WBD198 Audio Transcription

Bitcoin World #5 - Chile: Political Protests, Bitcoin & Climate Change with Guillermo Torrealba

Interview date: Tuesday 4th February 2020

Note: the following is a transcription of my interview with Guillermo Torrealba from Buda. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I talk to Guillermo Torrealba the Co-founder and CEO of Buda, a Bitcoin and cryptocurrency exchange that operates in Chile, Argentina, Colombia & Peru. We discuss the ongoing political crisis in Chile, Bitcoin and climate change.

“There is no clean revolution, you need to get mad at some point.”

— Guillermo Torrealba

Interview Transcription

Peter McCormack: So, you pronounce it for me again.

Guille Torrealba: It's Guillermo, originally Guillermo in Spanish.

Peter McCormack: Guillermo. So I'm going to go with Guille?

Guille Torrealba: Yeah, it's the easy way!

Peter McCormack: Okay. All right, well thank you for having me here.

Guille Torrealba: It's a pleasure man!

Peter McCormack: Impromptu interview and it's great to be here in your city Santiago. Had a really, really good time. Short, hopefully I'll come back but yeah. So, I think I've done a couple of these on location podcasts and I want to do it more actually, I want to get around the world and go to all the different places that have got Bitcoin and find out about it. But I always think it's good to have that kind of political, economic and cultural context and the reason I came out here was because I wanted to find out more about the protests. So I think we should probably start with a little bit of a history lesson. But let's start now, we talked yesterday, let's talk about the protests and why they're happening, because I know by asking you that question you're going to give me a short history.

Guille Torrealba: So I'd say that it all began four years ago when Allende who was a communist president elected democratically got into power and the country was in a very bad shape after only three years of government. In great part this was because it seems like socialists and communists mechanisms don't work as well as they would like at least and in part because the bigger powers of the world actually did a lot of effort for this system for this communist countries in Latin America to not work.

I mean the US and all that. So anyway, three years after Allende's beginning of the presidency, the country was in extremely bad shape and the military coup happened and the military coup was very tough, the whole dictatorship that lasted for what, like 20 years, from '73, '83 almost like 19 years.

Peter McCormack: Pinochet?

Guille Torrealba: Yeah Pinochet, exactly! So that was very tough on human rights, it was very, very tough on liberty. For long, long years people couldn't go out of the street after it was like 10pm at night. I don't mean like a couple of weeks, I mean years! So a whole generation had to actually go to parties that would last the whole night, which is a good thing and a bad thing! So it was very tough on the social, more humanist part.

Peter McCormack: Is this because it was too dangerous at night or because there was a lockdown on the streets?

Guille Torrealba: So I would say that the communist movement in Latin America was super big. So the strength of this movement didn't disappear with the coup, it remained and they were army people, so very strict. Actually the Chilean Army it's well known in Latin America for being pretty tough. So they applied all this military and all this army discipline to society and the best way they found it was to... Again, it was their way to fight this movement.

So that happened but the other side of this almost 20 years of dictatorship was that Pinochet, what he did was he wasn't a communist he was a general and he started listening to the Chicago Boys which were mostly Chilean communists that had been to Chicago University. They applied pretty much all what they could apply in the United States, everything that they had in theory that would work a lot, they applied it to Chile. In some ways it worked incredibly well, so they privatized pretty much everything, only certain things remained state-owned. They privatized pretty much every single thing. In many ways the economy went up, in most of ways the economy went up super quickly, super amazingly, sort of like what happened in China.

It's also sort of a dictatorship, you could argue that in Chile, it wasn't a dictatorship. So nobody could actually not agree with what was being said and done, so the economy grew a lot and poverty went down a lot and all these metadata was actually doing great. But fast forward 2015, 2014, we started seeing trouble as a society mainly because of debt and because of inequality in terms of wealth.

Peter McCormack: Which party was in power then?

Guille Torrealba: When?

Peter McCormack: In 2014, 2015?

Guille Torrealba: All right, so the military coup ended in 1990 and then a president from left side took power.

Peter McCormack: It wasn't a far left though? Centre left party?

Guille Torrealba: Exactly, more centre.

Peter McCormack: Somebody said to me it was a bit like Tony Blair's government in the UK.

Guille Torrealba: I'm not sure what his policies were but you're right. The general wasn't going to give up the power to a super leftie, so he gave it to a president that actually won through votes and what happened after, was that Pinochet gave the country to democracy, to people again and he built a constitution. This constitution wasn't changed at all in the next 20 years and every single president after those 20 years was from the left side. Only Pinera was... I mean he got to power for the first time like 10 years ago. He didn't do anything also to restructure this, but in 2014, the economy was doing super well and pretty much every single metric that the country or the economies were worried about, were doing well.

So our inflation rate has always between 2% and 4%, the Chilean peso is pretty stable, we're growing fairly stable and we're always growing. So what happened is that people started getting into great debts and they weren't able to pay for education and they were coming out of high school with debt and they were going into university or college, were getting into greater debt and you had the same problem with food.

You were actually using your credit card to buy food and then you were using your credit card and your debt to pay for health, the health season was really bad. So things had started getting bad like five, six years ago, but nobody wanted to really realize this, until three months ago, in October. It was a very small thing, so the price of the subway station went up like 10 pesos...

Peter McCormack: But before we tackle that, because that was the trigger.

Guille Torrealba: Yeah, that was the trigger.

Peter McCormack: But you say there's been a build up, a discontent and there's been build up of debt. How does it work, is this people on the streets talking? Is this commentary on TV? Is this opposition politicians raising the issue? How would you get a feel for the discontent?

Guille Torrealba: So it's mainly people on the street. So five years ago, it was the students that were actually in high school, they were called the penguins, because we use uniforms in Chile which are black and white. So it was the penguin movement, which was huge, massive. Today we have congresswomen and congressmen that were actually students from that time, so it has always been from the people, not even from people in congress and politicians.

