they still have smartphones, and they’re still transacting. So I think people need to realize it doesn’t have to be money or digital gold, like it is both.

NLW 

So I mean, on this front, I actually forgot to ask this question, and then we got talking about something else. The question around what happens when bitcoin goes down? Like, have you seen people be stressed out? How does it impact it as a medium of exchange? I mean, this is the critique that we’re constantly from people who don’t think that bitcoin is viable for this type of setting is, it’s way too volatile. What is your experience with that?

Michael Peterson 

That’s been a real big concern of ours from the beginning, but it’s actually been much less of an issue than we anticipated. We’ve seen like, even in this last big drawdown, the people that just recently got into bitcoin, they’re kind of freaking out. But the people who, you know, have only been at it for six months, they’re like, “No, we understand this is how bitcoin works. This is kind of the history of it, we think longer term, it’s going to go back up.”

I actually like it when we have these big drawdowns, because it it kind of squashes the speculative fever, when we’re having that big run up, then I was starting to get concerned because then people were, you know, thinking about borrowing money to buy bitcoin, or selling their family land to buy bitcoin. And we’ve always really discouraged that we want people to dollar cost average in, or for the stores that are accepting bitcoin, like set aside a part of that as their savings. But we don’t encourage people to be overly leveraged.

And we also encourage them to make sure they understand the ups and downs before they go into it deeper. And we do see a little bit of shifts, like most recently, when we saw this big pullback, we did see less people spending their bitcoin at that time. They weren’t, you know, selling it, but they were just holding on to it and not spending it and waiting for it to go back up. So you see slight shifts, but most of them have been pretty adept at, you know, kind of riding the waves and knowing how to manage the volatility.

NLW 

When it sounds like that’s like, that’s a natural, mature tension that people have to make decisions on for themselves, right? Like, you’re not getting, it sounds like there’s no denying you guys aren’t trying to obfuscate the fact that bitcoin is this asset that’s likely to appreciate over time based on its particular dynamics and global adoption. But at the same time, the whole point is like people get to make their decisions day in, day out about how much they can use, how much they can save. And that’s just kind of an individual process that everyone in every family has to go through.

Michael Peterson 

Exactly, what I will say is it has really, really switched the mentality about savings. El Salvador is a very spending culture. It’s not a savings culture. And we’re seeing people for the first time in their life, like they’re really focused on savings, because they have this sense that well, “what I’m spending today is probably gonna be worth double in the future. So I’m going to spend as little as possible.”

NLW 

I think one of the things that I always think about is, I don’t know, if we never talked about this, but I spent the first I don’t know 5, 10 years of my early career thinking that I was going to be focused on global development and global social change. And it’s unbelievable how frequently our kind of good-intentioned thoughts towards other people lead us to infantilizing them, and not giving them decisions. So, something like “people can’t deal with the volatility of bitcoin or they can’t make the decisions for themselves about how much to save versus spend,” like, “we shouldn’t give them the availability to spend it because you know, everyone’s going to want to save it.” Well, that’s just patronizing. Right? You’re not assuming that people have the ability to make decisions for themselves about how to strike those balances. And it’s not something that people do intentionally. Often, it’s just something that kind of happens.

Michael Peterson 

I’ve seen that when people come down, they’re kind of shocked at how sophisticated these users are. Especially for a lot of them, they’re living in poverty. And I tell them, hey, these people have made 10 times as many bitcoin transactions as you have, like in real world settings, they know what they’re doing. Even when Strike came down, they were wondering, “why do people keep sending money back and forth between the Strike wallet and the Bitcoin Beach wallet?” Well, they’ve used it as their bootstrap trading engine. When they want to go into bitcoin, they send it out of Strike into the Bitcoin Beach wallet, when they want to go to dollars, they send it out of the Bitcoin Beach wallet into Strike. And they were kind of blown away, like, “wow, we never thought people would use it like that.” So I think it’s really been a showcase for just how much intelligence there is in the region, and that they have just been held back by, you know, bad circumstances. But how much this can change in a short period.

NLW 

How, what has the mood or sentiment been like, since the announcement a couple days ago, about this bill, in the places, you know, in the communities that you work?

