Bitcoin Merchant Adoption: This Time is Different?

Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics brought to you by Swann dot com. Is there a shift and a different way of thinking about Bitcoin merchant adoption? Will Cole from Zaprite rejoins me on the show to talk about his thoughts on this idea, as well as why many people are getting the concept of the circular economy wrong. Will, welcome back to the show. Stefan, thanks for having me, man. Lots of things going on, I know you and Parker have recently shifted over to, Zaprite, so we're gonna chat about that. And I'm, I don't know, You and Parker perhaps have been working on some ideas around, the way we think about Bitcoin. so let's get, let's, you know, let's start with a little bit of that and, yeah, actually maybe you just want to tell us a little bit about the shift to Zaprite as well. Let's start with that.

Yeah, yeah. I guess, you know, in, in our little world here in Austin, it was a big move for, for us. Parker and I left Unchained back in November and, took a little break, first of all. like you, I was, third time over, becoming a father again. Congratulations. So- Born in February and, took a little bit of time off for the first time in what, twenty-something years, and, and Parker was writing his book, so that was nice. And then, of course, we, we got pretty itchy there, after just even a few months of not going into the office every day. And really, you know, obviously we knew we wanted to work in Bitcoin, and we were just exploring. And, you know, for me in particular you know, while building Unchained and working with that team, you know, I just have tunnel vision and can't really think about anything else going on. I don't look at competitors, I don't really look at what's going on in the industry, I'm just sort of focused on us and our customers, and it was really kind of a great moment for me to see, you know, what's been happening in Lightning since twenty nineteen, you know, what's, what's been going on in the world of Noster, you know, all those types of things And, and what's going on in the world of mining? And so we were really just trying to find problems that hadn't been solved or hadn't been solved well, and, you know, for me personally, you know, on the product and engineering side, I like these things I call like in-between businesses, right? I consider Unchained to be an in-between business where, the problem we were solving on one hand, you had, you know, full custodial exchange setups like Coinbase or Kraken or Or, you know, or Gemini or something where a lot of people keep their coins, and on the other end, you had people, you know, putting, putting, you know, single sig devices or multisig devices in their, in their, you know, home safes and Just trying to figure it out, and Unchained kind of found this like in-between space that they could live in, where, you could do multisig, but maybe because of collaborating with Unchained, you would actually do it, you know, instead of just saying, "Yeah, it's the best way to do it, but I can't do it." I think Mutiny is another one of those types of businesses. Lightning Wallet, you know, I'll admit After Node Launcher, Pierre Rochard's Node Launcher stopped being, active, I stopped, doing non-custodial, Lightning. It was just kind of a pain in the ass, it was even kind of a pain in the ass, back then, but I was just using custodial Lightning. And, when Mutiny came around, and I could set up a non-custodial Lightning wallet in thirty seconds, like, what a beautiful in-between business. And really, it's just a, you know, question of what are you

To, you are going to make sacrifices. And so that's where my mind always went to, and that's where I was going to when I was thinking about what I wanted to work on next. It's like, what is the ideal of what someone can do, and then how do I make sure people actually do it by giving up a few of the things and making it easy enough to do? so this is a real roundabout way of saying, you know, we looked at a lot of things. I was looking at mining, I was visiting coal plants all over Wyoming and trying to figure out how, you know, Bitcoin miners could, you know, own their actual energy production. I still think that that's a, there's a big horizon there, problems to knock down. And then when we were looking at payments, the real thing that popped up was, I wanna accept payments for- Things that I do, I wanna be able to contract and charge in Bitcoin and things like that, but I don't wanna run a server. Was basically the question I was, or the problem I was trying to solve. I love BTC Pay server on one side, but it was a lot of overhead for what I wanted to do personally, what Parker wanted to do personally, and then, you know, on the other end of that, you know, spectrum, you had like the open nodes or BitPay's of the world, where it's, you know, fully custodial, That I like, you know, single sig wallets, multisig wallets that I like. I just want the money to go there. I don't want an in-between step. And it just turned out that there really wasn't anything out there to do that. And, so Parker and I were really ready to go out there and try to do something in the e-commerce space, with just that. But then we remembered there was a guy that, worked in, out of Pleb Lab in Austin. had also worked out of the Bitcoin Commons a bit, his name's John McGill, and he had started this company, Zaprite, and it was really around contracting, right? invoicing. And, we talked to him a little bit about the e-commerce setup. He'd already kind of built the back end that, that we had envisioned. Turned out he had a really similar vision of where he wanted to take Zaprite, so we just joined teams, right? and it made a lot of sense.

Great. And so, yeah, I think you've, you've spelled out, I guess, where Zaprite sits, because obviously many listeners will be thinking, "Oh, hey, I could just run my BTC pay server and blah, blah, blah, right?" Which, of course, that's a great option, I, you know, support that, I use BTC pay myself, but there is, like you said, this in-between group of people, and that's a sizable group of people, and I think it's important that we-- Obviously, you and I, and probably many listeners There's a lot of people where we need to get out of the echo chamber and reach people and make Bitcoin easy for them. I think that's really what it is, is trying to get more people in. And, you know, I, I think it's interesting to talk about this as well, because sometimes people maybe frame it in the wrong way. They say it's kind of like mass adoption, at all costs kind of thing. And to, to me, it's not that. It's more like, how can we expand the pie of Bitcoiners, and it's still going to be group of people broadly speaking, right? So, you know, where we are today in the world, how many self-custodial Bitcoin users are there? Probably less than one percent in terms of global population, right? Something in that range, and we wanna get to like ten or twenty percent, right? Like at least what services can, you know, that marginal person who's like the fifth percent, five percentile person, not the one percent percent, you know, person, right? but how, how are you thinking about these questions?