Politicians aren't doing anything and the other thing that are making people extremely angry is that inequality is growing and you see big differences in treatment for poor people and for richer people, which has always been like that in South America, there's no doubt about it, but now we know it.

Peter McCormack: Because of corruption?

Guille Torrealba: Because of corruption, but built-in corruption they're not even breaking the law.

Peter McCormack: Systemic corruption.

Guille Torrealba: Yeah! For instance, there were these two very famous businessmen that own the bank, Penta Bank and they laundered 30 million dollars. They were in jail in their mansions of course, for like a couple of months and they were given a couple months of ethic classes. They had to go to university and they had to take ethic classes.

Peter McCormack: Sounds tough!

Guille Torrealba: Sounds very tough man. They were humiliated, but on the other side, these guys a couple of weeks ago was given five years because he faked equivalent of seven dollar bill and that's being known, people are not willing to give their lives for this system.

Peter McCormack: Is there a clear divide in the city, in that the wealthy and the elites live in one area and stay in one area and don't mix or do people still generally mix?

Guille Torrealba: No, Chile's the most segregated country that you can imagine. The difference between parts of the city where the rich people live and the poor people live, it's super well marked. Again, even for Latin American standards it's very clear when you're moving from one side to the other. But the interesting thing is that when the movement started, when the trigger happened, so the metro subway the price went up for like 10 pesos and people were extremely mad.

Extremely! It was like 10 pesos out of 700, so it was like 1.5%, but people were out of their heads of anger and so the vice president of transport, he went out and say, "well ladies and gentlemen you can actually start waking up earlier because the ticket price will be lower" and that was it, actually that was the trigger, it was the fact that...

Peter McCormack: Because that's an insult!

Guille Torrealba: It's an insult! The average transport time in Santiago is like an hour and a half in the morning and then an hour and a half in the afternoon, so people are working 9 hours, 10 hours plus lunch, plus 3 hours of transport and they're getting debt to buy tickets.

Peter McCormack: Three hours of transport because they can only afford to live outside the city, but the jobs are in the city.

Guille Torrealba: Yeah, exactly!

Peter McCormack: So it's almost like they are spending all that time on the public transport, which I've heard isn't great also.

Guille Torrealba: No.

Peter McCormack: And they're coming in to probably, I guess some of them in their minds' service the rich and the elite who live here in the city and it feels like another tax on them.

Guille Torrealba: Oh of course, and that's exactly what I mean with inequality. So inequality's not bad per se, but it is bad when your conditions are bad, right. So if we're all living in a good standard but there's someone that is, I don't know, a thousand times richer than me, all right I can understand that.

Peter McCormack: So it wasn't really the 10 peso change, it was more the signal that again, it's another cost rise for the poor.

Guille Torrealba: It's another cost rise for the poor in the contexts where the poor are fed up with politicians saying that they're working for them, and actually and transparently not doing anything.

Peter McCormack: One of the really interesting things here with this which I've discovered, this isn't a left or right thing, this isn't being directed to any specific political party. This is something that's been building up through different parties, both centre left and centre right.

Guille Torrealba: Yeah, some people call it a brainless movement, because there is no leader. With the brainless it doesn't mean that it's not smart, it means that actually there's no central node actually coordinating this. So people exploded one day and 10 days later there was the biggest manifestation in Chile with 1.5 million people in Plaza Italia, the newly named Plaza Dignidad in the centre of Santiago, which is a very iconic Plaza, how do you say Plaza?

Peter McCormack: Centre?

Guille Torrealba: The centre, yeah. A million and a half people, that's a huge amount for any standard, even more for Chile. We have like 17 million, so 10 percent of the population was in one spot demanding change, was super, super... I mean you had the whole spectrum there.

Peter McCormack: How much of a middle class do you have in Santiago in Chile?

Guille Torrealba: I'm not sure about the number, but the middle class is being squished. So the lower class has a lot of help from the government and then the upper class is living comfortably in Chile.

Peter McCormack: But is there any support from people in the upper class to this though?

Guille Torrealba: To middle class?

Peter McCormack: No, support of the people who are protesting.

Guille Torrealba: There were part of the upper class there. Of course I have to consider myself part of the upper class and I was there. I'm happy with people waking up, what I'm not super happy is that I think that they're pointing their anger to the wrong person, but that's another story. The problem is this, the Chilean system wasn't that bad. The Chilean system was good, I mean we picked KPI's and the KPI metrics were actually growing well. That's good, I mean we were doing well, the thing is that we weren't waring for the people.

So the problem is that once the people get angry enough, they don't reason and that's what's happening today. So we went to the other side, now Chile it's under, I would say the influence of Antifas who are becoming extremely aggressive, who are burning and destroying infrastructure which is affecting mostly people who are not to blame. It's like you're seeing a kid that has been treated very unfairly and who's so mad that it's hitting and kicking absolutely everything and everyone in its surrounding, and you can't stop it.

Peter McCormack: But this general discontent from... it's something I'm seeing everywhere I go, it doesn't matter whether I'm in London or I'm here. I went out and watched the protests on, what day did I arrive? I'm trying to remember, was it Monday? Yeah, Monday I arrived and I was surprised at, I would say the average age was probably like 18 to 20 years old. Very young people!

Guille Torrealba: Yeah, more than energetic and more...

Peter McCormack: And excited, probably. Some find it exciting and some are angry, and a lot of us when we were young and in our 20s, we thought society was unfair and we hated the government. We all went through that, a lot of us, not all of us, but you know what I mean.

Guille Torrealba: Yeah, of course.

Peter McCormack: I understand that but at the same time, have they stolen the protests and pushed it with a different agenda and its lost meaning?

Guille Torrealba: Yes that's happening and what is super sad is that what started with a legitimate purpose which is losing support. A lot of people are getting scared, are saying, "look I don't want Venezuela, I agreed with you, I don't agree with you anymore" and that's super sad, again, because the system is broken. I'm not kidding, I am part of the portion of the population that has advantages and I see that it's not fair.