Michael Peterson 

I think it’s been well, obviously, within our team and our community, people have been ecstatic. I think, in the broader country, there is some confusion, you know, there is going to be a learning curve. I was actually at the conference in Miami for the announcement. So I wasn’t in El Salvador, and I’m in San Diego now. So I haven’t been back in the country since the announcement. But I’ve been talking with my team. And overall, they, especially in El Zonte, everybody’s just thrilled because, you know, this this little podunk, you know, beach town, that’s never been that important, you know, in the greater scheme of things in El Salvador, and now it’s the focus of the whole country. And there’s real good paying jobs that are moving in and people that want to be there. And so it’s a real dynamic time for the people in El Zonte.

NLW 

How do you guys think about this transition, like, you guys are likely to be looked at as a model, people are going to want to have information from you, you’re going to see more companies that want to come in. I mean, you’ve been very deliberate, intentional, it sounds like and how you’ve rolled these things out, how you’ve helped people figure them out, you know, how you’ve let the programs grow, how you’ve let people take charge of how these different programs are going to evolve. How do you think about this mass new force, both domestically, you know, but also internationally, that could be coming your way?

Michael Peterson 

We definitely want to be careful for how that rolls out. We don’t want to disrupt the community, we want to see growth happen in ways that’s good for the environment, that’s good for the quality of life for people. But we really view good paying jobs coming in is really life changing for the people there. A lot of them, you know, five years ago, their only plan or their only thought of how they can make it in life was to sneak into the US and work in some dead end job, and hopefully, eventually come back and retire in the country that they love, you know, having their kids grow up with them, hardly seeing them. Now they feel like “I can become an engineer and get a good paying job here, I can start a company that maybe it’s not directly bitcoin, but it’ll provide services to these bitcoin companies that are coming in.” And we’re seeing people kind of move their way up the food chain. And so for the first time, they’re really dreaming and thinking about how they can help lead the world.

NLW 

Has anything particularly surprised you about what you’ve seen from President Bukele and his team over the last couple days?

Michael Peterson 

To be quite honest, I’ve been kind of blown away by how aggressive and full-throated their plan has been. I mean, I think even if I had put together a proposal, it might have been a little more timid. And so I’m glad I wasn’t the one putting the proposal together. I mean, they, they really went for it, they’ve really swung for the fences. And I think that’s going to be what it takes for them to win in this. I think there’s going to be a lot of governmental and non-governmental forces that are going to come out and try to thwart this, I think there’s a lot of vested interests that are not going to want to see this work. And so I think they really did have to swing for the fences. And I think if they are successful, it’s gonna just be the first in many countries to go that route. If the forces that be can stop them, I think it’s going to be really hard for the next country to make that decision.

NLW 

What’s the best way for bitcoiners who are now interested in investing in this experiment who want to be helpful? What should people be doing other than just paying attention to it?

Michael Peterson 

We’d love for people to come down. I mean, El Salvador is a beautiful place to come on vacation, to come work remotely. Especially if you’re stuck in an environment where it’s cold for half the year, you know, why not spend that half here in El Salvador, surfing and doing yoga in the evenings, and, you know, living with other bitcoiners. So, we encourage people to get out there. But also to, to really reflect on what the promise of bitcoin is, for people in the developing world.

A lot of Americans think, “Wow, bitcoin, you know, is good as a store of value, but we have PayPal, we have Venmo, we have all these other things, the banks are fine, you know, I don’t see why you need to use it for payments.” That’s only the case for like 5, 10 percent of the people in the world, the majority of people in the world have horrible banking systems, if anything at all. And so I think Americans are really going to underestimate how quickly bitcoin is going to take over the world. And I think if we’re not careful, we’re gonna be kind of the last one on the boat.

NLW 

Mike, this has been an awesome conversation. I love hearing about this project and how it’s evolved. And obviously, your work has not only not gone unnoticed, it’s now been a catalyst for one of the most significant events in bitcoins history. Anything else that we should talk about before I let you go and get back to everything you’re working on?

Michael Peterson 

Just let me know when you’re planning on coming down. Because I know you’d like the international scene. And I can’t believe you haven’t been down to visit us yet. Because it is right up your alley. So in so many ways, you need to come down and spend a couple of months there in El Zonte. at Bitcoin Beach. We actually just built out a podcast studio for people like you that want to come down and work from there, so just let me know when you’re coming.

