Bitcoin Payments in 700K locations in South Africa

And I know people tell me I'm crazy when I say this, but we wanna establish like the alternative to Visa and Mastercard. We're positioning ourselves to build an alternative rail to card, and we're promoting, as hard as possible for that rail to be a Bitcoin Lightning based rail. If we don't use Bitcoin as money Then the whole system that we're in essentially configures itself around the notion that Bitcoin is only something that people hold onto and they never actually use, they never actually move it around, and that's a big problem.

Hi everyone and welcome back to Stefan Livera podcast. We're gonna be chatting about some really interesting news on medium of exchange and using Bitcoin as payment. I think probably the big headline number you people might have seen is it's now theoretically possible for over seven hundred thousand merchants to accept Bitcoin. And one of the men helping make this happen, or one of the men behind making this happen is Carel van Wyk. I hope I pronounced that correctly, from Money Badger. Carel, first of all, welcome to the show. Thank you, Stefan.

I just want to point out it's seven hundred, locations, so not seven hundred merchants. We get that, Oh, sorry. Okay, gotcha. Yep. Yes, no problem. Yeah, I guess

we're, yeah, just to get the right number. Seven hundred thousand locations, at which you can, pay with Bitcoin. So, I know you've been around Bitcoin for a little while. You were a co-founder of Luno, back in the early days, and then I believe you've, you've been Now with Money Badger.

Look, I think, for me, for me, I'm an engineer and a software developer, and I grew up in the age of, you know, the rise of the internet and, South African tech idols like Mark Shuttleworth, and the like. So I've always had this deep appreciation for open source software and this notion of sort of a global network or a global, ecosystem. And so when Bitcoin arrived, when the pa-- the white paper arrived, and I read this thing, I was like, I was really blown away because it already matched a lot of things I've been thinking about for a long time before it, and it's one of those things that you believe is sci-fi until you realize that it, it actually exists. and so that's kind of my background. And As a part of that, I've always wanted to build new things, especially things that, you know, interface with the real world, and money is one of those things that's like, like Bitcoin is this, perfect overlap between the digital world and the real world. and so that's something that's always excited me, and I've always wanted to build stuff in the space. And luckily, I've had a couple of opportunities, like you say, Luno, Luno was the first Bitcoin exchange in South Africa. It's now one of the largest exchanges in Africa It's like natively African, and Moneybadger. So Moneybadger takes this whole idea of Bitcoin, which is a store of value, one step further to the medium of exchange, concept. And so the idea is that Moneybadger tries to make Bitcoin money. That's why we're pushing so hard to add so many new stores and new merchants and, and places to accept Bitcoin, because we think that's vital for the future of Bitcoin, especially in South Africa, where our relationship with money may be a little bit Different, from people elsewhere in the world.

Gotcha. And so, give us a bit of an overview. When did Moneybadger start and sort of a bit of the journey up from when it started to now?

Yeah, the journey, it's one of those things like, I can only describe it as, maybe guided by the divine hand of Satoshi, if I can put it like that. It's, it really was, the, being at the right place at the right time. so like I said, I've been working on stuff for Luno, I actually bought some merchant payment stuff, at Luno, and as part of that, we had a project with one of the largest African retailers, grocery Stores like, I mean, if you're in the US, maybe it's like Walmart or, what would you have in the, in the UK? Maybe like, Oh, I, I wouldn't know. Yeah, I mean, I'm not from the UK,

I'm Australian myself, but, I don't know, maybe like a Tesco or something like that, as I'm guessing, something like that. I don't know, one of these big, you know, kind of supermarket shops, I'm guessing.

Exactly. So, this big supermarket chain called Pic'n'Pay approached Luna and said, "We want to add Bitcoin payments." a lot of people ask us, "How did you orange pull this retailer?" And the fact is just simply that they wanted this. They wanted to demonstrate the capabilities of the- Technology, stack, and one of the ways they could do this was to say, "Well, let's add Bitcoin, which is this crazy new future form of money," and didn't work. So this was 20-- 2017, we didn't have Lightning yet, and, as you know, on-chain transactions, they can get expensive, and especially in like a rapid point-of-sale checkout scenario, it didn't work. and then subsequently, I've, I've lived, you know, I started playing with Lightning, other And it turned out that all the problems that we faced were solved with this, the Lightning protocol, not only the speed and the, the cost, but also sort of the control That's sort of native to the protocol, and then, it just happened that Pek and Pe gave me another ring on the phone and said, "Hey, has anything changed?" and I said, "Uh, absolutely, I think we've got something now that will definitely work." we built a POC, deployed it to one store, tested it, worked phenomenally well, deployed to a number of test stores, one of them is in, a little coastal town called Mossel Bay, if maybe some people have heard about sort of- Of the Bitcoin Beach project, while Mosel Bay is a equivalent Bitcoin Beach project called Bitcoin Acasi, that was just to test this thing. And listeners would, long time

listeners would know I've done an episode with, Herman from Bitcoin Acasi, but, yeah, go on.