So it's very sad that a minority that is aggressive enough is for instance, they're going to the houses of court members and they're saying that they're going to kill them and their families if they don't do this or if they don't do that in court with the cases that the Antifas are considering, I don't know, relevant.

Peter McCormack: Which makes it all unproductive.

Guille Torrealba: Extremely unproductive.

Peter McCormack: There is a second layer to this, there's somebody else I met the other day who said that there is a second layer to this relating to the pensions and wanting pension reform. Can you explain that side to me?

Guille Torrealba: Yeah, so with the pension reform, the pension is one of the things that has people more concerned. So 30 years ago we had the same system that pretty much every single country where the working population paid for the pensions of the people that actually stopped working, and there was this Jose Pinera, who's actually the brother of today's president, who sort of invented a new system where you would to save from your pocket, from your salary every month so when you...

Peter McCormack: Private pension.

Guille Torrealba: Well, private pension. He invented it and Chile exported it to every single country. The thing is that we went from the old system to the new system, so everyone started saving and some people started saving when they were 40, some people started saving when they were 50 because how civilization works, some people that used to not need to work now they needed to work and they're now getting a $100, $150 of salary in a country where you can't leave with less than $500 or $600.

Peter McCormack: Hold on, just a couple of questions. What's the general retirement age in Chile?

Guille Torrealba: 65 for man, 60 for woman.

Peter McCormack: Okay, similar to the UK. I think we've made ours the same though, I think it's the same age. I think it's by 65, but I can't remember exactly but I think it is. Okay, and the state pension, what did that used to be?

Guille Torrealba: I'm not sure what it used to be, but today a fairly large amount of the population that are getting a $150 or a $160 a month.

Peter McCormack: From the state?

Guille Torrealba: From what they saved, so this sort of mixed fund.

Peter McCormack: Because if you're 60 years old when they change the pensions...

Guille Torrealba: Yeah, so the transition wasn't perfect. So what happened is that our pension system for the person that is saving is functioning incredibly well. So they're using the money fairly, the money is renting and they're not stealing money. It's super, it's incredibly supervised by the government so that's working well. The thing is that we went completely private and we didn't take into count that there were people that was going to start turning 65 like 10 years ago and they weren't going to have money and these people have to pay for their kids school or their grandkids school.

So today we're risking for instance, one of the bad things of having this extremely, extreme movement is that people want to go back to the old system which doesn't make sense because the pyramid, it's inverting. There's less people working than people retired, so it all went mad.

Peter McCormack: Okay, so that's part of the protests as well? Because it's all kind of connected but there are separate issues, right?

Guille Torrealba: There are separate issues, people are not clear on what issue they're mad at. Pretty much everything, and they're mixing everything which makes this very difficult to manoeuvre.

Peter McCormack: What is the government response been so far?

Guille Torrealba: Oh, the worst!

Peter McCormack: They've not done anything?

Guille Torrealba: No, I think this is the first time that in Chile we have like 99% agreement on something and it's that the government has been the most inefficient and inadequate government that we could have. So, they're trying to save their, I'm sorry for the expression, but they're trying to save their asses.

Peter McCormack: I say much worse than that, don't worry!

Guille Torrealba: Cool, excellent! So yeah, they're trying to save their asses, they're being narcissistic, they're trying to save their image and for that they can't do anything. So they can't be too extreme with the cops because another thing is that people are very, very mad at the cops because the cops are attacking the problem in the wrong way. They're using tear gas pretty much for every single thing, like the whole city is covered with tear gas, it's super annoying.

Peter McCormack: Also, again I watched that the other day as I got tear gassed for my first time, as an amateur.

Guille Torrealba: How was that?

Peter McCormack: Not nice! So as an amateur journalist trying to learn more, this is my first experience of on location journalism.

Guille Torrealba: How was it?

Peter McCormack: It's exciting, scary and super interesting but you can... I've interviewed this guy called Jake Hanrahan, who's a proper journalist. He used to work for Vice, he's got a great podcast and he said, "you can never really understand things unless you're on the ground and you see it for yourself, you just can't. You can't understand it from the TV, you have to go and experience it." I get what he meant on two levels, firstly understanding at a local level what's going on because you have to speak to a bunch of people, but also understanding the experience of what it's like to be there which can be about being anywhere.

But there's a few things I observed, firstly, the cat and mouse between the police and the protestors seems utterly pointless. You only have to watch it once to realize this doesn't work, so what was really interesting was how organized the protestors were, you had the front line, you had the spotters on the different street corners, what I found most interesting was the traffic management.

Guille Torrealba: Oh yeah, it's amazing!

Peter McCormack: That was unbelievable. So watching them manage the traffic was incredible. But anyway, so I just stood and observed didn't film anything, and then I watched the police water cannons come out, they were also firing the tear gas, but the water cannons and the tear gas and everyone disperses and runs off and then everyone congregates and the same happens again. So it's just a game of cat and mouse, they can't defeat it with water cannons.

Guille Torrealba: And the sad thing is that now we're in that spot where nothing makes sense, but in the beginning, the front line, which are these people that are literally on the front line of the protest and they're actually fighting with stones against the cops. So they became extremely important because the cos wouldn't allow anybody to protest, so they were critical. But now that they were critical and they became sort of heroes, now they're doing things that you could argue if they're actually making a purpose. So yeah the cops are shooting, like we have 300 or 400 people that have lost an eye or both eyes because the cops are shooting, how do you call this?

Peter McCormack: Rubber bullets.

Guille Torrealba: Yeah, but in the face instead of shooting on the feet. So no, it's getting bad, people are getting pissed off of the police and the polices are super scared and the police and the government, it's a huge chaos.

Peter McCormack: And the thing is, it's one of those situations where you observe, you can see that it's just going to be an escalation of violence which is going to end with some tragic... Well you've already had tragic events.

Guille Torrealba: Oh yeah.