NLW 

Michael, thank you so much for your time. And I’m really excited to see what happens next. One really quick thought to wrap up this conversation. There’s obviously so much inspiring about the Bitcoin Beach story. And it’s a story that’s still being written right now. I just want to highlight how significant it is, how much it is a testament to the power of people to create ripples that change the world, just by doing things that make sense to them, and then telling the world the story of those actions. To reinforce this point, let’s just listen to the clip of President Bukele, discussing how Bitcoin Beach was influential in this whole movement.

Clip from President Bukele

You guys demonstrated that this is not something for rich people only. I mean, this is for everybody. And you guys demonstrated that a community can actually benefit from bitcoin. And now we’re going to demonstrate it in a country-wide scale. But of course, you’re the pioneers here. And hats off to you guys, because you had the courage to be the first here and you have done great. And actually, you have provided us with arguments, and with pictures, and with stories, and with everything that we need to have this bill passed.

NLW 

More than El Salvador, what I’d love for you to take away from this is that if you have some idea, some way to change the world, some way to impact your life or the lives of people around you, just go for it. Figure out how to get the people who agree with the way that you see things to join forces and do something great, and then talk about it, because you never know where it’s going to lead. I don’t think that in 2019 when they started to do community projects funded by bitcoin, Mike and the folks at Bitcoin Beach thought that it would lead not only to helping a community survive COVID but then to a nation becoming the first nation to implement the bitcoin standard in the world in less than three years. But here we are. Anyways guys, I hope you’re headed into a great weekend. I appreciate you listening. Until tomorrow. Be safe, take care of each other, peace!

The Tragic Life of the War Criminal Elliott Abrams

Elliott Abrams was once an innocent child. And then he decided to spend the rest of his life covering up brutal atrocities and defending right-wing dictatorships.

Elliott Abrams once said the animating force behind his and Ronald Reagan’s foreign policy was that the world is “an exceedingly dangerous place.” And this is true, largely because men like Elliott Abrams exist in it.Last month, Abrams was tapped by Trump to serve as his special envoy to Venezuela, to essentially help steer the Trump administration’s slow-burn effort to topple that country’s government — or as Mike Pompeo put it, “restore democracy” in the country.

It should go without saying that the idea the Trump administration is pursuing regime change in Venezuela for the sake of democracy and human rights is as laughable as calling Jamal Khashoggi’s murder a surprise party gone wrong. But in case you need to explain this to politically confused friends and relatives, here are eight good reasons why the appointment of Abrams, in particular, makes a mockery of any such high-minded rhetoric.

1. He was knee-deep in human rights atrocities

Let’s start with the most obvious point, which is that Abrams’ chief claim to fame is his role in Ronald Reagan’s blood-soaked foreign policy in Central America in the 1980s, for which he earned the nickname, “contra commander-in-chief.” The contras were the brutal right-wing paramilitary groups in Nicaragua who terrorized civilians throughout the decade, cutting a swath of torture, rape, and murder aimed at everyone from the elderly to children. Their methods were similar to those of right-wing paramilitaries in the other countries of the region, including El Salvador and Guatemala, all of which were supported by the Reagan administration. If you have the stomach to read about them, there’s no shortage of sources that outline their barbarity.

To Abrams, however, they were “freedom fighters,” their work in El Salvador was a “fabulous achievement,” and he mocked critics of Reagan as people forced to “run the risk” of arguing that such groups were “doing something wrong and ought to stop it.” He himself had no illusions about what it is that the contras were doing.The purpose of our aid is to permit people who are fighting on our side to use more violence,” he said in 1985.

This “micromanagement” at one point also involved Abrams secretly delivering military equipment to the contras under the guise of humanitarian aid. As commentators have noted, this is particularly relevant now, when the Trump administration attacks Maduro for refusing to let humanitarian aid from the US into Venezuela.

2. He covered up brutal acts of terror

Key to Abrams’ role under Reagan was playing down and denying the copious human rights abuses being committed by the forces and governments he and the administration supported.

As Minnesota Rep. Ilhan Omar pointed out in her grilling of Abrams earlier this week, part of the Reagan administration’s “fabulous achievement” in El Salvador was the horrific El Mozote massacre, which took place shortly before Abrams took up his post. In his attempt to convince the Senate to certify that El Salvador’s government was improving its human rights record — a precondition for receiving US aid — Abrams testified that the massacre had been “publicized when the certification comes forward to the committee,” and was “being significantly misused, at the very best, by the guerrillas.” He claimed he had sent military officers to investigate the reports, and that the massacre couldn’t be confirmed.