Yeah, I mean, like, I think about it strictly from like a product mindset, right? You know, that's how I've been thinking about the world for, you know, twenty years now, and, you know, from a product mindset, the, you know, is the ideal of what we know, you know, the value of Bitcoin to be and how to obtain that value, of the censorship resistance, of, you know, all those types of attributes that we talk about every single day. But how do you get people to actually do it, right? And what are you willing to

People to be fully self-sovereign, at the expense of some privacy, right? So it made a lot of sense for people that already had KYC coins, that weren't using mixers, that weren't doing those things, that had inheritance, you know, things that they wanted to think through, right? And they would give up that privacy, but they would maintain sovereignty, right? And so I don't pretend that these in-between type of businesses or products don't have costs associated with them, right? However, you know- That's, that's up to the entrepreneur to decide what, what's the best trade-off, right? The Mutiny guys, I think they made the perfect trade-off with the Mutiny wallet, which is like, you can have, excuse me, you can have a non-custodial Lightning setup, but you, we're going to manage liquidity for you. You're, it's just not even an option. We're just gonna do that, right? And I think that's a beautiful, you know, trade-off for me. Now, it's not gonna be for everyone, but it With, with Zaprite, it's the same, same sort of thing, right? Where we are going to make, you know, you don't get to run your own server, right? That, that is a trade-off that some people might not wanna make, but if they like their ca- custody solution, right? And they don't want that type of overhead, it could very well just be because they're a small business and they don't have the ability to run a server, right? Some people don't have that ability, even though, you know, it's not the hardest thing

it is, it is overhead, right? or maybe they have certain uptime requirements that they can't, you know, do themselves. So I think about these things about like, you know, in terms of adoption, is like the ideal is, I want people to be sovereign over their wealth, I want them to, minimize their counterparty risk, right? I think that that's Of the problems that we're trying to solve right now, maybe the most important one to do, right? I'd focused that on that on the custody side, how can we help people who want to earn in Bitcoin, you know, get that same benefit without taking, that, that first step? And I don't know, maybe some of your listeners will be familiar with this as well, is that I actually got inspiration from the fiat world, which is, a company called Modern Treasury. A lot of the, Bitcoin companies out there that, you know, deal with credit Processing and things like that, and Stripe can be your best friend one day and then tell you that they hate Bitcoin companies the next day. You know, it's just, it's just kind of murky out there on whether or not these big payment processors are gonna do business with you, and then in comes a company like Modern Treasury where- They don't take custody of funds at all. They hook up your bank account to your customer's bank account, and they're making direct payments to you, bank account to bank account, and it's a one time setup. And, I looked at that and thought like, "Well, if they can do that in the fiat world, like, I'd like to do that in, in the Bitcoin world."

So let's talk that through a little bit. So in the Zaprite setup, now I, the only expense I have with Zaprite is actually, funnily enough, buying

Parker or for you, can you just talk through what that looks like in terms of, you know, I presume in that case, Parker is self-custodying the coins or it's, you know, being, maybe if there's a lightning custodian, he can withdraw those, like, can you just walk through a little bit where the custody is sitting and a little bit of that setup?

Hundred percent. Yeah. So with Zaprite, what we decided to do is be sort of wallet or custody agnostic, right? It's bring your own wallet. And the two main use cases right now are for e-commerce, you're selling something online, it could be a ticket or a book or an event or, you know, you know, whatever that might be, or a single product SKU or, you know, whatever that is, or you're a contractor, we do invoicing as well. And, and the whole idea behind this is that, you have these things that, And you just say like, okay, what, what, what's my custody setup? Oh, it's a Trezor. Okay, I can throw an xPub in, and we'll increment addresses. And whether you're selling something online or you're invoicing to, you know, you know, a company that you're working for or something like that, you can get the Bitcoin sent directly to that. We also give you fiat rail options, you know, so you can, if you're charging in dollars and in Bitcoin, you can use like a Stripe account or,

or a Choice, right? So now most of our customers are do- choosing self-sovereign options, so that's, you know, either a single sig xPub or say like an unchained, configuration file to go straight to like your multisig setup. however, some of these merchants do need to do exchange, they do need, you know, if they get too much Bitcoin in, they might need to get some dollars out 'cause they have obligations in dollars and payroll and things like that. so you could also come in and bring your Strike account, for instance, and, that way, if you're getting too much Bitcoin, you can always exchange some out. And there will be more of those options coming down the line. You know, we We're trying to be sort of custody agnostic, although making sure that that self-sovereign use case of choosing the custody with, with, all the myriad, you know, ways you can do self-custody, making sure that that's seamless on,

on,

Zapright. So that,

I guess, that's from an on-chain perspective. What about from a Lightning perspective? How does it work there in terms of the custody? Like, does Zapright offer that Lightning aspect, or do you need to bring your own or roll your own for that

Again, it's sort of like on-chain, where like you, if you have your own LND, you know, setup, you can, you can hook all that into Zaprite as well. Gotcha. Or you could just use Strike. we're gonna be adding more options, more wallets, as it goes. This is from the merchant's perspective, from the, from the buyer's perspective or the payer's perspective, you can use any wallet, right? I-, i-, as, as long as they're accepting Lightning or accepting on-chain and you have a wallet

that Yeah, I guess that's a little bit about Zaprite, and let's talk a little bit about, this idea that, you know, we were talking about offline, which is the narrative shift, let's say. So, so as, you know, just setting the context, as it seems to be a common idea, and I, I probably agree with this idea, which is that We're gonna go store of value, and then later we're gonna transition into medium of exchange, and then unit of account. And I think famously Nick Szabo popularized this idea, Vijay Boyapati mentions this kind of idea as well in his bullish case for Bitcoin, and I, I see that as a logical thing, even though I personally spend, I recognize that most people are just gonna be hodling, and hodling is gonna be the very highly dominating use for some time to come. Now, of course, I would love if we were all living on Bitcoin today, but I also But I'm curious of you there.