Peter McCormack: I saw the other day about the bus being hijacked and one protestor running over another protestor.

Guille Torrealba: Yeah, we've had like, I don't know the number I stopped counting.

Peter McCormack: Number of deaths?

Guille Torrealba: Like 30.

Peter McCormack: 30 deaths?

Guille Torrealba: So because of protests, because of confrontation between protestors and the cops and cops running, like crashing with the cars on the protestors, cops that are not using uniform, it's sad. It's sad, but on some part of me, on the crypto side of me, the more revolutionary side, I'm also happy because there's no clean revolution. But you need to get mad at some point, you said something so, you said that this was happening in many countries, right?

Peter McCormack: Yeah, all over the world.

Guille Torrealba: But yeah, but in Chile we never said anything. So it was this kid, he's Colombian, it's this kid that never said anything, never said anything and he got so mad, so mad that he killed everything and that's part of our culture, part of how we are as Chileans, it could be explained because of the colonialism. But anyway, we have to wake up! So hopefully... I'm still pretty optimistic with Chile, I hope that things come out well.

Peter McCormack: Okay, well that's a useful context and probably a good starting point to move over and start talking about a bit of Bitcoin and a bit of crypto. But I do want to just focus on one point you said there, because as a Bitcoin person you like the revolution, you like the fact that people are fighting back, that is good and I understand that. It becomes a bit kind of murky and complicated because there is certainly a very significant and large group of Bitcoiners who very kind of, libertarian ideals or perhaps maybe even let's say, more conservative.

It's a range from conservative to libertarian ideals, less so on the socialist side understandably so. Yet in some ways the protests are almost socialist protests in some ways because these are people who are looking for the government because they want a better answer and this is where it gets complicated.

Guille Torrealba: Yeah, I'm not sure I agree with you. I mean no, I totally agree with you with the spectrum of the libertarianism in the crypto world, but I don't agree with that this has to be a socialist movement.

Peter McCormack: It doesn't have to be, I'm saying what it is, is that the protests appear to be socialists.

Guille Torrealba: Those are Antifas that are yelling the loudest, but you can argue that we had open markets when the Chilean banking system or industry has had record profits for 30 years. Santander is this huge banking corporation but it's in pretty much every single Latin country, Chile is the most powerful country they have and that has been so for 20 years, so there's no competition here. So it's not like we have an open market in the banking industry and you could say the same thing for several industries and you could say the same thing for drugstores. So how do you call when corporations get together by secret and agree on pricing for stuff like that?

Peter McCormack: Price fixing.

Guille Torrealba: Yeah, price fixing. We had some scandals, many scandals in the last five years from toilet paper to chicken to banking to drugstores which are affecting 90% of the population, so that's not an open market. You don't need to be a libertarian to say, "hey come on this is not working, this is not fair." That's why I don't necessarily agree with this being necessarily a socialist movement, which doesn't mean that I don't agree with some socialist aspects of it, but...

Peter McCormack: It's an interesting topic to get into because especially coming from South America, we talked about this yesterday and I'm not sure I'm 100% right, but just from my experience of looking at South America by visiting here, doing a lot of research, certainly socialism seems to existed historically within Latin America and it's that spectrum from socialism through up to full communism, we talked about Cuba yesterday, we've talked about Venezuela, also where socialism becomes hijacked by dictators, we talked about that there seems to be a history of socialism in South America.

But when you get in the world of Bitcoin, any form of socialism is evil. I've had debates with people where there shouldn't be free schooling or healthcare, there should be no government, everything should be free trade and if you question or challenge any of that the response back usually is, "well you're a statist" or "you're an enemy of freedom" and they try and prove it with economics and I fully understand the arguments, I fully get it and I appreciate a lot of it and I throw myself in it, but I also sometimes think I can't see a world adjusting to that world and it not becoming chaotic and anarchist. That's one of the things I just can't fully get myself there. Do you understand what I mean?

Guille Torrealba: I do! I have so many things to say regarding that.

Peter McCormack: Cool, we got time!

Guille Torrealba: So we can get philosophical and we can go all the way to free will, I mean if we're not born equal, we don't have the same opportunities. If we were equal and we were 100% conscious of our acts and of the consequence of our acts, then you could argue that then you had to take responsibility for your actions. But the facts is that we are not. For instance, why are pensions necessary to be obligated or imposed, it's because our incapacity to value future benefit or future well-being, personal well-being as much as we value today. So if we don't impose pensions, what is going to happen is that we're not going to save money because we want to use that money today and we're going to come to this age, to any age where we won't be able to work and we can't work, we can't live.

So if that happens, the whole society will come eventually to that point and when you have a million people that are 70 years old, don't have any money and are living on the street begging for a coin, they're not going to say, "all right, I take responsibility for not saving, I will fucking get my hands on you because you have money because I want to save my life, because I want to eat, because I need to eat." So government in that sense needs to act as a knowledge database and needs to recognize that we have a bug in our coding system. We have a bug and that bug is not allowing us to save money for our future unless someone imposes it.

So that's one example why we need someone imposing us to save money, otherwise we will have enough people to destroy our system because they truly will need to survive and they won't be able to just say, "all right, I didn't save money so I will starve." No, that's not going to happen. So you can view it from that side. You can view it from another point of view, which is incentives. So nobody's born good, nobody's born bad, nobody's born right wing, nobody's born left wing. So I strongly believe in human incentives and if you see a country or a population that leans towards socialism, you can argue that it's because of the education and maybe that's the only explanation that could be.

Or you can actually also ask yourself if there are situations or conditions in the context and in the surroundings of people that are pushing them towards socialism. That's what I think that has happened in Latin America for the past 200 years since we are countries. Plutocrats have always been disproportionally powerful, so it's like what happened in Russia with the Zsars and the Russian Revolution.

Communism is not good but we learned after trial and error that it's not good. But you can explain why people were so mad, it would be very unfair for us in 2020 and the comfort of our salaries and our comfortable living to say that they were all stupid, that they were all mad, that they were all evil. So it's complicated, I think it's at least complicated.