Yeah, fantastic, people there, they were so helpful to, help us like figure this out and make it work really well. and the rest, I guess this is three, we deployed this nationally in two thousand and twenty-three, and subsequently we've added a number of other stores and retailers and, payment service providers.

Excellent. And now, you tell me where I'm getting this wrong, as I recall, it was like initially you needed a separate app that would like decode their, like their, you know, that merchant or each location would put out like a barcode, and you needed a separate app to scan it, and then that would kind of read it and get an invoice, and then, then your lightning wallet would be able to pay it. Whereas nowadays, what you've actually built is like the lightning wallets or some of the lightning wallets, like Blink and others They can just like natively read it. Is that what's going on?

Yeah, so I think, there was a lot of confusion initially. There's still a lot of confusion, I think people forget that it's still kind of like there's a lot of, development happening in Bitcoin then, specifically when it comes to user interfaces and usability. Some, some wallets get it right and some still struggle a bit. So the, the, the situation for Africa was that unlike, other African countries like- Like Kenya that have in TESA, or, you know, India, Brazil that have the UPI, or Pix, which is kind of like a common QR standard, right? South Africa didn't have this. So what we had was, like a, a number of mobile payments, service providers that each had their own QR standard. Right. So now, so essentially we've got kind of, kind of like this, let's say, ten different QR code providers in South Africa. and none of them are going to display a Lightning code, basically. So we have, we have to figure out how we're going to bridge this gap between the proprietary QR codes that's being displayed by these payment service providers and then, you know, the Lightning network and Lightning wallets. So the first thing that we did is we implemented what we call like our reference application, which is the Money Badger application. All it does is it scans one of these proprietary QR codes and it essentially translates it into a Lightning invoice. Right, so now we've got the Lightning in our second payment, and it kinda works. If you're a South African, you don't, maybe you don't mind installing sort of a SA Lightning Payments app, to scan QR codes, But obviously that's not ideal. Obviously you want everything to be one single app and one single smooth interaction. So then we had a conversation with the guys from Blink. The, Bitcoin Blink wallet. And they had a very interesting idea. They said, "What if we crafted a special Lightning address? So it's, it's using Lightning URL, protocol?" And we craft a special Lightning address where the, let's call it the user part or the user ID part of the address is the actual full QR code data So it can be proprietary QR code data, but that's the user ID part, and then obviously the server part, the host part would be the money badge or the main, and then all that's left to do Is to match the pattern of the QR code to Money Badger. Right? So if you, if you see a QR code and it says "Pick and Pay" somewhere in the QR code Then the Lightning wallet knows that it's a Moneybadger Lightning address, and then it's actually very, very, very simple. So now we have this means Or any Lightning wallet to implement proprietary QR codes with no third-party API, implementation. So there's no like, code from a specific country or specific provider that is filling up the code base of the Lightning wallet so that means any open-source Lightning wallet can very easily, by simple pattern match, they can add support for all of these South African merchants and retailers that we're adding support to, both online and physical. I don't know. So, so just walk me

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

if you, if you have, Link, and maybe under Lightning Wallets Harvest, you've got the, the notion of a Lightning address. I think in the Blink, they may, may call it a pay code. and so these, these are essentially like special money badger pay codes or money badger liking addresses, like an email address, right? Yeah. and When you scan one of these codes, like a Payconiq QR code, and you use it in this way as a money bagger email address pay code, then everything just works seamlessly via the Lightning protocol, and you get your Lightning invoice and you can pay it.

Gotcha. And then how does it know which specific invoice, as opposed to just, you know, pick and pay? How does it know like that specific invoice for milk for whatever three, whatever dollars or whatever it is?

Well, that it gets very interesting because there's very, there's like a large number of, QR code types. So you get a dynamic QR code that's linked to a specific transaction, and it'll give you the basket, essentially the basket information. then there are static QR codes, so if you're going to, I don't know, like a, a restaurant, sometimes they don't have a static QR code and you have to enter the amount, which you then send to the merchant. sometimes you can add a tip, sometimes you can add a note, et cetera. So there's still this whole sort of world of Easier thing to see is around QR codes we need to solve. but ultimately with a, with Pay, for example, that's a dynamic code. You scan the specific code for that transaction that you're busy with at that point in time. So that means that you get the Lightning invoice for that specific transaction

Gotcha. Okay, yeah, fascinating. And so, so, talk us through that journey. So you started with Pick and Pay. How many Pick and Pays are there in South Africa? I presume like there's a lot of them, right?

so we've got a, a number of retail-- Do you mean Pick and Pay stores themselves or like competitors of Pick and Pay, Pick and Pay shops?

Yeah, I meant the stores themselves, yeah, Pick and Pay themselves.

There's, okay, so I mean, it's kind of hard to, to, to compare South Africa's population of about fifty to sixty million people, we've got seven provinces, and so there's a Pay and Pay in almost every town in South Africa, the last count I saw it was about thousand six hundred outlets Pay and Pay.