Yeah, I mean, you know, Nick, obviously, Nick Zabeo influenced me incredibly along my entire, Bitcoin journey, what he wrote post-Bitcoin and even pre-Bitcoin in that, in that sense. But, yeah, I think that, you know, I've definitely been aware of this narrative at least since twenty sixteen, right? Is like, focus on the store of value side, focus on custody, focus on these types of, problems right now, because-- and I, and I buy into If you wanted to accept Bitcoin as payment, if there weren't satisfactory custody options out there, it's kind of moot, right? the first question that a merchant or anyone trying to earn Bitcoin has to ask themselves is, if I got Bitcoin, what can I do with it? Can I, can I keep it safe, right? otherwise, I'm just going to exchange it out immediately. You know, I don't even blame, companies like BitPay, you know, that came really, really early on where like the number one part of their business was just- Just exchange, right? You know, storefront says we accept Bitcoin, but merchant accepts dollars. It's like, well, if you were around in twenty fourteen, maybe that was the best option, right? It, it, you know, the custody options were few and far between at, at that time. It was, it was more difficult to self-custody. I think a lot's changed in the last, six, well, more than that, you know, what did that be? nine years, since, since those types of companies were

On the self-sovereign side, multi-sig, single-sig, open-source, you know, companies like Unchained or Casa, you have a lot of options. And I, I, I wouldn't go, go far so far as to say that like custody's solved, but the options out there, I think have reached a, a, sort of threshold, of quality to where any reasonable, person who wanted to accept Bitcoin can find a satisfactory answer out there for storing it. Now, once that has cleared from, from the person who wants to accept Bitcoin, now they have to accept Bitcoin to that place, right? Because if they understand the value of Bitcoin, of accepting Bitcoin to begin with, one of the things they're gonna want, going to want to avoid is the counterparty risk that comes with full custodial options, right? if you can't do that, then using Bitcoin or accepting payments in Bitcoin, it's, it's not pointless, but, it's been, you know, sort of damaged in some way. you're, you're, you're, you're not really getting the benefit that you could be. And so I do think that this next wave, and, I think we're at the very beginning of it right now, and we'll see it a lot in, in whenever the next bull market comes about, is that outside of people just going to exchanges Bitcoin, one of the ways they're going to stack Sats is by, accepting it, in their businesses, probably starting out grassroots from small businesses. these are individuals who have unilateral decision-making abilities at their companies and with management of the treasury to say like, "Well, I want Bitcoin for myself personally, and I'm out there, you know, earning money in the market, you know, I have an e-commerce store online, or I'm a lawyer who has, you know, this roster of clients, and I'm relatively self-sufficient, I get to choose How, what people pay me in, and, and that the demand for payments, isn't gonna come because, you know, we go hassle a bunch of, point of sale, you know, restaurants or something like that saying, "Hey, you should really accept Bitcoin," 'cause then they're just gonna turn it all into dollars immediately anyway. It's gonna come from those people that have made, who understand the value of Bitcoin and have the decision-making power over their business to say, "I want part or all or, you know, whatever it is of my treasury denominated in Bitcoin, and one of the easiest ways they can do that is just to get it at the point of sale, wherever they are selling. so I have heard a lot of, you know, counterclaims to this. I don't even think that people that don't view the world this way are necessarily wrong if you look at it from like a historical perspective, but I'm trying to, you know, see where the wind is blowing and logically what makes sense to me is that it is gonna be these merchants that sort of set off the adop-- the next adoption curve

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Say as to why, you know, now or in this current, you know, coming cycle and not, you know, a future cycle.

Sure. Well, I don't know for sure, right? I'm, I'm, I'm making a bet right now, I'll point back to, you know, say early twenty twenty, right? The same argument was being made around multisig and, and that it was just too confusing, the, the market wasn't there yet, and at the beginning of twenty twenty, that was the current state of things. There were, you know, maybe low number of thousands of people using multisig, I mean, you could see the, the transactions on chain, right? It was, it was a very, very small percentage of wallets that were being spent from, that, that were multisig wallets. From, you know, working at a place like Unchained in early twenty twenty, we didn't have a lot of customers, right? But over that year, it got a little bit better, and then in twenty twenty one, there was an absolute freaking boom, right? the doubters didn't predict that, not even Unchained, we didn't predict that, right? We were making a bet that sometime soon, people were going to make this leap. I'd say that I'm making the same sort of argument here on the, on the merchant side, which is, look, at the end of the day, there are people that want Bitcoin, right? And the best way to get it right now, for the most part, is just to go out and buy it with your dollars, right? But there are going to be people out there that they find a more efficient way to obtain that Bitcoin, right? The reason I'm choosing merchants and not, you know, buyers in this case is that I think you're right, the incentives on the buyer side right now isn't necessarily to spend their Bitcoin. but, I think that merchants are gonna put people into a sticky place here. I think that they will discount their products if you pay in Bitcoin. You already see that in some places, you know, my favorite VPN out there is Mullvad, if you pay in Bitcoin, you get ten percent off, like, these guys fucking rule. They have a great product, and for that- Type of discount, I'm happy to pay in Bitcoin, right? I also think that reading the tea leaves in terms of, you know, capital gains taxes and things like that, I think it's very likely that we end up with, at least in the United States, with a de minimis, you know, amount of Bitcoin that can be spent without capital gains. I think that's almost inevitable. I don't know what that number's going to be, but I think for most normal purchases, say anything between zero, you know, one cent and, you know, two hundred to six hundred From capital gains taxes. I don't think w-w- that we need to rely on that for this to be successful necessarily, but I do think those types of things are very likely to pop up here, you know, rather soon. but most of all, I would say that, the people spending Bitcoin, right, are gonna be put in a position that they're not being put in right now, which is the daily things that they want, whether it's, you know, someone's Shopify page or, you know, they're paying for, you know, lawyer, paying a lawyer or paying an architect or something like that, if those people wanna be paid in Bitcoin, they're gonna have to figure it out

Yeah, interesting. Yeah, and so I think, let me, I guess I'm parsing your argument this way as it's going to be merchant-led in certain ways, because those merchants will prefer the Bitcoin to the fiat, and so that's, I guess, that's the thesis that you're putting forward, that's the idea.