Peter McCormack: Yeah, that's the point I've always come to. I don't think there's a binary answer and I do think it's complicated. I really appreciate some of the libertarian ideals and the arguments make absolute sense but when I try and imagine a scenario how this actually works, how it actually plays out, I don't think it's that simple. If we had say, no government, a situation of no government, us having free trade between ourselves, I understand that, but if we didn't have that, I do think there is a potential for a breakdown in society whereby there's people who won't have anything and we know in any example where the is a breakdown in society, that people will resort to violence and crime.

We know that's happening in Venezuela, we know people are being shot or attacked or being stolen from., so I can't ever picture will that be a better world. Yes it will be better in terms of freedom and liberty. I fundamentally understand that but will it be a nicer and safer world, I'm not convinced. I'm not convinced whether it's because we're so conditioned to this current structure of society where we have a state, or it's just because we don't fully appreciate how humans will react and behave. But I do support the idea of smaller government, less government, I do support the idea of weaning ourselves off government.

So if we move from a state pension to a private pension, we wean ourselves off that and we teach people, "this is how you save, this is personal responsibility", I totally buy that. But I think a lot of the stuff needs to be thought through in a lot more detail because we're talking about tens of millions of people, to suddenly move to a situation where it's all personal responsibility, we're all at home with our guns protecting ourselves and we have free trade between each other, I'm not sure if that's a nicer world. It might mean we've got rid of the bullshit government, but it might mean that it's, I don't know, more dangerous? I just don't know.

Guille Torrealba: So you're right. I also don't know, but I feel there's a continuum where one side is, you have zero government and then you have people doing whatever they feel is fair when they get robbed and then the other extreme where it's communism, where the government is actually doing the work through the people that employ with the money.

Peter McCormack: Which I think is worse, obviously.

Guille Torrealba: I'm not even sure it's worse, I mean they're both inviable. There's a reason why we're here, somewhere in between, so I truly and profoundly believe in a smaller government, I truly believe in government regulating the private sector but doing it well, truly doing it transparently and efficiently and not doing the actual work. So I don't believe that a government should be hiring people to do the pensions, the pension job.

Peter McCormack: Well it depends what they regulate as well because again, I've listened to a lot of podcasts by Tom Woods, who's a big libertarian and in there they cover lots of scenarios with regards to centralized regulation of private enterprises and I've heard some very good arguments for why it doesn't work. But at the same time I would have concerns, maybe similar to you. One of the ones I discussed recently was with another libertarian, I was talking about what happened with Uber in India, where Uber could go in with so much money they were able to offer loans to people to buy cars and then with those cars they could start driving people around.

But so many people joined Uber that the prices they were getting for their journeys was dropping and then they couldn't afford to pay off the cars and then people ended up committing suicide. This is world documented, my friend Jamie Bartlett covered it in his documentary, The Secrets of Silicon Valley, and that was a very abusive situation and that was fuelled by Silicon Valley debt. They were able to do that and they were able to go in and like vultures take over the private taxi air things, I think it was in Mumbai. What I worry about is that corporate greed will always exist. How do you regulate it in a way which isn't too intrusive? Do you understand where I'm coming from?

Guille Torrealba: Of course I do, and I think that's the big question. So, going back to Bitcoin I don't feel inflation is a tax they should have power to put on people, but I have the feeling that every single company, and I'll get stoned for saying this in Chile, but I strongly believe that every single company should move towards being fully owned by its employees in the long term, because they are...

Peter McCormack: But it's very controversial, I mean that's a very socialist ideal.

Guille Torrealba: I don't know if socialist, I'm not saying that the government should do it. I think that society should... It's sort of being done today in Silicon Valley, so stock options are the best way to keep employees.

Peter McCormack: So you're really referring to as an individual who owns a business should have the... So it's personal choice...

Guille Torrealba: I don't know what's the mechanism, but I think that companies in the long run should tend to be owned by the node that actually produces the value and this came from many hours of thinking of how to distribute without having the state to manually and arbitrarily say, "I'm going to put a tax on you." or "I'm going to tax your wealth or your production" because that doesn't feel organic.

What it feels organic is that there has to be a mechanism where wealth gets distributed in a better way than having one person or one group of people in the government saying, "all right, now 20%" or "now 25%" or "now 30 percent" until you find that point and when you found the point the society changes so much that then 30% is not the right number. So I don't think the government should get there, but what I'm trying to say is we need to find a way as a society to start transferring value or wealth in a more organic and more natural way.

Peter McCormack: I can see you're wrestling with it. You don't know the answer, but its in your head and I guess it's because you are seeing wealth inequality and you're recognizing it. Now a lot of people say, "look this is just the way it is, this isn't the fault of billionaires" and I understand all of that and I accept all that. But it doesn't change the fact that you're just recognizing wealth inequality, which is probably down to a number of problems globally, the different protests that we've been seeing over the last year globally, usually it comes down to some form of discontent, usually some form of inequality with regards to wealth distribution.

Guille Torrealba: Yeah of course and it's being seen everywhere.

Peter McCormack: Let's talk about Bitcoin. Come on, that's what we're here for and we've done a good 45 minutes without getting to it. Give me the backstory for Bitcoin for you, because I only met you yesterday and I'm here at your exchange, the biggest exchange in Chile, so thank you for having me here. Tell me your background into Bitcoin.

Guille Torrealba: So I used to have another company and it didn't work out. The day I decided to shut it down, literally I closed my laptop and I reopened it because I didn't have anything to do it was like 11am in the morning, I talked to a friend on Facebook, he was online, I said, "what are you up to?" He was the only guy online, everyone else was working and he said, "I'm mining Monero." I was like, "What's that?" It was an alt coin and I was like, "what's that?