Another incident was the 1980 assassination of Archbishop Oscar Romero, killed on the orders of Major Roberto D’Aubuisson, one of the administration’s partners in the country. “Anybody who thinks you’re going to find a cable that says that Roberto d’Aubuisson murdered the archbishop is a fool,” said Abrams. In fact, two such cables existed. Abrams would later insist that any criticism of the Reagan administration’s activities in El Salvador were simply “a post-Cold War effort to rewrite history.”

Meanwhile, as Guatemalan dictator Ríos Montt embarked on a campaign of genocide in the country, Abrams said he had “brought considerable progress” on human rights. He defended Reagan’s lifting of a military aid embargo on Montt’s government, claiming the slaughter of civilians was “being reduced step by step” and that it was “progress” that had to be “rewarded and encouraged.”

3. He’s an unrepentant liar

Abrams told Omar that it is “always the position of the United States” to protect human rights, including in Venezuela, and he stressed the US didn’t want to arm anti-Maduro forces. Besides his well-documented record of doing exactly the opposite, Abrams’ words are even less relevant when you consider his history of outright lying.

We’ve already seen how Abrams regularly lied to cover up or play down abuses by the right-wing forces he supported. This practice would ultimately land him in trouble when he misled Congress about the Iran-Contra affair with statements that ranged from outright lies (“we’re not in the fund-raising business”), to lawyerly parsing of the truth (“I said no foreign government was helping the contras, because we had not yet received a dime from Brunei,” he would write later).

Abrams would forever maintain he did nothing wrong, later writing a sanctimonious book that painted himself as the victim of an unjust, vindictive system that had criminalized “political differences.” “This kind of prosecution is something new in America, and it is wrong,” he wrote, before bleating about the “bloodsuckers” and “filthy bastards” who wanted to do him in.

Abrams rained ire upon Lawrence Walsh, the special prosecutor tasked with investigating the Iran-Contra scandal: “You, Walsh, eighty years old, and nothing else to do but stay in this job till the grim reaper gets you. Is this your idea of America?” Abrams insisted the independent counsel law under which Walsh (along with Watergate prosecutor Archibold Cox) served was unconstitutional, despite the fact that the Supreme Court had upheld it 7-1, with even the conservative chief justice Rehnquist affirming (Scalia dissented). It didn’t matter anyway, because the late George H. W. Bush pardoned him.

Abrams managed the trifecta of showing contempt for the truth, the constitution’s separation of powers, and the concept of checks and balances, all in one fell swoop. There’s no reason to believe any of his assurances now.

4. He hates democracy

Abrams has also shown a lifelong contempt for the very thing he’s now meant to be advancing: democracy.

When the Uruguayan military government imprisoned Wilson Ferreira, the country’s most popular politician and a fierce liberal opponent of its rule, Abrams defended the Reagan administration’s meek response, which the New York Times had called “stunning.” Abrams explained that “the transition [to elected government] itself is more important than the immediate situation of any individual politician.” Abrams had earlier insisted there was no evidence the Uruguyan military was stifling political freedom, even as it

  • closed newspapers,
  • arrested its opposition, and
  • continued to ban political leaders, among other things.

Around this same time, Abrams was one of a number of Reagan officials who supported Oliver North’s call to pardon Honduran general Jose Bueso Rosa, despite his having received a relatively lenient sentence. Rosa had been convicted after being caught in Florida plotting to overthrow the Honduran government.

In 2002, Abrams reportedly “gave a nod” to the military coup that attempted, ultimately unsuccessfully, to remove the democratically elected Hugo Chavez from power. The Observer, which broke the story, called Abrams “the crucial figure around the coup.” Abrams has had his eye on toppling Venezuela’s government for some time.

When Hamas defeated Fatah in the 2006 Palestinian election, Abrams, then the point man for George W. Bush’s Middle East policy, helped implement a scheme to nullify the results by fomenting a Palestinian civil war which, they hoped, would remove Hamas from power. When the plan backfired, with Hamas emerging victorious and in full control of Gaza, Abrams accused Hamas of staging a “coup.”

5. His only political principle was anticommunism

Abrams’ disregard for democracy is part and parcel of his general philosophy, which views left-wing governments uniformly as threats to be stamped out.