Yeah, I mean, i-if we think that people want Bitcoin at all in the future, merchants are a part of that, right? They're just people that want Bitcoin, right? if there are satisfactory ways in order to keep that Bitcoin safe, if there are sat-- and if they can find ways to obtain that Bitcoin, without some of the downsides of going to an exchange, without some of the counterparty risk that they would take otherwise, there are a lot of benefits actually to taking Bitcoin directly from your customers, right? And directly into the custodial solution that you prefer. I think that, this actually becomes the preferred way for many people to get zats.

Yeah, and I think it's also important to point out here that we're saying merchant, but even individuals can be a merchant in this context, right? Because an individual, instead of just being an employee of a company, maybe he is now a contractor and he's billing people, and they could be all around the world, and for them, it may literally be easier to pay with Bitcoin than to pay, than to do fiat wires, and so it makes- It may actually be easier to use Bitcoin, and that individual, who in this context is a merchant, he wants Bitcoin, and so this is, I guess, so Zapright could offer, and Zapright is not just US, right? It's, it, it's worldwide.

and your use case right there is the foundation of how Zapright started. That's John McGill's entire story, right? So he's an Irish citizen, right, who is doing a lot of work in the United States. he's a contractor, he's a designer, you know, he's He wants to be paid in Bitcoin, none, none of the invoicing options really work for him. He built Zaprite to scratch his own itch, right? And where Parker and I came in is that, you know, John was very, very far down the line with that, with that invoicing product, it's very popular amongst, Bitcoiners, you know, around the world, and, where we came in is we wanted to, you know, expand that into the e-commerce, you know, and eventually, you know, other spaces, but that the, the mechanisms, right? If you imagine what he's actually doing in that, the product that he's building is basically a UI and a, and a user experience wrapper or just around your wallet and my wallet. You're, you know, I do some contracting work, for Stephane, Stephane needs to pay me, it's just connecting Through this invoicing front end, same thing that we're doing now with payment links on the, on the e-commerce side, but very much what you're talking about is exactly why Zaprite was built, was just on the individual contracting level.

Gotcha, yeah. Okay, so it makes a lot of sense then for, particularly in the contractor case where you have a payment request, now if you weren't willing to run your own BTC Pay, then that's where Zaprite can make it very simple and easy. And that, I guess, comes back to that question we were saying before around getting outside our echo chamber of, you know, people who are maybe not at the level that they can run their own BTC Pay, and that's where Zaprite can sort of open the door, make it easier for businesses and individual contractors to take payment You know, even from the end user p-purchasers perspective, they might be using some other solution to kind of get around their own capital gains taxing, as an example, like the Strike use case, right? Like they might just be literally pulling out their Strike app Paying with fiat on their side, but the merchant or the contractor, the Zaprite user in this case, is still getting their Bitcoin that they wanted. So it's sort of easing the-- It's the opposite of what BitPay,

BitPay was doing in the early days, right? Right. So like BitPay was just taking in, you know, you know, Bitcoin from, you know, me and you and turning it into, you know, dollars for the, for the merchant or for the contractor or whoever, right? It's kind of inverting that. Absolutely. And, and Strike was Exactly for that reason. the other thing, the other thing that I would say, in all this is, and this really comes from Parker and, but I'll do my best, you know, to sort of summarize his thoughts on this, is that, you know, whether you're an individual or you're a, a small business or big business, you know, having Bitcoin at all is a balance sheet decision, right? a lot of people have already made that balance sheet decision, right? MicroStrategy's already made that balance sheet, made that balance sheet decision. Most Bitcoin startups have made that balance, balance sheet decision, and you and I as individuals have made that balance sheet decision. So the only question at this point is, how do we get it? Right? And right now Almost everyone, including MicroStrategy, including Block, including most of the startups out there that keep some of their treasury in Bitcoin, they're going out and they are, you know, buying Bitcoin on an exchange or OTC or something like that with money they raised or money that piles up from their customers, right? The only-- so they've already made the decision that they want Bitcoin, we've made it, and those companies have made it. Now the question is, is there a more streamlined way to, to receive that Bitcoin, right? I think there's a big enough market of people that have already made that decision to really lead to a boom in these, you know, I won't call them, you know, kind of in the payment processing world to start building out that use case, on Bitcoin rails.

Fantastic. And so this does also get into the question around circular economies, right? And I, I know you have thoughts on this. I believe, you-- I think you were saying you believe it's, it's a bit of a misconception. Why do you believe cir-cir-- this term of circular economy is a misconception?