And he said, "well, come here and I'll show you." So he taught me everything about Bitcoin, my mind exploded, I started business, couple of years I studied economics and every single question that I would make to my friend with paradigms I had in my head, he would crash them! Of course not him, but the protocol, the system and this was early 2014, he had been up and running for four years and he was doing super well. I just fell in love, so the same day that I shut down a company I decided to open Buda.

Peter McCormack: That day?

Guille Torrealba: And I did, the same day.

Peter McCormack: You realized, "I've got to do an exchange!"

Guille Torrealba: Yeah, my girlfriend broke up with me like two weeks later.

Peter McCormack: Her loss!

Guille Torrealba: That's the cost of it! Yeah, there was no free will in that. I had nothing to do with that decision, the decision was made for me.

Peter McCormack: When was this?

Guille Torrealba: April 2014. So I decided to make an exchange. That wasn't the idea I liked the most, but for any idea that I had, I had to be able to exchange. So I met my co-founders and they had a web developing company, we started building Buda, on April 2015 we launched with one customer, I was the only registered customer! It all started from there, then we raised some money from DCG and from local investors, then we got a fund from the government which was very cool, first time government from any country was backing something related to crypto, of course they didn't know it was crypto.

Then we opened Colombia in 2016, then Peru 2017 and then Argentina in the middle of the crash, so that was our fourth and last market we opened. We've been up since then.

Peter McCormack: How much of a rollercoaster has it been?

Guille Torrealba: Oh, huge! So we lead the 2017 Bubble which was good and bad, I was sort of worried for what was happening. It was obvious that it was going to crash, it was going to be bad, but then we still grew as a company a lot. Before the bubble we were like 5 people, after the bubble we were 35 people and in March 2018, all the banks in Chile, like every single bank at the same time shut every single bank account of every single crypto company in Chile and Chile was like 60 percent of our income.

Peter McCormack: Was there any warning of this?

Guille Torrealba: No!

Peter McCormack: Just overnight?

Guille Torrealba: No, we received a letter that said that we had 2 weeks, 10 days of running time to get the money out of there.

Peter McCormack: And the reason being?

Guille Torrealba: So there wasn't one reason. Some said money laundering risk, another said lack of regulation, others didn't say anything. So we went from growing a lot, to having zero operations in Chile, that was in March.

Peter McCormack: How many employees did you have at the time?

Guille Torrealba: 35. So we went from making a fairly good amount of money to zero in a space of two weeks.

Peter McCormack: Wow!

Guille Torrealba: Yeah, so we sued the banks on the free competition court, which is the court related to economic freedom in Chile.

Peter McCormack: Wow, because this wasn't actually regulated?

Guille Torrealba: No, this wasn't regulated and even though in the contract, banks always have this right to close an account without warning and because of no reason. They were very, very stupid so all the banks at the same time, to all the companies.

Peter McCormack: So they colluded?

Guille Torrealba: Of course! We didn't sue them for collusion because that's very hard to prove, but it was so obvious and we had a large KYC time, we had our protocols. The protocols were certified by an independent company, we were doing our job so this wouldn't happen. So the court ordered them to reopen the accounts, they did.

Peter McCormack: How long did that process take?

Guille Torrealba: Like a whole month.

Peter McCormack: Okay, that's not too bad, in a month.

Guille Torrealba: No, it's not too bad. But in that month we lost, it was like 40% of the customers.

Peter McCormack: Did you have to turn the website off or could people still trade with what they had in their account?

Guille Torrealba: No, we gave everything back and they couldn't trade, there weren't pesos, right.

Guille Torrealba: So there were Colombian pesos, but then they re-opened the accounts, we're still on trial, but they closed all our accounts in Colombia like a week later.

Peter McCormack: And is that coincidence?

Guille Torrealba: Yeah, I think so, I don't think there was any correlation between the two acts. So 2018 was bad for every crypto company and we weren't exception, it was horrible. The team went from 35 to 10 people. We had to raise money again, but here we are up and running again. The company's healthy, all our markets are up and running, it's been a rollercoaster.

Peter McCormack: Bitcoin's about to go back over $10,000! We're at $9,700.

Guille Torrealba: Amazing!

Peter McCormack: Yeah, another record for the year.

Guille Torrealba: Now we're super, super happy with our history, we're very proud. We were always very focused on Bitcoin, our customers can trade other cryptos but Bitcoin's our main.

Peter McCormack: But you don't have a lot of different coins on there, right?

Guille Torrealba: No, we have Bitcoin, Ether, Litecoin and Bitcoin Cash. But we were, I think the first or the second exchange in the world to allow our customers to receive through Lightning Network and deposit and pay invoices.

Peter McCormack: So that's very interesting. I know that the HodlHodl guys did it as well. Was that challenging to build that out?

Guille Torrealba: It was challenging but all the competition was there, so I guess the biggest risk was that we were one of the first. So there's always this uncertainty, confusion and fear. I don't think it was that hard in terms of technology, technology wise, it was hard to take the decision and to open it. We did open it with a lot of restrictions and very safeguard, but I think the hardest part was as a founder team to decide that that was the future of crypto and we were going to commit to it much earlier than the other big companies that we were looking at. So it's hard to in that sense, be the point of [inaudible]

Peter McCormack: Did you get much uptake with Lightning? What is the use case? Is it people that just want to trade but just have less money? They want to trade with a few dollars?

Guille Torrealba: So we want to push this protocol that takes advantage of the huge Bitcoin infrastructure, like the main net infrastructure, but without the need of the 10 minute confirmation. So the use case I guess was people paying bills between them and it hasn't grown that much, but we didn't expect our business to be based on Lightning, we just want to help the ecosystem and the technology to grow towards a future where we see that the infrastructure that has been built is useful, not only for big transfer but also for small payments and that's where Lightning Network's so important.

Peter McCormack: Oh, so you're ready in advance of when it maybe is required on other large scale?

Guille Torrealba: Yeah and I want to help the ecosystem look where it's possible to do stuff.