And that was your first, merchant that you had, done this with, there was the trial or the pilot, and then you've expanded it out from there.

Yeah, I guess the, the, the, the learning from that was that whereas in the past, the, the, the, like using a blockchain for retail payments, it sucked. and this time around using Lightning for retail payments was really cool, like it works really, really well. in fact, you know, people always say, "Well, Tap to Pay is so fast," but actually, Lightning transactions are even faster, by a couple of seconds. so yes, it worked, it, it worked so well that we deployed to all, Bitcoin pays nationwide.

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

Exactly. Yeah. So there's already this notion of QR payments, in the country, and every single person sitting So they have the option to select QR code checkout. there's a lot of other, like non-bitcoin or non-coin wallets that also use this rail. So there's a lot of other QR, options. but fundamentally what this meant was that we had no, we, in no case do we need additional staff training. That's a huge thing because there's like thousands of lanes. I mean, le-- there's a thousand six hundred stores, but each store might have ten lanes, so that's Like tens of thousands of lanes, right? and so to train a lot of staff on a s-- like a very niche payment option, that'd be quite a, a big ask, but at the end of the day, you can now walk up to any till, in any pickup pay in the country and say, "I'm paying with a QR code," scan either with, Lightning wallet that has really implemented the sort of pattern matching or with the MoneyBagger app, and then you can pick, any of the other Lightning wallets and then pay with that.

Fantastic. And so then, in this case, that merchant is just receiving fiat on their side, right? Like they don't have to think about it, they just get that auto converted to fiat, yeah?

So in the past, definitely most merchants that we engage with said, you know, we just want the exact random amount, and we want you to sort of beat card rates. We don't like paying card rates, it's very expensive. Can you beat card rates? Yes. Can you give us an exact random amount because we see the price of Bitcoin going up and down all the time? Yes, we can give you the exact random amount. now what we're starting to see Is, more and more merchants asking us about sort of split settlement. So they're saying, you know, they actually want a portion of receiving, a, a portion of it. Yes. so there's this sort of cautious optimism, but we do have one merchant that's, like a pizza, they're, I think one of the oldest pizza, delivery brands in the country, they're called Balthus Pizza, and they have been taking Bitcoin settlements since the start. So we just take them straight to, like, their Bitcoin wallet. Gotcha. It's, it's, I think it's something that's changing. for now, most merchants aren't taking fiat, but, we're also making it very easy for them to accept Bitcoin should they choose so.

Fantastic. And I mean, that's really cool because in, I think, we'll get to kind of the criticisms part of this later. I guess one other thing I wanted to touch on before we get to that, Is, just the sheer numbers, like that's kind of incredible when you really think about it, like seven hundred thousand locations is just an incredible, like, number of, locations that you could go and pay. I mean, for so long, let's say people look at btcmap dot org, you know, for so long it, it would have been a very low number that you would see. You look in the whole country and it would be like, you're scanning around to try and find somewhere that you can even pay with Bitcoin. And now it's just like, for South Africa And I was having a quick look on your website, I think it's through Zapper and then through Scan2Pay, you got, like, you, you basically got a lot of these numbers up from that. Do you wanna just talk us through this journey there?

Yeah, sure. So I think, look, when you, when you go on BTC Map and you, look for these locations, there's still that little bit of education that's needed. So there's still kind of like a bit of uncertainty about which wallets support, which don't. so obviously if you install the MoneyBagger application, all wallets are supported and all cards are supported. That's the very easiest way to do it. But I understand that people just wanna use their own wallet, and, something like Blink has become very popular in South Africa Yes, let's just use Blink as an example.

so

when we add a new PSP or a new mobile, QR provider

All that we need to do is we need to essentially give the wallet a list of these new patterns that they need to match. so for us, we did a lot of heavy lifting, obviously. We integrated with Zapper, which is a mobile QR, payment provider, and then- Scam to Pay, which is another one, and they've got massive reach, by the way, they've, they've, they're across like most of the large brands in, in South Africa, so that means Filling stations, a lot of other grocery retailers, but also, you know, online, there's a lot of online shopping that they cover. So suddenly that ballooned the number of shops and locations where you can, spend via our system. and now it's simply a matter of somebody needing to make, code change or, or like a pull request or a merge request on all these code bases and adding these new patterns, and then it just magically works. But it takes some time. So, yes, if you go and look in, On BTC map, I think the, there's usually some, if you click on like a location, there'll be some indication of what is the application that you'll need to, to scan a pay, and then hopefully, you know, s- in the near future you can just use Blink, I think at the moment Blink supports everything. Yeah, that's, that's pretty much, that's pretty much the, the, the strategy. So what we said is that we can either onboard individual merchants, and that's gonna take a lot of time, but what we wanna do is like just, you know, aim for the moon and add all merchants in one go essentially. So the point is, working with a PSP, they've got existing distribution and adding us just as another provider on their network gives us immediate reach to like vast numbers of locations.