It's, so this is something that, you know, John and Parker and I have talked a lot about, right? is that, for Bitblock Boom, Parker put up a, a infographic, that was basically saying like, "Here's this imaginary theory of the circular economy where you have all these nodes of people around and they all connect to each other, you know, in this perfect sort of like web of, of, payments, but that's not actually how things work at all." not, not in, in the least. What happens is, is that you hire a plumber, and the plumber bills you, and he bills you in Bitcoin, and you have to make a decision, right? It is transactional, it is peer-to-peer, right? It is company to customer, and, after a long time, a gradual buildup of a lot of people making a lot of individual decisions that benefit them for, for whatever balance sheet decision they've made, you get something that looks- Looks like the circular economy, but it doesn't start that way, and it doesn't need to be bootstrapped in a way where you say like, "Well, the network isn't valuable until all these people are connected in this way." It's like, "No, you just need a lot of individual decisions." And with the amount of Bitcoin education out there and with, with the growth of people wanting Bitcoin in general over the last, you know, fifteen years, right? what we see is that there are more and more people making that individual decision, saying like, "I want Bitcoin," Circular economy, right? And all, in practice, it's just individuals saying, "Hey, I'm doing something for you. I'd prefer it if you paid me in Bitcoin." It's a very simple, simple idea, right? In that once enough people make that decision, it starts to look like a circular economy, but it is a gradual buildup, just like anything else in Bitcoin has been gradual, right? Understanding Bitcoin was gradual, understanding how to use Bitcoin was gradual, understanding how to store Bitcoin was gradual. There's not going to be a moment in time Some sort of singularity where everyone just starts trading in Bitcoin, it's just gonna sneak up on you after a long period of time. you know, at first it was just the people writing books about Bitcoin that were accepting Bitcoin, and then your electrician's gonna ask you for it, and then, you know, it's just gonna keep on happening and keep on happening to where you, as someone who, you know, has Bitcoin, is going to have to figure out your own balance sheet strategy of how do I spend and replace, or how do I start earning in Bitcoin so I don't have No balance sheet issues.

Right. And so it can also bring up thoughts around what people call circular economies, as an example, famously Bitcoin Beach, El Zonte, and, you know, many others around the world. I know there was an early one in, in the Netherlands as well. I think it's called Arnhem, something. I, I can't remember the exact name. But anyway, there's a bunch of these, but- To the point you were making, it's not necessarily that the people in these economies are only earning from other people in that same town or region. In many cases, their income may be coming from outside of that region, right? And this comes back to even just a general broader economics point, which is, you know, sometimes people confuse this as well. They confuse this idea of having like a trade surplus or a, you know, a current account deficit, like they sort of get- A little bit confused in thinking that, oh, just having a trade account, you know, surplus is a good thing and because you're kind of earning more than you're spending. But the reality is, in many cases, there will be different individuals who you have a surplus or a deficit with, right? For example, if there's a convenience store near me and I go buy, you know, sparkling water or something every now and then from them, well- I'm not earning any money from them, I'm only spending to them. I only have a def-deficit, right? Because I buy stuff from them, and I don't earn anything from them, because my income comes from elsewhere, right? So it's the same kind of idea that the same-- it's not necessarily going to be that you can only earn Out of other people who are also Bitcoiners, yet, you know, and m-maybe over time it will, but, you know, I, I, yeah, I think it's a bit of a misconception in that aspect too.

Yeah, I don't, I don't have any big-brained, you know, theories for your listeners here. It's like if your electrician is gonna do a job and he wants to get paid in Bitcoin, right? You're gonna have to fucking pay him in Bitcoin. You're gonna have to figure it out, right? And what I'm saying is it Rational for those people to charge you in Bitcoin, right? it was always kind of a weird thing that we ended up in where a lot of the payment processors in the Bitcoin space, where their main business was exchange, right? The problem was, is that there weren't a lot of people that wanted to accept Bitcoin, right? And so in order to build a Bitcoin payment system, your main job was to convert that Bitcoin into dollars. I, you know, right now, that's probably still a bigger market than people, accepting Bitcoin on a direct basis, basis without exchange. I, I see that world changing, right? I think it'll be gradual, I think it happens merchant to merchant, but it's totally rational, right? Especially for, For, you know, like you said, you know, cross border payments or anything like that, is that, you know, it is a rational decision for a merchant to make to opt out of the fiat system, i-is, as much as it is any individual who wants to opt out of the fiat system, right? I find people that are skeptical of this to be, a little bit odd in their thinking, at this point, is that, the people that run businesses are just people, and they're gonna make the same rational decisions that we make for our individual families Balances, right? it seems inevitable to me, even if it's a little bit early right now, but it is happening.

Yeah. Any comments on the accounting and compliance tooling and things like this? So as an example, if you're a businessman and you wanna take Bitcoin payments, you might already have some kind of fiat-based accounting system, and that's been one of the traditional difficulties is kind of having the Bitcoin side of it and then needing some way to integrate the two. In some cases, it might be simple just having a CSV and then give that to your- Accounting and they kind of mix it all together. What's your view? Is Zapright doing anything on this, or is this still kind of, you know, yeah?

Yeah, and I mostly view this through like the Zapright mindset right now, which is essentially, to start out with, you just need all the information. So if you're, if you're accepting Bitcoin, you need to know certain things, right? Like how much Bitcoin did you get? What was the exchange rate at the time of the transaction? you know, all those types of things that you would

We do. We build this nice CSV, you have, you have everything you need to, import it into whatever accounting software you might use or just to send to your accountant in a really nice way that they can manipulate and, you know, get all the stuff that you, that you need. in the future, we will do more direct integrations with accounting systems, you know, the QuickBooks and NetSuite and, things of the world, building out a nice webhook, you know, system so whatever you're using, you can, you

Actually, you know, just go straight into your accounting software. You know, all of that is going to be, you know, something that grows on the Zaprite side over time, but the most important thing is right now, what you can get is every single piece of information you need to do the, the bookkeeping, compliantly in your jurisdiction, for accepting Bitcoin. On, it is really important long term, especially, you know, as you have more complex businesses, accounting gets more and more complex, and so you'll need those integrations into the net suites. That's not really our customer base right now, but it will be soon. And so that, that is on our radar, something that we're working on. We have- one, one upgrade coming out, next week on that, yeah.