Peter McCormack: Okay, so you're in four countries, Argentina, Peru, you're back in Colombia...

Guille Torrealba: We're back in Colombia.

Peter McCormack: What happened?

Guille Torrealba: So in Colombia we tried to sue the banks, that didn't work out. So Colombia doesn't work as well as Chile. Chile works really well, I was amazed and I was super impressed with that. No, in Colombia we tried everything, we even talked to the Vice President of Economics, he received us in his office and he wrote about Bitcoin before he was a Vice President in 2014, so he was super happy, he told us at the end of the meeting.

We found payment processors that were willing to give us service because we were very known in Colombia and we are now starting to get relations again with some banks. I guess they got scared, as Colombia also has this history of drug lords and I'm not sure what happened, but it took us a year and a half to reopen the operation. So we can't be any happier because of that.

Peter McCormack: Do you plan to expand through all of Latin America?

Guille Torrealba: So that was the plan two years ago, but now we want to consolidate what we have. So opening new countries is the easiest part, the hard part is to consolidate.

Peter McCormack: Right, so should we talk about the big thing?

Guille Torrealba: Yeah!

Peter McCormack: Well, firstly let's just put it out there, I find this really interesting and it is going to be controversial and not because you're doing it, it's because of the implication that comes with it. It kind of throws out an accusation, maybe a couple of accusations out there, but I still think it's super interesting, so we're going to get into the area of carbon emissions. We're going to talk about that and it's something I've covered recently and I did say something recently that pissed a few people off. I did word it very badly, but it is what it is.

I'm going to put it out here, I personally believe that humans are causing the planet to warm up. I do believe that and I do believe we're polluting our oceans and I do believe we're generally wreaking havoc on this planet. I am a hypocrite, I've talked about this and now I'm flying here and then I'm flying to Bolivia, so I am a hypocrite. But let's get it out there, you're about to do something that nobody else has done. So you explain it.

Guille Torrealba: Yeah, no pressure with that introduction! So yeah, I don't think it's an accusation but I know that some in this community will get offended because of this, but in Buda, we decided not only start measuring and compensating the carbon footprint that our operation produces, which is taxes and gas and electricity and servers and whatever that we use, but we're giving our customers the possibility to mitigate their carbon footprint emission when their doing Bitcoin withdrawal. We're doing this because it's a fact that Bitcoin is consuming, it's not wasting and that's where people get super offended.

Nobody's saying that Bitcoin is wasting electricity, Christmas lights waste electricity! Bitcoin doesn't waste electricity but it consumes a lot of electricity, so much that it consumes even more than Chile, the whole country of 17 million people. Electricity it's produced mainly in China where the great percentage of the electricity it comes from coal. So the Bitcoin industry is having an impact on the world, on the ecosystems, on the natural ecosystems and on the planet, and I think that it's beautiful. I don't want to look at it from the accusations point of view, I want to look from the other side.

I think it's beautiful that we, as a community that is just being born, as technology that is just being born, can actually measure or impact and start mitigating it. So what we're doing is that we partnered with an NGO that is recovering wetlands in the southern part of Chile. So wetlands are super important natural ecosystems because there are many flora and fauna that only lives in wetlands, so if you kill wetlands species can go extinct. So they're working with wetlands that have been destroyed near cities, they're restoring them.

So what we did is that we calculated the footprint of a single transaction, we did a lot of estimates but whatever, I mean you can discuss if it's 300 or 280, the thing is that we measured the carbon footprint of a single transaction and we're telling our customer every time they're making a withdrawal, we said "a single transaction of Bitcoin produces more or less like 300 kilograms of carbon dioxide." If we go to the open market, that's like $2, that's what it costs. It's $6 in big quantities, it costs $6 to buy a whole ton of carbon dioxide. So we're saying, "at 300 kilograms, it's about $2, do you want to compensate that footprint?" And that money's going to go to this NGO that is going to help restore the wetlands.

Peter McCormack: So it's optional?

Guille Torrealba: It's optional, you can do 100%, you can do 50% or you can not do it. Again, for me it's very, very important that people understand that we're not trying to look hippy, we're accepting that Bitcoin consumes a lot of electricity, that electricity is not wasted it goes 100 percent to security. So the blockchain is ever more secure when we increased mine power and that's amazing! But it has an impact and we can do something about it, so I would like to transform this into a movement. I would like this community to feel proud that they are actually doing something, I don't know if many just born industries are doing this.

Peter McCormack: And we can do it with airlines, right? You book a flight you can choose to offset your carbon.

Guille Torrealba: Not in Chile.

Peter McCormack: It depends on the airline, I know that for example British Airways, they have an option at the end where you can just pay and it's a few pounds or whatever, depends on the journey, but you can pay to offset. I've always wondered with some of these things, what is the thing they're doing to offset it? And does it actually offset it? That's one of the things I do wonder, but it's a very interesting thing because again, this is another thing that's very difficult to talk about because you're right, it doesn't waste the electricity, it is used for security. But even wanting to discuss it, sometimes the Bitcoin defence comes up, which makes it very difficult to talk about and I've also seen mixed reports on what energy is used. Is it dirty coal in China or is it clean energy that's produced in Iceland?

And I've seen kind of a mixed bag but at the same time, it is a lot of energy being used. If Bitcoin continues to grow it's going to be more, it is a certain percentage. If there is a way for people to have a choice, if they do it's completely optional and you want to offset your carbon, I can't see why this is controversial. It will be, but I can't see why it is. Unless people see it as a threat, they see it as an accusation.

Guille Torrealba: Yeah, that's the point. So I would say this community is still very sensitive. We take it very personal when someone says something wrong about Bitcoin, we take it like they're damaging our ego, our image, our personal image. Maybe because we're full into it, it happens to me.

Peter McCormack: We have a lot invested into it.

Guille Torrealba: I've invested all my wealth into Bitcoin and my past five years emotionally, time wise. I just had a daughter a year ago and it wasn't in the best time of my life.