Yeah, that's, I mean, that's incredible when you think about it. Seven hundred thousand, it's just, massive. And obviously the other big news that's just come out recently, which I'm sure you're following, in the US, is, Dorsey and the guys at Square have turned on for up to four million merchants, which is incredible when you really think about the scale of that. Now, to be clear, I think those merchants have to opt in to turn on Bitcoin payments, so there's a bit of a campaign going around that. But, Comparing the South African market and Bitcoin, you know, payments and let's say the US market.

Look, I think, it's fantastic that a, a, a essentially like a PSP, very essential payment provider, added native support for Bitcoin Lightning payments and like- A-amazingly, it looks to me like they're saying that there's, a zero fee. Is that right?

I believe so, yeah. I think it's zero fees until twenty twenty-seven. So I think it's maybe an intro offer to get more people in, but hey, it's, you know, because I think part of the, attraction there is normally they're paying whatever, like two, three percent for credit cards. So if they're paying zero, that's kind of a good incentive there.

Yeah, I mean, I don't, that, that's not only a good incentive, I think that's sort of like a, a make-or-break kind of thing, like that's the deal maker, and that's, I think the, the angle that we need to take ultimately is to say, well, look

these card companies are charging you an arm and a leg, and if you consider Bitcoin, the technology allows, the, the system to, to be much more efficient, in terms of pricing So you can get it much cheaper, and so that, that's kind of the deal, right? Hey, we're gonna give you an option that's much cheaper than card, but then you also need to help us to promote it, and maybe you need to opt in, but it's a no-brainer because there's no risk to you, there's no chargeback risk, I think. Like, I don't know what the terms and conditions are, can't speak for them, but, the, that mechanism doesn't exist. the fraud, profile Just steal somebody's plastic card, right? and so I think like the value proposition for the merchant with this idea of a very low fee, it becomes so strong that eventually, they'll catch on and they'll opt in, and switch it on, and then they'll start looking for the customers, the bitcoiners that wanna spend, they'll start finding them and advertising to them and reach a new audience. So I think that's really fantastic, and I hope that we-- so we also have sort of similar terminal providers in SA that we're already talking to, already kind of trying to do proof of concept with it. We're hoping that this, announcement from Block and Square allows us to sort of get these things over the line in SA as well.

Excellent. And so let's talk a little bit about what this means, let's say, as Bitcoin advocates, Bitcoin Maxis, whatever you wanna call us, now for a long time in the community, there have been kind of these ongoing, let's say, debates. now some people would say it's not really a debate, People who kind of frame it in terms of, oh, no, it's mainly a store of value, and others who are kind of more in the MOE side of that. and I mean, my perspective is more like, I think the hodling aspect is probably the most kind of economically important, but I think maybe there's a social factor that is kind of interesting around the medium of exchange part. I'm sure you've seen some of the back and forth, the, around, let's say someone like a Dan Held, who I was kind of going back and It's not really that important. Think about all these other years in the past that merchants have done this, and it didn't really make a big difference. Really what matters is more like the Ngu factor, the hodling, and maybe, like the lending and borrowing and collateral and some of those factors. I'm curious your position on this. Obviously, I'm sure you have, some kind of disagreement. how would you see this question, around trying to get merchant adoption for Bitcoin payments?

Yes, I mean that whole discussion is, like there's so many voices and there's so many different perspectives. So I think that to really give a good, input We need to be very clear about the goal that we're trying to achieve, right? is it simply sort of mass Bitcoin adoption, and mass adoption of Bitcoin as money as well? or are we trying to solve a problem for a specific group of people? Maybe just we're, we're trying to solve the problem, for bitcoiners that are already, living their lives on a Bitcoin standard and they just need more places where they can spend it to support their daily needs? but I think something that is maybe not considered in the rest of the world and that weighs very heavily in South Africa specifically is, the, the need for us To have access to a form of money that doesn't have the same restrictions as our fiat currency have, and that's something that the US won't understand. So maybe, maybe to, to give a concrete example, so in South Africa, if you're in South Africa, you are limited in the number, or the amount of money, that you're allowed to send Abroad, out of the country, and that number hasn't been adjusted for inflation in at least fourteen years. Right? That's a very long time for inflation to erode a, a threshold. and there's no indication that that, these thresholds will be adjusted. So to give you some idea of the threshold, when it was first, The current threshold was, was implemented was in 2011, and at the time you could probably purchase a house for that amount, right? today you could probably purchase, a luxury car. For that same amount. And so the question is, what does it look like in ten years' time? Will that threshold be updated, or is it gonna be like a straitjacket just, that just keeps pulling you tighter and tighter until you can't move? and we're kind of like more and more stuck in this economic black hole. It's difficult for us to attract, financing if you, if you're a, like a, a bright startup founder, and you're looking for investors, they'll say, "Well, we're not gonna invest in a In this black hole essentially, financial black hole. So it's like a,

it's a, what's the word, a, the roach motel aspect, like you can put money in, but you can't take it out.