Back to the show in a moment. When it comes to merchant adoption, you need to make sure that you are self-custodying your coins, and CoinKite dot com make it easy for you to do this. They have hardware devices such as the Coldcard, which you can use to self-custody your coins, and this is a phenomenal device. It's very secure, it has all kinds of features, it's very reliable, and it makes it so easy for you to secure your coins. If you Buy the cold card and get a USB-C cable, plug it directly to your computer and use it with desktop software such as Sparrow Wallet, Specter Desktop or Electrum. If you're intermediate or advanced, you can use more advanced modes such as micro SD cards, you can use Seed EXO or Trick pins, and of course, if you're advanced, you can use multi-signature. There's so many options and you can use this to self-custody your coins and even do this as a merchant by using the xPub feature, like we talk about in this episode with Will. So go to coinkite dot com, order your cold cards either for yourself or your family or your friends, and get a discount with the code LIVERA. And now back to the show. Great. Okay, so let's talk a little bit more about where things are going, maybe a little bit more broader, maybe a little bit of macro, a little bit of, you know, talk about- Where things are with inflation, you know, are we in a recession now? I think this is sort of some of the conversation now, and I'm curious if you have any views on, you know, what recession means for Bitcoin. Like, will Bitcoin take a hit if, you know, if becomes clear later that, okay, yeah, the US is in a recession right now, you know, do you have any thoughts on whether that is gonna push people into Bitcoin or perhaps there'll be an initial sell-off because there'll be people who maybe have to sell something?

Yeah, you know, I'm not, I'm not a macro guy in general, you know, but, you know, I do have thoughts on this, and, you know, for your listeners, they might sound very simplistic, but seems simple to me, which is, you know, I'll, I'll start this with saying like, it always kind of amazed me that Bitcoin took off

I don't wanna say like so fast, but, where it seemed like there were a lot of Americans, proportionally into Bitcoin very early on, right? And the reason I found that surprising is that, you know, relatively, we had good money compared to a lot of other fiat currencies around the world. you know, when you have the petrodollar and, and, you have a large demand for your dollars, you're actually in a pretty good position compared to a lot of other countries. it surprised me how little Bitcoin took off in the very early days in the Venezuelas and, you know, Lebanons of the world, although they seem to be catching up, you know, pretty quickly now. so yeah, I think that anyone who, experiences inflation, and for Americans, for many Americans, this is the first time they've experienced it at any rate, you know, over fifteen percent. And, and I'm not talking about the CPI, I'm talking about actual inflation, right? I think we've seen in, inflation, you know, at or around ten percent many, many times in my lifetime, but this is the first time where we're seeing it at twenty, twenty-five percent, right? And, when I talk to people, and these are anecdotes, you know, it's not a secret anymore, you know, I'm a lot of people's Bitcoin friend or Bitcoin neighbor or guy who sits with them, next to them at a baseball game, you And you can see them starting to ask more questions, because, look, the dollar ain't shit, right? they're noticing this for the very first time in the United States. There wasn't a lot of pressure to understand Bitcoin or to value it because, again, you can look around the world and relatively speaking, if you're an American, you're in good shape. you're not feeling like you're in good shape anymore. When you go to the grocery store and, and you have a family of four or five and your grocery bill is four hundred dollars and it used to be two hundred and fifty, and then someone's telling you that, "Well, there's only eight percent inflation," and you're like, "Fuck off, that's not true, right? That can't possibly be true, you know?" It costs a hundred dollars to fill up my Suburban and it costs four hundred dollars to buy groceries. It was less than half of that two years ago, right? it doesn't, you know, you don't have to have a sophisticated macro view to feel that in the United States anymore. And, as we know, because of the dollar standard around the world, we export inflation to other countries, we export it to China and anyone that holds our debt. And, so those countries are feeling it even more than Americans at this time, and it's only been happening for about a year, a year and a half at this point. And so- Yeah, I, I, I do think about that, and I do think that, you know, all of those people that are experiencing this for the first time, they have, they have a Stephan Livera, they have a Will Cole in their life who has talked to them about Bitcoin at some point over the last ten years, they're gonna be like, "Wait a minute, like, what about this?" I can give an example, you know, I, I mentioned the baseball game thing isn't actually, you know, a made-up thing. I'm sitting next to

restaurant franchise, here in Austin. he owns the entire business and they franchised, they have like six locations in Austin. And I'd talked to him about Bitcoin like three years ago, around twenty twenty, and honestly, he wasn't that interested. It didn't, it didn't really appeal to him. And, you know, towards the end of the season last year, we're sitting next to each other and he leans over and he's like, "Okay, tell me a little bit more about this." And I asked him why he wanted to His business, whether it was labor costs or production costs or rent, everything was skyrocketing. Everything around him was skyrocketing, and he saw his treasury balance just being absolutely decimated, right? More than decimated, because of inflation. It was the first time in his life That he had to confront, what we all knew was inevitable, which is the dollar can't hold its value, and he was seeing it rapidly happening, right? I don't know how, I don't know how merchants, I don't know how independent contractors are going to avoid this, for much longer. in fact, many of them are making the choice not to, and, or, that they can't avoid it, right? And that they have to make the step. I do think that we have some tooling in the Bitcoin world that we can build to make that transition easier for people, which is why, you know, I focused on custody for a long time, and now I'm focusing on the Direct payments is, I think that that order of operations makes a lot of sense, and I really don't think people are gonna be able to avoid this. you know, in twenty twenty-one, you know, I think back and I just forgot the name of the book, I think it's When Money Dies about the Weimar Republic. I think Adam Tooze, yeah, yeah, yeah,

yeah.

Yes, there's a line in that that just haunts me, and I, I tweeted about it. I think it's about, yeah, go

on, yeah.