Abrams, who once told a reporter that he’s “been a counterrevolutionary for a long time,” cut his teeth opposing student protesters at Harvard in the 1960s. He believes the idea that human rights extend past the political and into the economic realm to be “nonsense” and “old Soviet bromides.” As such, he viewed defeating the Soviet Union as the greatest US priority, telling one interviewer that “the greatest threat to human rights is the Soviet Union, not Guatemala or the Philippines.”

In 1984, Abrams quite candidly explained to Policy Review that his human rights policy was one of double standards: fierce opposition to communist rights abusers, and coddling of oppressors friendly to the US.

“Liberalization for purposes of letting out steam always involves line drawing,” he said. “How much steam should you let out? At what point do you risk anarchy and destabilizing the regime?” He went on to explain that “the line drawn varies from country to country,” and that “even a highly imperfect regime may well give a much better prospect of democratization than would the Communist regime that might follow.”

In other words, no matter how brutal or outright fascist a government, it was by default preferable to a communist one, a philosophy he applied in obvious ways to his work in the Americas. It was also evident in his treatment of Cuba, whose prisons he denounced in 1984 as “barbaric” and whose leader, Fidel Castro, he labeled “oppressive” and accused of “betrayal.” He attacked human rights groups, politicians, reporters, and church groups who praised Cuba as “apologists” who “will never take off their rose-colored glasses” and had spent “years defending tyrants” and “years obfuscating the truth.”

At literally the same time he was doing this, Abrams publicly defended Turkey, a key regional ally, from criticism of its human rights record. Abrams praised Turkey, which had recently been pilloried in an Amnesty International report for widespread torture of its people, for “extraordinary progress,” charging that “some who criticize Turkey’s human rights situation have no interest in human rights in Turkey or anywhere else,” but “simply use this issue as a weapon with which to attack a vital member of the Western alliance.” He dismissed Amnesty’s claims as “false history,” criticized human rights groups for “an appalling shallowness of analysis” that ignored social, political, and historical context, and charged that the Turkish people “resent the activists’ shrill and uninformed criticisms of their country.”

As Abrams had earlier said, “the line drawn varies from country to country.” If you played nice with the Reagan administration, your human rights record was tempered by nuance and context, and it was getting better anyway. And if you didn’t, you were beyond redemption.

6. He dislikes journalists and accountability

Abrams no doubt sympathized with Turkey’s rulers because he himself had first-hand experience dealing with pesky journalists and human rights groups.

He said critics of Reagan’s support of the contras would have “blood on their hands,” and accused human rights groups of having communist sympathies. He hopped aboard the Reagan administration’s McCarthyite attempt to shame congressional critics into giving him a blank check in Latin America, claiming that there was an “elaborate and skillful” campaign by Nicaragua’s Sandinista government to “manipulate Congress and the press.” When the GAO released a report alleging contra corruption that was inconvenient for the administration’s attempts to secure aid, Abrams dismissed it as a “smear campaign” cooked up by Democrats.

While Abrams didn’t have a police state at his disposal, that didn’t prevent him from lobbing heavy-handed broadsides against reporters he didn’t like. He refused to be questioned by or debate certain journalists he perceived as critical. Most infamously, from 1986 to 1987, Abrams accused left-wing Colombian journalist Patricia Lara of being a “Cuban agent” and “an active liaison” between Colombian terrorist organization M-19 and “the Cuban secret police.” In October 1986, Lara was stopped by New York immigration officials and imprisoned, before being sent back home, without explanation.

Abrams claimed to have “concrete evidence” that Lara was “heavily engaged” with M-19, but when challenged to reveal evidence, claimed it was based on “intelligence information” that he couldn’t reveal. The Colombian Defense Ministry, then battling M-19, categorically denied they had any such information, and assigned her a bodyguard because Abrams’ accusation had put her in danger. The country’s foreign minister said “we don’t know where the US government obtained” such information.

Abrams also granted a “meritorious honor” award on the Office of Public Diplomacy, a government body responsible for waging an illegal domestic propaganda campaign, in which Iran-Contra architect Oliver North was closely involved, that disseminated Abrams’ preferred narrative about the region. Abrams praised it for “setting out the parameters and defining the terms of the public discussion on Central America policy” and countering the “formidable and well established Soviet/Cuban/Nicaraguan propaganda apparatus.”