You might be able to take your money out But it's, but not your returns and, and that principle will erode with, over time, with inflation. So, okay, so, so we look at money a little bit differently. We, we kind of feel that the restrictions of money and fiat more, directly. And okay, the, a long story short, what boils down to in this debate for us is that if we don't use Bitcoin as money Then the whole system that we're in, just, I know we've had this, this terminology ossification, you can also say like crystallization or calcification or whatever, but the whole system essentially configures itself around the notion That Bitcoin is only something that people hold onto and they never actually use, they never actually move it around. And that's a big problem. So for example, in just before we launched the pick and pay thing Our Reserve Bank Deputy Governor said we don't consider Bitcoin to be a form of money because you can't walk into a shop and spend it, right? So that's the view from the Reserve Bank, that's the view from our financial services regulators, that's the view from the banks, that's the view from the payments industry. Right? And then there's nothing that can happen, no, there's no innovation that can happen, no movement, no, nobody can go and build cool stuff, if all the rules are formed around Bitcoin as something that, you know, you buy it, you keep it with a bank or some, some exchange somewhere forever, and then maybe at some point you'll sell it back to fiat and then do something with it. The, the whole system crystal, crystallized around that notion, and then one day, you know, maybe the Bitcoiners start going, "Well, we want to So in South Africa, we think it's like urgent, it's a matter of urgency for us to demonstrate the use case of Bitcoin as money, as currency, as something that you use to support your day-to-day needs, right? Not only luxury goods and services and like holidays and fancy cars and Lambos and stuff, but the daily bread that you want to eat, because that changes the mindset, and I, I believe that we've started to succeed in this. So we've, I think like- The, the, the dialogue in the country has started to shift. There's a lot more talk about, unfortunately, crypto payments. I mean, you know how people are, like, and the, and the media, they don't differentiate, so there's a lot of talk about crypto payments. we're getting a lot more interest from payment service providers that want to differentiate, and they say, "Oh, we see that you can do crypto payments now, can Money Badger please, enable crypto payments for us?" And we're also now having different, starting to have different conversations with regulators and the like. one example is that, we have this whole licensing thing, we have the whole grading thing, if it is grading of the country, don't know, some people might know what that is, but I guess a quick overview for listeners. FATF

is Financial Action Task Force, and they are kind of one of these big international organizations that basically push a lot of this kind of, the kind of KYC, AML noose that we're all under in today's world. KYC, AML sanctions, in America it's called BSA, Bank Secrecy Act. But basically these restrictions are kind of con- constantly constricting, and if you get put on what's called the gray list or the blacklist by FATF as a country, then your country can get shut down and maybe correspondent banking partnerships, people may not wanna send money into your country, so it can be a pretty big kind of, quote unquote, death sentence or a very, not death sentence, but like a very constricting thing, at least in the fiat payment world. And so that's why some of these countries, they sort of feel the pressure to sort of go along with what FATF says, to say, "Oh, if FATF told us we need to do more AML and compliance and sanctions and what all this stuff, okay, we'll force that onto our banks and our companies and

Yep, a hundred percent. it's the naughty list for countries, in the, in the global financial system. And so we, we got on this gray list, and our regulators worked really, really hard to get us off, and a part of this was to license What they call crypto asset service providers or VASPs in other, other places of the world.

but they failed to consider the payments use case, so now they've basically classified all service providers as, financial service providers. In, in other words Investment speculation, brokerage, all of that stuff. And they, they are now in a position where all of the, people trying to do Bitcoin payments in South Africa, their licenses are kind of like pending this very long discussion that's been dragging out for over a year now. Between the financial services regulator and the ba- the, the reserve bank, because they didn't consider the use case, they thought people don't use it as money, and now suddenly they're caught with their pants down. then if you look at like Kenya They have a very simple solution. They said, "Okay, well, the investment services providers, they go under the investment regulator, and the payment services provider, the Bitcoin payment service provider, go under the payments regulator." but we failed to do so here because that, that mindset wasn't here, and that view wasn't here. And so that's why I think like it's so important and crucial for us to demonstrate the MOU, the, the, the, the medium of exchange, MOE, use case. That's kind of, I think, a very important reason to do it, that, that's not even considered by the, the broader debate.