Ferguson, yes. Yeah. there's a line in that that like haunts me, and I think about 2021 in this sense, which is, the well-to-do Germans, in the Weimar Republic, as hyperinflation started, the quote was We all thought we were getting rich, right? And I think in twenty twenty one, that's how a lot of people felt. We all thought we were getting rich, right? But it was just a mirage, right? So what happens after that is the next, you know, three, four years of our lives. And, I'm not claiming that it will necessarily be as bad as the Weimar Republic in the United States or anything like that, but like, it doesn't just stop, right? It doesn't just go away. It's, it's not some Paul Krugman

Well, it's still bad, right? the groceries are still going up, the gas prices are still going up, the housing prices are still going up. This is all bad, for us. Of course, his argument would be, you know, well, if you just don't count energy and you don't count food and you don't count cars and transportation costs, it all looks okay now. It was like, well, yeah, if you, if you take out everything that matters in life, it might not, it, it, you know, inflation might not look that Right? so yeah, on the macro side here, it, it's, it's that the illusion of the two percent target, I think, did a lot for making people not understand Bitcoin, but that, that, that contract's been broken completely. Now, it's, it's not just that inflation is, isn't always, hasn't been higher than two percent, it's now noticeable in a month-to-month, rate, if, if you're living in Ohio, right? That, not only is it not two percent, not only is it not eight percent, but It's twenty-five percent, right? And when that happens, it crushes people's, not just belief system, but it crushes their understanding of money completely. And I would say trying to convince a lot of people about Bitcoin over the years is one of the things that has always been surprising to me is how mad It makes people, when you confront them on their understanding of money, right? It makes them angry, not curious, right? And you, you kinda have to back off. Now, I think that, people will be more receptive. they won't be so angry when you say, "Hey, isn't, doesn't this kinda suck? Doesn't, doesn't this make no sense that, like, you can't just keep a dollar and spend it in a month and it's still worth a dollar?", right? that, you know, a car that used to be Under a two percent inflation target. I think that the whole illusion of the Federal Reserve's competency in managing the monetary policy of the US dollar has been shattered for tens of millions of people.

Will a lot of people simply chase into other assets there? Will they just chase into property or into other things instead?

Yeah, it'd be nice to be able to do that, and historically, that's what people have done, right? I, I do think gold will do fairly well. I mean, I don't know. I think real estate and property, people are gonna think twice, you know? you know, especially, you know, a lot of that money was going into the commercial, space, that hasn't done so well Well, I, I, I see a lot of, sweaty, brokers in downtown Austin right now with, you know, thirty percent, you know, or seventy percent occupancy rates. no, I mean, like, you know, of course some people will do that, and I do think that there are assets that are better than dollars. there are a lot of assets that are better than dollars, but for people that want to- Stay in, you know, a cash or cash equivalent, that want to do more modest savings without taking the risk of, of those properties. I think Bitcoin's gonna, you know, especially over the next few years compared to any other time frame that we've, seen with Bitcoin, that far more people will be finding refuge in Bitcoin than ever had before.

Yeah, I, I also think it's fair to point out that the awareness is there now that, I would say most people in the Western world have heard of Bitcoin, maybe they don't hold it, or maybe they, you know, they kind of had a crypto punt a few years ago and they kind of, you know, forgot it, forgot about it, neglected it. Maybe now's that second or third touch point for them that now they're gonna take Bitcoin more seriously. So maybe that's also, a little bit of what's, going on. I think one other angle that Is that there may be some people who think, "Well, hey, if we're going into a recession, maybe they want to hold some dollars because they think that, you know, assets are gonna be on a fire sale, right? That I'm holding some dollars 'cause they wanna pick up property on the cheap or they wanna buy stocks on the cheap if they're expecting, let's say, the stock market to drop a lot in the next year or so." so I guess that might be for some people, why they still wanna hold dollars. Or short term US Treasuries because of that expectation, even though they still believe in high inflationary expectations.

Yeah, I mean, h-- again, historically that would be the rational behavior. I think that, you know, for the more sophisticated, you know, investors out there, they're gonna have to realize that, you know, Fed policy has become so, you know, dominant. Like, it's one of the best things about working with Parker is every time I try to come up with a theory About what's going on in the world, you know, you know, money wise, he's just like, "Dude, it's just the Fed. Like, stop, stop trying to think about anything else. It's just the Fed, right? And what, what else does the Fed do? Like, the Fed has made it pretty clear that propping up the stock market is one of the, you know, they will kill the bond market in order to prop up the stock market, any, you know, i-if they have the choice to do so, is that, you Stocks aren't cheap, you're not gonna be able to do those types of things because the Fed has made it its policy to pick up those assets and buy them themselves and create a demand when, that goes down. It's like the stock market going down is just not an option anymore, right? Once QE happened the first time, you know, you know, a lot of people said it at the time, you can't really unring that bell because now that you've shown that you have that tool, what is your excuse for not using it?

Yeah. So zooming out a little bit, as, as we've spoken about today, we're talking about merchant-driven adoption of Bitcoin for payments, and so I guess zooming out, obviously- You were around or you were familiar with what happened in twenty thirteen and fourteen, right? That was kind of the merchant adoption days, and we didn't have Lightning then, so I think Lightning is a genuine game changer there. and so what we saw was a lot of, let's say, businesses who took Bitcoin, but then they stopped taking Bitcoin, and then that was crucially used as an argument by, let's say, some of the B-cashers saying, "Oh, look, X, Y, Z company, they took Bitcoin, now they don't," you know, et c Better for this kind of, you know, commerce, low, low to medium value commerce, let's say. Obviously, high value commerce you still do that on chain anyway. and so, yeah, I guess where, where does it sort of, boil out? Do you think this time is gonna be different now because of Lightning and because of the, the custody improvements?