7. He’s a fan of regime change

Like any neoconservative worth his salt, Abrams has an abiding faith in the US government’s ability to simply remove world leaders it dislikes at will. (He’s also continued the neocon tradition of never personally fighting in any war, avoiding Vietnam thanks to a hurt back that happened to clear up once the war was over.)

When Abrams wanted to remove former ally Manuel Noriega from power in Panama, the former chairman of the Joint Chiefs of Staff under Reagan wrote, he threatened sanctions, then actually imposed sanctions, then established a Panamanian government-in-exile on a US military base. Abrams finally called outright for the US military to topple Noriega, in an op-ed titled “Noriega Respects Power. Use It,” which is what George H. W. Bush ultimately did. It was a chilling preview of where US policy on Venezuela may now be heading if Maduro stays in power.

Reflecting on the mistakes of Reagan’s Latin American policy in 1989, Abrams’ regret was that it hadn’t been more forceful. “You can make a very good argument that after the successful rescue mission in Grenada the president should simply have said, ‘Look, we have to enforce the Monroe Doctrine, we cannot have a Communist government in Nicaragua,’ and done whatever we needed to do to get rid of it, including a naval blockade or possibly even an invasion,” he said.

In 2007, Abrams blessed Bush’s plan to launch a covert operation to destabilize Iran’s government. Two years later, he mused about what should happen if Iran develops a nuclear weapon. “Responsible leadership cannot allow this to happen,” he said. “Preventing it through military action perhaps is the second worst decision we could make. The only worse one being to say it’s all right now, it’s acceptable, we will not act.” But this wouldn’t involve regime change or the killing of civilians, he stressed; just a strike on nuclear facilities. Iran, Abrams warned, was one to three years away from developing a nuclear weapon.

In 2013, Abrams told a House Armed Services Committee hearing that the US had to get militarily involved in Syria. Why? Because “a display of American lack of will power in Syria will persuade many Iranian officials that while we may say ‘all options are on the table,’ in reality they are not — so Iran can proceed happily and safely toward a nuclear weapon.” Two years later, he said at a Council of Foreign Relations event that Netanyahu had two options: either strike Iran right then, or wait two years and see if an administration willing to take a tougher line, or sanction an Israeli strike, would be elected. Abrams, it seems, got his wish.

8. He’s beloved by the Right

In case anyone still believes the fiction that “anti-Trump” conservatives actually oppose Trump, Abrams is a living reminder that there’s no daylight between Trump and the establishment Right that pretends to dislike him.

Abrams was once an “anti-Trump” Republican who signed a letter opposing his candidacy in 2016. He tutored Paul Ryan in foreign policy when he was Mitt Romney’s 2012 running mate, and served on Marco Rubio’s so-called National Security Advisory Council in 2016. It’s no surprise the Florida senator, long viewed as an establishment-friendly, “sensible” conservative alternative to Trump, is now all but directing Trump’s Latin American policy, sounding virtually indistinguishable from Abrams.

Abrams has now served in every Republican administration since he first entered government bar one. In between, he’s worked at the Heritage Foundation (whose head of Latin American policy just called him “a patriot and dedicated voice for repressed communities”), helped found “anti-Trump” Bill Kristol’s Project for the New American Century, was a fellow for the Council on Foreign Relations, and was a board member of the National Endowment for Democracy, the US government’s arm for foreign political meddling.

Meanwhile, just look at who came to Abrams’ defense after his grilling by Rep. Omar. The National Review — which not long ago put out a much-celebrated “Against Trump” issue whose purpose, according to its editor, was to say, “He’s not one of us. He’s not a conservative, and he’s not what conservatism is” — just published an editorial calling Abrams “one of the wisest, most experienced foreign-policy heads in this country,” and “a steadfast advocate of freedom, democracy, and human rights.”

A former Bush administration official and current Harvard professor defended Abrams as “a devoted public servant who has contributed much of his professional life to our country.” The newly rebranded neocon Max Boot, who very publicly proclaims he’s seen the error of his ways and broken with the ugliness he now sees in the GOP, deemed him “a leading advocate of human rights and democracy.” Unfortunately, it’s not just the Right; the Center for American Progress’ vice president of National Security and International Policy called him “a fierce advocate for human rights and democracy” who simply “made serious professional mistakes.”

That someone like Abrams, who’s now leading Trump’s regime change efforts in Venezuela, is warmly embraced by the coterie of establishment and “never-Trump” conservatives should tell you everything you need to know about these groups.