This episode is brought to you by CoinKite, the makers of my favorite Bitcoin hardware wallet, the Coldcard Q. Now, some people think self-custody is too hard, but it's really about taking responsibility for your Bitcoin wealth and understanding that self-custody gives you a true feeling of liberty. The Coldcard Q has a full keyboard and big screen, it's got two secure elements and a true air gap, allowing you to go fully air-g You can power the device using three triple-A batteries, so you don't even have to plug it into the wall for power. You can easily use it with Sparrow Wallet for PC or Nunchok on mobile, and you can dial it into the right level of security and complexity that you choose. If you want a simple setup, just use twelve words and single signature. If you want passphrases, easy. If you want to add multi-sig or co-signing features, you've got those too. So go to CoinKite dot com, use code Livera to get ten percent off on your I see, yeah. And so, I, I mean, as I'm understanding it, we can think of it like maybe there's a social or a political benefit, to people who are, you know, Bitcoin advocates that if you can, if there's more places, you know, that are, like, like to your point around demonstrating the MOE use case or demonstrating the payments use case, then, it will be considered more from that perspective, and we can maybe even argue in different countries maybe there'll be a bit more push to take away capital gains tax as well, Capital gains tax on Bitcoin, and so maybe if it is being used as money, then there's better argument around, okay, well maybe we, maybe they have to just take away the capital gains part, or maybe they give you like some kind of de minimis exemption under a certain threshold, no capital gains, and then I can also think of it like this, like to your point as well, that if you're already a Bitcoiner and you're already holding, you're already holding Bitcoin It, it gives you more potential off ramps, right, that you can just natively spend it instead of having to go to an exchange, sell it there, get fiat, then use that fi- fiat to pay, for your groceries or whatever. Exactly. Now

the, the tax, angle is interesting. Definitely that is a barrier to adoption. It, it adds friction, even though I tell people, you know, if you're paying capital gains tax, it means you're beating the system. So, like, you shouldn't feel too bad about that. But do you know what is the country in the world with the most-- let's call it the most, that, that have capital gains? Okay, so let me put it like that, the cou-- the country in the world that, that have capital gains, that has the most rational approach? To Bitcoin spending specifically to the, to the MoE use case in terms of its tax, tax guidance. Well, Australia has

a certain role, yeah. Yeah, there have a rule about if you purchase those coins, it-- with the intent of spending them, I think it's up to ten thousand dollars. I don't know, someone correct me if I'm wrong there, but I, I believe that's, you know, that's what I've heard.

Exactly. So you already have this, this, you know, concept embedded in your tax code already, that you can spend without incur-- it's not a deemed disposal, you don't have to do a calculation every time that you, that you pay. You just separate your payments wallet from your savings wallet and then- You're pretty much set. So there are, there are ways to do- Yeah, so

hopefully that could be brought into other countries. I don't know, Senator Lummis in the US was talking about having like a de minimis, I think $600 or something. Anyway, the point is There are people talking about this, and there's actually different countries, like I know, Czech Republic recently brought in a rule, I think it's like if you've been hodling for two or maybe for three years, no, no CDT on spend. and, so So there, there are some countries that are trying to make moves on this. There are other countries that just don't have a capital gains tax, but, you know, in some of those countries, they have. So I believe Netherlands doesn't have a capital gains tax, but they have a wealth tax. and I think similar with, Switzerland. I believe Singapore doesn't have a capital gains tax as well, so that's interesting. but, you know, some of these countries are small, and, you know, obviously, most countries have a capital gains tax, and

Allowance that you can just use it for day-to-day payments. So, so that could be something there. now, I guess, do you see any other benefits? I think maybe it's difficult to quantify the benefit of having more locations that you can off-ramp. Is there Is there any other element that you could point to and say, "Well, that's a benefit of actually having more MOE adoption or payments adoption for Bitcoin"?

Yeah, I guess the, the way we see it is that there's a top-down and a bottom-up approach to Promoting Bitcoin adoption. The top-down approach is what MoneyBagger is taking, so we're saying, "Let's add as many merchants as quickly as possible to the network." Then there's obviously the bottom-up Community approach, the Bitcoin beaches of the world, you know, people starting their own town, forming Bitcoin communities and groups, and onboarding merchants one by one. So one of the biggest benefits I think of the top-down approach is that it very much supports the community approach. it makes the lives of the people trying to orange pole the, the peer-to-peer, style merchant, it makes their lives a lot easier because I can say, "Look, one of the biggest retailers in the country is accepting Bitcoin, so why shouldn't your store also consider it?" And then, you know, walk through the shop owner through it. So that's definitely something that We've heard very often is that, like it helps with the, the, the grassroots campaigns. and then I think something also that it helps with, that, that's kind of counterintuitive is that we found that people who start spending the Bitcoin They end up saving more. So it's counter to this idea that if you, spend this very scarce asset that's going up in value forever, that you'll regret it down the line. I think it depends on how you do it, because what we're seeing is that people actually just acquire more of it, and in fact, they're incentivized to earn Bitcoin now, or to convert their full salary into Bitcoin, because in the past they knew they needed to have some fiat reserve for expenditure, whereas now that level of reserve for people that's like crazy Bitcoin maxies, that are like 100% Bitcoin, that fiat reserve is dropping that, that amount, and what ends up happening is that they end up saving more Bitcoin. So it's not that they end up in a situation where they're spending this valuable thing that they should be hoarding forever. In fact, they end up with more and in a better position down the line.