Peter McCormack: But it's also your personal and professional reputation. For example, if you talk about Bitcoin on Facebook amongst your friends who aren't into Bitcoin, they'll see it and probably think, "oh just shut up, here's another Bitcoiner." But also then they'll read something in the press and they'll say, "Bitcoin uses more electricity than Argentina", wherever it is or Chile and for them to then criticize it because they see magic internet money, a way to make a bunch of people rich as using up all this electricity, they're not seeing the deeper layers, where we want a better, harder form of money, we want money that can't be stolen. Which is especially relevant in places like Argentina where I've been and talked about the Corralito.

Guille Torrealba: Yeah Corralito, the buck runs.

Peter McCormack: Yeah, I was out there recently where twice the currency has changed and completely wiped out people's savings, we've seen what's happened in Venezuela, Zimbabwe, Iran, Turkey, lots of different places, so they don't understand that this is actually an important tool for liberty and human rights. But therefore when anybody ever brings these up, I think people have such a defence because part of their identity is linked to Bitcoin and if your identity's linked to something, a criticism of that thing is a criticism of you. I still feel like these things need to be talked about a bit more.

Guille Torrealba: Absolutely! You're completely right. This has to be talked and that's why we feel that what we're doing is important because we're saying, "let's talk about it." But it can be attacked, I truly think that as today you can't consume products and just throw the garbage away, you have to take your garbage! If you produce CO2 and you don't mitigate it, it's the equivalent of not taking your garbage because someone else will have to do it in the future and we're just as a society making the transition, so we're not completely sure about this, but in 20 years time, in 30 years time, it will be nuts not to compensate as a company. Like Microsoft a month ago said that it will compensate for the whole time since they were funded.

Peter McCormack: Oh wow!

Guille Torrealba: Yeah, that's how it should be. Now it's "wow", because we're not many companies doing it but eventually every single person will have to compensate for its impact and there's nothing wrong with it. It's cool to be human and it's also amazing to have a planet.

Peter McCormack: Yeah, I find the climate thing, outside of my personal opinions, I find it absolutely fascinating because the division is bigger in Bitcoin. So amongst my friends and home there's no real disagreement, everyone kind of believes climate change is real, it's being caused by humans, if we don't do something about it then there's very severe consequences for the planet of which we're seeing. I think we're seeing now, I don't think it's a coincidence these weather patterns... When I was out in Latvia they were saying this is the first time they've not seen snow this time of year, it was unusual and there are the increase in floods in places like Miami.

But I find it fascinating because I threw myself into it recently and the volume of rejection of climate change or the science or whether this is a natural cycle is huge. The stuff coming in was, I had to kind of try and research it all and most roads lead back to funding from oil and gas industry. That's what I found, but at the same time I find it amazing that there isn't a very clear and obvious basis of facts here that we can all work on that there is this debate and perhaps that's been the success of those who have a vested interest in not seeing any change done, I don't know, but I find it fascinating that there is this kind of disagreement and it's even more so in Bitcoin.

Guille Torrealba: It's true, we're very extremist as a community. What makes me a little bit sad is that we don't even have to. I do believe in climate change and I do believe that we're part of the reason, but even if you don't you can actually go outside the city and see how polluted the farms are and the ocean is. You don't need to think that the climate is changing to actually understand that plastic bags in the ocean are not good, so what we're doing with this initiative of zero carbon dioxide transactions for Bitcoin, is to just do our work.

We're not saying, "be an altruistic human being and do this for people that you don't know." It's that you used products that waste trash, take up your trash and do something with that, don't leave it there for someone else to pick it up in the future! You do it, because you calculated it and that's the trash. So I'm happy about it, I don't think this is an attack to the ecosystem, I think that this is I'm raising my hand as Buda and we're saying, "Hey, let's do it."

Peter McCormack: Yeah, I don't see it as an attack, but I think people will see it as an attack.

Guille Torrealba: Yes, I agree.

Peter McCormack: Even though it's a voluntary and it's an optional thing to do that you want to choose to offset your carbon of that Bitcoin transaction, people will still see it as a... I think the thing is, people will see it as somebody within Bitcoin who is adding to the accusations that Bitcoin is wasteful. Now I agree with you, it isn't wasteful, the security's important. But that's why I think you'll get the... I could be wrong!

Guille Torrealba: I also think so. So we could both be wrong.

Peter McCormack: Yeah, we could be wrong! It'd be very interesting to see the feedback, I think I'll be very intrigued by it. Do we have a date for this? Target date?

Guille Torrealba: Yeah, it will be during the third week of February probably.

Peter McCormack: Okay, well so to let people know that this show will have come out afterwards because I've agreed to that with you, and I've scheduled it to come afterwards. But I'll be super interested to see the feedback.

Guille Torrealba: Me too!

Peter McCormack: It might trigger some other people to do similar.

Guille Torrealba: That's the whole point of it, as a company we're 0.016%, we made the math, of the transactions in the Bitcoin network, so hopefully we're the example, not the only ones.

Peter McCormack: Okay, all right cool, so anyway we're going to go off in a bit, we're going to meet some Chileans, you're going to be a translator for me, so thank you for that. Just before we close out, firstly thank you for your hospitality, it was great to meet you and I find this everywhere I go and it is amazing so thank you for that. If people want to find out more about Buda and they want to check out that you're doing or want to get in touch with you personally, you know somebody listening to this might hear about this carbon neutral Bitcoin transactions with Buda and they might want to do it themselves, I'm sure you'd happily talk to them about it, how could they reach you and how do they find out more about Buda?

Guille Torrealba: So Buda.com In social networks, Twitter mainly @BudaPuntoCom, the Spanish dot. My email is g@buda.com, so just the G of Guille. Happy to help! This is not about me, this is not about the brand, this is about the ecosystem, the technology. So thank you very much, let's go to Plaza Italia and yeah, congratulations for the podcast.

Peter McCormack: No, thank you, thank you for having me!