I think absolutely, and I think, I think more than, I mean, Lightning is obviously, you, you hit the nail on the head. There's, there's really two variables, right? The custody improvements, I think, are number one, right? Is just the ability to save Bitcoin in a manner that I'm comfortable with over a long period of time is, it has to happen first. There's no way you can just bootstrap this thing from, you know, a medium of exchange unit of account before the, the store of value, argument has been solved, a problem has Solved, and again, I'm not saying it's completely solved, but that there's enough out there now to where, I, I would call it familiar. Anyone who's familiar with banking and holding dollars can find a custody solution that is familiar to them and is also beneficial to them, right? From there, they have to be able to accept it. I do think that this time will be different, or I wouldn't be doing what I'm doing. It doesn't necessarily mean that I'm right, but I think that all of the signs of how people are going to accumulate Million Bitcoin in the future are pointing to this, right? I also know that it's inevitable, it will happen. Maybe it won't happen this cycle, maybe I'm wrong on that, right? maybe it happens in ten years, but it is going to happen, and just like multisig and just like so many of the thing, the, the groundwork that we've had to lay before Is that, as people make this, this, decision to start moving Bitcoin into their unit of account, right? The, the thing that they want to accept, the way that they, you know, valued their own balance sheet, the more they're going to demand it, you know, as, as compensation for their services, right? I think that logic is Sound, and, I think that the macro environment that we're seeing right now with, with, you know, a, a, a, a unprecedented in the last fifty years inflationary, you know, economy that we live in, that, that All of the, all of the prerequisites we need for those individuals to start making those logical decisions are here, right? And the next three years, I think, is very important for that.

As you spoke about before in twenty twenty-one, there was what's called the wealth effect, right? As the stock price went up, people felt like they were wealthy, they could spend more. And I think it's also fair to say that happens in Bitcoin too, right? As the Bitcoin's price goes up, you see a lot more people willing to spend, right? You look at, let's say, Bitrefill data, obviously that kind of thing goes crazy during bull cycles. And you know what? Maybe that is also that each time, each time we go around, we do this go-around Just natively or using an intermediary partner to sort of help them, and so, yeah, I think each time that group of people who are willing to actually day to day use Bitcoin is growing, and so I think, where, you know, it comes back to individual choices. Individuals are gonna choose to accept Bitcoin and to spend Bitcoin, and that is what's gonna drive that next level, and for some people who are more on the outside, they- They can look at that and say, "Oh, wow, hang on, there are businesses who, you know, who take Bitcoin. There are, let's say, Bitcoin Beach and these communities who are doing it, and so it really does work." So I think maybe that's, that's where it sort of, it all boils down for me. What do you think?

I, I think that, you know, you know, even the premise of this, anyone who's stuck in twenty thirteen or twenty fourteen is making a very big mistake.

The idea that something didn't work back then, not working now because it didn't work back then, is, is hilariously like shallow thinking, right? And I know that it can be hard to get out of, I've heard people call this, you know, the, the loser's curse, right? You know, and you see this in investing a lot, which is, you know, oh, well, I bought In 1997, stock and it tanked on me. And yeah, it's doing good here in 2004, but I'm not gonna buy it again because, you know, I've already been down that road with this company before, right? And you can- You can, you know, sort of extrapolate that into any type of decision, right? This loser's curse of having a bad experience with something in the past and then not having the confidence of, of, or, or, or even having an open mind to consider that, it could be different, because there are different variables at play this time around. twenty thirteen, twenty fourteen Bitcoin, i-it's just a hilariously different world, than we live in today, primarily because of the two things that you mentioned, the custody, options and the existence Not just the existence, but the sort of maturity of the Lightning Network, I would even say in twenty twenty, I had a lot of questions about, you know, like the Lightning Network working, right? You know, people could still have those questions today, but there's been a lot of risk de-risking that has gone out of that, you know, answering that question of whether or not Lightning is gonna be able to scale the way we want it to for these types of payments, right? it doesn't mean it's a hundred percent going to work, but, you know, if you were Now, right? and, I would say I've definitely gone through that sort of, change over the last three years myself. Back in twenty fourteen you know, I think that, the narrative was, you know, everyone was aware that the on-chain payments, you know, other than the b-cashers who were delusional about this, type of thing, everyone was aware that we were going to have to solve the on-chain problem, that it wasn't going to happen on-chain, and a lot of people warned about that back in twenty thirteen or twenty fourteen. The idea that the predominant narrative in Bitcoin in twenty thirteen or twenty fourteen was that, we were going to do all these transactions on-chain is, is There were a lot of people loud about it, but, you know, I wasn't, you know, you can't fool me, I was there, right? there was a narrative around it, it was a small minority of people, we argued about it for a few years, and we just, and we saw how small of a minority it was. a lot of the talk back then was about side chains. I think that, you know, and the Lightning Network in many ways is a side chain, and that we've seen one of them come up, i-in that, that does change what we're able to do now. this isn't twenty thirteen, this isn't twenty fourteen, it's a whole new world out there, and, and the tools that we have at our disposal are, you know, i-i-it's, it's an order of magnitude, if not more, better than in twenty thirteen or twenty fourteen. it's just not the same.

Yeah, and look, I'm, I'm all about, seeing more people earning with Bitcoin, so I'd love to see more people do this. you know, the more stackers there are out there The, the more this, kind of this, virtuous cycle, continues. So let's see that grow, and before we finish up, Will, where can people find you?

pretty much, Twitter is the main place. I'm at will cole on Twitter, also on Noster, despite my business partners' famous distaste for Noster, I love it, and so I'm will cole there. You can find me, I'll, I'll tweet out my xPub at some point here.

Fantastic, I'll put the links in the show notes and thanks for joining me, Will.

Hey, thanks, Stefan. Have a good one.

Show notes are available at stephanlivera dot com. Thanks for listening, and I'll see you in the citadels.