Could it be that there is a familiarity effect, right? Like for a lot of people, maybe they, if they haven't really had it explained to them or haven't seen it with their own eyes, they loosely think of like Bitcoin and crypto as like either it's kind of dgen gambling stuff or kind of internet money, but once they've actually spent it with their own, like out of their own phone wallet, let's say Maybe they become more familiar with it now, and now they're kind of a bit more savvy with it, and then after they've maybe earned and spent a little bit, now they start thinking, "Oh, actually, I should be hodling this. I should be actually trying to accumulate." And, you know, yes, I'm spending some, but I wanna try to earn more than I spend, right? Like personal finance one-on-one, right? Earn more than you spend, and just do that with Bitcoin, right? So I just think that's a simple approach that works for most people is just Of course, it's different situations, like if you're old or you're retired and you have to spend down, okay, that's a different story, but kind of for younger people, that, that seems like a very simple, approach. So maybe it's a familiarity, familiarity effect.

Yeah, and that's, that is a very powerful mechanism to change somebody's mind, is when you, when you let them do it. So what I've often done is, I've met, when I meet, meet sort of, people that's not from the Bitcoin space, like people that I need, advice from or, that we want to partner with. What I'll do is I'll meet them in a location that I know accepts Bitcoin, and then after that, I'll say, "You are paying the bill today." we're going to install a Bitcoin wallet on your phone right now. I'm going to send you the sat, and you're going to spend it, and you're going to see how easy that is. And I've never seen anybody that isn't surprised by that experience

or not sort of- Having an aha moment, it's always a little,

Yeah,

yeah. So they, they sort of just, yeah, I think for a lot of people, look, people are busy, they've got jobs and families and kids and different things, and maybe they're just, obviously they're not as into it like you and I and maybe many listen, many listeners of this podcast are, so it's just a, you know, a factor of having seen it, having, and I guess making it real for them, like that factor of, I can go down to the shop to I can buy my bread, my milk or whatever, and it feels a lot more real, once you actually do that, whereas like when it's like all online on, on an exchange website somewhere, you're buying BTC on the exchange, maybe it doesn't feel as real for them.

And this, yeah, I mean, there's still so many people that say, "Uh, oh, it's crypto," and Bitcoin and crypto is the same thing. It's like most people still say that. So like differentiating the two, there's so many lessons that you have to learn, but the question is, what is that first switch in your mind that flips? When you actually start paying more attention and then start digging into it and then getting down the rabbit hole.

Yeah. And while we're here, I mean, have you had a lot of interest on people talking about things like stablecoins, or has most of the interest actually just been like, no, just keep it on Bitcoin?

yeah, so in terms of sort of the numbers,

definitely when I speak to people about this, the expectation is that it'll largely be stablecoin expenditure, right? So if you look at kind of the, the reports that people like, Chainalysis put out, they'll typically say, you know, stablecoins, especially US stablecoins, is massive in Africa, and especially Nigeria, and yes, it, it is big. So then the expectation is obviously That people will be spending USD T, USD C, via this network, but in reality what we're seeing is that it's actually a lot of it being driven by Bitcoiners And two thirds of the transactions that we process is in Bitcoin. That always surprises a lot of people. So they're like, "Hm, okay, what does that mean? Does it mean that there's actual true Bitcoin adoption? Because it's not just this, rail that you can spend your Altcoin or whatever on, or a stable on. And you can, see this also in the stats of the wallet. So I know we've, we've got some, we've got a good relationship with Blink, and they show us that the, the adoption statistics for the wallet in South Africa indicates that people download and install it not only to, like, store their Bitcoin, but also to spend it. and as the number of shops in South Africa increase that accept it, the number of- Blink installs proportionally increase as well, so the rate of Blink installs go up as the stores, number of stores go up. So we can certainly see in the numbers that we have, that there's kind of like a groundswell of Bitcoiners in South Africa that's adopting it

for their, like, daily living,

Yeah, I, to

me that's phenomenal. The, the numbers are definitely very, I think positive in that regard that there are people using it as an MME. They aren't small, but the, the rate of growth is rapid.

The other question I've got to ask you on this around the numbers and, and the growth, now it may be too early to say just based on when you turn things on, but historically, and you've been around a while, you've been around for many cycles in Bitcoins, I'm sure you've seen this, but the historical pattern has been, oh, bull market, lots of people spend, bear market, maybe not so much, right? That's been the historical pattern, but what I am noticing and what I'm hearing from people is actually Lightning is starting to see just like secular adoption

Seeing like just steady growth in Lightning payment volume, is that what you're seeing on your node and in your volume?

So there's, I think there's base, baseline growth but then we see sort of booms in spending when, when there's a boom in the price, definitely, and we do see dips in spending when there's a dip in the price. So that's still, there's still a, a very clear correlation there, and I think it's simply a matter of People feel rich when the price goes up, and they feel poor when the price goes down, and then they're more stingy.

Yeah, I think it's maybe a psychological factor, right? Like if you felt like, "Oh, we're at all-time high, one hundred and twenty-five thousand," oh, your people might feel a bit more like, "Hey, let's live a little," and then now once it's down at whatever, hundred K, hundred and three K as we speak, maybe they feel a bit more like, "Oh," and the sentiment is down right now online, so

Is just a general baseline growth going on, and I, I presume part of that for you is also just because you turned on so many more merchants and locations, right?

Yes, I think so. So we can't see massive spikes when we turn on, so when we turn on shops, it's typically like thousands at a time. and then the problem is communicating where those shops are. So then it's a matter of sort of, you know, BTC Map adding stuff there, we've got our own map adding stuff there, putting out, messaging on social media, putting out messaging on the website. So like it's a big task, but what, what we see definitely is that, there's, there's like big ramps up, in spending on the network, but Like I said, even when we aren't doing that, month on month, it's always growing. So there's this baseline steady growth, in user numbers,

in the number of wallets that's using it, and that's amazing.

Excellent. So yeah, I mean, I, let's see more people, get onto it and, start earning and spending, and this, might be a way that even some of those merchants start to spend or start to, let's say, hoddle and they actually wanna accumulate Bitcoin too. Now, at the start, obviously, I'm not expecting that to be a big factor. Maybe at the start, they just kinda auto convert everything to fiat, and obviously they have bills and wages and electricity bills and everything to pay, and rent and whatever else they're paying, and You would expect that some of them will start to actually increase what's colloquially known, I guess, as the hodl ratio, right? Like some of the payments will come in and they'll start to actually hodl more and then start to actually, take the orange pill themselves.

Yeah, so I think we, we need to be patient. if you, coming back to that debate of, of Bitcoin as a medium of exchange, if you expect things to just be, to just change overnight, you will, you'll always be disappointed. change takes time and changing people's mindsets take time, and there's different motivations behind every decision. So like where, where we starting, we starting at merchants accepting fiat and they take the fiat, right? Now we're starting to see there's these special use cases are starting to pop up. So we're seeing, oh, there's a merchant that, they need to pay suppliers, foreign international suppliers, and they're having trouble with the SWIFT system. It's unreliable, or it's too slow or whatever. they're saying, "Well, hey, you know, can we receive a part of our settlement in a stable token, UCT?" And then we say, "Yes, of course, you can do so, and we enable that for them." But now they're on a platform Where they can very easily add Bitcoin, should they choose to. And we know that there's now, I mean, this past year has been big for sort of, you know, Bitcoin treasury companies, right? Been a lot, a lot of talk around keeping Bitcoin on your balance sheet as a company. We've seen the first South African company now, rebrand to, I think it's Africa Bitcoin Corporation, and they're sort of positioning themselves as a Bitcoin treasury company. And a lot more companies are going to start thinking about keeping the most liquid and best performing asset of the century, of the millennium, on their balance sheets, right? And now we can tell them, well, you-- guess what? It's, if you're with one of these PSPs, it's like a one-click solution. You don't have to do like a lot of heavy lifting. You immediately get access to like a, a nice treasury account where you can set your Allocations. and then suddenly it's like very, very interesting. So there's a very long plan that we're working with. It's a, it's a bigger strategy than just adding Bitcoin acceptance for merchants. It's sort of, like I said, it's, it's changing the narrative, and that ultimately, the change in the narrative is what's going to drive the, the full loop of accepting Bitcoin, holding Bitcoin, and then spending Bitcoin.

So what's next for MoneyBazaar? What can people, look out and look forward to seeing?

So we'll certainly keep, working on adding more shops and more merchants and bigger brands, like the, the, the most popular household, retailers in South Africa. We've got a couple of new partnerships that we're working on, obviously I can't like divulge too much, but certainly I think what we're going to be doing in the, in the following year is to put a lot more emphasis on the let's say merchant treasury solution, and trying to find those merchants where giving them the option of being settled in Bitcoin, allows, gives them a real advantages and benefits. and that's the use case I think that we'll, we'll be focusing on and developing, in the next year or so. But, in the payment space, definitely, the, the goal is to essentially establish-- and I know people tell me I'm crazy when I say this, but we wanna establish like the- An alternative to Visa and Mastercard. We're not trying to, you know, compete for Bitcoin payments versus USD T versus Solana or whatever, we're positioning ourselves to build an alternative rail to card, and we're, promoting,

as hard as possible for that rail to be a Bitcoin Lightning, Based trial.

Excellent, well, I'll, I'll, that's probably a good spot to finish up there. So listeners go and check it out, the website is moneybadger dot co dot za. And, Carel, thanks for joining us. Any final comment? And, thanks for joining us.

Thanks, Stefan. My final comment is just like, why, if you, if you think that, Gresham's law applies to Bitcoin and that, you know, bad money drives out good? Why the hell do you still have bad money? Just only have good money, and then you have to spend it.

Fantastic. Well, it's, it's great to see what's happening out there, and, yeah, keep up the good work. Thank you, Carel. Thanks, Stephan.